Businesses must adopt circular economy models to meet consumer demands and mitigate future supply chain risk. Consumers are becoming more discerning and more demanding of businesses to be responsible. As a result, they’re pivoting towards companies that engage in circular practices.
According to the latest Capgemini Research Institute report, Circular economy for a sustainable future: How organisations can empower consumers and transition to a circular economy. More than seven in ten consumers want to adopt circular practices, such as reducing overall consumption (54%). Purchasing more durable products (72%) and maintaining and repairing products to increase product life (70%).
In contrast to the ‘take-make-waste’ linear model, a circular economy is regenerative. It aims to gradually decouple growth from the consumption of finite resources. For consumers, this means buying durable products that are recyclable or made with recycled materials. Keeping them in use for a long time through effective maintenance and repair. Or ensuring responsible end-of-life actions so that little to no waste is generated.
For businesses, this includes developing products and business models that eliminate waste by design, reducing the use of raw materials. In addition to planning for return/recovery of products and packaging, among other actions.
Consumer demand for circularity
Driven by concerns about waste and resource depletion, consumer desire to adopt mindful consumption practices is growing. However, nearly 50% of consumers believe that organizations are not doing enough to recycle, reuse, and reduce waste across sectors. 67% expect organizations to be responsible when advertising products and to not encourage excess consumption.
Past reports from Capgemini show that organisations are failing to take bold action on their circular economy practices. In that context, consumers are increasingly shifting their spending towards companies that practice circularity.
This is especially true in areas where consumer awareness is highest, such as food and plastic waste. For instance, 44% of consumers have increased their spending in the last 12 months on food and beverage companies that focus on recycling, reuse, and reducing waste. 40% have done so for personal and household-care products.
As consumer interest in sustainability further translates into action, organisations must increase focus and investment in circular practices within the design of their products.
Breaking down barriers to circularity
Consumers are currently constrained due to issues of convenience, access, and cost. 60% cite a lack of sufficient information in product labelling as a reason for not taking positive circular actions. (on origin, recyclability, recycled content, etc.) 55% say expense is a barrier to repairing products, and over half (53%) cite not wanting to compromise on convenience.
This is an inevitable result of the eCommerce boom of the last 10 years. It has instilled a great desire and expectation for convenience and low-cost through major retailers. Particularly those that offer next-day or even same-day delivery services.
There are regulatory efforts such as the EU’s ‘right to repair’ initiative to extend product lifespan. However, it is also incumbent on businesses to break down barriers. Currently, consumers’ circular approaches are primarily focused on the post-use phase.
For instance, 58% of consumers say they segregate and dispose of food waste post-use. But only 41% of consumers shared that they buy food that uses minimal packaging. Potentially also pointing to choices that are actually made available to consumers. Responsible disposal is a key to the circular economy. However more needs to be done to ensure waste is not created in the first place.
Circular economy key to sustainable growth
“The circular economy is the key to sustainable growth. As of now, consumers already make greener decisions, but they can choose only from what is offered to them. Industrial organisations need to bake-in a green life cycle,” says Roshan Gya, Managing Director, Intelligent Industry at Capgemini Invent.
“The winners will be those who will secure a deep transformation in 3 areas. Minimising the impact of their existing products and services, developing products of tomorrow that will embrace circularity principles by design.
“Furthermore, reinventing their operations that include new sustainable business models. These companies will be the new leaders of tomorrow on their markets with a strong consumer relationship and loyalty. In a sustainable journey, circular economy is an investment today for how we should do business in the future.”
Enterprise Times: What this means for business
Capgemini research shows that up to 72% of consumers want to adopt circular practices. However, organisations are not providing the convenience, access, information, and affordability to enable them to do so. Sustainability is becoming a major business issue for all enterprises.
Cop 26 is currently thrashing out new ways enterprises can reduce their carbon footprint and become carbon zero. Businesses must embrace circular economy practices and enable greater consumer adoption to build resilience for the future. Businesses have to take steps, otherwise, they will not be able to keep in touch with how consumers want to engage with the environment.
Companies undertaking digital transformation must ensure, it’s done in a sustainable manner. The report identified some critical actions for businesses to implement circular economy initiatives. It may be worthwhile a read to ensure an inclusive and sustainable future for your enterprise.