Circular Economy Business Model: Patagonia Case Study

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The floor to the experts

The aim of circular economy would be both financial profit and zero waste, for this reason, it should be ensured that, in every stage of the life cycle of a product, the raw materials can be recovered or recycled for creating new products. Nevertheless, the introduction to the circular economy practices are just beginning, in fact, according to a survey by UPS and Greenbiz, of 423 business leaders, 52% know the circular practices and could provide examples, while 38% think they know what both its definition is, but don’t know well what concerns.

Instead, who knows it for sure is the Ellen MacArthur Foundation which maintains a directory of the top 100 companies that are pursuing the circular economy vision, so that are insured both the profitability and the sustainability.[1]

Therefore, in this chapter, we will focus on who has implemented this business model, in different markets, and on the benefits that it has brought, moreover we will introduce some companies that have begun their business founding itself on the idea of circular economy, creating new places of employment and new segments.

1.    Patagonia

Patagonia was founded by Yvon Chouinard, passionate about rock climbing, in the 1973. The founder began as climber at the age of 14 and with the time he acknowledged some problems related to this sport as the possibility to use only soft iron pitons, which could be used just once and then left in the rock. This way, in 1957, he began to produce alone his own equipment. The voice spread and shrtly he began to sell them.

The demand for his gear was so raised that could not handle it alone anymore, so he purchased more sophisticated machineries of production and merged with Tom Frost, an aeronautical engineer and a mountain climber, founding the Chouinard Equipment in 1965.

In 1970, the company had become the greatest supplier of tools for climb but meanwhile those tools were becoming a problem for the environment, because the Chouinard’ pitons created serious damages to the rock. Consequently, the company decided to retire little by little from the market. Nevertheless, in 1972, they succeeded in introducing an alternative in the market, in fact they began to commercialize aluminum chocks that could be inserted and removed in the cracks by hand, rather than with the hammer. In a few months, the commerce of the pitons was exhausted and the chocks were sold at a rapid pace.

Besides this, Chouinard introduced another great novelty in the world of the climb, that concerns the outfit, in fact he introduced colored garments, that until then, had never been used for climbing.

Contemporarily to the beginning of the production of sporting clothes, and not only for climbing, Patagonia was founded.
The firm didn’t introduce only these innovations on the market, in fact they began a research and development process that brought to the creation of two new more functional materials for climbers, the Capilene and the Synchilla. The sales grew more and more, until the 1991 recession stopped the growth and threatened the company’ independence. Nevertheless, they succeeded in taking the situation back.

Other great strides, within the company, were the introduction of on-site child care centers and the continuous commitment to the environment safeguard. On this last matter, Patagonia analysed the environmental impact of the four fibers they used the most, and they discovered that the cotton industrially cultivated was the most harmful for energy consumption and as source of pollution, for this they decided to shift all their garments to the organic cotton. This process finished in 1996, so since then the cotton products are realized with organic cotton.

1.2 Mission

“Build the best product, cause no unnecessary harm, use business to inspire and implement solutions to the environmental crisis.”

To respect their own mission, Patagonia makes its best efforts to reduce its own impact on the environment. In this sense, the firm uses renewable energies and it implemented specific programs for the CO2 reduction as the drive-less program in which the employees are encouraged not to use one car for one driver. Besides it tries to use raw materials that cause as little harm as possible and, for this reason, since 2000 they work with Bluedesign Technologies to assess and to reduce the resources consumption in their own supply chain and to receive support in the chemical substances management, in the dye procedures and in finishing the employed fabrics. Using these materials they are tried to lengthen at the most the product’ life cycle and, from a circular economy perspective, they have launched the program “Worn Wear” with which the investments are promoted on the quality, the reparation of objects when broken or don’t work anymore, the donation to other people of what is not used anymore, the recycling of more repairable products or otherwise not employable anymore and the celebration of durable garments, capable of accompanying us for good part of the life. Through this program, the customers are given the possibility to repair their clothes and equipment in the shops and in the reparations center, they are taught how to effect reparations in autonomous way and they are proposed opportunities to purchase garments and equipment of quality that have already been used rather than to buy them new.
Moreover, at the end of the products life, Patagonia accepts all the own decommissioned products so that to facilitate their reuse or their recycle process. From 2004, Patagonia has recycled or transformed 74.417 kg of products.

1.3 The circular economy within Patagonia

Patagonia has always maintained its efforts for sustainability and, in 2013, they have launched the “WORN WEAR” program through which they are looking for to extend the life cycle of their  products, avoiding that they end in dump. In fact, the firm mends and resells their own products that have been returned. In practice a garment can be bought used on the special platform or new on the official site, once worn out or broken, it can be returned in the shops by customers who receive an economic incentive, so that the company can give it a new life. This program is also very helpful for the planning of new products, in fact feedbacks can be given through the reparations for creating some resistant clothes more and more. [2] Moreover, as part of its Worn Wear program, Patagonia employs 45 full-time repair technicians in Reno and sends a biodiesel-fueled repair truck around the country.[3]

