INSIGHT by the Ellen MacArthur Foundation
Recent geopolitical shocks and economic uncertainties have highlighted the need for resilient supply chains. As we move away from a take, make, waste linear model, the circular economy offers businesses the opportunity to redesign their supply chains to meet these needs, as well as reduce costs and cut greenhouse gas emissions.
This white paper — Building a circular supply chain — and accompanying fact sheet, produced in collaboration with the Circular Supply Chain Network, explains what circular supply chains are, the benefits and challenges in implementing them, and how supply chain leaders can transition their organisation’s supply chain from linear to circular.
| What are circular supply chains?
Circular supply chains require three things:
-
Distributed and interconnected networks to leverage local and global partnerships with suppliers, customers, and industry peers
-
Multidirectional flows of information, goods, and money to enable data — such as the location, material composition, and disassembly options of an item — to flow between network partners
-
The ability to capture and deliver value by keeping products and materials in use
A) secondary (i.e. non-virgin) and/or regeneratively grown products and materials that can be circulated within the economy or safely returned to nature.
B) actions done to inputs to allow their (re)introduction to the value chain and the retention of the maximum amount of their embedded value (i.e. maintenance, repair, refurbishing, remanufacturing, and, as a last resort, recycling).
| What are the benefits of circular supply chains?
Recent geopolitical shocks and economic uncertainties have highlighted the vulnerability of traditional linear supply chains. Circular supply chains enable businesses to become more resilient by decoupling operations from the extraction of natural resources, thereby increasing material security and reducing exposure to price volatility.
Furthermore, the supply chain at a typical consumer goods company accounts for more than 80% of emissions. The circular economy is vital in order to tackle climate change — eliminating waste, circulating products and materials, and regenerating nature enables businesses to reduce their greenhouse gas emissions, as well as their costs.
| What is the role of supply chain professionals?
Supply chain leaders are critical in the circular economy transition as they are responsible for the sourcing, movement, and transformation of the 100 billion tonnes of materials that enter the global economy each year.
In addition to exploring how supply chain leaders can transform their organisation’s supply chain by focusing on nine key areas, the paper also highlights how supply chain professionals can influence the wider system. Given their connections to network partners, including suppliers and customers, they can play a catalysing role in advancing the adoption and scale of circular economy principles beyond their own organisations.
Supply chain leaders have an enormous opportunity to deliver economic benefits to their organisation and environmental ones to society.
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
