Since the Industrial Revolution, humanity has relied on a linear economy: we take, make and dispose. Companies source the raw materials to make their products. They sell them to customers who use them until they wear out, and those products are then thrown away.
While this worked well for a long time, at least financially, growing global awareness of climate change and the environmental damage caused by this model have rendered it obsolete in the modern age. To be successful now, businesses simply have to transition to a circular model.
The circular economy is a model of production and consumption that involves sharing, reusing, repairing, refurbishing and recycling existing materials and products for as long as possible. This greatly reduces the amount of raw materials extracted from the planet and increases the lifespan of those materials or the products made from them.
How much do we mean by “greatly reduce?” A study of three key industrial sectors—electric vehicles and battery manufacturing, the built environment and the electronic equipment sector—shows that adopting circular economy strategies could cut annual greenhouse gas (GHG) emissions by between 370 million and 850 million tons of carbon dioxide equivalent.” That represents a reduction of 7% to 16% of total US GHG emissions from those three industries alone.
Not only will the planet’s finite resources eventually make raw-material scarcity and environmental damage inevitable. Companies that have already transitioned to a circular economy model are enjoying clear advantages over those still clinging to the traditional linear model.
Hernan Saenz, Global Head of Performance Improvement Practice at Bain & Co, has said that he “…cannot imagine a world in which, in ten years, purely linear models are the winning models in the economy.”
In recent years, almost every industry has seen supply chains disrupted or broken completely due to global crises. This includes the pandemic, conflicts in areas where food or raw materials are sourced and growing resource scarcity.
Circular economy models are much more resilient when supply chains are under pressure, as companies already have access to what they need. Even if the materials are in something they’ve already sold once, they can be recovered and fed back into the production process.
“Whether it’s a customer, a regulator or an investor, they want circular models. That is the way you’re going to make money in the future,” says Hernan Saenz. The circular economy model has become a business imperative, not just something environmental activists care about.
Forbes points out that circular models can reduce material use—and therefore costs—by as much as 70%. And the World Economic Forum describes the circular model as “the blueprint for any business building a sustainable future.” According to the WEF, the fundamental concepts of value creation, capture and delivery aren’t just changed, but “fundamentally reimagined” by the circular economy model.
Around 24% of American consumers actively consider a product’s environmental credentials when shopping. In contrast, only 4% say they don’t engage with Environmental, Social and Governmental concerns and don’t intend to. Millions of consumers are already aligned with circular economy values—it’s up to businesses to meet them there.
Of course, making the move to a circular model isn’t easy. It could mean, for example, moving entirely from sales to offering repair and maintenance services. That kind of model was once common before disposability became the norm. We now need to relearn what we’ve lost.
Education plays a vital role in preparing professionals. Not just to work in a circular economy, but to conceive, implement and lead the change. New York City is already a global hub of innovation. Check out our MS in Business for Social Impact and Sustainability. A program that builds on that with a cutting-edge curriculum that empowers individuals looking to align sustainable impact with profitability.
Meanwhile, our partner institution in Madrid, IE Business School, has crafted its Master in Management to deliver the skills and knowledge needed to drive purposeful change in business.
These programs reflect the changed realities in which businesses now operate. A sustainable future—for your career and in a broader sense—will depend on the lessons we can learn from them.
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Meag Gardner is an experienced writer, linguist, translator, and editor from Indianapolis, USA. She’s done anything from storytelling for luxury hotels in the Caribbean to song lyric translation, academic writing for universities, podcast production, app development, and she even ran an art gallery in Madrid, Spain.
Meag completed a B.A. in Spanish Language and Literature at Indiana University, where she earned a minor in International Relations and a Certificate in Translation & Interpretation Studies. During this time, she completed a semester abroad at the Universidad de Salamanca in Spain. She later completed a year of postgraduate studies in Fine Arts at the Círculo de Bellas Artes in Madrid, and several certificates in programming and software development. She has combined her love of language and storytelling with art and technology for a broader and deeper understanding of modern communication.
Meag is now the Head of Brand Narrative at IE University and a contributor to The Blueprint at IENYC. She is also an Adjunct Professor at IE University in Segovia, where she teaches Research & Academic Writing.
