In many cases, linearity is no longer a viable approach. Platforms have emerged as powerful and scalable solutions to address this challenge and leverage the economic and strategic advantages of the circular economy.
Published on 2024-04-04 by Nathalie Lamborghini Dumas.
#### In many cases, linearity is no longer a viable approach.
According to the Circular Gap Report, the global circularity rate is estimated at only 7.2%, meaning more than 90% of our global economy operates in an inefficient and/or waste-generating manner. This systemic inefficiency within our value chains leads to recurrent extraction of natural resources, in some cases non-regenerative, as well as continuous energy consumption for the production and distribution of new products, further feeding the waste stream and carbon production, while contributing to sub-optimal productivity.
Companies find themselves at a decisive turning point, facing a now obsolete "extract, manufacture, discard" model. This approach not only leads to resource waste but also neglects considerable economic perspectives. Companies are trapped in a repetitive cycle: they buy expensive materials, bear production costs and struggle to recover their initial investments.
However, these difficulties hide an important transformation opportunity. Platforms have emerged as powerful and scalable solutions to address this challenge and leverage the economic and strategic advantages of the circular economy. By promoting resource efficiency, extending product life and optimizing asset utilization, platform-based business models open a sustainable path to growth.
#### 1. Orchestrating circularity
Platforms function as digital ecosystems, connecting different stakeholders to foster collaboration and innovation in the circular economy. Imagine a marketplace bringing together manufacturers, consumers, repair services and recycling centers, facilitating interactions. This platform ensures:
Information exchange: manufacturers disseminate comprehensive product information, including material composition, maintenance instructions and recycling methods, enabling consumers to make informed choices. In return, consumers share their usage data, providing valuable insights to manufacturers and repair services.
Resource flows: the platform simplifies physical resource management throughout the product lifecycle.
Financial transactions: platforms integrate secure and transparent payment systems to facilitate various transactions in the circular economy.
Data collection and optimization: platforms collect abundant data on product usage, waste production and consumer preferences. Using data analytics, stakeholders derive insights that refine their circularity strategy.
#### 2. Addressing specific sustainability challenges
Platform-based business models are game changers.
2.1. Empowering consumers and producers: platforms play a central role by providing consumers with essential information about the environmental impact of products and suppliers. Good On You rates clothing brands based on their social and environmental impact. Yuka deciphers food and cosmetic product labels.
2.2. Extending product lifecycles: platforms such as Machineseeker in Germany connect companies with surplus equipment. Vinted offers a platform for consumers to sell and buy second-hand clothing. BackMarket is a global marketplace for refurbished electronic devices. FixFirst offers a B2B2C SaaS solution enabling companies to streamline repair and refurbishment workflows.
2.3. Optimizing product and service utility: the transition from selling products to offering services (clothing rental, tool libraries, etc.) promotes responsible use. EquipmentShare offers an "Equipment as a Service" model for the construction sector.
2.4. Improving efficiency and productivity: Flexe connects companies with flexible warehousing and logistics solutions. Docloop streamlines B2B document management and flows in logistics.
#### 3. Circular platforms driving business growth
The circular economy is not merely an environmental management issue: it is also a strategic approach for business growth. The World Economic Forum estimates that potential savings from material reuse alone could reach $1 trillion annually. The European Commission advocates for businesses to adopt circular models, projecting the creation of 700,000 jobs by 2030 in the EU alone.
In conclusion, through the ecosystem economy, companies can strengthen their resilience to various challenges, adapt to evolving market dynamics and ensure long-term success in a resource-constrained future. Platforms are essential to the circular economy, offering advantages that go well beyond environmental aspects. It's not just an environmental issue but a strategic imperative for businesses.
By Nathalie Lamborghini Dumas and Adam Mitchell-Heggs.