March-April 2020

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PalletCentral • March-April 2020 31 refurbishment and remanufacturing can bring products back to high-performance levels, creating new value while avoiding the need for new materials. At the most basic level, when materials and products are intentionally cycled within the circular economy, we can achieve important sustainability and economic outcomes: 1) We avoid sending valuable materials and products to landfill; 2) When we keep products out of landfill we can reuse, repair, refurbish or remanufacture them into viable alternatives, offsetting the need to manufacture new ones; 3) When we keep materials out of landfill we can use them again as manufacturing inputs, offsetting the need to extract new materials; and 4) When we design products, business models, and systems to facilitate this cycling through a variety of mechanisms and innovation, we can create new kinds of value for customers, and add value across the value chain. Through circular economy, organizations worldwide are exploring how to integrate into a circular economy, and experimenting with new opportunities for design innovation, system-efficiency, and an evolving value-proposition that also reduces environmental impacts. The outcomes of this innovation are clear: when businesses intentionally design their products and systems to be circular, there is exciting new value and opportunity to be realized. One example is Philips Lighting, which has introduced the concept of "lighting-as-a-service." In this model, Philips retains ownership of both lights and fixtures, covers the upfront installation costs, and provides responsible materials management and recycling for end-of-life lights and fixtures. Philips' commercial, industrial, and government customers, through long-term performance contracts, pay Philips Lighting only for the lumens that are consumed during the contract period – effectively, paying for the service of lighting, rather than for the lights themselves. This model enables more affordable facility retrofitting for Philips' customers and a motive to reduce overall electricity consumption. More important for circular economy, this model incentivizes Philips Lighting to minimize its operating costs by designing lights and fixtures to be durable, easily maintained, and to allow for the recapture of materials and products when they reach end-of-life as part of a circular system. There is a significant opportunity to re-imagine alternative business models and systems that work towards increased circularity, sustainability, and economic growth objectives. This may be achieved by reducing virgin material consumption by increasing recycled content; by virtualizing content that formerly required a physical form (e.g., digital music and book platforms); by exchanging non-renewable material inputs for renewable ones; or by sharing assets rather than owning them, as a means to increase utilization and productivity rates, as observed for vehicles and accommodations (e.g., Zipcar and Airbnb, respectively). Many organizations around the world are setting out to demonstrate the possibilities of a circular economy, and consumers are responding. It's important to remember that a circular economy is not going to solve all of the world's problems. It is a toolbox of options that can help us to move towards a more sustainable future of reduced greenhouse gas emissions, improved material efficiency, and a redefined concept of value. One of the most promising aspects of a circular economy is that it is founded on actions, practices, and principles that have been around for a very long time: Reuse, Repair, Refurbishment, Remanufacturing, Recycling, Composting, Energy Recovery, and Biosphere Replenishment. In other words – we already know how to do most of these things and have been doing them for centuries! In 2015, the European Union adopted a Circular Economy Action Plan that every EU member state must be a participant. The Action Plan includes concrete programming, measures, targets, and timelines for achieving improved resource efficiency, improved recycling rates, and innovative product and system design with the goal of "closing the loop" of product and material lifecycles. The EU's Circular Economy Action Plan is not just about the environment. More than EUR 15 billion has been

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