Will You Be My Partner? Cooperation In A Circular World
Current and future environmental challenges are so huge that one company alone will not be able to solve its problems on its own. Referring to a circular economy, it is almost impossible to transform products and processes in such a manner that e.g. 100% of a chair will become the exact same chair again, after its first lifetime.
In order to change our current economic system towards circularity, companies must cooperate with each other towards the common goal of closed-loop circularity. This cooperation starts between stakeholders along their own value chain but most definitely has to reach further. Companies need to become creative and think outside their current ecosystems. Companies, across-industries, need to connect and create new value through the establishment of new partnerships.
Why the level of cooperation between companies is low
Sharing information or even resources with other stakeholders often is seen as a threat for most companies. Various reasons can be derived from practical experience for this fear. Three main concerns are:
Loss of competitive position: the fear of losing market position through sharing information. By sharing information about material composition or processes, a company could lose its negotiation power towards a customer
Loss of autonomy: the challenge of shared decision-making processes; the company needs to build consensus with the partner before action can be taken. Furthermore, the company needs to take over wider accountability by representing the decisions of the partner.
Conflicts of interest: a decision or action may be right for the interests of the partnership but may be at odds with the individual organization’s interests. Therefore, the company fears having to make decisions against the good of its own company
A great initiative to overcome fears and to build sustainable relationships with partners is the Partnership Accelerator started by United Nations Department of Economic and Social Affairs (UN DESA) and The Partnering Initiative, in collaboration with United Nations Office for Partnerships (UNOP), UN Global Compact, and the UN Development Coordination Office.
The benefits of cooperation
When companies overcome the fears of collaborating, new potential can be unlocked. Depending on the value chain step where the new cooperation becomes active, a company creates new value. Let’s have a look at three value chain steps as example: Production, collection and recycling.
Every year the textile industry produces 16 tons of waste, of which only 25% is reused or recycled, 75% ends up in landfills.
In order to reduce waste in a textile manufacturing company, the company should start to consider for which industry its own waste can be a valuable additional resource. Conversely, this company should also include in its own design process the question of which waste from another company (regardless of industry) is a material alternative for its own product.
In theory, such a business model is called "waste to value". The positive effects of such a partnership would not only be the reduced waste, but also the establishment of a new revenue stream and the reduction of costs for waste disposal and recycling.
If we now look at the end of life of a product, the Collection and Recycling steps are relevant. Especially in the B2C area, one of the biggest challenges is to get the products back to the company. In-house tackle-back systems and recycling processes are very cost-intensive and resource-intensive, so setting them up is only worthwhile if the quantities involved are very large.
For this reason, a partnership is a good idea at this point. There are already companies that have specialized in the end-of-life of a product and offer joint solutions for entire industries.
From the textile industry, the startup Worn Again should be mentioned here. Founded in 2005, the startup's mission is to develop a holistic approach to the collection and recycling of textiles from the fashion industry in order to return waste to the garment manufacturing process. So far, only 1% of textile waste is recycled back into fashion production.
Participating companies can increase customer loyalty and awareness by introducing customer programs for returning old products. On the other hand, they can also increase their independence from their suppliers by building up their own material stocks. The importance of such independence became very clear, especially in times of Covid, in order to reduce supply bottlenecks.
It’s clearly shown that corporations positively impact the shrinking of the environmental footprint, trimming operational waste, and using expensive resources more efficiently.
An odd couple going the road together
The circular economy Pioneer, Timberland, has been demonstrating how a cross-industry partnership can create the waste of one company into new value of another, since 2008.
Timberland is most famous for its boots. Searching for new opportunities to increase the amount of recycled materials in its products, Timberland began to design soles made with recycled rubber from discarded car and truck tires. The demand increased and a new problem arose. The company couldn’t guarantee the quality of the recycled rubber any longer. Therefore, in 2010, Timberland developed a new product with at least 35% latex, reusing pre-consumer or post-industrial rubber that would otherwise go into landfills.
In order to guarantee the quality needed for their boots, they initiated a cooperation with the tire manufacturer Omni United. This was the beginning of the Timberland tire, which was directly created with a second life purpose: After carrying trucks and cars safely across the roads, the rubber becomes the outsole of boots that carry us across cities & nature.
Let Circulix find your perfect match
During the process of creating the most impactful Circulix offer in order to support companies on their way towards circularity, we understood through many industry interviews and our conversations with customers, that to know & understand where your company stands today and what needs to change within your company, is only half of the work. The next step is to identify and network with partners to implement defined strategies. With Circulix we offer the end-to-end solution to solve this challenge by connecting you via our own network.
After we identified where the biggest improvement potential within your value chain lies, we connect you with the right partners across-industries to make your products and processes as circular as possible, and to create undiscovered value, together.
To master our challenge of finding reliable and impact-driven partners, we have established our own partnership network as well as formed our perfect match. We now have started to work with the Initiative Circular Economy of the Bundesverband der Deutschen Industrie (BDI-ICE) as a network partner to provide a holistic solution approach to their Industry partners and to work hand-in-hand toward a comprehensive value offering for corporates in need of a circular economy. Together, we will conduct industry workshops and industry projects to drive the road of a circular economy together.
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