Strategies for Responsible Businesses

CR Talks

Talking in Circles

Several years ago, in a hushed conference room in Geneva, I spent several days with a number of academics and corporates, embroiled in long discussions on how CR should not be reduced into linear categories. In our current economic system, we extract resources like water and energy and make products that are largely disposed of at the end of their life or after use. This broader thinking on production impacts understanding on CR which continues to be bounded by misunderstood institutional roots, political limitations and legal parameters.

Such ideas have now become known as the circular economy. The circular economy is a notion that argues for a "restorative economic model", one where production works within resource boundaries. A circular economy is also waste-free and resilient by design. So, production must account for social and ecological impact, or what is called "closed loop".

Simply put, businesses are judged on linear measurements – sales and profits as well as year on year growth projections. Supply chains are time-bound, with quick turnarounds to satisfy insatiable consumption demands – all working in a linear process. The results are depletion of resources and a culture of perpetual waste.

So, how do we move towards this notion of circularity?

One of my favourite writers of fiction is Haruki Murakami. The world he builds is a dreamy one, full of talking cats, dead girlfriends and endless, rainy days.

He says this: "It's all a question of imagination. Our responsibility begins with the power to imagine. It's just as Yeats said, in dreams begin responsibility. Turn this on its head and you could say that where there is no power to imagine, no responsibility can arise".

So, with some imagination, businesses can make the transition from the traditional linear model of production and consumption to a circular model, based on reusing resources and regeneration in production.

Some examples of interesting companies in this area are Steelcase, the furniture maker and Desso a Dutch carpet and artificial turf company.

Steelcase's Thinkchair is 98% recyclable by weight, contains 38% recycled content and can be disassembled in five minutes. The chair can be recycled over and over again. Steelcase has re-imagined the office chair.

Desso, the carpet company, shows new thinking in redesigned carpet tiles which can be disassembled with yarn that can be reprocessed to continue upcycling the materials.

It has also developed a bio-degradable base made out of corn by-products and is experimenting with yarn from bamboo, which allow used carpets to be safely returned to the food-farming system.

Some other examples are companies building laptops made of plastic from old laptops, making aluminium car body parts made from old cars and producing flushable or compostable diaper lining.

These are interesting developments but it must also be remembered that the linear economy can be traced right back to the Industrial Revolution and largely continues to inform current business practices.

During the Industrial Revolution, the factory employing hundreds of workers became representative of the corporation at large. In part, this was a reflection of the power of the new industrial processes that reshaped age-old relationships. The factory owner had the privilege of the "old lord of the manor but none of the responsibilities". Labour was seen as a replaceable cash nexus. Major issues of responsibility and morality became acute.

The famous Marxist, Friedrich Engels observed: "One day I walked with one of those middle-class gentlemen into Manchester. I spoke to him about the disgraceful unhealthy slums and drew his attention to the disgusting condition of that part of the town in which the factory lived.

"I declared that I had never seen so badly built a town in my life. He listened patiently and at the corner of the street at which we parted company, he remarked: 'and yet there is a great deal of money made here. Good morning, sir!' "

Such ideas of profit at all costs has not changed much, except where legislation has intervened subsequently.

The question is how do we re-design business to be circular? It is not so much a fundamental redesign of business and end-to-end overhaul of value chains as a rethinking of the overproduction and overconsumption culture. It goes back to the core of a business and integrates the notion of profits with purpose. For companies that operate efficiently around a critical resource such as water or energy, market forces are happy to ply the necessary rewards.

There are different ways to be circular: companies like Uber are thriving on the sharing and collaborative culture, in which consumers choose access over ownership. As sharing is becoming acceptable in new ways, we are realising that young people want a car for mobility and not so much as a status symbol.

Similarly, Airbnb is opening up the market for holiday accommodation without the need to build new hotels. Other examples of being circular are Coca-cola, which has managed to reduce the amount of water used per litre of product by 24% in 10 years. There are also exciting new start-ups working around the notion of circular like Waste Ventures in San Francisco, which is working on profiting from waste, to Evocative in New York which grows packaging materials from mushrooms.

At the end of the day, no business operates in a vacuum, every decision and action is influenced by a wide range of forces, both internal and external to the business. Successful business leaders enable their organisations to harness the forces that will enhance performance, while optimising their response to performance limiting forces. The circular economy energises businesses with new possibilities and markets.

-first published in The Sun Daily and edited for this site-

Jay DesanComment