Industry's Next Frontier

A growing number of businesses are rising to meet the challenge of sustainability by harnessing the power of technology and embracing the concept of the “circular economy” – a more holistic conception of how businesses are connected to the environments and communities in which they operate. The idea of the circular economy goes beyond just the eradication of waste from manufacturing. Rather, it encompasses the whole lifecycle of a product, from how it’s designed and made to how it’s distributed and sold to how it’s used, reused, and eventually disposed.

Participants were treated to some examples of circular economic thinking not only from companies like IKEA, Schneider Electric and eBay but also to lessons from a government, from Vincent Biruta, Minister of Natural Resources of Rwanda, a country that has taken a leading role in promoting the circular economy. Rwanda has very recently signed a Letter of Intent with the World Economic Forum, which will see the Forum help the Rwandan government to imbed the concept of the circular economy into the very DNA of production and consumption systems, and help Rwanda build a network of countries that will also adopt these principles.

Peter Agnefjall, Chief Executive Officer of IKEA Group, Netherlands, shared some of the Swedish home furnishings giant’s initiatives, including its drive toward near-energy independence through its own renewable energy push. IKEA now owns nearly as many wind turbines as it does stores globally, and Agnefjall suggested that the company is as much a “small renewable energy company” as it is a furniture seller. Recently an IKEA store in Renton announced that it has the largest rooftop solar installation in the state of Washington. And IKEA completely ended the sale of incandescent light bulbs in all its lighting fixtures, moving to much more energy-efficient LED lights.

E-commerce marketplace eBay has similarly pushed for sustainability, focusing on greening its data centres and driving toward zero-carbon footprint data centres. When a platform like eBay promotes circular economics, said Devin Wenig, eBay’s President and Chief Executive Officer, it acts as a “force magnifier”, multiplying the beneficial effects of its own policies. While the company pushes for more efficient capacity utilization internally, its more important role, said Wenig, is its “external role to drive capacity out of the system”. By providing an efficient marketplace for goods that might otherwise be thrown out, it not only reduced landfill impact but also removed the need for an item to be manufactured again.

Privahini Bradoo, Co-Founder and Chief Executive Officer of BlueOak, USA, spoke as an actual hands-on practitioner of the circular economy. Her company processes electronic scrap, or “e-waste”, to extract gold, silver, palladium and copper – high-value metals that are then resold to luxury good manufacturers. “From one ton of cellphones you can extract as much gold as you can from 100 tons of gold ore,” Bradoo said.

Jean-Pascal Tricoire, Chairman and Chief Executive Officer, Schneider Electric, France, pointed out that through dialogue companies can bring their shareholders around to the idea that the drive toward circular economics is good for their bottom line: Sustainability ultimately means less risk. And consumers, whose attachment to brands is often closely tied to their belief that brands they support share their values, are demonstrably able to get behind companies that pursue strategies for sustainability, even if it means less short-term gain.

Ultimately, said Andy Serwer of Yahoo! Finance, the circular economy “should not be just as good as but actually better in terms of all kinds of KPIs”. What’s essential, he said, is partnership between the public and private sectors, and an inclusive approach that brings in all constituencies: employees, shareholders, customers and communities.