“If a product is totally worn out, we are going to take it and recycle it. If it needs to be repaired, we are going to have a mechanism to repair it. If it can be resold but they don’t want it any more, there’s a mechanism to do that,”

-Rose Marcario, Patagonia’s president and CEO-

The Patagonia business all revolves around the echo-sustainable image that they built in the time, that is also one of its strong points. In this sense, its commitment is seen by the fact that Patagonia often uses natural material as wool or cotton and the American brand has created even a recycling fabric using plastic bottles. The fleece Pcr, born in 1993, and that today is used in around 31 products of the collection. Doing this way, according to Patagonia, 92 million bottles are been recovered, avoiding dumps. To strengthen the fame of echo-sustainable enterprise they also installed solar panels above the parking lot of the Ventura offices in 2005, that furnish the 10% of the energy used by the whole structure.[4]

The huge steps taken by Patagonia within the circular economy have brought her to win the “Circular Economy Multinational Award” at World Economic Forum in January. During his speech, Ryan Gellert, general manager of Patagonia Europe, has remembered that Patagonia has just begun to explore the possibilities concealed by the circular economy and that the work to change the mentality and the habits of consumers is still so much.[5]

Being a private-held company enable the firm to do what wanted, not having external pressures to increase the sales. However, that was not an obstacle to obtain a $710 million in sales, whose 1% is donated each year as a compensation for their environmental impact.[6]

2.    Philips

In the ICT sector, one of the great pioneers of the circular economy is Philips that implemented various circular initiatives. In fact, the firm is trying to improve its own design rules so that to facilitate the products repairability, their implementation and their modularity. Philips is restructuring its business models in the medical sector and is implementing similar models for remanufacturing and parts harvesting in other businesses within Philips. [7]

History

In 1891 Frederiks Philips bought a small factory to Eindhoven, beginning to produce carbon-filament lamps. Well soon he became one of the greatest producer in Europe. Twenty years later he went public in Amsterdam, this brought to the necessity to develop high-performing products more and more and it was so that in 1914 a research laboratory was established for innovative products.
Four years later, medical X-ray tubas was introduced. This way the firm began to diversify its own portfolio and to protect its own innovations with patents. It was in this period that the business expanded in China, Australia and Brazil.

The 20s saw Philips specializes in the broadcasting sector, starting the production of broadcast instruments in the 1927. On this the Dutch firm got an immediate success, succeeding in selling over a million radio within 1932, and to become the first world producer. The very first innovation arrived in 1939 with the beginning of the production of the electric razors Philishave.

On May 9th 1940, the Philips’ manager was informed that Germany had invaded Netherlands and, after having moved to USA with a huge quantity of funds, he succeeded in moving the firm to the Netherlands Antilles. Ended the war, the business center was brought to Eindhoven.
The ’40s and ’50s were those more innovative, in fact in the 1949 Philips introduced the Synchrocyclotron, used for the treatment of the malignant tumors. Instead in 1963, it introduced the Compact Audio Cassettes, setting the standard global for tape recording.

Instead The ’70s and ’80s were the years of the acquisitions within the electronics and the microelectronic sector. The 1984, for the Dutch multinational, is the year of the records: in that year they have realized a sales of 55 million Dutch florins and sold over 100 million televisions. In the same year, they acquired the control of the German Grundig.

In 1988 the record division, denominated Philips PolyGram, is ceded to Seagram and then it will belong to the Universal Music Group. In the nineties, Philips faces a financial and a sales crisis, and the firm decided to engage a restructuring program. Around 1991 it introduces on the market the high-definition television. Philips has always been busy in the diffusion and in the search of innovations that brought a benefit to the collectivity, in fact they introduced the environment experience in 2002, the 3D scanners in 2006 and, and six years later, Philips introduced the AlluraClarity interventional X-ray system, which offers excellent visibility at low X-ray dose levels.

Our mission

“Improve the quality of people’s lives through technology-enabled meaningful innovations – as co-creator and strategic partner for the Philips businesses and complementary open innovation ecosystem participants.[8]

For fulfil its own mission and to improve the life of people, Philips is committed to integrate the proper business with the sustainability.

2.1 Philips’ circularity

At Philips, they have begun to explore the linear economy alternatives with the arrival of Frans Van Houten. This way they have implemented the circular system, but this has brought to drastically change the way according to which the ownership and the value was thought about.[9]

It was so that the “Healthy people, sustainable planet” program was born, launched by the CEO in 2015, whose principal pillars are:

  • to create the value for the clients through sustainable solutions
  • leading by example in Sustainable Operations
  • to multiply the impact driving sustainability through the supply chain.

This new strategy has been adopted thinking about the clients that seem considered more and more the purchase of green products, but also because the redraw of products and services in circular economy view can produce superior margins for the company.

In fact, Philips has for example, introduced the sale of light as service, the payment happens only for the light that is used, while the company take the technological risk and the investment. Besides, when the equipment is not more proper, Philips withdraws it to recycle it or to upgrade it. Practical examples are Singapore and Buenos Aires, that use this service, in which Philips installs the equipment and maintains it, while the customers pay just for the used light.
In this way, has been saved since 50 to the 70 percent of energy and the installation of the LEDs allows a longer duration of the product life, because these last five times more of a normal light.

