The system of production, use and disposal that has been dominant since the industrial revolution is making way for the circular economy, in which waste becomes raw material. It is imperative to extend the life of the products.

The aim is for companies to continue to grow, but in a sustainable way. And for this there are many ways to achieve this.

Big companies, with more clout, and also more controlled and demanded by their investors and by society, are leading the changes in this area, but they are not alone and not enough.

Small and medium-sized enterprises (SMEs) have an important role to play in this transformation, as they represent the largest group of organizations in Spain.

SMEs have the opportunity to join this production model for six reasons:

Belief: It is time for all social actors to act in favor of reducing the impact of people on the planet.

Reputation: both to society to show that it is committed to the environment, through corporate social responsibility, and to investors who demand profitability but also more sustainability.

Profitability: the savings resulting from the reduction and reuse of waste have a positive effect on the cost account.

Question: the rise in the cost of natural resources. The price of raw materials rises due to scarcity.

Economic opportunity: European Fund Next Generation EU allocates a very important item to sustainability and the circular economy is central to these tools.

Obligation: The new regulatory measures that promote corporate sustainability and penalize practices that do not respect the environment.

How the circular economy affects business reputation

Ferrán Curtó, deputy director of the ESADE Leadership Chair, confirms that it has been documented that companies adopting a circular economy model are gaining reputation: “It is beneficial for investors, for a possible acquisition by third parties, when they choose a public tender …”.

The improvement therefore goes beyond the relationship with the consumer. But he adds: “Cooperation between the administration and companies is necessary, society in general must take sides, otherwise the trends will not be reversed.”

An opportunity for all companies

While it appears that the changes are only affecting industry, the service sector needs to move towards a more sustainable model. And now is the time. Paula Sánchez, Executive Director and co-founder of the circular economy consultancy CoCircular, confirms that some SMEs in the sector do not yet know that they can join and that they have to start with small changes: “A commitment to digitization, recycling within the office and even encourages employees to share travel”, says this expert who participated in the webinar ‘AND the world to come: the circular economy of the future’, organized through HUB Company and BStartup of Banco Sabadell.

Vicente Serrador, founder of Mojuru Modular Buildings, emphasizes that major hotel and restaurant chains, as well as transportation companies, are increasingly introducing circular economy systems.

Stock closer

Reducing polluting emissions from freight transport is another aspect that every business must master. Currently, much of the production and delivery takes place in countries thousands of miles away, which involves long round trips.

The ability to deliver deliveries to closer regions is gaining in popularity. “By buying from local suppliers, you save on travel costs, materials and energy,” says Sánchez. However, there is always the possibility that costs will rise if companies are forced to buy from a supplier in close proximity rather than from a supplier that offers a more competitive price.

“Costs may be higher right now,” says Curtó. “But the fuel price is going up, so local trade makes even more sense.” And he adds another aspect: “It is necessary to guarantee supplies after the experience after the outbreak of the health crisis and to guarantee both food sovereignty and the supply of technological products.” According to Serrador, “Anything that can reduce the environmental footprint in the production of products has a positive impact on the circular economy system.”

A new way of consuming: enjoying a good without buying it

The West has a mature position in the field of sustainability. Citizens are increasingly involved in consuming or using resources wisely. For this reason, Curtó advocates that companies take advantage of this increased awareness as an opportunity to rethink their manufacturing and marketing models. “You can enjoy the value of a good without owning it,” he says.

There are deep-seated cases such as car-sharing, which ties into what was mentioned earlier about efficient ways to travel to the workplace. In this sense, Serrador adds: “If an employee does not have to go to the office every day because of his working conditions, he can share the transport with colleagues, use public transport to go to work or even because of working hours, minimize the movement, of course also influences . The sum of small changes adds up to a big one.”

There are other collaboration examples that aren’t quite as intuitive, but that Curtó calls plausible. A flat rate linked to mobile phones and other devices. Instead of owning the terminal, the customer uses it for a while and when it becomes obsolete, exchanges it for a newer one. Curtó emphasizes the advantages: “The company manages the resources. You can use the materials and re-manufacture, improve and put them into circulation.”

Instead of depositing the electrical or electronic device in a suitable container, the citizen ultimately takes it to the company where he bought it. Fashion is a very favorable sector for these changes. It’s transversal, everyone buys clothes. There are companies that repair or overhaul the clothes they sell. The costs are higher, but it also lasts longer and pollutes less.

Enlist the help of sustainability experts

Behind the changes that some companies are going through in their production model, there are profiles that are trained in the circular economy. In other cases, there are companies that employ employees who are committed to corporate social responsibility (CSR). “Investors, suppliers, consumers and regulators are putting pressure on companies to join forces on this issue,” said Curtó.

“There are innovation departments for improving resources and there are also those responsible for adopting the agile methodology,” adds the deputy director of the ESADE Leadership Chair, referring to a faster and more fluid way of doing work. organizing, that is, more efficiently .

Sánchez notes: “Coherence is essential as a company’s DNA and culture”. Changes in companies go hand in hand and in part, increasingly with sustainability in mind.

Employees are involved and must be beneficiaries. Curtó assures that it is not possible to move further towards sustainability if the working conditions of the workers are not taken into account. Sánchez encourages companies to promote good practices with regard to their employees and train them in the process towards the circular economy.

Report changes?

Ferrán Curtó, deputy director of the ESADE Leadership Chair, confirms that the explanation of the new actions is the end of the process. “You should not fall into opportunism or greenwashing,” he assures. “The company really needs to believe in it, activate internal incentives so that the employees are part of the turnaround and make changes in the governance model,” adds this expert. All with the aim of implementing the circular economy model in the organization.

Paula Sánchez, executive director and co-founder of the circular economy consultancy CoCircular, points out some specific actions to transfer the changes to customers or shareholders. “Through external communication channels, in the packaging of the products and in the facilities themselves,” he explains. “Ultimately, the best communication is the result of the actions performed,” concludes this expert.

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