Leaders on circular economy 'outperform rivals by 5%'

Will Green is news editor of Supply Management
23 February 2021

Firms implementing circular economy principles are outperforming rivals in terms of cost savings and revenues, according to research.

A survey by consultancy Kearney found circular “leaders” reported a 5% or more improvement in core KPIs as a result of switching to circular products and business models.

Kearney said the survey, involving 150 companies across the world, identified 34% who were leaders in the circular economy. In this group, 32% reported revenue increases, 38% reported cost savings benefits, 50% reported improvement in customer loyalty metrics and 70% an improvement in brand recognition.

Kearney cited figures that showed around 100bn tonnes of materials were processed each year and 91% of these were newly extracted from the ground.

“The circular economy is key to reversing this trend by eliminating waste and emissions,” said Kearney. “It works by closing open material cycles, so that the value of products, materials and resources is maintained in the economy for as long as possible and the generation of waste minimised.”

Kearney said leaders were differentiated by a strategic focus on circular activities, quantified targets, industry partnerships and contacts with investors and policymakers.

Yelena Ageyeva-Furman, partner at Kearney, said the benefits of a circular economy were “not singularly environmental”.

“Circular economy is the next step in the world’s necessary move to a sustainable future,” she said.

“Those implementing circular initiatives are reaping both monetary and reputational advantages. In the Fourth Industrial Age, it pays to be sustainable, and those who persist with the unsustainable take-make-waste economy will inevitably start to lag behind.”

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