Nevertheless, the process to arrive up to here is not easy, some problems exist from the supply point of view and the products recollection, in fact, at present, in Europe only 40% of the lamps are recouped, whose however 85% are recycled for the reuse.

Philips is actively putting efforts for the transition towards a circular and more sustainable economy, in fact last year has invested 558 million of euros in Green Innovation, while in the healthtech business has invested over 1.3 billion in sustainable innovations.
In the annual report, Philips affirms that the transition toward a circular economy is fundamental to create a sustainable world and to use the resources in more efficient way, so that it is possible to decuple the economic growth.

Besides the lightening sector, Philips is also using the circular economy principles in the healthcare sector, where they are developing some leasing relationships so that they will be able to take back the equipment and to improve it and to propose it to a new client. This is already a business worth € 200 million.
However there are also here elevated challenges, because in this sector clients are less prepared to use “secondhand products “, despite it is renewed and guaranteed as new.

Nevertheless the figures speak for themselves, despite the program has been launched just last year, in the annual report, Philips has underlined that the 9% of their own revenues are originated from circular products and that the greens revenues reach the 59% of their sales only as it regards the HealthTech businesses.
The preset target is to increase the circular business, within 2020, and to derive from this the 15% of their own revenues.
To get these results, Philips has reconsidered many elements of their products design during the manufacture and the supply process.

An example of commitment is the new SENSEO® , the first one-cup coffee machine for single or couple families.

The main challenges in this case was about the aesthetics, because recycled plastics are available just in dark colors, and the use of recycled plastics for the baseplate. In the end, they manage to use 90% ABS plastic from post-consumer electronic waste to make the baseplate.

From an environmental point of view, this compact machine needs lees packaging and causes less emissions for transport it. SENSEO® Up is just the first product created for the initiative that aim to use 3.500 tons of recycled plastics for their products.[10]

Looking ahead

Van Houten believes that the circular economy cannot express its maximum potential until more firms won’t adopt it worldwide. Besides the CEO has affirmed that an important role should be played by governments in theirs establishing some percentages of products that must be made through circular systems.

“We hope that by setting the right example, we can help encourage the right behavior. This is just the beginning.”[11]

3.    BASF SE

In the chemical sector, BASF is a leading company that adopted the circular principles. Despite above all it is a chemical company, BASF is actively involved in making its productive sites more environment friendly and they promote the efficient uses of the resources. Besides through a continuous research, the firm has succeeded in developing products for almost every industry, which it makes even more important its stick to the circular economy.[12]

History

Friedrich Engelhorn, jewellery and entrepreneur, founds the joint-stock corporation “Badische Anilin – & Sodafabrik” (BASF) in Mannheim in 1865.

Around ten years later, the scientists of BASF discover the principal ingredient for the synthetic production of indigo, so in 1914 the firm begins to commercialize the so-called “Indigo Pure BASF”. The greatest market was in China where BASF already has a center from 1885. The introduction of this color will become historical during the ’60s with the launch of the jeans.

From the beginnings of ‘900, Carl Bosh discovers how to turn the atmospheric nitrogen into synthetic ammonia, used to produce based nitrogen fertilizers, that was exhausting itself in that period. In the ’30s, the BASF magnetic tapes are produced and are used, in 1969, for the recording of the unpublished work “Get Back Sessions” by the Beatles. Nevertheless, these activities will be ceded after few years to a Korean South firm. In the mid-50s, a new great innovation is introduced, the Styropor, a light insulating foam composed by 98% from air. From the 60s, the group intensifies its own commitments in environmental themes, so much that in 1974 a new plant of waste water management is planned. In 2013, BASF researchers develop the first FWCTM four-way conversion catalyst that allows to remove the principal harmful gases from the engine. Lately, Basf is focusing its attention on water solution, on batteries for the mobility and on wind power.[13]

3.1 Mission

“We create chemistry for a sustainable future.”

BASF is the world’s leading chemical company and for this reason wants to contribute to the sustainability of the planet. Their commitment in using the resources responsibly because of their three value pillars:

  • Responsible production
  • Being a reliable partner
  • Try to find the best solution for market needs[14]

In 2017, BASF has confirmed his commitment in the environmental issue announcing the membership to the CE100 program by the Ellen MacArthur Foundation, remembering however that the substantial efforts are about the behaviors and the technologies use and that the process must concern the whole supply chain. This collaboration has been made for discovering together new possibilities that the circular economy can offer.

Besides BASF has become the pioneer of the “New Plastic Economy” initiative by the same foundation, through which it is revolutionizing the world of plastics design, beginning from the packaging. This because the company has a broad plastic portfolio and enjoys some help of experts in plastics that have also developed experiences with biodegradable material and bio-based plastics, as ecovio®.[15]

Moreover, the products development is gotten through efficient processes that allow to get higher product yield in their plants. The aims are therefore to reduce the emissions and the wastes. The firm also get involved in helping his own clients to improve their own processes and to avoid any by-product.

