CLIMATE LEADER PAPERS
Over the past quarter-century, little has changed business, or the global economy, more than the rise of supply chains as the core organising principle for production and distribution of everyday products.
It is likely that in the next 25 years, fundamental changes in consumer expectations, natural resource constraints, and technology advances will remake every aspect of business, not least for supply chain models.
One approach for staying ahead of these changes is circular economy thinking. The circular economy holds the potential to revolutionise the production model the world relies upon. This is no small thing: CDP, for example, estimates that 50 per cent of the average company’s carbon emissions are embedded in its supply chain.
What, then, are some examples of what can—and should—change?
Four core steps can lead to circular supply chain models that drive sustainability progress.
The first step requires a change in thinking. Circular economy principles envision a departure from the traditional “take-make-dispose” model in favor of a system that radically reduces—or eliminates—waste. As is so often the case, it is as much the “software” of our thinking as the “hardware” of our practices that drives or prevents change.
Second, circular supply chains require changes in product design. Everything from automobile components to athletic footwear can be re-imagined to ensure that components have fewer toxic elements and can be easily reused or recycled.
Third, circular supply chains require radical collaboration. Too often, production capacity is used inefficiently. Competitors share facilities but in many cases fail to coordinate production, resulting in excess—or strained—capacity. Companies are increasingly looking to manage their costs, and connected machines drive greater efficiencies. The obvious competitive issues that prevent optimising capacity may be a luxury that companies can no longer afford.
Finally, the reverse cycle to reclaim materials is a fundamental element of the circular production model. The creation of reverse logistics not only reduces or eliminates waste, but also brings economic opportunities from the repurposing of scarce natural resources, which can generate new enterprises, as well as additional employment for people populating these efforts.
One thing to note is that, on its own, this model may not address ongoing issues regarding supply chain labor practices. That said, greater coordination among buyers could result in more concerted efforts to ensure the fair treatment of workers, as well as a material reduction of the production spikes that cause overwork in export facilities.
Circular economy principles have always made sense in terms of wise use of natural resources, and this remains true, now more than ever. And with increasing imperatives to reduce waste, more openness for collaboration among buyers, and growing ambition regarding companies’ climate pledges, the time is right to use circular economy principles to redefine supply chains for the next quarter-century.
BSR is increasing its focus on circular economy, working with our member companies to help them integrate circular economy into their strategies. We have also established a partnership with the Ellen MacArthur Foundation to maximise the impact of these efforts and draw on the important research undertaken by the Foundation. Additionally, BSR is an institutional partner of the Sustainable Innovation Forum (SIF15), the largest business-focused event taking place during COP21, which will feature a keynote session on this topic.
Aron is recognised globally as a preeminent authority on corporate responsibility and sustainability strategy by business, NGOs, and the public sector. Under his leadership, BSR has doubled its staff and expanded its global presence, which currently includes offices in Copenhagen, Guangzhou, Hong Kong, New York, Paris, San Francisco, Shanghai, and Tokyo. On a day-to-day basis, Aron advises senior executives at more than 250 member companies and other global businesses and is regularly featured as a speaker at major events and in a range of top-tier media outlets. Aron is co-author of the book Sustainable Excellence: The Future of Business in a Fast-Changing World, which spotlights some of the sustainability strategies that drive business success. Aron joined BSR in 1995 as the founding director of our business and human rights program and opened BSR’s Paris office in 2002, where he worked until assuming his current role as President and CEO in 2004. Previously Aron practiced law in San Francisco and worked as a journalist at ABC News in New York
BSR is a global nonprofit organization that works with its network of more than 250 member companies to build a just and sustainable world. From its offices in Asia, Europe, and North America, BSR develops sustainable business strategies and solutions through consulting, research, and cross-sector collaboration. Visit http://www.bsr.org for more information about BSR’s more than 20 years of leadership in sustainability