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The Circular Economy (pt. 3): How Businesses are Changing for the Better

In this series’ previous post, the circular economy was defined as a system that closes the loops of production to reduce waste, but what does that actually look like? In the following posts in this series, we'll discuss the ways in which corporations can begin to close these loops.

Businesses have already begun to take action. At the Business Roundtable in 2019, 181 CEOs signed a new statement of purpose for their corporations. This roundtable discussion had previously endorsed principles around shareholder value: a measure of corporate performance through profit maximization.

According to previous statements, the corporations operate primarily to serve their shareholders: individuals who own shares of the corporation. By virtue of their status as partial owners of the corporation, the shareholder focus is detrimental because they are only beneficiaries and have no legal duty to be held accountable for misdeeds surrounding issues such as emissions and worker safety.

However, this new Business Roundtable statement supersedes all the earlier principles by outlining a standard for corporate responsibility that advocates for a purpose beyond profit. This shifts the focus from the shareholders to the stakeholders who have an interest in the company, such as investors, employees, customers, and suppliers. This company-centered model asks business leaders and entrepreneurs to define their own purpose and the purpose of their organization, while also building a stakeholder map that describes how value increases for each individual involved in the company.

Similar to the circular economy model, by prioritizing long term value, this company centered approach is much more sustainable as it helps to meet the needs of the present without compromising the ability of future generations to meet theirs. Companies within the circular economy model do this by generating profits while doing good for society and the environment. Below, we have highlighted examples of large companies shifting towards this model and what has incentivized them to change.

  1. Increase Efficiency: When Puma published its environmental impact costs, (specifically their water and carbon data) the company was motivated to find ways to lower water, energy, and fuel consumption by 60%. This reporting helped the company profit from sustainability initiatives.

  2. Better Reputation: FedX made the goal to shift its 35,000 transportation vehicles to clean energy models like electric or hybrid engines. They have successfully implemented this initiative to 20% of these vehicles, which translated to a fuel consumption reduction by more than 50 million gallons.

  3. Cost Efficient: The multinational conglomerate company, 3M, was able to save approximately $2.2 billion through its 3Ps Program: Pollution Prevention Pays. This program encouraged the company to restructure their internal manufacturing process, invest in earth friendly equipment, and recycling/reusing production waste.

Stay tuned for part four, where we will explore more about what national and state policy initiatives are out there in the United States -- more specially in both Massachusetts and California -- to make this circular economy model a reality.

1 Comment

Unknown member
Aug 23, 2021

That's right! We need more initiatives like this. I support brands that are changing to be sustainable.

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