Close

BASF operates more than 60 wastewater treatment plants worldwide

Within 2020, the company wants to reduce by 70% its own emission of polluted air, in fact they have established some standards to reach this objective.

3.2 BASF’ Circularity[16]

Their commitment for the environmental theme is also reflected in the data furnished by the annual report in fact the issues of carbon monoxide, total sulfur oxide and dust, together to other materials, are decreased.

In fact, the total amount of emission went from 28.585 metric tons in 2015, to 26.735 in 2016.

As for the waste management, the total amount of waste generation has increased, however, with it, also the waste recovered has increased.

However, this is just a little step, considering that, in 2015, the BASF Verbund avoided 3.5 million tons of CO2 emission and it saved 1 billion in costs.

In conclusion, BASF has implemented several solutions that regards circular economy, which can bring new opportunities and new solutions.

In this sector the potentialities are huge, in fact products that includes chemistry could be found in the automotive sector, in the urban development sector and in the manufacturing sector.

According to Dr. Martin Stuchtey, founder of SYSTEMIQ Ltd, “the chemical industry may well be approaching a “golden age” if it finds the courage to forge new paths – because we need innovations from chemistry in order to achieve a circular economy.”[17]

4.    SunPower

SunPower plans, produces and furnishes the more powerful and diffused solar technology available in the world. Private, firms, government and provider of public services can use the whole experience of SunPower and its documented results to maximize the return of their own investments. At the moment, it is the only solar firm to have gotten the Cradle to Cradle CertifiedTM, that certifies their commitments in the whole solar production chain.[18]

History

In 1985, Dr. Swanson, electrical engineering, constituted the SunPower thanks to the funds in research support for the photovoltaic and to two venture capital societies. In nineties, they began the innovative applications, starting from the fueling of a race car and airplanes. In the new millennium, the firm became public on the NASDAQ list, and consolidate the firm’ position in the solar panels thanks to the nomination of a new CEO, Tom Werner. In 2007, SunPower acquires PowerLight vertically integrating itself for the residential and commercial sector.
From 2010 onwards, to become the leader of the sector, SunPower tighted a partnership with Total SA and acquired the French society Tenesol SA and the Greenbotics, to offer services of robotics cleaning the large photovoltaic plants.  In 2014, SunPower gets the Cradle to Cradle certification. It is the first and only firm of the solar panels sector to have gotten such recognition.
Finally in 2015, First Solar and SunPower announce the proposition for a public offering of a YieldCo.[19]

4.1 Mission

“Our company exists to help change the way our world is powered and leave the planet better off for future generations. That’s our purpose. It’s why we’re here.”

SunPower in putting so much efforts in being a responsible producer, in fact, to be sure that their products came back to be recycled or reused, they extended the insurance cover up to 25 years and it is proved that their products would work for 15 years more that the insurance period.

Besides the commitment in the photovoltaic sector, the company undertake the responsibility to limit at the most the refusals in dump, not allowing the sending in landfills of the scrap materials.[20]

“SunPower takes a holistic approach to sustainability, ensuring that our Direct Current solar panels not only provide sustainable energy, but are manufactured in a very sustainable way. We’re extremely proud of this certification and look forward to extending it across our facilities.” [21]

– Marty Neese, COO, SunPower

In this sense, the company has obtained the landfill-free certification through which it is assured than less of 1% of waste are dispose in dumps in their plants located in Mexico and in France. In practice, Sunpower uses completely a circular approach that has brought her to get great revenue more and more, increasing by 62% in 2016, in comparison to the previous year.

Besides the number of their employees has increased to 593 people and, according to the 2016 National Solar Jobs Census, the jobs in this sector are grown by 20% for the fourth consecutive year and the numbers don’t seems to decrease.[22]

4.2 The approach

SunPower has a completely circular approach, whose first footstep is the inspiration.

In this first phase, training courses are implemented on the circular economy so that the employees know what these practices are and how they work.

The second step concerns the products, that have received the Cradle to CradleTM certification, that assures that the firm’ products can be recycled to the endless and reuse to create something new. Besides the elimination of the concept of refusal is assured, toxic and not, selecting sure material both for the nature and for the man.

Finally, the costs reduction is also assured, because reducing the input of virgin materials in the recycling processes, they lower the general costs of the materials and produced products.

Sunpower has also received different certificates as it regards their own materials, always according to a recycling and of “Zero Waste to Landfill” point of view.

Then we can pass to the process, that counts four characteristics:

  • Reliability: the life of the products results lengthened by 25 to 40
  • Quality: the products are made simpler to be able to recycle them, but also more strong and less expensive to maintain
  • Reuse / Recycle: they use only material that are good to be reused as aluminum, silicon, copper and glass, that represent over the 97% of BOM.
  • Triple certification: that are about the Zero to landfill, the echo-friendly factories and the maximum use of PV.

In the end, it needs to repeat the processes, closing the cycle and extend the supply chain.

5. Renault

The automotive industry is the major consumer for what concerns the raw materials, whose reserves will run out in the 2030.

