Bin Lu, EVP of Global Power Products Division, Schneider Electric, argues that collaboration – from data transparency to reverse logistics – is what makes circular models scalable and profitable.
Nearly 4.88 billion people worldwide rely on smartphones as a staple in their daily lives, but what becomes of these devices once we move on to the latest model? All too often, smartphones are used for just a couple of years before being forgotten in drawers or discarded – ultimately ending up in landfills where they pose environmental risks by leaking hazardous substances and adding to the mounting e-waste crisis.
But what if smartphones – and other tech products – were designed differently? Imagine modular devices with parts that can be easily repaired, replaced, refurbished, or recycled. Not only would this cut down on environmental damage, but it would also help manufacturers manage rising raw material costs. This is just an example of shifting away from a linear model of consumption, to what is known as circular transformation.
As businesses face mounting economic pressure, the circular economy offers a smarter, more resilient path forward – one that reduces waste, strengthens supply chains, and opens up new revenue streams. By embedding circular principles into their operations, companies can improve profitability while supporting long-term sustainability.
Yet, the latest Circularity Gap Report reveals a troubling reality: only 8.6% of the global economy is circular. This means that of all the minerals, fossil fuels, metals and biomass that enter the economy each year, just 8.6% are cycled back. The rest doesn’t just harm the environment, it’s a huge burden on industries and economies. To reverse this trend businesses, policymakers, and industry leaders must work together to scale sustainable and circular solutions.
What is a circular economy?
According to the Ellen Macarthur Foundation, “The circular economy is a system where materials never become waste and nature is regenerated.” Essentially, it’s a departure from the linear take-make-waste model, to a more regenerative, sustainable, and resilient one.
To turn this into action, businesses should incorporate the Ecodesign principles ‘use better, use longer, and use again’ into their product and service offerings, operations, and customer engagement. It might not be an immediate transformation, but an incremental one.
The business benefits of circularity
The perception that circular business models are less profitable is outdated. In fact, companies that integrate sustainability into their core strategies can gain a significant competitive edge. Circularity enables businesses to manufacture products more efficiently, with less – an advantage at a time when material costs remain high and businesses look to cut costs.
By adopting circular design principles, companies can ensure greater repairability, reduce waste, and optimise resource use. With over 80% of a product’s environmental impact determined at the design stage, it’s crucial for repairability, reusability, and modularity to be considered right from the start. Additionally, circularity can help mitigate risks associated with geopolitical instability, as businesses become less reliant on volatile supply chains for raw materials.
The key to widespread adoption lies in demonstrating value. Customers must see the tangible benefits of circular models, including cost savings, improved product longevity, and environmental impact reductions. With regulation like the EUs Circular Economy Action Plan, it is becoming increasingly important for compliance.
Investing in education, awareness, and market readiness will be essential in fostering a circular mindset across industries. Larger companies should be working with suppliers and partners to educate them and help implement circular actions.
Driving circular innovation through strategic partnerships
Collaboration is at the core of a successful circular economy. Industry partnerships can accelerate the adoption of circularity by creating shared ecosystems where waste is minimised, and resources are maximised.
Schneider Electric recently announced its partnership with One Click LCA to improve transparency in environmental data, which has historically been a persistent challenge in the architecture, engineering, and construction (AEC) industry. This partnership will offer insights for industry experts to make more circular, data-driven design decisions.
Businesses should also look to established recycler partners with proven reverse logistics capabilities. At a MasterTech site, MasterPact circuit breakers are collected, disassembled, upgraded, and reintroduced into the market. This initiative has led to a 45% reduction in emissions per unit, equating to savings of approximately 755kg of CO2 per MasterPact.
Overcoming challenges through a collaborative approach
Despite its benefits, circularity presents challenges, particularly in reverse logistics, which can be up to 11 times more expensive than traditional supply chains. Costs associated with returns, transportation, and refurbishment can be prohibitive. However, strategic partnerships can help alleviate these pressures by distributing costs and leveraging shared expertise.
Industrial symbiosis, where one company’s waste becomes another’s resource, further enhances efficiency and reduces costs. Moreover, designing products with modularity, upgradability, and ease of repair in mind will make circular business models more viable.
A circular path to economic and environmental resilience
As global challenges intensify, the case for circularity grows stronger – both for the planet and for business. Companies that make sustainability a core part of their strategy will be more resilient in the face of supply chain volatility, cost pressures, and shifting market demands.
Progress toward a circular economy means reimagining every stage of a product’s life, from eco-friendly packaging to designing for easy repair and reuse. Each step forward strengthens the foundation for a more sustainable and adaptable economy.
By forging strong partnerships and embedding circular thinking throughout their operations, organisations can drive meaningful change, foster innovation, and help build a net zero future. The opportunity to embrace circularity is here.
