There’s an ongoing energy crisis. Energy bills have ballooned, even with government support and wholesale price caps. It’s a difficult period for businesses of any size—but there are things you can do to stay the course.
Although there might not seem to be any easy ways of reducing the amount of money you’re paying, sustainability and the circular economy could be the light at the end of the tunnel.
What is the circular economy?
The circular economy transforms the linear approach of taking, making and disposing into a cyclical model of make, use, return, recycle, reuse and make.
In other words, keeping materials, products and services in circulation for as long as possible by focusing on industrial processes and economic activities that are restorative or generative by design.
Although the circular economy is most associated with sustainability, there are impactful ways to make it pay off financially in the short and long term.
Think about eliminating waste and pollution by rethinking and redesigning how you make products, for example, powering systems with renewable energy in mind.
Market intelligence firm IDC says organizations that have made progress on environmental sustainability goals, including circular economy principles, are also making headway on broader business objectives, such as improving profitability and operational efficiency.
Keep your eye on your energy consumption
The circular economy is often associated with recycling and being more efficient with materials, but the same principles can apply to energy consumption. The simplest way to cut energy waste is to minimize unnecessary energy use.
Take the way Dakota Hotels uses technology, for example. It shows exactly how following circular economy principles can cut your energy consumption, with the Internet of Things (IoT) having an important role in improving efficiencies.
Dakota Hotels can collect data from various sensors and meters and draw insight using reports and dashboards from its financial management software.
“We can present this insight to people in key roles around the business, from the maintenance team to hotel managers,” says Sam Hartley, the finance director at Dakota Hotels.
“The granularity of this information means that we can compare trends, review our electricity costs and consumption, and make adjustments, which benefit both the bottom line and our sustainability credentials.”
Not only can Dakota Hotels meet the needs of its increasingly eco-conscious customer base, but the circular economy strategy slashes the group’s energy bills by tens of thousands of pounds annually.
Sam adds: “At a time when costs are under scrutiny, this has been incredibly welcome as both a short-term saving, and helping us to meet our long-term sustainability goals.
“As we move increasingly towards renewable energy usage, the system will be crucial in evaluating its value against other sources.”
Dakota Hotels is using technology to save money and improve its sustainable credentials, showing that cost benefits from the circular economy are within reach.
To better understand how businesses can get joy from the circular economy, Sage recently conducted a comprehensive survey and analysis of business leaders’ attitudes toward the principles and benefits of the circular economy.
The report’s results showed that the circular economy and sustainability are priorities—an overwhelming majority of survey respondents (84%) have a role in circular economy and sustainability, with 32% saying it’s central to their job.
Adopt a transformational mindset
Taking advantage of the circular economy is not just about improving your business—it’s about transformation. Rather than “How can we improve this process?” ask, “Why are we doing things this way?”
If you have sustainable margins and a steady income, it’s easy to stick to the status quo.
But the market doesn’t stand still. You’ve got to be proactive.
“Whether you’re a CEO, CFO, or CIO, it’s essential to get in front of challenges,” says Isaac Sacolick, the president, founder and chief information officer (CIO) at StarCIO. “Agility in the face of business risk is critical.
“It could mean buying laptops so people can work from home or being proactive in shutting operations in a particular region when supply or resource difficulties arise. That’s why the ability to look ahead is essential.”
A successful circular model is also about having the right people and cultural mindset—prizing curious, provocative, innovative humans.
Isaac recommends recruiting and encouraging curious and provocative colleagues to overcome any challenges in thinking innovatively. He says: “You need people who ask questions, who can look at how issues are solved today and challenge assumptions.
“They should be able to do their research and see how other people are doing things. What materials could you look at to build your parts?”
So what can you do? Look for people trained in advanced data-rich technologies to take full advantage of the circular economy. It’s vital to have a team that can forecast how a circular model will affect costs and consider the associated risks beyond quality and cost.
The circular economy isn’t limited to physical businesses
The circular economy isn’t limited to businesses that have offices, warehouses, or deal with physical materials.
Suppose you are part of a cloud-based Software as a Service (SaaS) company with an entirely digital operation. In that case, it’s worth considering sustainability across the infrastructure and cost of ownership you use, including your energy use and environmental impact.
In our Sage research, respondents ranked digital transformation technologies in order of importance for chasing your circular economy goals.
1. Cloud applications and infrastructure (74%)
The cloud drives digital transformation, impacting every aspect of business in every industry. Think of enterprise resource planning (ERP), workforce training, or apps to monitor machines.
With the circular economy, cloud software helps you research, design and develop products more efficiently and cost-effectively. The cloud also helps to transform physical processes. You can fabricate, manufacture, and analyse products by innovating with processes that drive sustainability, such as 3D printing and digital twin solutions.
2. Data analytics (68%)
Data analytics can support your circular economy strategy by speeding up product development and quality control while reducing costs. You can more easily monitor your systems and make the best use of resources, eliminating waste as much as possible.
Data analytics can also strengthen your supply chain to help with logistics, distribution, and product scheduling.
3. Automation (67%)
Automated processes speed workflows, boost productivity and reduce human error. You’ll also yield analyzable data that can improve circular economy production performance.
4. Internet of Things (48%)
By adopting Internet of Things (IoT) technology for machinery, endpoints in the field, or products and parts, you can carry out predictive monitoring and maintenance, increasing efficiency in support of greater circular economy sustainability.
The circular economy helps you do the right thing
By taking this approach, you’re not just saving money, you’re also doing the right thing—which is becoming more of a legislative necessity due to regulations being put in place on businesses in response to the threat of climate change.
Here’s four more takeaways from the Sage report that are worth digesting:
- Improving your brand image and reputation concerning sustainability is a big priority, as it could lead to customer acquisition and retention wins.
- Digitalising manufacturing processes to support the circular economy could make your business more robust, resilient and profitable in the long term.
- Sustainable business practices are now a critical concern for customers, employees, shareholders and supply chain partners who want to take responsibility and action around sustainability.
- Customers will expect your business to conscientiously control and limit your damage to the planet; creating and implementing an environment, social and governance (ESG) strategy will help that become a reality.
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