Consumers with a high degree of social and environmental awareness will change their behavior and brand choices to match their values. Yet most brands operate on a linear “make, use and dispose” business cycle.
Now, however, leading companies are pulling away from that model, embracing a circular economy that follows the “take, make, use, recycle” pattern to reduce waste and their environmental footprint.
With the planet expected to host nearly 10 billion people by 2050, the circular economy isn’t a fad. It’s a lifestyle for consumers, and a best practice for intelligent enterprises to grow the top line, protect the bottom line, and increase brand value. Intelligent technologies play an important role in implementing the circular economy strategy.
As the Earth’s population continues to grow, so do our agriculture and energy usage, pollution, waste, and overall consumption. According to the Global Footprint Network, in 2018 the global demand for resources was 1.7 times more than what the earth can sustainably support — and it’s getting worse. A circular economy can help contain and reverse the damage done — both to our planet and to the bottom line — and can potentially create $4.5tr of new economic output by 2030.
Today’s consumer cares about making a difference in the world, and leaving the planet in better shape than they found it. Millennials and Gen Z consumers buy from brands that embrace social and environmental responsibility, benefiting companies that improve standards by using recycled materials or eliminating child labor. Similarly, B2B customers in industries such as public services and utilities expect partners to align their business priorities to a higher purpose than just revenue generation.
Aligning corporate goals with the United Nations Sustainable Development Plan is one way that enterprises in every industry can find their purpose and begin moving toward a circular economy. SAP, for its part, has pledged to become completely carbon neutral by 2025.
Best-run businesses are grounded in purpose, managing resources effectively in a circular economy to reduce their overall impact on the planet. While this means different things for each industry, there’s an opportunity for leaders to thrive in each market.
For example, data collected from sensors embedded into city infrastructure, such as the sewer systems in Buenos Aires, Argentina, helps ensure that basic services are working, while protecting people from natural disasters and other emergencies.
An equally impressive innovation in Cape Town, South Africa shows how data from sensors in water utilities, electrical smart meters and RFID tags on garbage cans can help improve basic services for citizens.
The city of Heidelberg, Germany optimizes the collection of recycled glass using sensors in the containers. This avoids unnecessary noisy collections and overflowing containers, making the city more livable while reducing service cost.
While different industries are using intelligent technologies in unique ways, here are some manufacturing companies who are solving social and environmental issues around the globe.
- Signify: A 2019 SAP Innovation Award winner, it developed a product that translates light usage into costs per building, floor and room. This Light-as-a-Service model allows users to make better informed decisions, while driving operational efficiency and conserving energy.
- MAPAL: The tool manufacturer uses a cloud platform to collaborate across suppliers and customers to efficiently manage products that are in and out of stock, so that customers are able order the right amount of product without producing waste or excess inventory.
- Siemens: The global provider of energy-efficient technologies has committed to a carbon-neutral future to help customers make sustainable energy decisions. The company has implemented an analytics platform alongside its own automation technologies, which allows building managers to analyze and use energy more wisely.
- Daimler: One of the world’s largest vehicle manufacturers has created a digital supply chain to achieve real-time operations to plan, source, and deliver the right materials to customers at the right time, without producing waste.
- DPaschoal: The tire and auto parts dealer collects old tires, then recycles 80 percent of them into other consumer products. Cloud technology creates personalized connections to ultimately help customers save on maintenance costs and better respect the environment.
As our global consumption of resources increases with every passing year, it’s up to the biggest and most influential brands in the world to drive the discussion forward, and continue to lead us toward a circular economy that reduces our collective impact on the environment. Leaders and innovators are emerging in every industry, and it’s crucial that enterprises of all sizes continue to innovate and collaborate to promote social and environmental health.
Consumers and B2B customers already expect this type of promise. It’s time that brands demonstrate their commitment to the circular economy and embrace a brighter future — while creating a better brand experience for their customers.
Peter Maier is co-president of SAP Industries.