Circular economy business models unlock strategic advantage

24 February 2021 2 min. read
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Companies that invest in circular economy business models reap the benefits from their investments. New research by Kearney shows that circular leaders tend to significantly outperform their traditional rivals.

The survey of 150 companies from across the globe delved into the benefits and disadvantages of circular economy models, finding that 34% of the organisations surveyed can be defined as ‘leaders’ in the landscape. These frontrunners perform better than the laggards across a range of metrics, including enjoying a 32% increase in revenue generated and a 38% increase in cost savings. 

The results are according to the researchers notable, given the magnitude of the positive impact measured – demonstrating the growing impact circular economy principles are making in the business landscape. Once perceived as a cost for companies, embracing sustainability nowadays also can boost the top-line. Moreover, companies with a clear circular branding also benefit from improvements in brand recognition and customer loyalty.

Circular economy business models unlock strategic advantage

Commenting on the results, Kearney partner Yelena Ageyeva-Furman said: “The circular economy is the next step in the world’s necessary move to a sustainable future. The report reveals that the benefits of adopting circular strategy are not singularly environmental. In fact, those implementing circular initiatives are reaping both monetary and reputational advantages.”

On average, the companies surveyed by Kearney are still using an unsustainably high share of non-renewable sources in their production processes. However, the future is bright – nearly half of companies have earmarked circular economy as a key priority on their sustainability agenda.

The report comes at a critical moment when the world is facing a rising resource scarcity and waste problem. Currently, over 100 billion tonnes of materials are processed every year and over 91% of these materials are newly extracted from the ground. A circular economy is key to reversing this trend by eliminating waste and emissions.