The majority of US “sustainability executives” believe that the circular economy will be important to their business in the next two years while less than half of them thought so two years ago, a UPS survey has shown.
“The circular economy is defined as an alternative to a traditional linear economy (make-use-dispose) in which we keep resources in use for as long as possible, extract the maximum value from them while in use, then recover and regenerate products and materials at the end of each service life,” UPS explained.
Conducted by GreenBiz Group in partnership with UPS, the “2016 UPS/GreenBiz Circular Economy Research Study” provides a “deeper understanding of the business drivers and challenges associated with the circular economy”.
The survey results revealed that nearly nine out of 10 (86%) of sustainability executives surveyed consider circular economy to be important for their business two years from now, which is nearly the double from 47% two years ago.
The respondents expect the technology sector to be the main growth driver of the circular economy model, especially electronics such as computers and cell phones, “as take-back systems and product reuse are most easily integrated in those models.
Nearly three in five respondents have stated that their organisation is implementing circular economy principles in at least one of its product lines or service offerings.
“We are not surprised to see the growing importance of circular economy concepts to business,” Ed Rogers, UPS senior director of global sustainability, said. “Our customers are recognising the environmental and social impact of their products and operations across the entire value chain, from raw materials and design through manufacturing and logistics. They recognise the opportunity to move toward a model that keeps resources in use for as long as possible.”
The UPS study highlighted the critical role of logistics for implementing a successful and sustainable circular strategy, with 97% of the respondents considering logistics as either very important (87%) or somewhat important (10%) to transitioning to a circular economy.
The executives surveyed suggested that logistics companies can further greater participation in the circular economy through a seamless and convenient take-back model. This includes offerings such as pre-paid shipping labels, smart packaging and convenient take-back mechanisms to help fuel market demand. In addition, costs for consumers and customers can be reduced through the use of backhauling as well as through load and route optimisation.
“At UPS, we use our expertise in logistics to help enable and facilitate the circular economy,” Rogers said. “As this research shows, focusing on ‘first mile’ logistics is crucial to helping businesses implement a cost-effective circular economy. UPS partners with customers to implement seamless take-back systems that include turnkey packaging, pickup services and pre-paid return labels. Taken together, all of these assist in the reverse logistics processes needed for a successful circular economy.”
Another critical factor for widespread adoption of circular economy principles is creating market demand, the survey further revealed. 26% of the respondents identified customer and consumer demand for products that are recoverable, recyclable or refurbishable as the most important factor for adoption.
As the greatest barrier to implementing an effective, global circular economy, the survey identified an insufficient business case.
Other key barriers respondents identified include:
• Logistics costs to reclaim used goods (36%)
• Lack of executive leadership understanding/education (36%)
• Lack of consumer understanding/education (36%)
• Other business objectives taking priority (30%)
According to the study, two motivating factors for both business customers and consumers are cost savings and convenience. The respondents cited the following incentives to ensure the return and the reuse of consumer products or their components and materials at the end of its period of primary use:
• Rebate in the form of cash back (56%)
• Convenience of returning a product at a brick-and-mortar location (47%)
• Ability to return a product using pre-paid shipping (42%)
• Discounts towards a future purchase (40%)
GreenBiz Group’s mission is to define and accelerate the business of sustainability through a wide range of products and services, including its acclaimed website GreenBiz.com and e-newsletters, webcasts on topics of importance to sustainability and energy executives, among others.
