Circular Business Model Design : Business Opportunities from Retaining Value of Products and Materials

Today our economy is largely based on linear material flows, and many products, such as electronics, furniture,building materials and textiles, are discarded even when they could still be used. Without urgent action, globalwaste is expected to increase by 70% by 2060 and global materials use is expected to more than double. We arestarting to realise that linear material flows are not only a loss of valuable products and materials, but are alsoinconsistent with ‘planetary boundaries’ and are a main cause of sustainability challenges. More than 50% of allgreenhouse gas emissions are estimated to derive from materials management in our economy.One proposed solution is a shift towards a circular economy, in which products are not discarded; instead, their embedded economic and environmental value is retained for as long as possible in a closed-loop system. This is achieved through, for example, reuse, repair and remanufacturing of products, or recycling. Many suggest that a circular economy also offers new business opportunities for companies.This thesis focuses on how companies can devise ‘circular’ business models (CBM) to capitalise on suchopportunities, focusing on CBMs that retain value embedded in products and materials. Based on pioneering companies that have devised CBMs for value retention, the thesis examines what value their business model creates for the environment, business, society, and customers, and how value is created. The thesis also explores how tools to help practitioners integrate circularity in their business model can be developed and improved.A key finding is that CBMs for value retention have significant potential to reduce environmental impact, may have a promising business case, could generate employment, and could produce additional customer value. However, value is not created by default. Recommendations to secure value creation along the various value dimensions are provided. To help practitioners integrate circularity in their business models, a structured overview of CBM innovation tools is presented and a CBM canvas for value retention proposed. A guideline shows how CBM toolscan be developed to more effectively support practitioners.Future research is needed to improve methodology for comparing financial and societal value creation by circular versus linear business models. Implications for value creation if CBM were upscaled need further investigation.Whether the financial value alone will be sufficient to incentivise businesses to shift towards CBMs within the short time window we have to address climate collapse remains doubtful, so research is needed on policy interventions that can help accelerate the transition

Circular Business Models : Defining a Concept and Framing an Emerging Research Field

To aid companies in transitioning towards a circular economy and adopting strategies such as reuse, repair, and remanufacturing, the concept of circular business models has been developed. Although the concept draws on contributions from various academic disciplines, and despite its increasingly frequent use, few scholars clearly define what a circular business model is. Understanding about what makes a business model circular is diverse, hampering the theoretical development and practical application of circular business models. This study aims to help frame the field of circular business model research, by clarifying the fundamentals of the concept from the perspectives of resource efficiency and business model innovation. Expanding on these findings, a review of how the concept is used in recent academic literature is provided. It shows that a coherent view is lacking on which resource efficiency strategies classify a business model as circular. This study clarifies which resource efficiency strategies can be deemed as relevant key strategies for circular business models, and suggests a new definition of the concept. With the definition grounded in analysis of the fundamentals in terms of resource efficiency and business models, the study contributes to theoretical advancement and effective implementation of circular business models

A circular business model mapping tool for creating value from prolonged product lifetime and closed material loops

The concept of circular business models has been identified as an important enabler for companies moving towards circular practices. Circular business models help to prolong lifetimes of products and parts through successive cycles of reuse, repair, remanufacturing and closing material loops. To realise economic viability and reductions in environmental impacts from innovating towards a circular business model, integrated planning of the product lifecycle and value creation architectures for each cycle is pivotal. One key approach used to support business model innovation in management studies has been the visualisation of business models. Visual representations reduce complexity and reveal tacit structures to help understand and communicate the business model, generate and develop new business model ideas, and remove obstacles to innovation. However, for circular business models, there are no visualisation tools that help plan the product lifecycle in a way that creates and captures value from multiple use cycles and closed material loops, and that can capture how business model elements are adjusted to effectively implement each cycle. This paper presents a visualisation tool to map circular business models. The tool offers a standardised representation of the elements and possible cycles of circular business models to prolong the useful life of products and parts, and close material loops. A pilot case based on the company Fairphone exemplifies various potential benefits, including the tool's ability to reduce complexity and order potential interventions for embedding circularity in the business model. Suggestions for future research are made to refine and test the tool

Financial assessment of reusing materials in buildings : Comparing financial potential of wood, concrete, and glass reuse

Buildings are responsible for a third of global greenhouse gas emissions, with much of their life cycle impacts resulting from embodied impacts of building materials. One solution to reduce embodied emissions is to use of secondary materials such as by-products and waste materials for producing building materials (in this study referred to as reuse solutions). While this is reported to have positive environmental and economic impact, many financial barriers to economic application remain, centering on labor-intensive recovery processes, low end-of life value, fluctuating material volumes and qualities. This paper aims to advance understanding of the financial potential to reuse different end-of-life materials for building materials by presenting a cost structure analysis of three reuse solutions developed by a Scandinavian case company for wood, glass, and concrete. Findings indicate that profit margins differ considerably by material stream and application. Expenditure for production processes (i.e. cutting wood to planks, assembling glass into windows, mixing aggregates to new concrete) was a significant cost driver in all three reuse solutions. Costs for purchasing end-of-life materials also differed significantly in each case, reflecting the differences in residual value of each material stream. Future research is needed to expand the financial assessment to consider the upscale potential and effect of economies of scale for each case. In addition, we suggest to investigate other dimensions of value such as economic aspects (e.g. job creation and societal costs savings from environmental impacts), as well as the environmental improvement to advance understanding of the relevance of material reuse for buildings

Financial assessment of reusing materials in buildings : Comparing financial potential of wood, concrete, and glass reuse

Buildings are responsible for a third of global greenhouse gas emissions, with much of their life cycle impacts resulting from embodied impacts of building materials. One solution to reduce embodied emissions is to use of secondary materials such as by-products and waste materials for producing building materials (in this study referred to as reuse solutions). While this is reported to have positive environmental and economic impact, many financial barriers to economic application remain, centering on labor-intensive recovery processes, low end-of life value, fluctuating material volumes and qualities. This paper aims to advance understanding of the financial potential to reuse different end-of-life materials for building materials by presenting a cost structure analysis of three reuse solutions developed by a Scandinavian case company for wood, glass, and concrete. Findings indicate that profit margins differ considerably by material stream and application. Expenditure for production processes (i.e. cutting wood to planks, assembling glass into windows, mixing aggregates to new concrete) was a significant cost driver in all three reuse solutions. Costs for purchasing end-of-life materials also differed significantly in each case, reflecting the differences in residual value of each material stream. Future research is needed to expand the financial assessment to consider the upscale potential and effect of economies of scale for each case. In addition, we suggest to investigate other dimensions of value such as economic aspects (e.g. job creation and societal costs savings from environmental impacts), as well as the environmental improvement to advance understanding of the relevance of material reuse for buildings