Circular economy stakeholders

Whether circular economy is developed on a territory or within an activity sector, businesses play a key role. They remain at the forefront to rethink their products, procurement, operations and business models. Organizations may want to explore the potential benefits of providing their customers with maintenance and repair services, selling services or usage rather than products, or launching a new range of second-hand or refurbished goods.
 

Circular economy can lead to a range of benefits for businesses, including:

• cost reduction;
• higher profitability;
• job creation;
• customer retention;
• reduction in environmental impacts;
• security of supply and greater resilience.

The implementation of a circularity approach touches several units within an organization. The businesses and industries that choose this path will have to create new relationships with clients and suppliers, and may also become involved in local stakeholders’ ecosystems, such as within an industrial ecology framework.

As it becomes imperative to collectively shape the social and ecological transition, the values, practices, and development models of the social economy make it a very effective driver to accelerate the shift.

Owing to their democratic functioning, territorial presence, social responsibilities and benefits, social economy enterprises constitute a strong link to give impetus to the circularization of the economy by and for regions across Canada.

Major cities are emerging as the new leaders of circular economy. In 2014 already, Amsterdam set things in motion with a broad action plan which paved the way for a new neighbourhood designed with circularity in mind, and launched its Circular 2020-2025 strategy embracing Kate Raworth’s Doughnut model. Paris has held its estates general on circular economy (in French) since 2015, Brussels has implemented a regional program and Seoul is becoming the new capital of the sharing economy. France also announced in February 2020 its anti-waste, circular economy law (in French).

The implementation of circular economy at the territorial level serves to:

• better understand goods, materials, water and energy flows to target priority sectors and resources;
• identify missing drivers and links across the territory to create new value loops;
• ecosystems of innovative stakeholders by imagining optimal scenarios with business models, productivity and circularity targets by bringing complementary organizations together.

Regional development agencies play a key role in supporting businesses seeking to create industrial symbiosis and in sparking circular economy processes on their territories. Municipalities and regions also have a very important part to play in:

• adapting regulations to new strategies such as sharing economy;
• ensuring their services, set the example to inspire other local stakeholders and create a leverage effect by integrating responsible procurement criteria in government contracts.

Governments are responsible for creating conditions that will foster the emergence of a circular economy, specifically by adopting adapted regulatory measures, coherent tax measures and policies and funding programs to support the transition from a linear to a circular model. Integrating circular thinking into public procurement practices and major initiatives, such as investments in infrastructure, constitutes a key lever to support the shift. With globalization, creating market conditions favourable to circular economy and developing collaborative ties with other states are also critical. Governments must assess their own circularity progress and ensure the transition leads to economic, as well as environmental and social benefits.

Circular economy yields many positive outcomes for governments. It creates local employment and stimulates innovation while helping to reduce the widening gap between resource availability and increasing demand by businesses and consumers. Circular economy also renders economy as a whole more resilient in weathering the volatility of commodity and energy prices and risks of market shortages. It directly contributes to the energy transition and fights against climate change.

The transition to circular economy raises complex issues. It opens new fields of research, driven by the knowledge shared between different sectors.

In addition to developing the knowledge required to implement circular economy, researchers must anticipate the potential rebound effects of circularity strategies. For example, while the purchase of used goods leads to savings for consumers and avoids the use of virgin materials to manufacture new products, will consumers then choose to invest these savings in other goods and activities that generate environmental impacts equal or greater than those avoided with the purchase of second-hand goods?

The academic sector must also enable new generations of experts to develop innovative skills to support the implementation of the 12 circular economy strategies and learn to work collaboratively with different stakeholders between organizational functions

Occurring as part of social, business and even household activities, finance involves providing the funds required to carry out an economic transaction. In that respect, it constitutes a key step in any development process at the micro, meso or macro level. As an innovation that rethinks production and consumption patterns by breaking away from the linear model, circular economy holds significant potential to become the new economic paradigm. When funding for circular economy projects goes hand in hand with financial support for collective ownership, the opportunity arises to finance a new economic scheme that will engage in the fight against climate change and inequalities and create a more sustainable, equitable and democratic economy.

The transition to a circular economy cannot take place without the participation of citizens. By adopting responsible consumption practices, they can urge businesses to develop new products and services that better meet sustainability criteria. Within their communities, citizens are joining forces to drive innovative initiatives, especially within the sharing economy. These alternative consumption habits enable them to preserve and even increase their purchasing power (e.g. renting products, sharing or selling goods), but also creates new social ties to exchange and share goods and services.

The transition to a circular economy presumes that citizens/consumers will profoundly change to their relationship to goods and resources by:

• considering themselves as users rather than consumers of a good;
• perceiving residual materials as resources rather than waste;
• dissociating their well-being from consumption of goods;
• taking on an active role in the circular value chain (value loop).

Consumers play a very important part in the end of a product’s service life or life cycle. More often than not, consumers decide whether a product is repaired, thrown out, donated, resold or recycled, and their behaviours are therefore fundamental in establishing circular economy.

The transition to circular economy assumes that all organizations will integrate new purchasing criteria into their procurement policies (e.g. acquiring services rather than products or choosing refurbished or recycled goods rather than new products). Because the procurement team drives its organization’s purchasing processes, it can also reconsider actual needs and seize opportunities to reduce the quantity of goods and services consumed at the source.

As far as manufacturers, their purchasing agents will be called upon to:

• create ties with nearby organizations determining opportunities for industrial symbiosis;
• collaborate with production to move toward a closed-loop system, through self-supply from their own products or similar products at the end of their service lives;
• support their colleagues in R&D to identify materials and suppliers that will lower procurement-related risks;

The circular economy therefore offers a unique opportunity to strengthen organizations’ responsible procurement initiatives.

Manufacturing teams are at the front lines to target and reduce energy, water and material losses in production processes. They steer the deployment of the operations optimization strategy. 

Circular economy will lead them to explore new avenues to, for example, reclaim production losses, use recycled materials, refurbish products after their initial use loop and test new technologies such as additive manufacturing and 3D printing.

Focused on their clients’ needs and expectations, sales and marketing experts can guide organizations toward the most relevant strategies and test their interest in new business models, such as the performance economy. Circular economy can yield opportunities and open new markets, reclaim by-products and sell used and refurbished products. Teams will then have the power to redefine marketing strategies and ensure that their salesforces have the tools and arguments to properly position them.

When an organization chooses to provide maintenance, repair and refurbishing, its after-sales services must be strengthened. These teams are often well positioned to know their products’ limits and weaknesses in terms of durability (e.g. defects).

To reduce the environmental impacts of transportation and specifically the quantity of fossil fuels consumed, logisticians can rely on new information technologies to optimize routes, determine alternative modes of transportation and consolidate procurement. 

Reverse logistics must also be implemented to recover end-of-life products and create a network of intermediaries that can contribute to recovery and repair of products, refurbish and recycle product components. For logisticians, the next step is then to ensure that recovery flows and production flows are in synchronization.

Managers in finance and accounting must establish the financial parameters and conditions that will enable their organization to move toward circular economy. A circularity approach can have a major influence on the financial strategies to be implemented. For example, when transitioning from selling a product to selling its use, financial flows must undergo significant changes to account for the rise in assets as the organization retains ownership of its products and material capital. In a sharing economy strategy, an organization can either own its products or serve as an intermediary between market agents.

Accounting plays a key role in estimating the potential financial gains of the circular economy (e.g. reclamation of by-product and product losses, energy savings, equipment sharing between local businesses).