Circular economy business practices and models
Circular economy business practices
You can start by reviewing internal processes and identifying where you can test and implement circular economy business practices.
Examples of circular economy business practices include:
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Producing a product or service using less input materials or producing more product or service for the same amount of material.
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Practices that avoid waste of products and materials in the supply chain.
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Design that incorporates the principles of a circular economy.
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Taking responsibility for the product during the use phase (e.g. lifetime repair) or at end-of-life (e.g. implementing or funding a recycling scheme).
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Being a supplier of and/or using circular processes (such as asset management), technologies (such as data analytics) and obtaining circular training or advice to upskill your organisation in the circular economy.
Circular economy business models
A business model describes the rationale of how an organization creates, delivers and captures value.
A circular business model aims to create, capture and retain more value from resources. This is generally achieved by slowing the flow of products and materials in the economy, reducing the demand for new products and materials, and avoiding waste generation through design.
Examples of circular business models include:
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Extend the use period of existing products and components, by repairing, upgrading and reselling. This reduces resource extraction and waste generation. Types of Product Life Extension models include:
Sale of durable or reusable products
For example, Emmy is an online platform for second-hand products (mainly used designer clothes).
Sale of spare parts, consumables and add-ons to support long-lasting products
For example, Astelav provides spare parts for electrical and electronics equipment.
Maintenance and repair
Prevent breakages or fix issues to keep things going. For example, Kokkola LCC provides laser cladding services for industrial equipment.
Refurbishment and remanufacturing
Restoration of degraded products to ‘as new’ condition. For example, Aceleron has designed a battery storage system using used batteries in electric vehicles.
Reuse
Products or materials are reused as is, without further processing. For example, My Wardrobe is an online platform for luxury and fashion goods (with a cyber-physical system). Another example is 3 Step IT, which distributes old IT equipment for reuse after refurbishment.
Re-sale
Used, second-hand and refurbished products are resold. One well-established example of this business model are the many car wreckers who extract usable and resell parts and components from cars.
Incentivised return
Incentivising for the return of used products for resale. For example, Varusteleka offer a buy-back scheme for their leisure and outdoor equipment (general and military use).
Redistribute
Collect and redistribute surplus products for sale or donation. For example, Good360 facilitate the transfer of surplus products from businesses to the Australians who need them most. Another example is food rescue organisations that collect surplus food and redistribute it to those in need.
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Enable increased use of products by making possible shared use, access or ownership of underutilised assets by organisations or individuals. They maximise the duration assets are used and reduce the need for individual ownership.
Examples include:
- Vehicle sharing, such as CarNextDoor
- Parking space sharing service, such as JustPark
- Short term accommodation rental, such as Airbnb
- Available labour and expertise, such as AirTasker
- Tools and equipment libraries, such as ReShare
- Toy libraries, such as the Richmond Toy Library
- Online auction platform for the public sector, dedicated to any types of machine equipment, goods or parts, such as Kiertoa Oy
- Excess food supplies, such as OzHarvest
- Clothing, such as My Sister’s Closet.
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Replace the traditional model of ‘buy-and-own’. Products are used by one or many customers through a lease or pay-per-use arrangement. Product longevity, reusability, and sharing drive revenue and reduce costs. Product obsolesce becomes a business risk, not an asset.
Examples include:
- Tyres as a service by Michelin. Tyres are leased per mile and not owned, incentivising durable, long-life, tyres, and repairs over replacements.
- Lighting as a service by Arc Renewables. A company leases the service of lighting at a reduced rate over time, incentivising long-life and high efficiency lights.
- Packaging as a service by Returnr (a round 1 Business Support Fund project). Single-use packaging is replaced with reusable packaging that continually loops from business to customer and back
- Product digitalisation: virtual options are developed to replace physical products, such as online video streaming services that replace traditional DVD ownership, such as Netflix.
- AI and IoT optimized building cooling service by Kaer Air.
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Recover useful resources from disposed products or by-products by transforming waste into valuable materials. This reduces the demand for virgin resources and creates new revenue streams.
For example, Fresh Select and Nutri V (a round 1 Business Support Fund project) upcycle surplus, off-spec and wasted food products into nutritious snacks.
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Replace traditional inputs derived from virgin resources with bio-based, renewable, or recovered materials that are safe and non-toxic. Through these models, companies can phase out the use of scarce resources, avoid waste, remove inefficiencies and decrease supply chain risks.
Examples include:
- Chemical-free organic cotton yarn, fabric and manufactured products by Organic Cotton Colours (OCC)
- The Stockton jacket by Kathmandu, which is made of three layers of recycled materials and a bio-based membrane as an alternative to typical synthetic textiles.
