Insights: Empowering the circular economy

The global shift towards sustainability has prompted businesses to focus on circular economy practices. The circular economy is expected to reach $1.49tn by 2030, with circular platforms comprising 58 per cent of it.

In recent years, the emergence of digital platforms has offered significant potential to power the circular economy, creating a closed-loop system where resources are used for as long as possible through recycling, refurbishment, and reuse. Currently, circular platforms comprise 24 per cent of the circular economy, valued at $408bn. This indicates tremendous growth potential for circular platforms in the coming decade.

It also means that businesses and organisations embracing the circular economy and leveraging circular platforms benefit significantly from this growth. This intersection of circular economy and platforms presents a new frontier for business models that aim to make sustainability profitable. It clearly indicates that the circular economy represent a significant economic opportunity for those who are vocal and active in driving sustainability.

At the 2023 MIT Platform Strategy Summit, I had the opportunity to be part of a panel on ‘Powering the Circular Economy with Platform Business Models’ where we discussed how platform organisations are supporting the concept of the circular economy and reducing waste by creating a closed-loop system where products and materials are continually cycled through the economy.

Digital platforms driving the circular economy

Digital platforms have become crucial players in driving the circular economy forward. They leverage lower transaction costs, network effects, and improved discovery engines, which can accelerate the adoption of circular practices.

Additionally, artificial intelligence (AI) capabilities can be integrated into these platforms to optimise resource allocation, match supply and demand efficiently, and enable predictive maintenance of products. AI technology offers valuable opportunities to enhance the circular economy potential of digital platforms.

To fully harness the potential of circularity on digital platforms, it is essential to have access to accurate and extensive data about material use. Aggregating and analysing such data can help identify opportunities for circularity and inform decision-making for platform businesses.

Organisations like the Ellen MacArthur Foundation have played a pivotal role in investing in data about material usage, facilitating informed choices for businesses aiming to embrace circular practices. This data-driven approach can drive the adoption of circular business models on platforms.

Key challenges

While the potential benefits of circular economy models on platforms are significant, various challenges must be addressed to ensure successful adoption. One key challenge is the limited availability of recycled materials, which hampers the ability of big brands to meet their sustainability commitments. Recycled materials are often scarce due to collectors and traders prioritising profit over maintaining the quality of these materials.

To mitigate this situation, digital marketplaces such as Rebound have emerged. It aims to bring quality assurance, transparency, trust, and regulatory compliance to the recycled plastics market, providing a reliable platform to navigate the complexities of the recycled materials industry.

Supporting and encouraging existing platforms to adopt circular practices is another critical step. Smaller companies, in particular, can flexibly align their practices with their values and prioritise sustainable choices.

Platforms and online marketplaces have the potential to disrupt traditional retail models by offering direct relationships between customers and platforms, enhancing customer experiences and enabling sustainable consumption patterns.

Encouraging localised platforms that promote repair services, like Goodwill, can further extend the lifespan of products and reduce waste.

Additionally, emerging platforms connecting consumers with local repair services can address barriers to repair, such as lack of knowledge and trust, presenting opportunities in fragmented repair markets.

Encouraging change

Governments and corporate entities play a vital role in driving sustainable practices and encouraging circular business models on platforms. Education and public awareness initiatives are crucial for promoting circular practices and fostering a broader understanding of sustainability issues. Platforms can act as catalysts for mindset change by driving sustainable practices within the private sector through collaboration and partnerships
with governments.

Making a larger-scale impact requires a strategic focus on sustainable circular platforms. While the prices of recycled materials may be higher than virgin materials, investing in recycled materials today can result in substantial cost savings in the future.

Governments and companies should actively invest in circular platform models to support the growth and sustainability of the circular economy, recognising the long-term benefits that circular practices can bring to society and the environment.

Digital platforms have opened up significant opportunities for powering the circular economy by making sustainable practices profitable. By leveraging the potential of circularity on platforms, businesses can improve resource efficiency, reduce waste, and foster sustainable consumption patterns. Overcoming challenges such as limited access to recycled materials and consumer barriers to repair services requires collaborative efforts between governments, companies, and platform providers.

Embracing circular economy models on platforms can drive innovation, economic opportunities, job creation, and environmental sustainability. The United Nations (UN) is actively addressing the concept of ‘green jobs’ that contribute to preserving or restoring environmental quality, supporting sustainable development and combatting climate change.

To design and empower platforms for these jobs, individuals must develop specific skill sets related to renewable energy, sustainable practices, and environmental conservation.

Through collaboration and innovation, we can accelerate upskilling and create a more sustainable future that integrates circular techniques into the fabric of our economy, benefitting both businesses and society.

The writer is the general manager at Rebound