NEW YORK, Feb. 5, 2019 /PRNewswire/ -- U.S. firms are increasingly looking to implement circular economy practices into their business models, finds a new survey and research from ING. According to 'Opportunity and Disruption: How Circular Thinking Could Change U.S. Business Models' nearly four in five firms have a strategic intent to implement a circular economy framework (62 percent) or have already put one in place (16 percent).
Business focus on sustainability in the U.S. grew substantially from last year. Almost twice as many U.S. firms are embedding sustainability in strategic decision-making in 2019 compared to 2018, rising from 48 percent in ING's 2018 study, 'From Sustainability to Business Value', to 85 percent in 2019. Those saying it had no influence at all fell from a third of respondents to just 2 percent.
"The U.S. is catching up to the world in embedding sustainability within their businesses, and this research helps us understand where companies are in that journey, their motivations and challenges associated with adopting the circular economy model," said Anne van Riel, head of Sustainable Finance, covering the Americas region. "U.S. firms across key economic sectors – automotive, consumer electronics and telecoms, food and agriculture, and healthcare – are rethinking relationships with resources, customers and supply chains to build future-proof businesses but are only just scratching the surface of the full value of the circular economy."
Implementation of circular economy When asked what the central principle of 'circular economy' means to each respondent, the results show firms still have a narrow view of circularity, prioritizing operational issues over strategic possibilities. The majority of firms (66 percent) focused on waste reduction and resource efficiency instead of a comprehensive approach to transforming their business model to create and retain value across all processes within their organization.
When discussing motivations for implementing these strategies, those still trying to learn about the circular economy said achieving cost savings was the key motivating factor for adopting circular initiatives in the business. On the other end of the spectrum, firms that have already adopted a circular economy framework cited evolving customer demands as the primary driver.
This early stage thinking is also seen as firms implement circular strategies. Companies across all sectors surveyed said improving the efficiency of their production and manufacturing processes was their first priority when implementing circular economy practices. Long-term priorities include redesigning products to extend their lifecycle and transforming the business model to change how customers access products.
Firms also need a bigger commitment and more cooperation from consumers, supply-chain and distribution partners to fully transition to the circular economy. The biggest barrier to adopting a circular economy framework was difficulty recovering materials for recycling (32 percent).
"The circular economy is about much more than increasing efficiency with materials and natural resources. It's about rethinking how to design differently, sell differently, value differently, treat risk differently and finance differently," said van Riel. "Companies that take the time to understand and apply circular economy principles to their business models have an immense opportunity to go beyond simply fending off disruption and positioning themselves for future success – they have the opportunity to lead entire industries, create new markets and redefine the customer relationship."
Longitude, of the Financial Times Group, surveyed 300 U.S.-based executives across four sectors: automotive (25 percent), consumer electronics/telecoms (25 percent), food/agriculture (25 percent), and healthcare (25 percent).
20 percent of the companies have annual revenues of $201m-$500m; 39 percent have revenues of $500m-$1bn; and 41 percent have revenues of more than $1bn.
CEOs composed 21 percent of the respondents; 34 percent have senior roles in the finance function; 11 percent are directors of sustainability; 11 percent are supply chain managers; 11 percent are responsible for product development; and the remainder work in operations or R&D roles.
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