How can a company increase its productivity, while reducing its dependence on primary materials and energy?

The circular economy is part of the answer to that question.

Instead of today’s take–make–dispose linear model of production, the circular economy is restorative by design — using and reusing natural capital as efficiently as possible and finding value throughout the life cycles of finished products. Three major principles govern the circular economy:

• Preserve and enhance natural capital by controlling finite stocks and balancing the flow of renewable resources
• Optimise resource yields by circulating products, components, and materials in use at the highest possible levels at all times
• Make the system more effective by eliminating negative external factors

FORFIRM's framework adopts an approach of circular economy based on technically viable implementation.

On that basis, by 2050, FORFIRM estimates that capturing all of the improvements as total-cost-of-ownership (TCO) savings could reduce corporate costs by 40 to 60 percent.

Disruptive technologies and business models could help a company to raise resource productivity and cut costs.

The digital and technology revolution could have a disruptive impact on many sectors of the economy.

By adopting circular-economy principles and integrating new technologies and business models, a company could achieve ‘growth from within.’ FORFIRM call this the growth-within approach because it focuses on getting more value from the existing stock of products and materials, while decoupling value creation from resource consumption. The concept rests on three principles: preserve and enhance natural capital, optimise yields from resources in use, and make the system more effective by removing negative externalities

The FORFIRM approach not only reduces structural waste and gives consumers new choices but also creates significant economic benefits.

FORFIRM framework in action

Building a circular economy requires complex efforts at the local, national, regional, and global levels. To transition from the current trajectory to a circular one, companies must undertake six actions: regenerate, share, optimise, loop, virtualise, and exchange—the FORFIRM framework:

• Regenerate. Shift to renewable energy and materials; reclaim, retain, and regenerate the health of ecosystems; returning recovered biological resources to the biosphere.
• Share. Maximise utilisation of products through peer-to-peer sharing of privately owned products or public sharing of pools of products; reuse them throughout their technical life spans; and prolong those life spans through maintenance, repair, and design for durability. Examples include car- and home-sharing business models.
• Optimise. Improve the performance and efficiency of products; remove waste from their supply chains; and leverage big data, automation, and remote sensing. None of these actions requires changing products or technologies.
• Loop. Keep components and materials in closed loops and prioritise the inner ones. For finite materials, this means remanufacturing products or components and (as a last resort) recycling materials. For renewable materials, it involves anaerobic digestion and the extraction of biochemicals from organic waste.
• Virtualise. Deliver utility virtually—books or music, online shopping, fleets of autonomous vehicles, and virtual offices.
• Exchange. Replace old materials with advanced renewable ones; apply new technologies, such as 3-D printing and electric engines.

In different ways, these actions all increase the utilisation of physical assets, prolong their life spans, and shift the use of resources from finite to renewable ones. Moreover, each action reinforces and accelerates the performance of the others. Separately and together, they could have a profound impact, increasing cost competitiveness substantially.

Not all of the technological advances will reduce costs; many might improve performance instead, and in some cases, the technology will need time to make a difference. But the analysis is persuasive: the circular economy carries a transformational potential that business—and society—would do well to take seriously.