More than ever, a company’s ability to solve complex social and environmental problems is being assessed by its stakeholders. With that idea in mind, TerraCycle, an American recycling company that helps companies transform their hard-to-recycle materials has brought together under the Loop initiative different competing companies including Procter & Gamble, Nestlé, PepsiCo, Unilever, Mars, Clorox, Coca-Cola, Mondelez, Danone and many smaller brands. Additionally, companies from the consumer product value chain have also joined the initiative such as Carrefour a food retailer, UPS a logistics company and Suez a resource management company. Together, their goal is to start by making over 300 products available in reusable containers, many created especially for Loop, in order to eliminate single-use plastics which are one of the main sources of the plastic pollution problem.
Although it is too early to tell for Loop, firms engaged in partnerships have reported a strong sense of success for their efforts and overall improved sustainability performance. For example, Danish brewer Carlsberg, reports making progress on its 2030 ambitions of zero carbon footprint, zero water waste, zero irresponsible drinking, and zero accident culture thanks to partnering, which is central to the company’s sustainability strategy “Together towards Zero”. For example, Carlsberg has set a target to have 30 partnerships to reduce shared carbon footprint by 2022. These partnerships include partnering with energy supplier Ørsted to use biogas at Carlsberg’s brewery in Falkenberg, Sweden, or installing new coating machines in Malaysia with the help of specialty chemicals company Arkema, to make beer bottles last longer, increasing the number of times they can be used before recycling.
As the Loop and Carlsberg examples show, designing for circularity is almost by definition a value chain partnering approach that involves multiple players. However, before jumping into a partnership, companies need to gain a good understanding of their potential circular value propositions. To do this, companies can start brainstorming ideas by identifying their biggest hotspots across the value chain: the environmental and/or social impacts associated with all stages of a product's life cycle.
Next, companies can analyze their hotspots through the lens of the waste hierarchy. The waste hierarchy is a tool that presents waste management solutions in the form of a pyramid from most favorable to least favorable based on sustainability. By looking at the five Rs of the waste hierarchy: reduce, reuse, recycle, rethink and replace, companies can design multiple alternative value propositions to address the most important hotspots in their value chain.
Finally, the impact and target from the waste hierarchy come in: to help select the right jobs, gain creators and pain relievers and to create propositions that are forwarding sustainability. Once the impact and its associated target have been set, companies can rank and prioritize their sustainability solutions. With multiple value propositions in mind, it becomes clear which partners to engage and to execute change.
Inspired by the two examples of circular partnerships but don’t know where to begin? If you want to boost your circular economy programs with business design thinking, start getting going with the Value Proposition Design for the Circular Economy attached in this article as a download. Please contact Jan van der Kaaij, Managing Partner, at firstname.lastname@example.org or call him at +31 6 28 02 18 80 for more information.