Natalya Makarochkina – Senior Vice President, Secure Power Division, International Operations, Schneider Electric
In the drive to become more sustainable, digital management technologies can start us on the circular journey
As enterprises make ever greater efforts to become more sustainable, with some expressing their intent to go beyond carbon neutral and into carbon negative, the benefits of circular economy practices have come to the fore.
The principles of the circular economy, breaking the linear cycle of resource extraction, use and disposal, has the potential to create new models of usage, with re-purposing, remanufacturing and recycling presenting new economic opportunities as well as sustainability benefits.
However, moving from a linear to a circular model requires major change, cooperation and commitment from multiple stakeholders. Bringing together multiple data sources, complex supply chains, and coordinating partner efforts, while also making financial provision for such major changes, is no trivial task that will require new thinking and new tools.
Digital technologies will be key to enabling the visibility, orchestration and management of circular economies and operations. Leaders in digital management technologies can share their expertise in accessing data streams and operational silos to allow the move towards, and deeper integration of, circular practices in a complete lifecycle.
With many digital leaders already at the forefront of sustainable business and economic efforts, their expertise combined with their existing capability can enable the move towards circular economies and the sustainability benefits they bring.
New economic thinking and action
As sustainability efforts for large organisations intensify, many are seeing the benefits of circular economies as the new operating model for the future to enable them to meet sustainability goals, while remaining responsibly profitable.
There are many benefits to circular operating models, not least of which is the reduction of waste and the ever-growing need for raw materials.
Recognising the broader benefits of circular economies, the Circular Economy Action Plan is at the heart of the EU European Green Deal as an international example of best practise.
The COVID-19 pandemic recovery is seen as an opportunity to begin those efforts to move towards more sustainable, more circular modes of business. However, there are many measures that need to be put in place before a circular economy can scale.
A report from the Ellen MacArthur Foundation said that limited data availability, unpriced externalities, and outdated accounting rules do not fully reflect the value creation of circular business models or linear risks. It further highlights that governments, financial regulators, and central banks have much work to do in setting direction and providing economic incentives.
The report recommends investment in circular activities, infrastructure, and innovation. There is also a need for improved transparency through standardisation and reporting requirements, referencing the EU Taxonomy, Chinese supervisory scheme for green bond verifiers, and the EU Non-Financial Reporting Directive. Finally, the report recommends integrating circularity in financial regulation, risk assessments and modelling, and exploring unconventional methods, such as integration of circularity in green quantitative easing.
Designing for the circle
From a product perspective, circularity begins with design.
Some 80% of all product-related environmental impacts are determined during the design phase of a product, according to the European Science Hub.
Better design provides greater scope for serviceability during operation, with the support of readily available spare parts, to extend operational hours and utilisation. Furthermore, modular design, with repurposing, remanufacturing and disassembly in mind from inception, combined with a focus on entire lifetime efficiency, can massively reduce waste, while supporting longer utilisation and maximum recycling of resources. Single use materials are falling out of favour as indicated by global demand for recycled materials, which grew by 17% between 2012 and 2016 for plastics alone.
Digital technologies are seen as a key enabler of circular economies, connecting, aggregating and allowing analysis of data to support the complex and sophisticated coordination of the disparate resources needed. A key recommendation of the Circularity Gap Report 2020 is to foster global collaboration to collect and share data. “This will enable identification of key data needed to measure and track circular performance, plus provide the necessary infrastructure and alliances to collect, retrieve and share data,” says the report.
As digital leaders begin their own journey towards circularity, shared resources and experiences allow organisations of all sizes to learn, understand and implement the principles.
Cooperation and sharing
Digital leaders have made significant progress in meeting sustainability goals. They have also made significant commitments for sustainability, such as the Climate Neutral Data Centre Pact.
Through insights gained in developing and widely supporting software tools, such as Data Centre Infrastructure Management (DCIM) systems, digital leaders can extend and combine those capabilitiesto allow organisations to better understand their own operations and how they can begin to introduce circular economy practices, align them with existing sustainability efforts.
Working together, digital leaders can share the advances they have made collectively in reducing energy consumption, improving efficiency of operations and increasing the utilisation of infrastructure, providing a reference for all.
Sustainability efforts cannot be effective when undertaken alone, they must be coordinated across the entire ecosystem, requiring not just the consent but the deep commitment of supply chain partners, including the likes of Scope 3 emissions. The move towards circularity will require even greater commitment from supply chain partners.
These efforts not only accelerate efforts to achieve sustainability goals, but also build greater resilience into supply chains, according to Gartner. The analyst has recommended a number of measures to transform supply chains to allow them to transition to circular models, such as deeper customer engagement and clear criteria for goals and measurement.
The level of cooperation and integration required to enable circular economies is greater than has ever been seen before. Only digital technologies, from IoT and edge computing to AI and real-time analytics, can bring together the disparate data sources and combined resources into a coherent, orchestrated strategy.
This spectrum of efforts in circular economies can be developed into a lifecycle, enabled by digital tools and technologies, to ensure that infrastructure, equipment, software and resources can be managed in a complete lifecycle to virtually eliminate waste, reduce raw material requirements and improve economic outcomes.
Schneider Electric has been recognised as a global leader in sustainability, and has a proven track record in working with partners to develop and achieve sustainability goals, also being recognised in 2019 by the World Economic Forum for its circularity efforts.
Building upon a strong programme for sustainability, Schneider Electric has made great strides in reducing its own carbon footprint. Through its membership of the European Data Centre Association, the company is also committed to Climate Neutral Data Centre Pact, a self-regulatory initiative.
Other examples recognised by the WEF are in the areas of food waste, dyes and colourants, plastics recovery and repurposing, tyre waste, and waste water treatment. The organisations highlighted range from start-ups to one of the world’s largest brewers. Each example shows the complexity of supply chains that centralise the materials to be repurposed or recycled, and the sophisticated processes applied. None of this would be possible without complex digital tools and platforms, enabling a cycle of measurement, analysis and determining outcomes.
A circular solution
The Circular Economy is widely perceived as a means to tackle many issues the world faces, while enabling sustainability efforts. Digital management technologies are recognised as the fundamental enablers of the practices needed to move towards more circular modes of operation. Digital leaders, such as Schneider Electric, have the expertise and the experience necessary to lead in this area, providing a set of tools, and as importantly, insights to allow lifecycle management to continuously monitor, analyse and improve.
Schneider Electric has been recognised for its achievements in these areas and continues to lead with its own efforts while sharing the journey and resources with partners, customers and the community.