This dependence is its great obstacle that introduce some great challenges as it regards the supplying, and it is also the element that increase more the costs of the enterprises. For this reason, Renault is actively engaged for finding some alternative solutions for these materials and for their sourcing, using recycled resources and investing in recycling technologies. Inside the company a closed loop has been created for integrating in the processes the recycled parts and, besides, a service of reparation that uses second-hand materials has been launched.

Renault is involved in this process since 1949, remanufacturing mechanical parts. This business had a turnover in excess of €200 million, in 2014.
For this company, the car are design to last and to be repair, for that the industry is going autonomously towards the circular economy.[23]

History

The Renault Brothers, Louis, Marcel and Fernand, officially found the Renault in 1899. Shortly after, the firm begins to produce their own engine succeeding in furnishing 1500 cars to a society of transport Parisian two years later. Nine years after its foundation, the Renault becomes the first cars builder of its Country. During the Post-World War I, it is decided to widen the range of produced cars and the company began to also produce agricultural vehicles and industrial machineries.

During the Second World War, the Billancourt factory is destroyed by the British bombing and it will be reconstructed in the 1944.

The company is requisitioned to the brothers because condemned for collaboration, having provided vans to the Nazis, and it is nationalized by the Charles de Gaulle’ government. In a second moment the Renault is entrusted to the engineer Pierre Lefaucheux, with whom the company reaches varied successes.

During the nineties, the firm is privatized and signs a partnership with Nissan, moreover they became the major shareholder of Dacia company. In 2000, the Renault Samsung Motors is created, having acquired the 70.1% of Samsung Motors’ shares, and started to sell vehicles in South Korea. Finally, Renault acquired 25% of share of AVTOVAZ in 2008, the Russian principal carmaker with the Lada brand and, in the 2013, they sign a joint venture accord with the Chinese company Dongfeng, to enter the Chinese market.

Mission

“Drive circular innovation within products and services to reinvent the future of mobility”

The Renault’ mission is very clear, for this reason the group has already introduced the circular economy principles inside their product’ life cycle. These principles, for their part, are based on the natural processes which don’t produce waste.
The company has four fundamental assumptions:

  • https://group.renault.com/wp-content/uploads/2017/05/renault_circular_economy_vehicles_life_cycle_1.jpgTo conceive ecological vehicles: In fact, the group is one of the greatest company to use second-hand materials, that derived from recycled products. Besides they are busy in creating repairable vehicles that are easy to dismantle and that contain useful materials for the reuse.
  • https://group.renault.com/wp-content/uploads/2017/05/renault_circular_economy_vehicles_life_cycle_3.pnghttps://group.renault.com/wp-content/uploads/2017/05/renault_circular_economy_vehicles_life_cycle_2.pngThe vehicle’ second life: through the subsidiary Renault Environnement, created in 2008, the company tries to maintain the control on the scrap materials. Moreover, it checks and it coordinates the several circular economy activities.
  • A “second hand” service: Renault has launched a service that offers the vehicles reparation with parts that are reconditioned and remanufactured. These parts are obtained from their ELVs (End-of-life vehicles) or from sales network. This way, the clients have a more affordable possibility to repair their cars and Renault can use a more echo-friendly approach.
  • https://group.renault.com/wp-content/uploads/2017/05/renault_circular_economy_vehicles_life_cycle_4.pngClosing the loop: Renault is trying to create a “short cycle” that is in conformity with the specifications of the automotive industry. An example is the wire gotten by the vehicles disassemble by the subsidiary Gaia.[24]

The advantages[25]

The remanufactured parts have the same value of the new parts, being guaranteed and having been tested as the new ones, nevertheless they are less expensive by the 30-50% of the price. For the cars industry, this is one of the few methods for succeed in reusing the components that otherwise would be thrown away.

Besides these activities ask for skilled workforce, which means the creation of new jobs.

Moreover, according to the data of the Choisy-le-Roi factory, updated to 2012, in this way it is possible to save:

  • 80% less energy
  • 88% less water
  • 92% less chemical products
  • 70% less waster production

Results

In 2016, to produce the Group Renault’ vehicles have been used:

  • 3.3 million of tons of steel
  • 390.000 tons of cast iron
  • 360.000 tons of aluminum
  • 590.000 tons of plastic materials

Of these data, results that the 15% of flat steel and the 100% of steels bars is drawn by recycled materials.
As it regards the aluminum, the recycled parts are of 100% for aluminum foundries, 40% for hot-pressed aluminum internally produced but it results 0% for that used for the wheels. While the recycled plastics results to be on an average of 19kg for vehicle.

All these activities have permitted to decrease the risk in the price volatility for raw materials and have also permitted to increase their revenues and gross margins.

Looking ahead

Mechanical parts are generally made with the view to be repaired, but it is possible to go further in research to improve materials and parts. Studies are being undertaken with the engineering sector to find the future of mechanical parts to improve the design, with a view to make disassembly easier and to increase the recyclability of materials. Other studies are delving into a revision of acceptance criteria and the interchangeability of components. It is still too early to evaluate the benefits / profits of these different initiatives, but the research is heading in the right direction showing it as a very promising market. For the automotive remanufacturing market alone, the figures will reach 104.8 million dollars by 2015.

