As more companies seek ways to assess holistic impact across the value chain, the concept of circular economy is quickly becoming the next big thing in sustainability. Now more than ever, companies are starting to take notice and are striving to close the loop, including UPS*, which is helping to bridge the gap by optimizing smarter, more sustainable logistics.
Last week, UPS and GreenBiz launched a 2016 study titled The Growth of the Circular Economy, which captures insights from sustainability executives about perceptions of the circular economy, including key business drivers, barriers and opportunities. Here are five major takeaways from the study:
• CIRCULAR IS HERE TO STAY: The circular economy is projected to continue to gain traction in the coming years. The majority of companies (86%) believe circular economy principles will be important to their organization in two years, a vast difference from only 47 percent two years ago.
• UNDERSTANDING AND IMPLEMENTATION IS GROWING: Ninety percent of companies feel they have a clear definition of "circular economy" and more than half (58%) state their organization is implementing circular economy principles. Yet despite this prevalence, few companies are currently standing out as leaders. Among the few that do stand out are Interface, which has been vocal regarding its sustainability focus, and Patagonia, which has made headlines with its notable "Don't Buy This Jacket" campaign and CSR-minded policies.
• LACK OF BUSINESS CASE IS THE BIGGEST BARRIER & OPPORTUNITY: The majority of respondents (38%) cited an insufficient business case as both the biggest barrier and opportunity for implementing a circular economy. Companies can help build a tangible business case by generating market demand and understanding drivers to adoption.
• EASE AND INCENTIVES HELP GROW DEMAND: Companies looking to generate market demand should prioritize ease and financial incentives, as the study found cash back rebates (56%), convenience of returns (47%) and paid shipping (42%) as the top three motivators to adoption.
• LOGISTICS IS A KEY DRIVER: Unsurprisingly, logistics is viewed as critical to transitioning to the circular economy: nearly unanimously, 97 percent of business leaders agree that logistics is important to driving the circular economy. However, in order to successfully make this transition, logistics will have to come full-circle, not only focusing on the "last mile," but on optimizing the "first mile" as well.
As more companies look to shift beyond the traditional "make-use-dispose" model, the circular economy has the potential to provide a viable and valuable solution for businesses across the globe. As the study shows, the key factor in making the circular economy successful will be generating enough market demand to make a clear business case. If the case can be made, the circular economy has the ability to not only pose a smarter solution for our planet, but also a roadmap for better business.
To download the whitepaper and full research study results, visit ups.com/sustainability.
-Lindsey Snow, Assistant Account Executive, CR Strategy