Here’s my prediction: in the not-too-distant future, circular economies – where the resources you use to create a product eventually return to the business to be reused or recycled – will be the norm. Businesses of tomorrow will look back at our sluggishness in making the switch and they will shake their heads in wonder.
But why has business been sluggish? After all, doing more with less, creating more value with fewer resources, has long been standard in business: you pursue profitable growth while also staying efficient with resources. That’s just good business. And yet despite this, building a circular economy and closing the loop in supply chains has been seen as Utopian : a nice idea, but too far away from the urgent realities of everyday business and everyday life. A circular economy is just good business! Last week, I spoke at the Financial Times Circular Economy Summit and shared my conviction that business needs to pour its energy into closing the loops on our economy if it wants to survive. With our resources increasingly being depleted, and research suggesting a 1% increase in resource efficiency is worth as much as €23 billion for business, there’s plenty of incentive for us to take action. And what’s more, building a more sustainable, regenerative business practice is more than achievable in our lifetimes. So what are we doing about it at Unilever? Embedded at the heart of our Unilever Sustainable Living Plan is the strategic vision to find new models of doing business which will decouple growth from its environmental footprint and recouple it with positive social impact. We quickly realised a circular economy could help us achieve our vision, especially when it comes to plastic. Plastic is a huge concern for us. Plastic packaging is essential to serve people with safe, quality products, and as a result, we use two million tons of it every year. But research tells us that just 14% of the world’s plastic is currently being recycled. The huge environmental cost of plastic is unacceptable, as is the reputational cost of what can be seen as branded pollution. And so in January we announced our plans to close the materials loop. By 2025 100% of our plastic packaging will be reusable, recyclable or compostable. This is in addition to our commitment to increase our use of recycled plastic content in packaging at least 25% by 2025. Currently, about two-thirds of our plastic packaging is recyclable. Most of the remaining unrecyclable packaging are single use sachets. They are used in developing and emerging markets, to make the products safe and affordable to people on low incomes. However, their complex material composition means they are difficult to recycle and therefore end up as litter. We recently made a breakthrough in this space with Creasolv®, a new technology to help recycle sachet waste. We will be opening a pilot plant in Indonesia later this year to prove this technology. But innovation and technology is not the full answer to the problem. We need to improve the collection and recycling of plastic waste that is already recyclable. Not an easy task. Infrastructures need to be built and we need collaboration amongst the many players, including waste pickers, waste management companies, municipalities, recyclers: we need collective action. Improving the recyclability and the recycling of plastic packaging to close the loop is a big task, one that will take time. But in the meantime we have a duty to make the problem we are trying to solve as small as possible by reducing waste. Our Unilever Sustainable Living Plan committed us to reduce the weight of our packaging by one-third and to halve the waste associated with the disposal of our products by 2020. We’ve made good progress to date, with a 29% reduction in consumer waste associated with the use of our products. Looking at the environmental, social and economic cost of waste, it is clear that a lot more needs to be done by all of us. But I’m encouraged by the attention this topic is finally receiving, and in the vibrant collaborative space that is emerging. Opportunities such as the one offered by the FT – which gathered business leaders, innovators and the experts such as the Ellen MacArthur Foundation – are helping us realise that the circular economy isn’t a Utopian dream: it’s just good business. This article first appeared on a LinkedIn post by Nitin Paranjpe, President Homecare at Unilever.
The most successful business models of the future will be circular
Join us as Regrained — a leader in the upcycled food space — and other innovators turning 'waste' into a resource share insights at SB'21 San Diego, October 18-21.