According to the CLEPA (European Association of Automotive Suppliers), the remanufacturing market in Europe is estimated at between 8 and 10 billions Euros.

6. DHL

Deutsche Post DHL Group he is assembling on to furnish a reverse logistics and to succeed so to complete the transition toward the circular economy.

In fact, the group has already implemented a strategy for the protection of the environment, the GoGreen program.[26]

History
DHL was founded in 1969 by Adrian Dalsey, Larry Hillblom and Robert Lynn. The three had the idea to send the documents in a faster way by airplane. In the 70s, the shipping company expanded their own business operating in the East Coast of the United States and in the Pacific, arriving in Europe in 1974. Few years later, the fax introduction let the firm in a crisis that, however, succeeded in recovering itself launching a service of delivery of goods in 1980. The Deutsche Post, in its diversification plan of the activities, started to purchase DHL shares coming to take its control in 2001 and the complete ownership in the 2002.

In 2005 Exel was acquired so that to strengthen the logistic division making the DHL the world leader in the logistics sector. At present, DHL has four divisions in which it excels:

  • DHL Express
  • DHL Freight
  • DHL Global Forwarding
  • DHL Supply Chain [27]

6.1 Mission

“Excellence. Simply Delivered.”

DHL wants to connect the people and being the first logistic company to which the people turn to, without however injuring the environment. In this sense, it is set to the heart of the global trade that drives the economic growth.
Nevertheless being a transports firm is inevitable, with today’s technologies, that the company does not pollute, for this reason, the GoGreen program has been implemented that considers the transports optimization and the reduction of the CO2 emissions. One of the services provided to empower their own clients is the DHL GoGreen Climate Neutral that allows to calculate and to compensate the carbonic anhydride emission produced by their transports through projects of climate protection that are recognized and certified. The extracted data are used for individualizing areas in which improvements are required and to optimize the commercial routes.[28]

6.2 The DHL’ Circularity

In 2015, DHL has joined the Ellen MacArthur Foundation so that to find some circular solutions for the proper business, and it is so that in 2016 you/they have developed a new model of logistics: the Reverse Logistics Maturity Model.[29]

The RLMM

The model started defining three demand-driven archetypes based on the type of production. Once individualized their own archetype, different sets of successful criteria are delineated.
The first archetype concerns the lows value extended producer responsibility in whose category are included the mass products that have a low value at the end of the life cycle. In this case, it would be necessary to create a solution in which the products are picked up in a centralized collection scheme and managed through a supplier of recovery services.In this case, the key factors are the consolidating return products for a cost-effective collection from large geographical areas, so that to create a reverse logistic network. Moreover, capabilities to recuperate different brands’ products are required to incentivize returns.

In the second archetype, the products included are those that have a great residual value, but have a moderate expected return rates. In this case the return of used parts must be combined with the supply of a refurbished part and with the optimization of the transports flows. Then the parts that have to be replaced are retired from a service partner and refurbished in the center.
The key success factor in this case is the combination of the pick-up of the parts and the delivery and installation of the new service parts.

The last archetype includes the high residual value products that are comparably complex. In this case, the reverse logistic has to preserve and maximize the product return value, adding the replacing of the asset with a new or remanufactured product.

In this case, the recovery responsible are different for each collection scheme and for this reason is easier to have a direct return. It is necessary to enable fast redeployment through inventory control and to partner with logistic provider so that it is possible to integrate deliveries.

“The Reverse Logistics Maturity Model is a valuable tool for any organization that is committed to embedding the circular economy more integrally into their supply chain. It also highlights the opportunities that exist for logistics companies to adapt and expand their services and approaches to support the circular economy, which in turn creates additional value both for business and the environment.”[30] Christof Ehrhart, Head of Corporate Communications & Responsibility, Deutsche Post DHL Group

6.3 Results

As for the financial year 2016, the group has increased the EBIT of 3.5 billion of euro, to whose increase have participated the whole divisions.
In this company, the principal benefits of the postal service use as a collection scheme include a lower cost for the improvement of the collection rates and the use of waste in a vast geographical zone. Moreover, this commitment improves the image’ group because consumers find more appealing the use of logistic service for the collection of recoverable products that otherwise would end in dump, in comparison to the traditional points of collection. In fact, the brand moves up three places on the Interbrand list of Best Global Brands.

7. SKANSKA

Skanska is one of the greatest builders of the world and it is also a leading company in project development.

History

Skanska Cementgjuteriet is founded by Rudolf Fredrik Berg in 1887 in the South of the Sweden. Ten years later, it signs out the first contract above the nationa borders for concrete hollow blocks for telephone cables in the UK. It gets a project overseas in 1956 and since then it started to expand its business in many developing countries where they buildt power plants,  water plants, infrastructures, schools and hospitals. In 1964, it overcomes the million of Swedish crowns. It is the first time. This way, the year after, the company is registered on the A list of the Stockholm Stock Exchange

In that years, they had started the million program with which they build 10.000 houses per year. It is in the seventies that they get the first project in the united states. Instead, at the end of the nineties, the company expands, acquiring construction companies in Finland, UK, Norway, Poland, Czech Republic and Argentina. In 1997, because of an environmental accident in Hallandsas, the company begins to adapt their own operations at the environmental demands, so in 2000 Skanska succeeds in being the first global constructions company to be certified with ISO14000. In 2015, Skanska rewrites its own values and started a new business plan “New profit with purpose” with which is intended to create value for their shareholders while contributing to create a sustainable future.

