PA Consulting (PA), the global innovation and transformation consultancy, that’s bringing ingenuity to life, has created a Circular Business Model Design Guide through an Ellen MacArthur Foundation Network collaborative project. The guide has been developed by experienced business designers and sustainability and circular economy experts at PA Consulting and the University of Exeter Business School.

The practical guide is designed to help business leaders – from start-ups to SMEs, through to big global players – to identify circular opportunities and business design models that create, deliver and capture value, in ways that also benefit society and the environment. The circular economy is a key enabler of the shift to sustainable business practices, represented in the UN Sustainable Development Goals as SDG12: responsible production and consumption.

The circular economy model provides a systemic approach to economic development, designed to benefit businesses, society, and the environment. Regenerative and restorative by design, it is based on three key principles: design out waste and pollution, keep products and materials in use, and regenerate natural systems.

Mark Lancelott, Sustainability and Business Design expert at PA Consulting, says:

“The guide explores how to create, deliver and capture value in different forms, recognising that this is critical to creating investable and scalable circular business models. Get this right, and there are real profits to be made, in ways that also benefit society and the environment.

“We are excited by the opportunities the circular economy presents, and to bring together our capability and insight in both business design and transformation, as well as in product and technology development and manufacturing.”

Ellen MacArthur Foundation

The Ellen MacArthur Foundation, which develops and promotes the idea of a circular economy has highlighted key economic benefits. A 2015 report found that in Europe alone, a circular economy could result in overall benefits of €1.8 trillion by 2030 — twice the €0.9 trillion benefits on the current development path. There are clear opportunities to create growth that also tackle global challenges, such as climate change, waste and pollution, and biodiversity loss.

In Europe, in the current ‘take, make, waste’ linear economy, another report found recycling and energy recovery captured only 5% of the original material value. Furthermore, moving to renewables can only address 55% of global greenhouse gas emissions — to address the remaining 45%, we need to move to circular business models and change the way we produce, use, and consume things. Adopting a circular economy framework in just five key areas — steel, plastic, aluminium, cement, and food — can achieve a reduction totalling 9.3 billion tonnes of greenhouse gases in 2050.

Stella Chavin, Network Activation Manager at the Ellen MacArthur Foundation, contributed to the guide, said: “We know that businesses are looking to create strategies for better growth — to deliver and capture value in ways that also benefit society and the environment.

“The circular economy provides solutions for how to do this. We were happy to support PA in the creation of this guide and convene members of our Network to share their perspectives. We are confident this guide will help businesses understand how they can adopt and further embed circular practices.”

Circular Business Model Design Guide

The guide has been informed by regular testing and feedback from businesses of different sizes, sectors and regions, from early stage start-ups to established multi-nationals. Agnostic of the sector, region, business activity, size or maturity, it can be used to identify new ‘greenfield’ circular business opportunities and define the business and operating models required. It also helps to explore and define how existing linear businesses can become circular, as well as refining existing circular business concepts and pilots for use independently or in a workshop setting.

The four-step guide will help business leaders make decisions about:

• WHERE TO PLAY– identify the circular business opportunities, using the circular value system mapping tool
• HOW TO WIN– create win-win circular value propositions, using the partner mapping tool and circular value proposition template
• HOW TO OPERATE– identify the circular capabilities businesses will need, using the circular capability checklist
• HOW TO PROFIT– select the right circular pricing strategy, using the pricing strategy checklist

These four steps will help businesses assess and refine the feasibility of the opportunity. The guide can be used in two ways: sequentially, working step by step in a structured way to identify and define new opportunities, or with a focus on areas to test and refine for those with an existing circular business concept.

Merryn Haines-Gadd, Researcher in Circular Economy and Design, University of Exeter, says: “Recognising the difference between circular value and linear value is a crucial aspect for facilitating the transition to a circular economy. This is why a multi-stake holder, value-led thinking was embedded into the tools and content right from the start. This guide is not only simple and easy to use but also a structured and powerful prompt for steering organisations and educators through their business modelling journey.”

Mark continues to say: “There are various business models classifying and categorising circular economy models, but they don’t necessarily equip leaders to design and make the right choices for their individual business or industry. This sophisticated but practical guide does just this; it is the first cross-sector guide where leaders can tackle this complex subject in a structured way and design a winning business model.”