**London**: As businesses increasingly recognise the potential of circular economy practices, Cognizant’s Manoj Mehta outlines strategies for overcoming barriers to adoption, transforming traditional models and highlighting market opportunities that can drive meaningful change while promoting sustainability and reducing waste.
Businesses globally are increasingly recognising the potential of circular economy practices in realising market opportunities as the push for sustainability intensifies. Despite this recognition, most circular initiatives remain in the pilot phase rather than being widely adopted. Estimates indicate that humanity produces over two billion tonnes of waste each year, utilising resources from the Earth at a rate 1.7 times that of the planet’s regeneration capacity. In light of these statistics, Manoj Mehta, Executive Vice President and President of Cognizant for Europe, the Middle East, and Africa, outlines essential strategies for unlocking the full potential of the circular economy.
For centuries, business practices have largely adhered to a linear economy framework, predominantly characterised by resource extraction and waste generation. Transitioning away from these entrenched habits necessitates a significant shift in mindset, with the commercial prospects of circular models serving as a pivotal incentive. According to Mehta, “once businesses see the market opportunities that circular practices unlock, they will find the economic justification to make meaningful changes.”
While the concept of circular business models is still developing—akin to the early days of Netflix in the 1990s—many organisations are establishing solid evidence of success in this domain. To facilitate the widespread adoption of circularity, businesses are encouraged to implement four transformative systems:
-
Design for Sustainability (DFS): This concept enhances traditional design practices by prioritising serviceability, extensibility, and recyclability. By leveraging AI-driven models, businesses can optimise the lifecycle value of their products, increasing the incentive to maintain or update them. For instance, Volvo has committed to becoming a fully circular business by 2040. The automaker’s EX30 model currently contains 17% recycled materials, with plans to increase this to 25% in future models.
-
Supply Chain Traceability: Effective traceability is critical for transforming carbon-heavy supply chains into more sustainable operations. This involves not only responsible sourcing practices but also reintroducing recovered materials into the supply chain, thereby reducing environmental and labour exploitation.
-
Manufacturing and Reverse Logistics: Companies must create frameworks that facilitate the effective reintroduction of recycled materials, with an emphasis on reducing single-use items during manufacturing. Digital Product Passports and lifecycle analysis are vital in structuring extended supply chains and logistics. GE Healthcare, for instance, highlights that its older medical equipment can see 82% to 100% of its components recycled or reused.
-
Lifecycle Revenue Models: Circularity prompts a reconsideration of product ownership and the value generated for customers. Manufacturers must adapt their business models to ensure revenue is generated through ongoing service rather than just initial sales. This shift is particularly relevant for industries involving substantial assets, such as turbines and construction machinery, where operating models could focus on delivering value “by the hour.”
In pursuit of establishing scalable circular business models, companies must overhaul various operational processes. Technologies such as Generative AI (Gen-AI) and the Internet of Things (IoT) are expected to play significant roles in this transformative landscape, helping to design, simulate, and effectively implement circular practices.
Successfully transitioning to circular operations necessitates a balanced approach between quick wins and comprehensive change. Companies should focus on four critical principles:
-
Tweak and Transform: Implementing incremental changes can validate concepts before embarking on broader transformative initiatives.
-
Integrate Downstream Visibility: Through mechanisms like takeback programmes and reverse logistics, businesses must monitor product and material lifecycles to optimise circularity.
-
Leverage Technology for Collaboration: Advanced technologies can aid in overcoming challenges associated with engineering expertise and process evolution, ensuring collaborative change.
-
Align Business and Customer Goals: Circular business models should create value for both enterprises and consumers, thereby enhancing material value propositions.
The circular economy presents a sustainable alternative to traditional, exploitative business models by fostering regenerative cycles that can yield economic benefits, reduce environmental impact, and secure long-term profitability.
Source: Noah Wire Services
Subscribe to Industry Updates