7.1 Mission

“To build for a better society”

Skanska has begun to implement the circular economy at the beginning of 2007, because they understood that there are not enough resources if we don’t start thinking and working in to circular manner, besides they have verified that the implementation of this model can bring some benefits as cost savings and less negative environmental impact within many areas like climate resources or hazardous materials.

For them the component that adds value to the circular economy are the partnerships through the value chain, that introduces however some difficulties of implementation because for each part of the value chain it is necessary to create an understanding of what could be done and what responsibility it has. Nevertheless, as many other areas within sustainability it is not moving fast enough and not getting enough attention in procurement processes the of the government’s actions are far too weak, but they believe however that circular economy is the logical continue on minimizing waste and increasing resource efficiency so we will see more and more of it among all firms.

One of the projects for which Skanska has applied their knowledges about the circular economy is a hospital construction in Stockholm, whose value was of 1.9 billion of dollars. The building was projected to be entirely recycled at the end of its life.

Skanska also believe that the key of their success for the implementation of circular systems are their suppliers, that must develop green products but at the same time adapt them to the necessities of the sector. [31]

Another example of green project carried out by Skanska in collaboration with PRUPIM is that of Hollywood House, a 1980s building, that resulted by now inefficient in terms of use of the energy and had high costs of maintenance. For this reason, they have been made some “green” interventions, among which:

  • Connection to district heating and power;
  • A solar photovoltaic array to generate renewable energy on site;
  • Water efficient plumbing fixtures and fittings;
  • Rainwater collection;
  • Energy monitoring and control systems;
  • Cycle storage, showering facilities and electric car charging.

This extensive retrofit resulted in an improvment of performances. In fact, it is esteems that Hollywood House will use 56% less energy than before and 55% less water than standard, so that the costs of these interventions will be recovered in 13 years through energy savings alone.

7.2 Skanska classification[32]

Skanska is not focus on the environmental sustainability alone but also in the safety, in the ethics and in the inclusion. Nevertheless, as it regards the environmental commitment, Skanska has decided to define some standards and some targets. As for the latter, Skanska is engaged in developing only deep green projects within 2020 in Europe, while other two unity will try to increase the green projects up to 80% of their activities portfolio.

But how the projects are categorized?

To Skanska the projects are distinguished on the basis of three colors, vanilla for the projects that are regular according the law for processes and products. Green, the processes and the performances of the products are over compliance, but not to the point to be able to be considered at impact zero. Deep Green, for that products that practically have an environmental impact equal to zero. To be defined such, nevertheless, the products must satisfy at least three some followings requisite

  • near zero carbon in construction
  • zero waste
  • zero hazardous materials
  • zero unsustainable materials
  • net zero water
  • net zero primary energy

7.3 The Results

Moreover, for its commitment in the environmental issues, they were recognized as a climate leader by “Climate A List”, so that now Skanska result among the 193 companies in the world which take climate action. In fact, Skanska reduced their emission from 2011 to 2016.

8. Floow2

FLOOW2 is the business-to-business sharing marketplace on which companies can share their own equipment, services and ability. It is an unique platform created in 2012 by Will Robben, who noticed that the clients of heavy equipment firms continually bought new tools despite that same tools were unused from other customers. Therefore, the platform save costs, it increases the economic sustainability and it brings to new profits. Besides, in this way, the impact on the environment is drastically reduced. FLOOW2 is the first mover on this B2B.[33]

FLOOW2 founds him on a model of collaborative consumption in the B2B sector. Despite different business models based on this type of collaboration already exists, this company distinguishes itself because they focus on the sharing of the activities among companies and started in the heavy equipment market and agricultural equipment. However now they exploit also the healthcare sector, detecting six other markets in which the platform can trade overcapacity.

Slogan

“Floow2 connects. Everyone collects.”

Floow2 describes itself as “an online intermediary service that lowers cost while it increases sustainability”, this because they set themselves to use the resources in an efficient way so that to improve the financial solidity of firms that use it. Using the services proposed by FLOOW2 will decrease the management costs and, contrarily will increase the profits. In this way, the flexibility of the business is optimized and using what we already have there will be a more sustainable economy because we need to produce less new because less is bought new, so fewer raw materials will be used and less carbon dioxide emitted.

8.1 How does it work this circularity?

The platform works in rather simple way, in fact all it takes is creating a personal account and then to seek the equipment of which need is had and to see if it is available. when a match is found, the bargain is made. as it regards the efficiency of the service, it mainly founds him on the feedbacks and the reviews left on the same base.[34]

“by shifting from a scarcity perspective to one of utilizing the abundance of goods already on the market through highlighting spare capacity, companies can make better use of what they already have. That can potentially lead to a reduction in the overproduction of goods by reducing demand. ”

Will Robben, Founder, FLOOW2

This firm has passed to a horizontal business model that strengthens the position of smaller actors thanks to their collaborations rather than to the relationships established with larger suppliers.

