The Next Economy
Philips, Dell, ASU Discuss How to Fill Existing Gaps in Shift Toward Circular Business Models

This #SB15sd Wednesday afternoon session on the circular economy convened a frank and open discussion about what is working, and what isn’t, when it comes to tweaking existing business ecosystems to accommodate circular models. Panelists compared notes on attempts to create new models, highlighted existing gaps, and discussed their visions for potential solutions.

The session was moderated by Kai Schubert of The Chemours Company (a subsidiary of DuPont), which focuses on incorporating sustainability trends into the next generation of products. He reminded us that although some brands have made compelling progress toward closing material loops, many challenges remain in most industries.

To begin, Stephen Roberts, Sustainability Brand Manager at Dell, brought the future population into perspective. We will have two billion more people on earth over the next 30 years — 3 billion more people in the middle class by 2030 — and linear economic models can’t keep up. Commodity prices are going up quicker than our economy is growing, and it takes more time, energy and money to acquire basic resources now than it did before. But, it’s not all doom and gloom: “If we shift the way we deal with fundamental issues within our economy, we have the potential to create a tremendous amount of value,” Roberts said.

The old paradigm of ‘make-take-waste’ isn’t working anymore — and Dell is beginning to design the concept of waste out of the system while increasing efficiency. He outlined three important phases:

Dell’s closed-loop plastic supply chain has generated 1.4 billion pounds of take-back since 2008. If the materials are suitable, Dell will use them again (if not, they are recycled). It’s just as essential that consumers understand what’s happening, and that Dell is properly communicating the importance of its environmental stewardship programs to them.

Markus Laubscher, Program Manager for the Circular Economy at Philips, then spoke about the pilot projects he’s created — he said he’s been fortunate to push sustainability initiatives to make the world healthier through innovation in safety and healthcare technology — and how Philips is looking at its production processes and going outside of the company to learn new best practices. How Philips interprets its approach is about value creation and value destruction; telling a top-to-bottom story through materials and components.

As the lighting industry moves from analog to digital, one noteworthy example is that hotels no longer need to ‘own’ their lighting; rather, they can pay Philips to install, manage and guarantee a certain types of lighting. This approach preserves the value of labor and capital costs of assets for the hotel, while smoothing cascading impacts such as recycling the light bulbs. The challenges of the circular business model are scalability, market perception, and organizational ownership. Strategy and marketing are the keys to success.

Third on the panel, Michael Waas, Global VP of Business Development and Client Services at TerraCycle, spoke about consumption and complex materials. Recycling is a modern concept, in opposition to the 5,000 year-old solution of burning or burying trash, and TerraCycle capitalizes on it in a truly unique way. The most sustainable solutions for waste are to 1. Stop buying. 2. Buy used. 3. Buy durable. 4. Buy consciously. But until we live in a truly circular economy, TerraCycle will step in to solve the problem of non-recyclable waste. Everything is recyclable — the only question is economics: “Is the material recovered enough to pay for the costs?”

At TerraCycle, all collected waste is recycled, reused, or upcycled — in order to design new products for durability and multiple functions. Input streams come from homes, hospitals and retail locations across 21 countries, to keep value in the materials. A great example: FritoLay has created the world’s first 18-wheel chip delivery truck wrapped in a banner made from chip bags. TerraCycle makes it easy for consumers to recycle any type of ‘waste’ (handling over 100 different types of materials). It’s helped Toys R Us, Office Max, 3M, Mars, P&G, Garnier and other brands to collect unique items such as toys and shampoo bottles, and campaigned in cities such as Vancouver to collect cigarette butts and other litter.

Arizona State University (ASU) is the first comprehensive degree-granting program of its kind in the United States. Rajesh Buch, Practice Lead of Global Sustainability Solutions Services at ASU, delivers practical and effective sustainability solutions to client organizations. He spoke about the Julie Ann Wrigley Global Institute of Sustainability, which is home to 345 sustainability scientists, a board of directors, and over 400 active students. The new addition of the Rob and Melani Walton Sustainability Solutions Initiatives is creating actionable programs through which the Wrigley Institute’s research will solve, educate and engage businesses to bring solutions to scale. Buch shared the Ellen MacArthur Foundation’s principals of the circular economy, and explained how the model implies net positive impacts. Finally, Buch conveyed that ASU’s work truly extends beyond research, proving that strong partnerships are vital for sustainability: The institution has synergistically partnered with The Nature Conservancy and the City of Phoenix on forest restoration solutions in northern Arizona.

Schubert closed on an optimistic “How Now” note, suggesting that we all must remain open for new ideas and be willing to do more together. Then, a circular economy is possible.