WhatgoesaroundcomesaroundThecirculareconomyinindustrialmanufacturingTHEBIGCircularityisthekeyCOMPANIESMAKEAMBITIOUSSTATEMENTSONDECARBONIZATIONReusing,repairingandrefurbishingcanchangetheworldSecondarymaterialsaretheanswerManyresourcesarealreadyscarceCIRCULARITYMEANSMORETHANJUSTRECYCLINGWASTEContents1–PAGE4Whatisthecirculareconomy–Andwhyisitsoimportantforindustrialmanufacturers?2–PAGE8Thetechnicalcycle–FourleversforchangingtheworldPAGE15InterviewwithAndrewMorlet3–PAGE17Whatcanwedo?Real-lifeexamplesofcircularity4–PAGE21Theimpactonbusiness–Howthecirculareconomyaffectsindustrialmanufacturers5–PAGE22Ataskforthewholecompany–Todo'sbybusinessfunctionPAGE24Inconclusion–AchecklistfordecisionmakersCoverillustrationandillustrationsonpage10/11,15-18:StudioMuti/FolioArt3ThecirculareconomyinindustrialmanufacturingThink:ActBACKIN1966,renownedEnglish-bornAmericaneconomistKennethE.Bouldingdescribedtheclosedeconomyofthefutureasaspacemaneconomy,oneinwhichtheEarth"hasbecomeasinglespaceship,withoutunlimitedreservoirsofanything,eitherforextractionorforpollution[…]."Hecontrastedthiswiththecowboyeconomyofthepast,inwhichresourcesappearedinfiniteandillimitable.Theevidenceisclearthatwehavenowenteredthisneweconomicphase:Unlesswecleanupouracturgentlyandstopactinglikecowboys,wewillsoonhavetoabandonshipandsearchforanewplanet.Today,91percentofmaterialflowsintheeconomyarelinear,meaningthattheyaremined,usedanddisposedofinasingleflow.Ourunidirectionalproduce-to-wasteapproachdestroyssocio-ecologicalsystemsandthecomplexandinterdependentnetworkofecosystemsthatweinhabit.Theextractionandprocessingofnaturalresourcesfortheproductionofgoodsisresponsibleforanestimated50percentofglobalgreenhousegases(GHG),andsoonerorlatertheseresourceswillbecomeunavailable.Forexample,theEuropeanChemicalSocietyforeseesthathalfofthe92naturallyoccurringelementsonEarthareatriskoffutureshortage–with17oftheroughly30elementscurrentlyusedinsmartphonesalreadyfacingprospectivesupplyconcerns.Environmentaldamagegoeshandinhandwithdamagetosocietiesandindividuals,ofcourse.Linearresourceextraction,productionanddisposalheavilyimpactsmarginalizedcommunities.Chemical-intensiveprocessingandtheimproperhandlingofwastecreateshighrisksofpollutionandharmsthehealthoflocalworkers.Forexample,accordingtotheInternationalResourcePanel,thetoxicextractionandprocessingofmetalresourcesisresponsiblefor39percentofparticulatematterhealtheffects.Andtheimpactgoesfarbeyondlocalworkers:ResearchcarriedoutattheUniversityofChicagofoundthatpollutionreducesgloballifeexpectancyby2.2years,aneffect89timesasimpactfulasthatofglobalconflictandterrorism.THECIRCULARECONOMYEXPLAINEDThesolutionliesinthecreationofacirculareconomy.Thisistheideathatinsteadofextractingresourcestobuildproductsthatwelaterdiscard,weshouldaimtomaintainthevalueofresources,materialsandproductsintheeconomyforaslongaspossibleinacircularprocess.Thecirculareconomyconsistsoftwofundamentalcycles,asdescribedinthestandard"butterfly"frameworksuggestedbytheEllenMacArthurFoundation.Thefirstisabiologicalcycle,inwhichnutrientsfromconsumedproductssuchasfoodandotherbiodegradablematerials,oncetheycannolongerbeused,returntothesoil.Thesecondisatechnicalcycle,inwhichproductsthatarenotnaturallybiodegradablearereused,repaired,refurbishedorrecycledsothattheycanremaininuseratherthanbecomingwaste.Thetechnicalcycleisofkeyimportanceforproductsmanufacturedbyindustrialfirms,whicharethefocusofthisstudy–automobiles,factoryequipmentandmachines,consumerelectronicsandthelike.Reusing,repairing,1–Whatisthecirculareconomy–Andwhyisitsoimportantforindustrialmanufacturers?4Think:ActWhatgoesaroundcomesaroundrefurbishingandrecyclingsuchproductscanbefacilitatedbyanumberofsupportingmechanisms,suchasredesigning,reducingandrethinkingownership(seeChapter2:Thetechnicalcycle).Thegoldstandard,however,istoremainwithintheinnercirclesoftheframework–thatis,reuseorrepair–asthisenablesmaximumvaluetoberetained.AWHAT'SGOODFORTHECLIMATEISGOODFORBUSINESSReducingenvironmentallyandsociallyharmfulresourceextractionandenergy-intensiveprocessingiscrucialifwearetoovercometoday'sclusterofglobalrisks,eachonecontributingtoandexacerbatingtheother.Butembracingcircularityisnotjustgoodcitizenship,itisalsogoodbusiness.Theadditionalbenefitsforindustrialsofbecomingmorecircularincludecostsavings,ascompaniescansavemoneyonprocurementbyreducingwasteandretainingmaterials.Thus,theEuropeanEconomicandSocialCommitteeestimatesthatbyimprovingresourceefficiencyby30percentbydeployingcirculareconomymechanisms,EuropeanindustrycouldsaveasmuchasEUR600billionannually.Companiesthatgogreenalsoenjoyreputationalbenefits:Consumersareincreasinglylookingforfirmsthathaveapositiveenvironmentalandsocialimpact,andthoseENABLERSSource:EllenMacArthurFoundation;RolandBergerAFromalineartoacirculareconomyTHETECHNICALCYCLEOFCIRCULARITYRawmaterialsSystemicwasteUser/consumerPartsmanufacturerProductmanufacturerRedesignRethinkownershipReduceRecycleRefurbishRepairReuse5ThecirculareconomyinindustrialmanufacturingThink:Actcompaniesthatdooftenenjoyacompetitiveedge.Moreover,businessesthathaveapurposeotherthansimplymakingaprofitoftenstandoutfromthecrowdinthewarfortalent.Notonlythat,beingcircularenablesregulatorycompliance.Regulators,themselvesfacinggrowingpressurefromactivistsandresource-relatedgrowthboundaries,areincreasinglydemandingactionbybusiness.Forexample,theEuropeanUnionhasadoptedaCircularEconomyActionPlanasaprerequisitetoachievingits2050climateneutralitytarget,andtheUnitedStatesandChinahaveenactedsimilarlegislation(seebox:Keylegislation).EUROPEANUNIONTheEuropeanUnion'sGreenDealentailstheregionbecomingnetzeroby2050anddecouplinggrowthfromresourceuse.OneofthebuildingblocksoftheplanisthesecondCircularEconomyActionPlan,addressingallthestepsalongproductvaluechains.Besidesnon-legislativeactions,suchasgearingpublicspendingtowardsrenewableproducts,thePlanincludesdevelopinglegislationinareassuchasproductdesign,information,circularproduction,wastemanagementandkeyvaluechains.Intheareaofproductdesign,theaimistoincreasedurability,reusability,upgradability,repairability,energyandresourceefficiency,recyclabilityandremanufacturingofproductsfromthedesignstageonwards.Regardinginformation,EUconsumerlawwillberevisedtoempowerconsumerstomakecircularchoices,withincreasedrequirementsforinformationonproductlifespansandrepairability.ThePlanalsoincludesactiononcircularityinproduction,establishingcirculareconomypracticesinBestAvailableTechniquesdocuments,promotingtrackingandtracingresources,andworkingtowardsindustrialreportingandcertificationschemes.Intheareaofwastemanagement,theaimistoharmonizewastemanagementsystemsandenhancetheimplementationofextendedproducerresponsibilityschemes.Finally,thePlanfocusesonhigh-impactindustriesandincludessectoralactions,suchasdevelopinganewregulatoryframeworkforbatteries,reviewingend-of-lifevehiclerules,reviewingpackagingrequirementsandsettingmandatoryrequirementsonrecycledplasticscontent.CHINAChinaenacteditsCircularEconomyPromotionLawin2009.Amongotherthings,thislegislationintroducedproducerresponsibilityforrecyclinganddisposalofend-of-lifeproducts.Itwasfollowedin2017bytheOperationNationalSwordinitiative,whichregulatestheimportofwaste,effectivelybanningtheimportofcontaminatedsecondarymaterials,suchasdifficult-to-recyclelow-gradeplastics.ThispolicydramaticallyimpactedEuropeanandNorthAmericanwastemanagementapproaches.China'scurrentcirculareconomystrategyislargelycoveredbythe14thFive-YearPlan(2021-25),whichservesasadirectiveforregionalregulations.Inlinewithitsambitiontoachievecarbonneutralityby2060,thePlanoutlinesqualitativeambitionsforimprovedwasterecycling,reuseandrefurbishment,andaimstoincreaseenergyandresourceefficiency.Italsosetsfixedtargetsforthefive-yearperiod,suchasreducingenergyconsumptionperunitofGDPby13.5percentandutilizing320millionmetrictonsofscrapsteel,equivalentto23percentofChina'sannualoutputin2021.UNITEDSTATESIntheabsenceofstrictFederallegislationoncircularity,theUSEnvironmentalProtectionAgency(EPA)drivesthecountry'scirculareconomyambitions.TheEPA'sNationalRecyclingStrategy(2021)aimstoachievea50percentrecyclingratebydevelopingimprovedinfrastructure,reducingcontaminationandstandardizingdatacollection.Inaddition,theFederalgovernmentprovidesgrantsfordevelopingimprovedrecyclinginfrastructure.Itisalsostartingtoembedtheideaofacirculareconomyinitsenvironmentalambitions,announcinganInteragencyPolicyCommitteeonPlasticPollutionandaCircularEconomyinApril2023.Stricteractiononthecirculareconomyisbeingtakenatstatelevel.InCalifornia,forexample,StateBill54establishedproducerresponsibilityandsettargetsforreducingsingle-useplasticpackaging.Keylegislation6Think:ActWhatgoesaroundcomesaroundCIRCULARITYCOMESWITHCHALLENGESAchievingfullcircularityislikelytoproveanimpossibletaskduetophysicallimitations.Aboveall,theresourcesandenergyneededtorecoverandrecycleusedmaterialsgrowinanon-linearfashionastheshareofrecycledmaterialsincreases.However,itiscrucialthatmaximumcircularity–atlevelsthatwilldependontheprecisematerialinquestion–istopoftheagendaforindustrialcompaniesandpolicymakersalike.Circularitysupportsdecarbonizationbyremovingcertainstepsinthevaluechain.Forexample,recyclingaluminumavoidsusingbauxite("aluminumore"),theminingofwhichishighlyenergy-intensiveandthereforecarbon-intensive.Thesituationissimilarforothermetals,andforindustrialproductsingeneral:Reusingtheseitemsmeansthatonlytheirinitialproductiongeneratescarbonemissions.However,notallcirculartechnologiesreduceemissionsatpresent,leadingtoacertaintensioninthepursuitofcircularity.Thus,chemicallyrecycledplasticscurrentlygeneratesignificantlymoreGHGthanplasticsproducedfromcrudeoilnaphtha.Whilethehigheremissionsfromrecycledproductionarebalancedoutbyloweremissionscomparedtoincineration,thisexemplifiestheneedforfurthertechnologicaladvancement–andcarefulcomparisonofenvironmentalimpactsacrossdifferentapproaches.Industrialshaveacriticalroletoplayincreatingacirculareconomy.AccordingtotheWorldEconomicForum,intheautomotiveindustry–responsibleforaroundtenpercentofindustrialemissions–materialsarecontributinglessandlesstothetotallifetimeemissionsofvehiclesovertime,andby2040willaccountforjust60percentofthetotallifetimeemissions.Thisreductionisbeingdrivenbytheshifttobattery-electricvehicles(BEVs)andgreenerenergyduringtheusephase.Iftheindustryintroducedcost-neutral,circularapproachestoaddressthegrowingneedforsustainablematerials,material-relatedemissionscouldbereducedbyamassive97percentassoonas2030.Ofcourse,responsibilityforthecirculareconomydoesnotliesolelywithindustrialcompanies.Otherstakeholdersalsohavearoletoplay.Asdiscussedabove,thetechnicalcycleforindustrialproductsinvolvesfourmechanisms:reuse,repair,refurbishandrecycle.Thelattertwomechanismsdependmainlyondecisionsbyindustrialcompanies.Buttheformertwo–reuseandrepair–dependondecisionsbyserviceprovidersandusers.Thatsaid,evenhereindustrialscanplayarolethroughsupportingmechanisms,redesigningtheirproductsandmotivatingcustomerstoreduceconsumptionandrethinkownership.BMilestonesTHEIDEAOFCIRCULARITYHASBEENTHEREFORALONGTIME1966KennethE.BouldingpopularizesthetermSpaceshipEarthtodescribehumanity'sneedtoconservenaturalresources1990Theterm"circulareconomy"isfirstdefined,inNaturalResourcesandtheEnvironmentbyR.KerryTurnerandDavidPearce1999Theideaof"naturalcapital"ashumanity'sscarcestresourceisestablishedbyPaulHawken,AmoryLovinsandL.HunterLovins2002WilliamMcDonoughandMichaelBraungartpublishamanifestoforeliminatingwasteinCradletoCradle:RemakingtheWayWeMakeThings2009Afterinitialregionalpilots,ChinapassesitsCircularEconomyPromotionLaw,pioneeringdedicatedlegislationonamajorscale2010ProfessionalsailorDameEllenMacArthur,havingexperiencedtheimportanceofresourceconservationwhilesailingsingle-handedlyaroundtheworld,launchesthethought-leadingEllenMacArthurFoundation2015TheEuropeanUnionadoptsitsfirstCircularEconomyActionPlan,aimingtotransitiontoacirculareconomythroughlegislativeandnon-legislativeaction.Later,in2020,itisrevisedandextendedaspartoftheEuropeanGreenDeal2022TheEuropeanCommissionproposesnewregulationoneco-designrequirements,emphasizingthestructuralimpactofredesigningproducts2023USlegislationonthecirculareconomyincreasinglyrisestoFederallevel,withtheWhiteHouseannouncinganInteragencyPolicyCommitteeonPlasticPollutionandaCircularEconomy1987TheReportoftheWorldCommissiononEnvironmentandDevelopment:OurCommonFuture,commonlyknownastheBrundtlandReport,recognizestheecologicallimitstoeconomicgrowthandestablishestheideaof"sustainabledevelopment",whichitdefinesas"developmentthatmeetstheneedsofthepresentwithoutcompro-misingtheabilityoffuturegenerationstomeettheirownneeds"7ThecirculareconomyinindustrialmanufacturingThink:ActASOUTLINEDBRIEFLYINCHAPTER1,thetechnicalcycleinvolvesreusing,repairing,refurbishingorrecyclingproductsthatarenotnaturallybiodegradable,sothattheycancontinuetobeusedratherthangoingtolandfillorincineration.Industrialmanufacturingcompaniesneedtotakeurgentactionhere.Below,wediscussindetailwhatthatactionmightlooklike.ForeachofthefourRs,wedivideoursuggestedactionsinto"smallsteps","bigleaps"and"moonshots"–thelastofthesebeingambitious,innovativeandoftenradicalideasthatcouldpayoffhandsomelyinthefuturebutwhoseimpactisdifficulttopredictatpresent.#1ReuseTheideaofreusingproductsisquitesimpleintheory.Inanarrowdefinition,productsareusedagainintheiroriginalpurposeafteronlysmallermodificationsorcleaning,therebyprolongingtheirlifetime.Anexamplemightbeacellphonethatisreusedaftercleaningorrepair.Formanufacturingcompanies,asecond,broaderdefinitionof"reuse"exists,inwhichproductsareusedagainbutforaslightlydifferentpurpose.Anexamplewouldbeacarbatterythatisreusedforstationaryenergystorageathome.Besidesreducingoravoidingusealtogether,reuseistheonlyleverthatdoesnotrequireanynewmaterialinputs.Let'slookmorecloselyattheexampleofcellphones.IntheUnitedStatestheaveragelifespanofsuchphones–thatis,themomentfromwhichtheyaresoldtothemomentwhentheyarediscarded–hasbeenjusttwoandahalfyears,since2014.AccordingtomarketdataplatformStatista,thislifespanisexpectedtodropto2.3yearsby2025.Forcompaniesthatprovidecellphonestotheiremployees,theexpectedlifespanisevenshorter:Cellphonesarereplacedonaveragetenpercentfasterbycompaniesthanbyconsumers.Yet,mostphonesarestillworkingwellaftertwoandahalfyears,andthosethatarenotaregenerallyeasytofixwithminorrepairs,suchasreplacingthebattery,changingthescreenandsoon.Thisisanareawherecompaniescantakeaction:Extendingthelifespanofthecellphonestheygiveemployeeswouldnotonlyreduceresourceconsumption,itwouldalsosavethemmoneybyreducingtheiroverallspend.Businessescantakemanyimmediatesmallstepsintheareaofreusetoimprovecircularity.Werecommendlookingfirstatthemainresourcesconsumedbythefirm'smanufacturingoperations.Forexample,unpollutedcoolingwatercanbereusedtocleanproductionequipment,asisdonebyleadingconsumergoodsbrandL'Oréal.Anothereasywinistoreusenon-productionmaterials(NPM),suchasunusedequipment.Companiescanutilizeresell/sharingmarketplacestotransferorsellusedequipment,suchasforkliftsorofficefurniture,tootherdivisionswithinthecompanyorexternalparties.Besidesimpactingemissions,thiscangenerateadirectmonetarybenefitintheformofadditionalrevenuesandreducedspendingonNPM.Bigleapscouldinvolveusingthesameproductionequipmentforotherproducts,forexample.Here,creativityiskey:Whowouldhavethought,forexample,thattheGermanliquorcompanyknownforitsbrandJägermeisterwouldproduceover100,000litersofalcoholforthemedicalsectorduringtheCOVID-19epidemic?Similarly,theintroductionofbi-directionalchargingintheautomotiveindustryenablesvehiclebatteriestobeusedashomestorageforenergy,asmentionedabove.Whenrenewablesourcesproducemoreenergythanneeded,thecarbatterycanstorethesurplusandatnighthouseholdscanuseittorundomesticelectricalappliances.Inthefuture,industrialsshouldaimtointegratecircularityintothedesignphaseofproductdevelopment.Ratherthanjustdefiningfirst-phaseuses,designengineersshoulddefineusecasesforthefollowingphases.Initially,thiswillmakelifemorechallengingforengineersanddevelopers,butitwillalsosignificantlyeasethetransitionfromthefirst-usephasetoa2–Thetechnicalcycle–FourRsforchangingtheworld8Think:ActWhatgoesaroundcomesaroundlessadhesiveconnections,goodphysicalaccessibilityofmachinepartsandeasieraccessforthirdpartiestoperformrepairtasks.Governmentsandindustryassociationsshouldsupportthiswitheasiercertificationofthird-partyrepairandmaintenancestaff.TheEUvehicleaftermarketprovesthatthisisfeasible,asdemonstratedbyits2002regulationensuringthird-partyaccesstotechnicalrepairinformationandregulation,ensuringthatvehiclescanbeservicedbythird-partyshopswithoutinvalidatingtheirwarranty.Onetechnologicaladvancementthatiskeyforrepairistheuseofaugmentedreality(AR).ARcanperformortrainrepairtasksonproductsandcomponents.Forexample,aircraftcomponentmanufacturerJamcohasdevelopedanARtrainingtooltogetherwithmixedrealitydeveloperObjectTheorythatallowsitscustomers'traineemechanicstoworkonaircraftseatswithouthavingtorefertoamanual.Fullypredictivemaintenancewillbethenextbigleapinthefieldofrepair,reducingrepairactivityandatthesametimeextendingproductlife.Forexample,GermannationalrailroadcompanyDeutscheBahnhasbeenemployingpredictivemaintenanceforanumberofyearsalreadybutisstillsomewayofffleet-wideimplementation.Byusingadigitaltwinofatrain,varioussubsystemssuchasdoorsandairconditioningcanbesimulatedusingreal-timedata.Maintenancetasksarenolongerperformedinfixedcyclesbutonlywhenabreakdownisexpected.Newtechnology,suchasadditivemanufacturing(3Dprinting),isalsosettorevolutionizeproductionprocesses.Additivemanufacturingreducesthesizeofsparepartinventoriesandleadstomuchlighter,lesscarbon-intensivecomponents,amongotherthings.MercedesBenzGroup,forinstance,isalreadyimplementing3Dprintingonasmallscaleforarangeofsparepartsintheirtrucksandbuses.Besidesfreeingupspace,thisapproachgeneratesmonetarybenefitsandreducesoverallemissions.Intermsofmoonshots,self-healingmaterialscouldbethenextbigthing,makingrepaireffectivelyobsolete.Self-healingmaterialsincludepolymers,metalsandceramicsthatfirstfillindamagedareasandthenrestorethestructureitself.Jointstudiesbycompaniesandresearchfacilitieshavealreadydemonstratedthefeasibilityofsuchmaterials.Whilethetechnologyisstillinitsinfancy,expertsexpectinitialapplicationstomaketheirwayontothemarketquickly;indeed,somematerials,suchasReverlinkfromspecialtymaterialsmanufacturerArkema,arealreadybeingproducedandmarketed.Anotherinnovativeideaishumanoidrobotswithahighlevelofdexterityandadaptivebehavior,suchastheFigureRobotorTeslaBot,programmedforuniversalrepair.Bysecond-usephase.Tobuildthefoundationforthischange,companiesshouldrethinktheircurrentdevelopmentprocessesfromaholisticperspective–forexample,integratingmarketresearchandstrategyintotheprocess.Moonshotsareideaswhoseultimateimpactisdifficulttopredicttoday.Intheareaofreuse,wecanimagineadevicethatscansacomplexproduct(forexample,avehicleanditssub-components)andidentifiespiecesthatcanbereusedinothercontexts–suchasreusingautomotiveLiDAR(lightdetectionandranging)sensorsinsurveillancecameras,trafficflowmanagementorcrowdcontrol.Orauniversalweartracker,usedtogatherinformationonusetypes,usecyclesandmechanicalstress.Wear-trackinghardwareandsoftwarestandardscouldeasilybeintegratedintoproductstoestimatetheirpotentialforreuse.Intheautomotiveindustry,forinstance,thiscouldtaketheformofasingle,smalltriprecorderthattranslatesusagepatternsintoreuseassessmentsforsurfacematerials,airfilters,brakediscs,brakecalipers,andrubberandplasticpipes.#2RepairRepairmeansbringingbacktheoriginalfunctionalityofadamagedproductorcomponent.Wehavebecomeathrowawaysociety,lessconcernedwithrepairinggoodsandcomponentsthaninpreviousdecades.Indeed,accordingtotheEuropeanEnvironmentAgency,astrongcorrelationstillexistsbetweenthegenerationofwasteandeconomicgrowth.Manyproductshavealsobecomemorecomplexintermsoftheirfunctionalityandthenumberofpartsused.Motorvehiclesoriginallyprovidedthebasicfunctionalityoftransportation,whereasmoderncarsarefulloftechnology,suchasstabilitycontrol,airbags,infotainmentsystemsandsoon.Asaresult,moderncarsnowfeatureupto30,000singlepartsandcounting,atrendthateventhelowercomplexityofbatteryelectricenginescomparedtointernalcombustionengines(ICEs)willnotbeabletoturnback.TheEuropeanUnionhasrecognizedthisshiftawayfromtherepairabilityofgoodsandproductsandrespondedwithitsEcodesignDirectiveforSustainableProducts(ESPR).Thisproposedlegislationlaysoutrepairrequirements,suchaseasieraccessforprofessionalrepairservicesandenhancedsupplyofspareparts.Smallstepsforcompaniesincludeensuringcompliancewithcurrentregulationsonrepairabilityandthinkingaheadabouthowtoincreaserepairquotas.Thatmeansmoremodulardesignsforproducts,pluspracticalthingssuchas9ThecirculareconomyinindustrialmanufacturingThink:ActCoolingwaterreuseSecond-liferesellplatformNon-productionmaterialresaleCross-industryreusecollaborationComplementary"productsalesBi-directionalcarchargingProductusecaseextensionReuseLIDARsensorsCirculardesignroadmapsProductlive-infoplatformReusecomponentscannersUniversalweartrackersReuseInter-organizationalrecyclingRecycledcontentquotasRecyclablematerialsquotasRecyclepre-consumerscrapSimplifyreturnofusedgoodsIncentivicesuppliersLong-termrecyclingagreementsStrategicbuyingalliancesSmartbinsDownstreamspecificationinformationWastewaterreusageBlockchainproduct/materialtrackingAutonomousrecyclingrobotsEstablishbuybackprogramsLeveragebiologicalrecyclingZerowastetolandfillRecycleARcustomerassistanceDesignforrepairabilityLowrepairingcertificationburdensLessadhesiveconnectionsMaterialdatabaseARrepairingsolutionsRecycledmaterialsquotasIncreaseproductmodularityKeybasematerialsupplieragreements3DprintsparepartsDigitaltwinsElectricarcfurnacesReevalutatespecificationneedsRepairingmanualsRepairtoolkitsofferingPredictivemaintenanceCommoditizerecyclingmaterialsSelf-diagnosticfunctionsOpensourcerepairguidesLong-termkeymaterialpartnershipsRepairfacilitylaunchSelf-healingproductsHumanoiduniversalrepairingrobotsRecycledcontentaccountingBiodegradableelectronicsBlockchaingreenwashingmitigationDecentralizerecyclingnetworksLandfilldronesandmicro-robotsRepairIncluderefurbishinginPDPAccountforGHGsavingsdataPartnerwithrefurbishingcompaniesCrowdsourcerepurposingideasDesignforsecondlifeRepurposingusedbatteriesRefurbishingcenterlaunchMarketplaceforrefurbishedproductsProductcomponentstandardizationAutomatedmaterialanalysesBuilt-inwear-and-tearsensorsReverselogisticssystemVisualshredsortingopticsBuildinreusabilityindicatorsEstablishbuybackprogramsProgrammablere-factoryfranchisesPrescriptiveproductionapplicationsAI-poweredassetmanagementDisassemblyAIassistantRefurbishMOONSHOTSBIGLEAPSHowtogetfromtheEarthtotheMoonWithintheareasreuse,repair,refurbishandrecyclethereisanalmostinfinitenumberofusescasescompaniescanapply.WeenvisagedevelopmentsacrossthreetimehorizonsSMALLSTEPSforthenext2-3years,BIGLEAPSforthemidtermandtrueMOONSHOTSwithalongerleadtime.CircularityuniverseSMALLSTEPSUSECASERolandBergerinitiatesrecyclingcreditsstandardforglobalwastesectorwithpartnersRolandBergeriscurrentlydevelopingavoluntarycreditsschemethatcreatesincentivesforcompaniestorecycleandtoreducetheirScope3emissions.Itishopedthatthisscheme,basedonblockchaintechnologytoensurefulltransparency,willbecometheglobalstandard.Theschemewillcreateaninternationalecosystemconsistingofwasteproducersandauthorizedwasteserviceproviders.Companieswillbeabletohaveanyrecyclingactivitiestheyundertakewithinthisecosystemofficiallycertified,iftheysowish.WeplantoshowcasethenewvoluntarycreditsschemeatCOP28withalivedemonstrationofacredittransactiontakingplacewithinthesystem.Inthefuture,wewillalsoexpandtheschemetoincludetradinginphysicalmaterialsandcarboncredits.Source:RolandBerger10Think:ActWhatgoesaround,comesaroundbutacrossproductgenerations.Additionally,iftherequirementsareconsideredsufficiently,rightfromtheverybeginning,componentscanbeassembledforcompletelydifferentapplicationsattheendoftheirfirstlife.Forexample,accordingtoresearchcarriedoutatRWTHAachenUniversityinGermany,usedcarbatteriesendingtheirfirstlifewith70to80percentcapacitycanpotentiallybeusedforhousehold-integratedenergystorageforanestimatedadditionaldecade.Whilethecapabilitiesrequiredforrefurbishingorremanufacturingproductsarenaturallyclosetothoserequiredforprimaryproduction,companiesdonotnecessarilyneedtotakethefirststepsthemselves.Bycooperatingwithrefurbishingspecialists,manufacturerscangainvaluablemarketexperiencewhileprovidingadditionalcredibilitytotheirpartners.Tofullycapitalizeontherefurbishingandremanufacturingopportunity,companiesshouldconsidermakingthebigleapofestablishingspecializedmarketplacesthemselves.Intheconsumersector,manywellrespectedbrandssuchasDysonandApplehavealreadytakentheplungehere.Productsoftendiffergreatlybetweengenerations,sotoday'srefurbishingandremanufacturingprocessesoftenfocusoncosmetictouchups,renewedwarrantiesandreplacingbrokenparts.Anotherbigleapwouldbetoofferremanufacturedproductsona"goodasnew"basis.Thiswouldrequiremanufacturerstocarryoutmoresignificantadjustments,standardizingcomponentcharacteristicsacrossproductsandgenerationstomaximizetheirpotentialforinterchangeableuse.Forexample,standardizinggearboxescanenablethemtobeeasilyreusedinnewproductsafterreinstatingtheirfunctionalperformance.Thiscouldbecombinedwithadvancedassessmentsofcomponents'reusability.Forexample,Nike'sB.I.L.L.robotcanautomaticallycreatea3Dmodelofashoeanddetermineitsflawswithawear-and-tearanalysis.Whenwear-and-tearsensorsorindicatorsaredirectlybuiltintocomponents–whichcanbeassimpleasprintingmeasurementreferencepointsonmaterialstoenablemonitoringofstretchingorabrasion–suchassessmentsbecomeeveneasierandmorereliable.Amongpossiblemoonshots,AI-poweredassetmanagementsoftwarecouldassesshowcomponentsorproductscanbematchedorrefurbished.Companiescouldthensendclientsindividualoffersforbuybackorreplacementofproducts,withpricescalculatedinrealtimebasedoncurrentinventoryandorderlevels.Alternatively,prescriptiveapplicationsforproductioncouldincludeautomaticwaste-to-resourcematchingandexecution.Dependingonthedownloadingrepairmanualsfrompurpose-builtrepairdataplatforms,theserobotscouldlearntheabilitytorepairdiverse,complexmachines,feedingtheirexperiencebacktothehumanoidrepairplatform.#3RefurbishProductsthataredamagedbeyondrepair,outdatedorthatnolongerappealtousersarenotnecessarilylostjustyet.Byexchangingorrepairingcomponents,especiallythosethathaveastrongimpactontheproduct'sperformance,companiescanbringthembacktoausablestandard."Retouched"productscanalsobecombinedwithservices,suchasrenewedwarranties,toincreasetheirvalueabovethatoftraditionalsecond-handproducts.Thisprocessiscommonlyknownas"refurbishing"or"remanufacturing".Thetwotermsarenotstrictlyinter-changeable:AccordingtotheAmericanNationalStandardsInstitute(ANSI),remanufacturedproductsmustbeatleastasgoodasnew,whilerefurbishingisoftenmoresuperficial,onlyincludingrepaintingandfunctionaltesting,forinstance.Whilemanufacturersoftenfearcannibalizationofnewproductsthroughrefurbishing,theEllenMacArthurFoundationhasfoundnonegativeimpactonsales,basedonlongitudinaldata.OEMsofferingremanufacturedorrefurbishedproductscanalsobenefitdirectlyfromtheirdurableandcirculardesignchanges.Ausefulsmallstepforcompaniesistoconsidertherefurbishingpotentialoftheirproductsearlyoninthedesignprocess.OnedesignwithgreatpotentialforfutureremanufacturingisthereplaceablebatteryofferedbyChineseelectricvehiclemakerNIO.Whilecurrentlyfocusedonimprovingchargingexperiences,thedesignpotentiallysavesNIO'scarsfrombecomingobsoleteduetoshrinkingbatterycapacity.Customerscanleasebatteries,swappingthemforfullyfunctionaloneswhennecessary.Aftereachswap,NIOchecksthebattery'shealthanddecideswhethertoremoveitfromcirculationornot.Batteryswapstakejustthreeminutes.Batterydegradationisalsoreduced,asbatteriescanbechargedmoreslowlyatNIO'spremises.Companiesshouldlookacrosstheentireproductlifecycle.Theycanpotentiallyembedrequirementsfor"secondlives"inthedesignofcomponentsasanadditionalstepinthedevelopmentprocess.Thismaximizesthenumberofcarryoverparts,notjustacrossdifferentproducts12Think:ActWhatgoesaroundcomesaroundshouldsetsecondarymaterialquotasformaterialsforthecomingyears,aligningthosequotasacrossalldepartments(procurement,R&Dandsoon).Forexample,quotasshouldbeestablishedforpolymertypessuchasPPandPC-ABS,forwhichproductswithupto100percentpost-consumerrecycled(PCR)plasticsarealreadyavailabletoday.Firmsshouldalsoalignwiththeirkeybasematerialsuppliersandagreeonframeworkcontractsforoverallvolumes.Anotherstepforindustrialmanufacturingcompaniesistocollectsortedwaste,suchasaluminumscrapfrompresses,andreturnitdirectlytotheirsuppliersforreuse.Themoresortedthescrapis,thebetteritisforimmediatereuse.Thissortof"closedloopconcept",asitisknown,wasrecentlyannouncedbyaluminumproducerNovelisandSmartPressShop,forinstance.Intermsofbigleaps,manufacturingcompaniesneedtostartengagingmoreintheirupstreamsupplychain.Thismeanscooperatingnotonlywithdirectsuppliersbutwithbasematerialproducers,too–thatis,theirsuppliers'suppliers.Inthesteelindustry,forexample,effectiveroutesexistsuchasusingelectricarcfurnace(EAF)technologytoproducesteelwithrecycledcontent.Thankstothismethod,companiescanintroducerecycledsteelintotheirproductsandatthesametimereduceCO2eemissionsbyupto88percent,assumingtheyuserenewableenergy.Thisentailsthemreevaluatingtheirrequiredspecifications,assomequalitiesthroughtheEAFroutearemoredependentonthesteelwastequalityusedasinput.Companiesshouldaimtoestablishstrategicpartnershipsfortheirmainmaterialsbysigninglong-termagreementswithsuppliers.Itisimportantforfirmstoidentifysuitablepartnersacrossindustriesthatrequireasimilarrangeofmaterials.TheEuropeanRawMaterialsAlliance(ERMA),forexample,helpscompaniesdiscussjointinvestmentopportunitiesalongcriticalrawmaterialvaluechains,suchaswasterecovery.AnotherbigleapistoestablishchemicalrecyclingplantsincountriesintheGlobalSouththathavegoodaccesstorenewableenergy–solarpower,say–andlargeamountsofplasticwaste.Thisplasticwastecanthenberecycledratherthangoingtolandfillorincineration.Inthefuture,companieswillbeheldfullyaccountablefortheirproductsandtheirresiduals,inwhatiscalledthe"extendedpolluterprinciple".Aprerequisiteforrecyclingistoknowthematerialcompositionofproducts.Companiesmustdevisesolutionsforthis,providingaccurateinformationonmaterials'ingredientsandoriginsbasedonadecentralizedauthenticationsystem,suchasblockchain.Theymustalsocomeupwitheffectivewaystogainaccessparts/productsneeded,anautonomousmodelwouldroutematerialsinproductionbasedonapriorcost-benefitanalysis.Byleveragingtheseopportunities,industrialmanufacturerscouldstreamlinetheiroperations,reducewasteanddowntime,andsoimprovetheirbottomline.Anothermoonshotideaisprogrammablere-factoryfranchises."Re-entrepreneurs"couldcreatefactory-likefacilitiesandoperateunderascalablefranchisemodel,pairedwitheasy-to-deploytools(3Dprinting,no-coderobotics,AI,CTscanningfornon-invasiveinspection)totransformdisposedproductsintonew.Thefacilitywouldbeorganizedintomodularsystemsthatcanbeeasilyconfiguredalongincomingmaterialstreams,suchaselectronics,oroutgoingmarketdemand,suchasrareearthmetalextraction.Locatingthesefacilitiesinurbanareaswouldreducecollectioncomplexityandtransportationcosts,whileatthesametimecreatingnewjobsandfosteringcommunityengagement.#4RecycleRecycling,orthedecompositionofgoodsintotheirbasematerialsforreuse,istheleastvalue-preservingofthefourRs.Butalthoughitusesresourcesforcollection,transformationandredistribution,itneverthelesshelpstoslowdownthebleeding,sotospeak.Recyclingcellphonesorlargeitemssuchasmotorvehicles,shipsorevenairplaneshavemajoradvantagesforindustrialfirms,butrecyclinganysortofwasteisalreadybeneficial.Insomecountries,recyclingmaterialssuchasglass,aluminumandsooniscommonplaceforbothhouseholdsandindustry.OfthecountriesobservedbytheOECD,Slovenialeadsonmaterialrecovery,with72percentofitsmunicipalwastematerialsbeingrecycledorcomposted,followedbyGermanyat66percent.Bycontrast,theUnitedStatesrecoversjust32percentofthesesamewastematerials,witharound50percentgoingtolandfill.Besidesthecreationofsuitablewastestreams,themosturgentissuewithmanyrecycledalternativesislackofsupply.Forexample,accordingtoPlasticsEurope,theEuropeanmarketforpost-consumerrecycledplasticshasgrownbyjusttwopercentagepointssince2018,whilegrowthofthemarketforfossil-basedor"virgin"plasticshasbeennearlyninetimesashigh.Theneedforcompaniestosecurerecyclingstreamsasasourceofrawmaterialsisclear.Smallstepsforcompaniesincludegainingtransparencyaboutwhatproportionsofrawmaterialsandpurchasedpartsarealreadyrecycled.Withthisknowledgeinhand,they13ThecirculareconomyinindustrialmanufacturingThink:ActThefourRsarefacilitatedbytwooverarchingenablers,whichwelabel"Redesign&reduce"and"Rethinkownership".Thesetwoenablersmakeitpossibletoclosetheloopwiththehelpoftheotherleversforacirculareconomy,eventuallyleadingtoreducedresourcedemand.REDESIGN&REDUCE"Redesigning"meansrethinkinghowproductsaredesigned,howtheyaremanufacturedandthatmaterialsareusedintheprocess.Manufacturingcompaniesshoulddesignproductsforlongevityanddurability,usingmaterialsthatareeitherplant-basedrenewablesorwhicharealreadybeingretrieved.Designingproductsfordisassembly,forexamplebybeingmodular,alsohelpswhenitcomestoseparatingmaterialsforfurtherprocessingorreprocessing.AnexampleofaredesignedproductthatleadstoreducedmaterialuseisautomakerPolestar'sfullyvegan-basedinterioroption,whichusesflaxfabricsandnaturalfibercomposites,amongothermaterials.Thisapproach,whichwonPolestaraPETAAward,notonlyemploysrenewableresources,butthoseresourcesarealsorecyclableattheendofthevehicle'slife.RETHINKOWNERSHIPTraditionally,companiespurchaseproductstousethemforacertainperiodoftimeandthendiscardthemoncetheynolongerneedthem.Firmsthathaveoptimizedtheiroperationsinlinewiththismodeloverdecades,nowseethemselvesconfrontedwithchangingcustomerdemandsandnewbusinessmodels.Insteadofsimplybeingsold,productsfunctionasdooropenerstosellassociatedservices.BusinessmodelssuchasProduct-as-a-ServiceandMaterial-as-a-Servicearegainingmomentumandwilleventuallypavethewayforaworldinwhichvirtuallyanythingcanbeprovidedasaservice–knownasanX-as-a-Servicemodel.Businessmodelsinwhichtheproducerretainsownershipoftheassetfacilitatemaximumusage,normallythroughfinancingoptionssuchasleasing,rentalorpay-per-useagreements.Extendedorlifetimewarrantyoffers,ontheotherhand,donotdirectlychangetheownershipequationbutratherforcecompaniestodesignproductsthatlastuntiltheycanbereturnedtothembycustomers–andideallythenrentedouttosubsequentcustomers.US-basedtechnologygiantDellisagoodexampleofamanufacturingcompanythat,aspartofitsoffering,providesproductswhileretainingownershipofthem.Dell'straditionalbusinessmodelwastosellpersonalcomputerstocustomers,butnowadaysthecompanyalsooffersasubscriptionserviceforbothhardwareandsoftware,combinedwithmaintenanceandsupport.Inthiswaytheynotonlyprovideabroaderoverallofferingtotheircustomersbutarealsomotivatedtodevelopproductsthataredurable,repairableorcanberefurbishedorrecycled.Italsoencouragesthemtoimplementpoliciesthatmakecustomerstreattheirproductsresponsibly.Enablerssuchaspyrolysisrecycling,andininnovativerecyclingfacilitiestoensurerecycledmaterialstreamsforthemselves.Othermoonshotideasincludemicro-scalerobotscombinedwithvisual-sensingdrones,releasedintolandfillswiththeaimoflocating,assessingandextractingvaluablemetalsandmineralsforreuse.Researchersarealsoworkingonbiodegradableelectronics,suchascircuitboardsmadefromflaxfibersthatdisintegrateinhotwaterinfivetotenminutes,biodegradablecasesmadeoutofpolylacticacid,andwater-repellentcoatingssuchaschitosan,whichisfoundnaturallyintheouterskeletonofshellfish.Mostlikely,notalloftheseideaswillproveultimatelysuccessful–butthosethatdocouldbetransformativeforspecificindustries.totheirproductsfromcustomersafterusage.Theeasiestwaytodothisisbyretainingownershipoftheproducts,forexample,throughfinancingmechanisms.Anotherwayisforcompaniestobuybacktheirownproducts.Here,cooperationswithothercompaniescanbetheeasiestwaytogainrelevantsizeandefficiencyinreverselogistics.Moonshotscaninvolvelookingatthedifferentmaterialandtechnologyroutesthatarelikelytoemergeinthefuture.Greenwashingcanbeavoidedthroughtheuseofblockchaintodeterminetheexactrecycledvolumestobeused,dependingonthevolumeofproductsandmaterialssold.Decentralizedproductionnetworkswillalsobeimportant,includingrecyclingfacilities.Companiesneedtoinvestdirectlyinnewtechnology,14Think:ActWhatgoesaroundcomesaroundHowfararemanufacturersinmovingtowardsacirculareconomy?Arewestillnotdoingenoughorthewrongthings?AndrewMorlet:Wearemakingprogress–andwhat'sparticularlyencouragingishowweareseeingmomentumtowardsacirculareconomyacrossawiderangeofindustries.Forexample,inplastics,manymanufacturersarepartoftheBusinessCoalitionforaGlobalPlasticsTreaty.WeconvenedthisalongwiththeWWFtosupportthedevelopmentofanambitious,legallybindingglobaltreatytoendplasticpollution.Havingthevoiceofmanufacturersalignedwithotherbusinessesacrosstheplasticsvaluechainisimportantasitdemonstratestopolicymakersthatcompaniesfromacrosstheentireindustrywantchange.Despiteprogressbeingmadeacrossarangeofindustries,we'renothittingthespeedandscalerequired.Weneedgreaterinvestmentandinnovationifwe'retomakesystemicchangeandswitchtoacirculareconomy.Makingthisswitchwouldallowustotacklesomeofthebiggestchallengesfacingourworldrightnow–fromclimatechangetobiodiversityloss.Isthereany'R'whichyouconsiderasmostimportantformanufacturers?Reuse.Thisisessentialtoacirculareconomy.Weneedtokeepmaterialswithintheeconomyforlongerandattheirhighestvalue.Reuseallowsustodothis.Whenwetalkaboutreuseinplasticpackaging,forexample,we'retalkingaboutbusinessmodelsinwhichasinglepieceofpackagingisusedforthesamepurposeacrossmultiplecycles.Forexample,withstandardcontainers,muchgreaterefficienciescanbeachieved,whilewhereneededalsoallowingbrandingidentitiesthroughlabelling.Manufacturerswillplayacrucialroleinhelpingusalladoptreusemodelsonamuchlargerscale.Reuseschemescancutlifecycleemissionsofaproductbyupto80%comparedtosingle-useproductsandreducepressureonnaturalresourcessuchaswater.Wespeaktomanufacturersaboutfocusingonthewholelifecycleoftheirproducts–notjusttheendpoint.It'simportantwedon'tjustlooktoanother'R'–recycling–astheprimarysolution.CarmakerRenaultoffersanexampleofamanufacturerthatisactivelyapplyingprinciplesofreuse,remanufacturing,andrecyclingintheircirculareconomymodels.ItsRe-FactoryjustoutsideofParistakesusedvehiclecomponentssuchasgearboxesandturbocompressorsandremanufacturesthem.It'sanexampleofamanufacturerkeepingmaterialsinuseandreducingthedemandforvirginmaterials.Whatarekeychallengesmanufacturersmustovercometobecircular?Design,design,anddesign.Weneedtoredesignexistingproducts,services,andsystems–orcreatenewones–usingtheprinciplesofthecirculareconomy.Thatmeansdesigningoutwasteandpollution.Italsomeansdesigningproductsfordurability,reuse,remanufacturing,andrecycling,tokeepproductscirculatingintheeconomy.Howcanwesolvethechicken-and-eggproblemofdemandandsupplyforcircularmaterials?Itneedstostartwithinnovation,offeringbetterchoices,andmakingthecirculareconomyeasyforcustomers.Thismeansinnovationfornewmodelsandcircularproductservicesystems,thatmeetcustomerneedsbetterandwhichalignwithcirculareconomicprinciples–thiswilldrivedemand.JapaneseelectronicscompanyRicohisanexampleofamanufacturerthathasbeenemployingcirculareconomyprinciplesformanyyears.It'sdesignedabusinessmodelthatworksforcustomersandourplanet.Ricohmakesphotocopiers.Insteadofsellingthemtocompanies,theyretainownershipandleasethem.Itmeanstheyareresponsiblefortheproductswhentheybreakdownorthecustomershavefinishedwiththem.Thisbusinessmodelincentivisesmanufacturerstodesignproductsthatlast,andthatcanbeeasilyrepairedandrebuilt.Customersvaluetheeaseofnotbeingresponsibleforthemaintenanceanddisposal,andRicohmakestheeconomicsworkforthem.INTERVIEWInterviewwithAndrewMorletCEO,EllenMacArthurFoundation15ThecirculareconomyinindustrialmanufacturingThink:ActThesetypesofbusinessmodelsdemonstratehowwecanchangethewaywemakeanduseproductstoreducewaste,easethepressureonnaturalresources,andmaintainprofits.Whatdopolicymakersneedtodotoimprovethecircularityformanufacturers?Leadingbusinessesarecallingforpolicychangesthatbothenablecirculareconomicsystemsinnovationandthatleveltheplayingfield.–andencouragesinvestment.Weseethiswiththeplasticsindustryforexample.ThroughtheFoundation’sGlobalCommitmentReport–whichwelaunchedfiveyearsagowithUNEP–manymanufacturershavebeentakingvoluntaryactiontoapplycirculareconomyprinciplestotheirbusinesses.Butthepatchworkcollectionofnationalinitiativesisslowingprogress.Policymakershaverecognisedthis,andnegotiationsarecurrentlyunderwaywithUNmemberstateslookingtocreatealegallybindingglobaltreaty.Weknowmanymanufacturerswithintheplasticsindustryarehopefulthiswillbeanambitiousandrobusttreaty.Similarly,businessesinotherindustriesarelookingtopolicymakerstodelivercertaintysotheycaninvestincirculareconomystrategieswithconfidence.Weneedthisifwe'retohitthelevelsofinnovationrequiredtodrivesystemicchange.Doyouseeanyregionaldifferencesinmanufacturingoncirculareconomyreadiness?Ifyes,wheredotheyarisefrom?Againandagain,weseeevidenceofhowmanufacturershavetheskillsandcreativitytoovercomechallengesandembracecirculareconomyprinciples-wherevertheyarebased.Intermsofpolicieshelpingusswitchtoacirculareconomy,lawmakersinplacesliketheEUhavebeenquicktoembracethehugesocialandeconomicbenefitsitwilldeliver.Spain,forexample,introduceditsownnationalcirculareconomystrategyin2020.WearealsoseeingsignificantprogressintheUSAwiththeadoptionoftheInflationReductionAct,whichbothstimulatesenergytransitioneffortsandissupportingbroaderindustries.Butit'simportanttostressthatinourdiscussionswithpolicymakersaroundtheworld–fromnorthtosouth,easttowest–weareseeingagrowingappreciationofthecirculareconomyandmomentumisbuilding.Thejourneytowardsacirculareconomyisspeedingup.16ThecirculareconomyinindustrialmanufacturingThink:ActINDUSTRIALMANUFACTURINGCOMPANIESwillfinditdifficulttoapplythe4Rsonaone-size-fits-allbasis.Thepreciseleversvaryfromindustrytoindustry,andevenfromcompanytocompany.Inonecase,acombinationofrepairandrefurbishmaybethemosteffective,inanother,purerecycling.Toillustratethispoint,belowwepresentfourdiverseproductareasandsuggestwhatfirmscandotomoveawayfromalinearbusinessmodelandtowardsamorecirculareconomythroughtheoperationofspecificlevers.CarinteriorsDesignedtoenhancethecomfortandaestheticappealofvehicles,carinteriorsprovideafunctionalandyetstylishspacefordriversandpassengers.Theyincorporateergonomicfeatures,storagecompartmentsandhigh-qualitymaterialstocreateanoverallpleasantdrivingexperience.Circularsolutions•Replacetraditionaltextilesmadefromvirginmaterialsinseats,footmatsandsoonwithrecycledtextilesmadefromupcycledPETbottlesorotherwastematerials•Exchangetheleatherinseatsandcoversforrenewable,veganmaterials,suchascactus,mushroomorpineappleleather•Upcycleplasticwaste,biobasedplasticsandrenewablewoodforcasingelements•Choosealuminumdecormadefromrecycledaluminumscrapfromwindowframes,aluminumbottlesandthelike•Installremanufactureddisplaysandofferreplacementandrepairoptions•Implement"designforcircularity"–usingmaterialsthatarerecyclable,withafocusonmono-materials,oreasytorepairandremanufacture,forexample,bylimitingadhesiveorbondingofplasticpartssotheycanbeeasilydismantled3–Whatcanwedo?Real-lifeexamplesofcircularityRecycledtextilesfromPETbottlesPremiumveganleatherWoodendecorRecycledaluminumpanelsRemanufactureddisplayBioplasticsurfaces17ThecirculareconomyinindustrialmanufacturingThink:ActDecantersDecantersusecentrifugalforcetoseparatematerialsofdifferentdensities,enablingtheirefficientprocessinganddisposal.Theyspinthemixtureathighspeeds,heaviermaterialssettlingatthebottomandclarified,lightermaterialsbeingdischargedfromthetop.Thisalsoenablestheefficientrecoveryofvaluablesubstances.Decantersareusedinwastewatertreatmentandthechemical,oilandfood-processingindustries,forexample.Circularsolutions•Replaceprimarycopper(forexample,incablesormotorspools)withsecondary,recycledcopperfromelectrical/electronicwaste,suchascomputers,orfromconstructionanddemolitionwaste,suchascopperpipes,wiringandroofingmaterials•Switchfromprimaryaluminumtosecondary,recycledaluminumscrap•Choosesecondary,recycledsteelscrapoverprimarysteel•Reducethethicknessofthesteelusedinnon-criticalpartstoreducematerialuse•Improvethecuttingprocesssoitproduceslessproductionscrapacrossthemanufacturingprocess•Implementpredictivemaintenanceforwearingandexpendableparts,toenablerepairandremanufacturing•Introducedesignforcircularityandmodularity,sothatpartsofthemachinecanbereplacedorupgradedtoincreaseoverallmachinelifetime•Enableasecondlifeformachinesbysellingoldorunuseditemsviainternalorexternalsecond-lifeplatformsRecycledaluminumusageRecycledsteelscrapModulardesignRecycledcopperAdvancedcuttingprocessforlessscrap18Think:ActWhatgoesaroundcomesaroundStampedsteelpartsStampedsteelpartsaremanufacturedbystampingflatsheetsofsteel.Varioustechniques,suchasblanking,bending,piercing,drawingandforming,orcombinationsofthesetechniques,areusedtofold,stretch,cutandprocessthesteel.Stampingisparticularlycost-effectiveforhigh-volumeparts,makingitidealforindustriessuchasautomotive,aerospaceandmachinery.Circularsolutions•Usesteelcoilsmanufacturedusingelectricarcfurnaces(EAF)ratherthanblastfurnaces(BF)orbasicoxygenfurnaces(BOF)toincreasetheuseofrenewableenergyandscrapintake–BFandBOFuse25to30percentscrapasaprocessmanufacturingvariabletocontrolprocessheat,comparedto100percentscrapforEAF•Implementvisioncontroltoidentifyandremovescrapparts•Ensureproductionscrapcollectionandrecyclingforuseaspre-consumerscrap•Communicatesteelspecificationstocustomersclearlytoenablerecyclingandreducedowncycling•Implementreverselogisticstocollectusedsteelpartsandsteelscrapfromcustomersandensurethatthisisrecycled–thislimitstheriskofdowncyclingorpartsendingupaslandfillClosedloopforpre-consumerscrapVisioncontrolElectricarcfurnace(EAF)steelRevisedmetalsheetspecifications19ThecirculareconomyinindustrialmanufacturingThink:ActDisplaysDisplaysarevisualinterfacesconveyinginformationandenablinguserinteraction.Multifunctionaldisplaysoftenreplacebuttonsforsteeringandmonitoringinindustrialprocesses.Circularsolutions•Userecycledmanganesefromreclaimedandprocessedscrapmetal,orfromwastematerialssuchasdiscardedbatteries,steelscrapandotherproductscontainingmanganese•Switchtosemi-conductormanufacturerswhorecycleorrecoverthemajorityoftheirprocessgases(suchasthefluorineusedforcleaning)andreuseheating/coolingfromtheirproductionprocesses•Usemulti-useratherthansingle-usepackagingforfinishedorsemi-finishedproducts•Takeadvantageofinnovationsinself-healingmaterials,forexample,capsulesorchannelsfilledwithhealingagentsthatrepairthemselvesautomaticallywhenthedisplayisdamaged,crackedorexposedtoheat–thisextendsproductlifespansandreducestheneedformaintenance•Usedetachableadhesiveconnectionssothatpartscanbeeasilyremovedorrepositioned–thisalsoallowsfortemporaryapplicationsandreuseofpartsandmaterials•Employdesignfordisassembly(DfD)toenabletheseparationandrecyclingofcomponentsatendoflife•ProvidecustomerswithsparepartsandrepairmanualssotheycanrepairproductsthemselvesRecycledmanganeseframeSelf-healingmaterialsDetachableadhesiveconnectionsRecycledcopperwiringGreensemiconductor20Think:ActWhatgoesaroundcomesaroundHOWWILLTHECIRCULARECONOMYaffectthebusinessofindustrialmanufacturingcompanies?Wedistinguishthreetypesofsolutionsintermsoftheirimpact.First,somesolutionswillimmediatelysavecostsorhaveaveryshortbreakevenpoint–forexample,simpledesignchangesthatreducethescraprateinproduction.Second,somesolutionswillhaveaneutralornearlyneutralimpactontoday'sbusinessparameters.Andthird,somesolutionswillhaveanegativeimpactontoday'sbusinessparameters.Companiesshouldprioritizethefirsttypeofsolutions,thosewithanobviouslypositivebusinesscase.Butunfortunately,mostsolutionswillbeofthesecondorthirdtype.Decisionsaboutwhethertopursuesolutionsofthesetwolattertypesaremorecomplex.Companiesneedtolookbeyondthenextonetotwoyearsandinsteadconsiderahorizonofthreetofiveyears,orinsomecasesevenlonger,whichiswhenthesesolutionsmaybegintopaydividends.Forexample,thecostofbuyingcarbonemissionscertificatesmighteasilyreachEUR200ormorepertonofCO2einthelongerterm,makingmanyinvestmentsthatarequestionableattoday'spricesclearlyadvantageousfromalonger-termperspective.Thatsaid,weadvisecompaniestofocusnotjustonfinancialaspectsbutalsostrategicconsiderations.Inparticular,werecommendtakingthefollowingintoaccount:•Currentandplannedregulation:InEurope,forexample,thisincludestheEcodesignDirective,newregulationson(waste)batteriesandtheupcomingCarbonBorderAdjustmentMechanism(CBAM)"•Thecompany'sowndecarbonizationpledge:Forexample,itsnear-termscience-based(SBTi)targets.Actionspromotingcircularityoftenreduceemissions.CompanieswillhaveallocatedcertainbudgetstoreducingCO2ealreadyandshouldconsidertheseachancetorealizecircularityactions,too•Customer,investorandstakeholderexpectations:Theseshouldinformboththecompany'sprioritiesanditsstrategicdirection•Resourcesecurity:Notallresourceswillbereadilyavailableoverthecomingdecade.Indeed,recentyearshaveshownhowpronesupplychainscanbetoscarcity,ashasbeenthecasewithcopper.CompaniesshouldconsiderthatenteringthecirculareconomymaygivethemsecureaccesstoresourcesWhatdoesthismeanforindustrials'bottomline?Acost/benefitanalysis–inwhichthecostsarefinancialortime-relatedandthebenefitsmightincludeachievingcircularitygoalssuchasdecarbonization–willshowthatthenumberof"low-effort/high-benefit"casesisprobablylimited.Manymorecaseswillbe"high-effort/high-benefit",somewithalongbreakevenpointandsomeneverpayingforthemselvesintermsofcosts,atleastundercurrentlegislation.Why,then,pursuesolutionsthatdonotofferimmediatefinancialbenefits?Foranumberofreasons.Theimpactofglobalwarmingisincreasinglyclear,andcustomers,especiallyyoungergenerationssuchasGenZ,expectcircularproducts.Moreover,theyareincreasinglylookingatpotentialemployers'sustainabilityrecords.Regulationisbecomingevertighter,especiallyintheWest.And,ultimately,companieshavenoalternative:Themegatrendsareinplace,thewheelisturningandinvestmentsthatcompaniesdoordonotmakenowwilleitherpaydividendsinthelongertermorcomebacktohauntthem.Aswestateinthetitleofthisstudy:Whatgoesaroundcomesaround.4–Theimpactonbusiness–Howthecirculareconomyaffectsindustrialmanufacturers21ThecirculareconomyinindustrialmanufacturingThink:ActPRODUCTION•Limitlandusebyonlybuildingnewfacilitiesonformerindustriallandorchoosingmorecompactlayouts•Reducewasteandestablishrecyclingroutesforpre-consumerscrap•Establishclosedloopprocessestobringunavoidablepre-consumerscrapbackintothecycle•Reducescrapbyadjustingmanufacturingprocesses•Introducejoiningtechniquesthatallowforeasierdismantling•Cutwaterconsumptionandpollution•MinimizeairpollutionTODO'SBYFUNCTIONLOGISTICSANDSERVICE•DevelopX-as-a-Servicesolutionsthatensuretheownershipofproductsremainswiththeoriginalmanufacturer•Establishbuybackprograms,includinggivingcustomersincentivestotradeinusedproducts•Prolongtheusabilityofproducts,forinstancethroughpredictivemaintenance•Introducereverselogisticssothatproductscanbereworked,remanufacturedandrecycled•ReducepackaginganddevisereusablepackingsolutionsINNOVATION,R&D,PRODUCTDEVELOPMENTBACKBONE•Explorebusinessopportunitiesforincludingcircularproductsinthecurrentoffering•Fosterdesigntocircularitybydrawingupguidelinesforspecifications,indicatingtheprerequisitesforfacilitatingrepairability,reuse,dismantlingandsoon•Makedesignsopensourcetoallowforrepairability,remanufactureandsoon•Implementa"design-to-circularitycenterofcompetence"tospeeduprollout•Incorporateartificialintelligence(AI)intoengineeringtoimprovecirculardesign•Trainengineers,forexample,bygivingthemaccesstodatabasesoncircularsolutions,biologicalandrenewablealternativematerialsanddetailsoftheCO2efootprintsofdifferentmaterials•Identifytechnologiesforthemanufactureofcircularproducts,suchasthechemicalrecyclingofplastics,andincorporatethemintothecompany'sprocessesPROCUREMENT•Achievetransparencyabouttheoriginsofmaterialsandcomponentsbyestablishingadata-sharingconceptwithsuppliersfromTier1toTierN,forexampleusingblockchain•Incorporateproceduresforincentivizingcircularsolutionsduringsupplierselectionandawarding,forexampleusingCO2eandshareofcircularityasakeyperformanceindicator(KPI)whenevaluatingbids•Secureaccesstocircular,greenandrenewablematerialsandenergythroughtake-backchannels•Scoutforopportunitiessuchasstartupsandsmallerplayerswhocansupportcircularityassuppliersortechpartners•BuildanecosystemofsolutionprovidersTHETRANSITIONTOACIRCULARECONOMYhasconsequencesforallpartsofthecompany.Theinnovation,R&Dandproductdevelopmentfunctionsneedtofosterdesigntocircularity,forexample,providingclearinstructionstothedesignengineerssothattheproductstheycreateareeasytorepair,reuse,refurbishorrecycle.Procurementneedstoachievefulltransparencywithregardtowheretheirmaterialsandcomponentscomefrom.Logisticsneedstoreducepackagingandinvestigatereusablesolutions.Allthecompany'sfunctionshavetheirownspecifictodo'sandonlybyeveryonedoingtheirpartwillitbepossibletobringcircularitytolife.5–Ataskforthewholecompany•Setgoalsandstandards,breakingthemdownbyfunction.Forexample:–Defineaminimumshareofsecondarymaterialperproductcategoryandmaterialgroup–Defineablacklistofforbiddenmaterials•Introduceadocumentationanddata-sharingconceptforinformationthatfacilitatescircularity,inparticulardetailsofCO2efootprintsandthecompositionofmaterialsbycomponent•Employdigitaltools,suchasdigitaltwins,tomonitorproducts'energyandmaterialuse,wasteandpollution•Raiseawarenessforcircularityamongemployees2223ThecirculareconomyinindustrialmanufacturingThink:ActThink:ActWhatgoesaroundcomesaroundUNLESSWECLEANUPOURACTurgentlyandstopactinglikecowboys,wewillsoonhavetoabandonshipandsearchforanewplanet.Asharshasitsounds,thisisparticularlytrueforindustrialmanufacturingcompanies:Unlesstheystartofferingproductsdesignedundercircularconditions,theywilllosetheirrighttoexist.Nocompanycanaffordtoignoretheimperativeofcircularity–evenifitmeansmakingshort-terminvestmentsthatdonotpayofffinanciallywithinthetypicaltimeframeofbusiness-casecalculations.Butalongwiththestick,thereisalsoacarrot.Circularproductscanfillnichesandmeetcustomerdemandsthatdidnotexistjustafewyearsback.Forcompanies,thattranslatesintomoresalesandpotentiallythechancetobalanceoutextracostsbyaddinga"greenpremium"tosalesprices.Tomakesurethatcircularitystaysfirmlyatthetopofthemanagementagenda,wehavedrawnupacheck-listfordecisionmakers.Thelistincludescriticaltaskssuchasclarifyingstakeholders'expectations,selectingappropriateactionsandimplementingtheminthecompany'sprocesses,aswellasimportantsupportingactionssuchaschangingthecompany'smindset.Butmostofall,topmanagementmustensurethatbuildingacirculareconomyremainsnotonlytopoftheagendabutalsofrontofmind–forthesakeofthebusiness,humanity,andtheplanet.Clarifyyourstakeholders'expectations,includingcustomers,investors,employeesandregulatorsCheckyourneedfordecarbonizationandworkouthowcircularitycanhelpyoumeetitPrioritizeyourcompany'sbusinessfields:Wherecanyouhavethebiggestimpact?Whichareasareessential?Whereareyoucreatingthemostpollutiontoday?Forhigh-priorityareas,deviseappropriateactionsandcalculatetheirimpactConsolidateoptions,thenrunanotherroundofprioritizationImplementyourchosensolutionsInparallel,createtherightenvironmentineachfunctionsothatamindsetofcircularitycandevelopandflourishacrossyourorganizationInconclusionAchecklistfordecisionmakersChecklist24Think:ActWhatgoesaroundcomesaroundAUTHORSHANNAHM.ZUEHLKE+49160744-7301hannah.zuehlke@rolandberger.comCHRISTIANBOEHLER+49160744-8017christian.boehler@rolandberger.comSIMONLOBINGER+1773794-2050simon.lobinger@rolandberger.comAKIOITO+49160744-8583akio.ito@rolandberger.comMARKUSBAUM+49160744-7121markus.baum@rolandberger.comCONTRIBUTORSADRIENHOBT(PCHINNOVATIONS)+493028489725moonshots@pch-innovations.comFABIANZIMMERHENDRIKFROEHLINGINTERNATIONALCONTACTSGabriellaBorgovan,RicardoCapitano,IsaacChan,MichelleDrewRodriguez,DavidFrans,DariaKoroleva,ClairePernet,DarrenPerrin,YvonneRuf,MarcusSchueller,IvySun,VascoTeixeira,MagaliTestard,HaniTohme,MarcWinterhoffWewelcomeyourquestions,commentsandsuggestionsWWW.ROLANDBERGER.COMFurtherreadingThink:ActBookletAcceleratingdecarbonizationThink:ActIdeasforActionAdaptingtoclimatechangeThink:ActBookletActandwin:ThesustainabilitygameThink:ActMagazineCirculareconomyThink:Act#39032023It'stoolatetofullystopglobalwarming,butnottoolatetolearntolivewithit.AdaptingtoclimatechangeCreditsandcopyrightThispublicationhasbeenpreparedforgeneralguidanceonly.Thereadershouldnotactaccordingtoanyinformationprovidedinthispublicationwithoutreceivingspecificprofessionaladvice.RolandBergerGmbHshallnotbeliableforanydamagesresultingfromanyuseoftheinformationcontainedinthepublication.©2023ROLANDBERGERGMBH.ALLRIGHTSRESERVED.PUBLISHER:ROLANDBERGERGMBHSederanger180538MunichGermany+49899230-023_2006_TABROLANDBERGERistheonlymanagementconsultancyofEuropeanheritagewithastronginternationalfootprint.Asanindependentfirm,solelyownedbyourPartners,weoperate51officesinallmajormarkets.Our3000employeesofferauniquecombinationofananalyticalapproachandanempathicattitude.Drivenbyourvaluesofentrepreneurship,excellenceandempathy,weatRolandBergerareconvincedthattheworldneedsanewsustainableparadigmthattakestheentirevaluecycleintoaccount.Workingincross-competenceteamsacrossallrelevantindustriesandbusinessfunctions,weprovidethebestexpertisetomeettheprofoundchallengesoftodayandtomorrow.