Besides FLOOW2 has the potentiality to drastically reduce the entry barriers, because now the start-ups can start their own business without having to invest in the equipment that they’ll use, lowering in a great way the cost and the risk to doing business.[35]

The founder admitted that the reaction to the idea has been very positive. In fact, they receive a lot of press attention and a good number of Construction and Agricultural companies decided to join their platform.[36] About the circular economy itself, they think that the circular economy is here to stay. Every company needs to change its current business model and business culture to a more circular one, in order to be future proof.

They also think that the most important component of a circular economy is the mind-shift from people, from linear to circular: Open to change, an open business culture, open to collaboration, open for connection, don’t just talk but act… It’s not just the technology that will change our system, the people are more important. However, this results to be also the main obstacle to implement the business model. Another great obstacle is that the circular economy is not fostered as it should, in fact they think that large companies, government agencies, and so on could have a bigger role in that by really practicing what they preach, instead of keep talking about the change.


[1] https://www.theguardian.com/sustainable-connections/2016/may/31/circular-economy-prosperity-footprint-reuse-recycle-waste

[2] http://www.just-style.com/news/patagonia-launching-circular-economy-digital-platform_id129797.aspx

[3] http://fortune.com/2015/09/14/rose-marcario-patagonia/

[4] http://www.repubblica.it/economia/affari-e-finanza/2016/04/25/news/patagonia_la_missione_del_rattoppo-138476582/

[5] http://www.patagoniaworks.com/press/2017/1/17/patagonia-wins-circular-economy-multinational-award-at-world-economic-forum-annual-meeting-in-davos

[6] https://www.businessoffashion.com/articles/news-analysis/how-patagonia-transformed-the-circular-economy

[7] https://www.ellenmacarthurfoundation.org/about/partners/global/philips

[8] http://www.philips.com/a-w/research/vision-and-mission.html

[9] http://www.philips.com/a-w/innovationmatters/blog/are-we-on-the-cusp-of-a-new-economic-revolution.html

[10] http://www.philips.com/a-w/about/sustainability/sustainable-planet/circular-economy/senseo-up.html

[11] http://www.mckinsey.com/business-functions/sustainability-and-resource-productivity/our-insights/toward-a-circular-economy-philips-ceo-frans-van-houten

[12] https://successstory.com/companies/basf

[13] https://www.basf.com/it/it/we-create-chemistry/creating-chemistry-magazine/special-150-years/milestones-in-BASFs-history.html

[14] https://www.basf.com/de/en/company/sustainability/management-and-instruments/quantifying-sustainability/we-create-value.html

[15] http://www.coatingsworld.com/issues/2017-06-01/view_breaking-news/basf-joins-ellen-macarthur-foundation-initiatives-for-circular-economy/35543

[16] http://bericht.basf.com/2014/en/managements-report/responsibility-along-the-value-chain/environment/air-and-soil.html?cat=v

[17] https://www.basf.com/en/company/sustainability/whats-new/sustainability-news/2016/talk-sustainability-mr-stuchtey.html

[18] https://www.ellenmacarthurfoundation.org/ce100/directory/sunpower

[19] https://us.sunpower.com/company/history/

[20] https://www.sunpowercorp.it/azienda/responsabilit%C3%A0-di-impresa/

[21] http://www.sustainablebrands.com/news_and_views/collaboration/sustainable_brands/walmart_sunpower_tarkett_join_circular_economy_100_u

[22] https://us.sunpower.com/blog/2017/03/29/sunpower-releases-latest-sustainability-report/

[23] https://www.ellenmacarthurfoundation.org/ce100/directory/renault-france

[24] https://group.renault.com/en/news/blog-renault/renault-actively-developing-circular-economy-throughout-vehicles-life-cycle/

[25] https://www.ellenmacarthurfoundation.org/circular-economy/interactive-diagram/the-circular-economy-applied-to-the-automotive-industry

[26] https://www.ellenmacarthurfoundation.org/ce100/directory/dhl

[27]http://www.bigbusinessstories.com/2011/01/history-of-dhl.html

[28] http://www.dhl.it/it/informazioni_su_dhl/soluzioni_verdi.html

[29] http://www.dhl.com/en/press/releases/releases_2015/group/deutsche_post_dhl_develops_logistics_models_for_circular_economy.html

[30] http://www.dpdhl.com/en/media_relations/press_releases/2016/logistics_model_supports_advancement_of_circular_economy.html

[32] http://group.skanska.com/sustainability/green/how-we-define-green/

[33] http://www.floow2.com/news-detail-it/~/items/floow2-achieves-b-corporation-certification-3464.html

[34] http://www.floow2.com/news-detail/~/items/floow2-turns-businesses-into-sharing-economy-participants-119.html

[35] http://www.floow2.com/news-detail/~/items/case-study-floow2-ellen-macarthur-foundation-126.html

[36] http://www.collaborativeconsumption.com/2012/10/23/10_questions_for_will_robben_founder_of_floow2/

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