NEWSLETTER by Alessia Falsarone. The author acknowledges the team at The University of Chicago Circular Economy and Sustainable Business Management Program and all participants of the innovation knowledge hub for their insights and collaboration.
When the Wall Street Journal incorporates Circular Economy into their Friday coverage, featuring The Coca-Cola Company as one of the most well-known consumer products companies in the US, advocating for a transition towards circularity and linking environmental targets with executive compensation goals, it is evident that circular economy practices are becoming increasingly important in the private sector’s sustainability agenda. This also highlights the significance of rethinking customer engagement as a crucial tool for organizations aiming to shift away from linear supply chains.
Can incorporating circular product features and values elevate consumer engagement to a higher level?
Engaging consumers on the value of circularity poses a significant challenge for companies. In addition to creating awareness about environmental and social issues, companies must effectively communicate how circular initiatives address these challenges. However, to truly foster a circular economy, consumer perception of value needs to evolve. This requires a shift in mindset and behavior from consumers who actively participate in closing the loop and preserving natural resources through the use of circular products and services. Giovana Monteiro Gomes and her colleagues from the University of São Paulo, Brazil and the HU University of Applied Sciences Utrecht (Hogeschool Utrecht), The Netherlands, have conducted research in the apparel industry to explore how companies can facilitate consumer engagement in circular consumption systems.
Specifically, they have set out to answer the question:
- How can apparel retail companies facilitate consumer engagement in circular consumption systems?
While their research framework was only tested with Brazilian and Dutch consumers, it highlights an important aspect: the willingness of apparel consumers to engage with circular products. By aligning communication and marketing strategies that support circular values, such as offering convenient platforms for shared apparel and promoting circularity initiatives as unique and luxurious, organizations can advance a circular flow of resources and products in the shorter term, while also encouraging changes in consumer behaviors and consumption mindsets in the long run.
| Circularity roadmaps explained
Embracing circular business models offers opportunities for companies to engage with customers, optimize resource usage, and ensure long-term sustainability. The circular economy is increasingly influencing marketing and sales strategies, providing new prospects for meaningful interaction with customers, employees, and their broader stakeholder community. For example, in a Harvard Business Review article, a team of researchers from INSEAD, emphasized the urgent need for the solar power industry to develop effective recycling capabilities to handle the increasing number of discarded panels. This challenge is likely to apply to wind turbines and electric vehicle batteries as well, highlighting the significant threat posed by the depletion of critical resources due to current production rates. Sales and marketing professionals play a crucial role in addressing these issues. However, in a truly circular economy, all functions of a company must align around the goal of utilization rather than growth. Companies must acknowledge the finite nature of natural resources and take proactive measures to anticipate resource scarcity. Consumers are demanding action, prompting businesses to respond. The impetus for change extends beyond traditional stakeholders and includes new collaborators. Pressure from investors, upcoming legislation, and evolving customer behaviors are driving the shift towards circular business models. However, simply devising an optimal circularity strategy on paper does not guarantee its success in reality. The strategic framework they advocate, VAP, seeks to support the transition from linear to circular business models by prioritizing 3 key factors:
- Value – the perceived value of a product will open the door for potential reuse/resell alternatives;
- Access – to close the loop, for example, reverse logistics cannot be too expensive or difficult, and the existence of a competitive secondary market for the product needs to be analyzed;
- Process – repurposing of reclaimed materials is not always efficient, cost-effective or even possible.
In the quest to establish a circularity roadmap, the team at INSEAD urges organizations not to forget the starting point: circularity is not the goal; sustainability is. Circular economy innovation can be an effective operational tool to reduce negative environmental externalities. Nevertheless, it requires the re-alignment of entire supply chains which can only happen with time, and steady consistent partnership efforts.
| Investing in the Circular Economy
Early stage ventures in circular economy are continuing to grow their reach and breadth of investors. The Canadian ecosystem has been on the lookout for circularity innovation and resource positive ventures. One of the early investments in the country so far this year comes from the province of Quebec. Aquatech BM, a leader in the field of commercial bottle washers and sterilizing equipment, has secured an initial round of C$1.7 million in financing backed by the sustainable investment teams at labour-sponsored fund, Fondaction, Investissement Québec, and an additional contribution from regional agency Canada Economic Development for Quebec Regions.
With a geographic reach spanning 80 countries, across several sectors, Aquatech’s circular water solution for bottle washing has enabled multifunctional capabilities for container recovery and sterilization delivered through one device with the result of also reducing energy consumption in the process, while also meeting standard requirements for hygiene and product safety. The company currently serves a number of industries, including brewing, wine, food, hospitality, dairy, pharmaceutical and research laboratories.
The changing makeup of portfolio companies says a lot about the future upside potential of an investment platform. Investors of the likes of Fondaction and Investissement Quebec continue to actively seed sustainable innovations to support the regional ecosystems they serve, prioritizing investments that generate positive economic, social and environmental impacts in addition to a healthy financial return.
| You don’t want to miss this week
A handful of e-learning modules (in English, Spanish and Portuguese) this week offer new opportunities for fellow circularity practitioners to learn and collaborate outside of their daily roles and responsibilities. Plus, enter the world of gamification with the beta version of Our Crazy Linear World on the Ganbatte platform by the Circle Economy Foundation.
Discover, grow and leave your mark!
Circular Economy Policy Maker E-Training (Duration: 2hr 38min). The e-learning course developed by the Asian Development Bank Institute provides an in-depth look at circular economy principles and highlights successful examples of circular economy transition- in Asia and globally. It also spotlights policy recommendations to help countries move toward circularity. Notable lecturers include: Edwin Keh, CEO, HKRITA – The Hong Kong Research Institute of Textiles and Apparel Limited; Maria Wirth, Researcher, alchemia-nova; and Louisa Freeman, Head of Business Development, Returnity Innovations.
Serie de Webinars sobre Financiamiento de Economia Circular (Duration: 5 sessions; one hour each*). The introductory series is designed for institutional investors, insurance professionals and representatives from government agencies such as financial market regulators and supervisors. Notable partners in its development include: United Nations Environment Programme Finance Initiative (UNEP FI), Inter-American Development Bank, IDB Invest.
Note (*): available via recordings, the series is delivered in Spanish, with English, and Portuguese translations.
Circularity Games (Beta Version). Circularity games is a gamified e-learning platform to assess, engage, train and activate people to enable the circular transition. It helps: 1. Uncover the circular potential of your team or enterprise. 2. Elevate your understanding of the circular economy’s principles. 3. Monitor your team’s progress with intuitive tools as you advance towards a circular future. Challenge yourself and check out the introductory game “Welcome to our Crazy World” for hands on experience with gamification that boost circularity engagement (mobile and desktop versions available).
Off to another impactful week!
| brief bio
Alessia Falsarone is executive in residence, practitioner faculty at the University of Chicago, where she leads the Circular Economy and Sustainable Business program. The article is based on the author’s newsletter A Week of Circularity from the innovation knowledge hub.
| 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.
