Circular economy examples from McKinsay

Mackinsy has two podcasts on the circular economy

The first describes how the linear model (from production through processing to design, retail and disposal) has prevailed for 150 years. Whilst great efficiencies have been made we lose alot of value when it is disposed. The CE concept is about capturing value through closing these disposal loops. However it is according to the experts on the pod much more than recycling.

“Recycling is the least value-capturing loop in a circular economy because it is only incrementally better than disposal. Rather, the tighter the loop, so to say, the more the original value is captured, including loops such as refurbishment or increased utilization, secondary-life uses, parts harvesting”.

they had that this CE principles of working will increase due to the Huge pressure on resources as middle class expands.

Innovation is important part of delivering CE. For example: Products can be viewed as a service. Examples would be “instead of buying tires, you buy kilometers. And instead of buying a jet engine, you buy hours of time in the air”.

There are lots of cost reductions that can come from material savings, reduced price volatility, and reduced need to duplicate value-adding activities.

A second pod focuses on CE in the food economy

In the interview the CEO of Danone Emmanuel Faber Innovation talks about focusing on extracting value from waste through managing their three key resources—water, milk, and plastic—as cycles rather than as conventional linear supply chains.

“One example of this is what we are doing in yogurt. To make Greek yogurt, you use a “strained” technology with a membrane, extracting a lot of acid whey. Instead of just seeing this acid whey as an effluent, we are testing technology solutions in five or six countries and working with different partners to find ways to use whey as a resource. We are already using whey protein, for instance, in our Early Life Nutrition business, and we will soon be able to use it for animal feed, fertilizers, and energy. What we’re doing is turning something that is a challenge today into something that will have value tomorrow”.

There are also corporate incentives at Danone for managers

“The annual incentive program for the 1,500 top managers at Danone encompassed the CO2 reduction objective, to the point where, broadly speaking, the yearly bonus attached to CO2 reduction was equivalent to the yearly bonus attached to profit generation. This is just one example of how we’re using incentives to embed our vision across the business”.

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