Toolkit: Circular business models
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The main purpose of circular business models is to use them as a checklist for environmental sustainability.
Just a reminder to keep a record of all the tools in the table below. As long as you can fill in all the cells of the table, you will be able to write a successful IA.
How to
Circular business models is an approach whereby businesses aim at reducing the use of natural resources, energy and waste by having materials cycle in an economy. Simply speaking: everything has to be reused. Circular business models (CBM) is not a business tool in a typical sense, it is more of a framework or paradigm that helps to make judgements about organisation’s environmental sustainability. Let’s find out what the 5 circular models actually mean and see some examples.
The IB Business Management subject guide includes 5 circular business models: circular supply, resource recovery, product life extension, sharing, product service system.
Some models are really similar and most of them refer to recycling. The difference lies in the emphasis, in different aspects of being eco-friendly and sustainable. As you read about the 5 models below, try to feel how exactly all five of them are different and what each of them emphasise.
Circular supply refers to the use of renewable, recyclable, biodegradable resources instead of scarce resources. Simply speaking, in circular supply, materials and goods are used as long as possible, instead of turning them into waste after use. The main emphasis is put not on the use of recycled materials, but on the fact that everyone is supply chain does so. In this article you can learn more about the 10 biggest renewable energy companies in the world.
Resource recovery refers to recycling: giving waste a second chance. Compared to circular supply, the emphasis here is not put on a supply chain, but on individual organisations that should all commit to resource recovery. For example, in this report you can find out how Walt Disney converts food waste into biogas in order to generate electricity.
Product life extension refers to the extension of the product life cycle by repairing, maintenance and upgrading. So, instead of withdrawing the product from the market and developing a new one, product life extension model suggests modyfying current products, in order to avoid waste. For example, on Caterpillar’s website you may see that they offer to return used components to...