A new report from ING group says U.S. companies could unlock $4.5 trillion of additional economic output, in just 11 years, if they institute a circular economic model — one that reduces waste, relies less on raw materials, and increasingly uses recycled materials.
Anne van Riel, the head of ING’s Sustainable Finance Americas, says it’s all about reduce, reuse, and recycle. “Traditional business models are typically geared towards a ‘take, make, dispose’ mentality. A circular business model looks to retain value from products parts and materials,” she said.
The report, “Opportunity and Disruption: How Circular Thinking Could Change US Business Models,” surveyed 300 U.S. executives and found 62% plan to move their companies toward a circular economic framework and 16% already have. But the ING report finds that evolution is being done in a fragmented fashion. Most companies focus on the cost savings aspect of circular initiatives and van Riel says, “...by focusing on this benefit businesses will struggle to unlock the full value of the circular economy. Circular models have the potential to redefine businesses by creating new revenue growth opportunities.”
US companies that have circular initiatives
ING highlights companies that have had success with circular initiatives. Heineken successfully achieved zero waste at several of its breweries. According to the report, Heineken has been able to reuse plastic, glass, and metal and also eliminate organic waste from its manufacturing process. Heineken actually makes money selling its organic waste, spent grains and barley husks, to firms that process it into animal feed.
Another company cited in the report is Johnson Controls, the largest manufacturer and recycler of batteries in the world. According to Liz Tate, the company’s director of public policy and global sustainability, 80% of the lead acid batteries made by Johnson Controls are made from recycled lead and plastic. Tate is quoted in the ING report saying, “recapture is critical to circularity.” But the report finds 32% of the CEOs surveyed say recapture or difficulty recovering materials to be recycled is the largest barrier their companies face to implementing circular practices.
To help them move past that difficulty, ING along with Accenture and Circle Economy, a self-described “social enterprise” based in the Netherlands, have launched the Circular Supply Chain Accelerator or CiSCA. It will help companies fund their efforts to create environmentally sustainable business strategies. Van Riel says, “ING is looking to help either by either providing the financing ourselves” or by connecting companies to other venture capital funds.
Adam Shapiro is an anchor for Yahoo Finance. Follow him on Twitter @ajshaps.