Circularity has become a trending topic in the business world in recent years. Earlier this year, 50 CEOS signed a letter to the Financial Times where they committed to accelerating their company’s transition to a more circular one, however companies still have a long way to go when it comes tracking progress in circularity.
Circularity has become a trending topic in the business world in recent years. The climate crisis has woken us up to the urgency of moving away from a linear economy towards one that designs out waste and keeps products and materials in use. Earlier this year, 50 CEOS signed a letter to the Financial Times where they committed to accelerating their company’s transition to a more circular one. This interest and uptake is positive, but it also raises questions about executive boards’ understanding of the ideas and commitments behind circular business models. Do these businesses know how to achieve this transition? Do we all have the same end state in mind when we say we want to ‘go circular’? And if so, how can we harness the interest of a select group of companies to transform entire industries, to achieve lasting positive change for developing countries, society and the environment on a global scale?
Circularity is still young
Compared to other Sustainable Development Goals, circularity as a business concept and activity is still in its infancy – currently less than 8.6% of the global economy is circular. There has been a sharp rise in circular rhetoric and innovations by companies, but it is often unclear whether circular targets are achieved and are socially and environmentally beneficial, since there is little data standardisation. All companies and stakeholders, including industry leaders, still have a long way to go when it comes tracking progress in circularity.
The case for transparency
Last month the World Benchmarking Alliance and Laudes foundation published their first scoping study on the potential for transparency to propel the circular agenda forward, with a primary focus on the fashion industry. They found that the private sector urgently needs to increase its transparency to move circularity beyond words to concrete actions. A key conclusion was that a well-designed transparency initiative would help companies to know what data they should capture and disclose to track progress. The breaking down of silos would also allow businesses to learn from another and identify circularity practices they could potentially adopt. It would engage companies and inspire them to do more across value chains.
The case for a benchmark
Based on feedback from extensive research and interviews with experts, the World Benchmarking Alliance also concluded that a publicly available and free circular benchmark would further incentivise companies to capture the best circular corporate practices. It would support companies to understand what constitutes circular best practices and give businesses comparable data, allowing them to measure themselves against their peers to better understand their position and progress.
The bigger picture
On a broader level, the standardised metrics that a circular benchmark entails are key for systemic change, as they would aid stakeholders to play their role in driving this transformation. It would assist socially and environmentally driven investor groups to identify companies that are showing progress in circularity and invest in them, which would inadvertently put pressure on the ones lagging to catch up. It would empower civil society organisations and consumers to keep track of companies’ progress and keep them accountable. The data would also help policy makers to know what policy regulations and changes are needed to support a circular transition, for example when it comes to recyclability, repairability and the use of plastics.
Time to align
Several companies have already committed to implementing circular principles. This is a great start, but there is much more to be done. If we truly want to transition to a new, more sustainable and circular economy, we need a roadmap to guide all key players. A benchmark would ensure we are all on the same page and speaking the same language.