Business Sustainability Economics

The Circular Economy Handbook: Realizing the Circular Advantage (Summary)

by Peter Lacy, Jessica Long, Wesley Spindler

What if you never had to buy a lightbulb again? Philips (now Signify) pioneered a 'light as a service' model for Amsterdam's Schiphol Airport. Instead of selling bulbs, they sell lumens—guaranteed light. Philips owns the hardware, so it's in their best interest to make it last as long as possible, be easy to repair, and be fully recyclable. This single shift in business model perfectly illustrates the circular economy: turning a disposable product into a durable, long-term service.

Waste is a Design Flaw, Not an Inevitability

The linear economy treats waste as the end of a product's life. The circular economy reframes it as a failure of imagination and design, viewing every used component as a valuable resource for another cycle.

The fashion company For Days offers a subscription for organic cotton t-shirts. When a shirt is worn out, you send it back, they recycle it into new yarn for new shirts, and you get a credit for a replacement. They have designed waste completely out of their system.

There Are Five Core Circular Business Models

The book outlines five key strategies for implementing circularity: Circular Supplies, Resource Recovery, Product Life Extension, Sharing Platforms, and Product as a Service. These provide a clear roadmap for any company.

Caterpillar's remanufacturing business is a perfect example of Product Life Extension. They take back used engines and components, rebuild them to factory specifications, and sell them for about 60% of the cost of a new part, while recovering 85% of the original energy and materials. This has become a multi-billion dollar business for them.

Digital Technology is the Great Enabler

Technologies like IoT, blockchain, and data analytics are crucial for tracking materials, optimizing reverse logistics, and connecting users in sharing platforms, making a complex circular system possible at scale.

The app Too Good To Go connects consumers with restaurants and stores that have surplus, unsold food. Instead of this food being thrown away, users can buy a 'Magic Bag' of surprise items at a steep discount. This digital platform turns potential food waste into a new revenue stream.

Mastering Reverse Logistics is Non-Negotiable

While making circular products is one challenge, getting them back from the consumer efficiently is a completely different and critical one. A successful circular model depends on a robust 'reverse supply chain.'

HP's 'Planet Partners' program provides free postage-paid recycling for their ink and toner cartridges in over 70 countries. The returned plastics are sorted, shredded, and used to create new cartridges, with over 80% of new ink cartridges containing recycled plastic. This complex global return system is the backbone of their circularity.

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