SDGs视野 | CIRCULAR BUSINESS MODEL AND BIODIVERSITY LOSS
作者｜Nelly
审核｜Richard Blair Sage
美工｜Richard
排版｜Yan
Abstract
One of the 2030 agenda for sustainable development targets is to take urgent and significant action to reduce the degradation of natural habitats and halt biodiversity loss. Although governments and other private entities have continuously made efforts to achieve this feat by 2030, there is still an enormous gap to achieve this target. Most businesses are known to have a continuous extractive relationship with nature because they never regenerate the natural resources they use production neither do they give back to nature positively in any way. Businesses, whether state-controlled or privately owned,do have a role to play in stemming biodiversity loss. This paper explores how businesses inculcate the circular economy features into their business model to transform their entire production and service delivery process from a linear to a non-linear process that is more biodiversity-friendly. The evidence given in this paper shows that circular business models play an important role in stemming biodiversity loss.
OUR BIODIVERSITY
Biodiversity includes a variety of living organisms on earth,including plants, bacteria, animals, and humans. Biodiversity brings together the different species and forms of life (animal, plant, entomological and other) and their variability. Since the industrial revolution, human activities have become a major threat to our biodiversity, while invasive species and disease remain a side threat. Human activities such as excessive tree cutting, overfishing, and irresponsible land use have increasingly destroyed and degraded many of the earth's species, forests, grasslands, wetlands, and other important ecosystems, putting the earth's magnificent biodiversity at risk. Biodiversity loss threatens the entire human well-being, food security, and other animal species. The duty of protecting and preserving our natural capital and improving our economic prosperity relies heavily on biodiversity. Hence, urgent action is needed to address the loss of the biodiversity that feeds the world.
Although it is hard to measure the world's current biodiversity in totality, the vast majority of indicators show net declines over recent decades. The analysis carried on Europe and Central Asia, Asia Pacific, Latin America & Caribbean, Africa, and North America, using species population as a measure, showed a significant loss in biodiversity was found in all regions, with encroachment on natural land identified as the most prominent threat to wildlife (the Living Planet Report 2020 (LPR)).
The graph below represents the number of population with the available threat data. Each of colours in the pie chart represents a particular threat category affecting the population as shown by the graph.
Dark purple (jam): land and sea usage
Red: climate change
Purple: pollution
Yellow: Invasive specie and diseases
Orange: specie over exploitation
An analysis of biodiversity loss in different regions
(Source: The Living Planet Report 2020 (LPR))
CIRCULAR ECONOMY
Bending the curve of biodiversity loss is technologically and economically possible, but it will require truly transformational change in the way we produce and consume food and sustainably manage and conserve nature (the Living Planet Report 2020 (LPR)). The planet's current state calls for a fast transition towards a circular economic model built on making the best use of the planet's resources and eliminating the concept of waste. A circular economy seeks to rebuild financial, manufactured, human, social, or natural capital to ensure an enhanced flow of goods and services. Across the globe, businesses, governments, and individuals utilize the circular economy's potential to transform our system into one that works for people and the environment.
There are numerous benefits of a circular economy, and they are classified based on the triple bottom line of sustainability (i.e.,economic, environmental, and social).
（(Source: Circular Business Models Identification by Paolo Rosa, Claudio Sassanelli, and Sergio Terzi)
Circular Business Models (CBMs)
While the circular economy is seen as the bigger picture, the circular business model (CBM) is considered smaller. Developing appropriate circular business models is considered a key enabler in implementing the goals of a circular economy. This economic model has a lot to offer to companies. According to Accenture (2015), the Circular Economy could generate $4.5 trillion of additional economic output by 2030.
The circular business model is helpful to understand how businesses form a value chain. No particular business is circular economy. Circular business models (CBMs) can be considered the interpretation of circular economy principles within the company's boundaries. The circular business model (CBM) is a new business model that demonstrates how we can fundamentally change the way we design, make and use the things we need.
Companies are like dots along the circle, forming a network between suppliers and customers called a value chain. This network can either be a straight line between natural resources and landfills (linear economy) or create a perpetual value cycle with zero waste (circular economy).
Linear economy business models are based on the following logic: take natural resources, make products for consumers that eventually become waste. Circular business models contribute to a circular economy by adhering to the circular economy's three fundamental principles.
Design out waste and pollution
Keep products and materials in use
Regenerate natural systems
Circular business models can take a broad perspective on a firm's value creation by internalizing a wide range of stakeholder interests, including society and the natural environment (Stubbs & Cocklin, 2008). Circular business models come in all shapes and sizes, depending on where they occur in the value chain. This diversity is what makes a circular economy dynamic and genuinely circular.
In a Circular business model, the value proposition, value creation, and delivery and value capture mechanisms are innovated to leverage the economic value retained in products after initial use to create new offerings (Linder & Williander, 2017).
There are different circular business model categories. They include:
Circular Supplies
The Circular business model supplies fully renewable, recyclable, or biodegradable resource inputs that underpin circular production and consumption systems. Through it, companies replace linear resource approaches and phase out the use of scarce resources while cutting waste and removinginefficiencies. This model is most powerful for companies dealing with scarce commodities or ones with a significantenvironmental footprint.
FUTURECRAFT.LOOP is Adidas' first running shoe that is "made to be remade." The high-performance running shoe was carefully designed with manufacturing and recycling partners so that "it can be returned to Adidas, broken down and reused to create new performance running shoes."
Protix invested €35 million in an industrial-scale production facility where it uses food waste to breed blackfly larvae, which it harvests to form high-value insect protein products.
Resource Recovery
Recovery of embedded value at the end of one product lifecycle to feed into another promotes return chains and transforms wasteinto value through innovative recycling and upcycling services. Having its bedrock in traditional recycling markets, this business model leverage new technologies and capabilities to recover almost any type of resource output at a level of value equivalent to, or even above, that of the initial investment. This model enables a company to eliminate material leakage and maximize the economic value of product return flows, is a good fit for companies that produce large volumes of by-products or where waste material from products can be reclaimed and reprocessed cost-effectively.
Re-Tek collects redundant IT equipment for medium to large organizations in the UK and Europe. They can remarket 80% of collected goods, enabling them to share revenue with the equipment's previous owners. This revenue allows them to harvest spare parts and work with recycling partners to address the 20% remaining obsolete goods. Through their business model, 99% of electronic systems they collect are diverted from landfills.
Product Life Extension
Product Life Extension allows companies to extend the lifecycle of products and assets. Values that would otherwise be lost through wasted materials are instead maintained or improved by repairing, upgrading, remanufacturing, or remarketing products. And additional revenue is generated thanks to extended usage. Using this model, a company can help ensure that products stay economically useful for as long as possible and that product upgrades are done in a more targeted way (for instance, an outdated component is replaced instead of the entire product). This model is appropriate for most capital-intensive B2B segments (such as industrial equipment) and B2C companies that serve markets where pre-owned products (or "re-commerce") are common or whose new releases of a product typically generate only partial additional performance benefits for customers over the previous version.
Guangzhou Huadu Worldwide Transmission is a Southern Chinese remanufacturing company that provides gearboxes and other automotive transmission systems. Guangzhou Huadu owns many repair and service centres that produce 35,000 remanufactured units each year. The main driver for success has been the development of an ecosystem that allows for the smooth collection and distribution of parts, and key partners include 21 auto companies and the large 4S automotive spare part franchise
Philips enables hospitals to upgrade their medical equipment (like MRIs and CT scanners) by trading in their old equipment to discount new systems. Philips refurbishes and upgrades older equipment and sells it again.
Sharing Platforms
The Sharing Platforms business model promotes a platform for collaboration among product users, either individuals or organizations. These facilitate the sharing of overcapacity or underutilization, increasing productivity and user value creation. This model, which helps maximize utilization, could benefit companies whose products and assets have a low utilization or ownership rate.
Mobike, a bike-sharing platform, was launched in April 2016, and within a year, its customers had cycled over 5.6bn kilometres. Starting in its hometown of Shanghai, the company has expanded into 160 cities, including Santiago, Chile, and Manchester, UK.
Circos is "a subscription model for baby clothing (and maternity wear) where members pay a monthly fee to access a range of high-quality clothing from different brands, delivered to their door." As babies outgrow clothing, it is returned, cleaned, and redistributed to another customer – eliminating waste and capitalizing on the clothing value, all while creating convenience for customers.
Product as a Service
The product as a Service business model provides an alternative to the traditional "buy and own model." Products are used byone or many customers through a lease or pay-for-use arrangement. This business model turns incentives for product durability and upgradability upside down, shifting them from volume to performance. With a Product as a Service business model, product longevity, reusability, and sharing are no longer seen as cannibalization risks but drivers of revenues and reduced costs. This model would be attractive to companies whose products' cost of operation share is high and have a skill advantage relative to their customers in managing the maintenance of products.
Cat Caterpillar's pay-for-use model bills customers on an hourly rate that includes the financing cost and any services chosen in a single monthly invoice.
These business models have their distinct characteristics and can be used singly or in combination to help companies achieve massive resource productivity gains and, in the process, enhance differentiation and customer value, reduce the cost to serve and own, generate new revenue, and reduce risk.
The impact of circular business models can extend far beyond just one company — collaborating with other firms to create circular loops can be mutually beneficial. For example, GEM, a Shenzhen-based battery recycling company, partners with Samsung and BYD by sharing recycling technology in exchange for easy access to discarded batteries. The recycled outputs, such as nickel and cobalt, are key to addressing supply bottlenecks that hinder the growth of the electric vehicle market.
Doing better for our planet and society is rarely the only reason businesses embrace circular business models. Here are six other reasons why businesses pursue the circular economy.
Save costs/boost profit margins.
Gain access to a new market.
Proactive compliance.
Attract talent.
Build a competitive advantage.
Build resiliency to market shocks from a predictable flow of used goods.
CONCLUSION:
To halt biodiversity loss, every hand, including government agencies, private entities, businesses, and individuals, must be on the deck because meeting the biodiversity target is no longer an option but a must. Individuals also need to change their beliefs and have more compassion for nature. Governments should make sure that industries that contribute to biodiversity loss pay the price by enforcing taxation, and industries that promote or practice circular business models should be encouraged by granting necessary subsidies.
REFERENCES
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