Sponsored by Worcester Polytechnic Institute
Discussions and debates surrounding sustainability are a big topic in the world right now – especially with younger generations.
Last month, Swedish teenager and climate change activist Greta Thunberg delivered a speech at the UN Climate Change Summit, condemning world leaders for their failed attempts at taking action against the climate crisis.
At an education level it’s important to consider how higher education institutions implement a curriculum that teaches aspiring businesspeople about the importance of sustainability within business. For instance, the circular economy is gaining momentum and attention within every industry and sector.
By eliminating the traditional linear economy, the circular economy ultimately works to limit waste and maximize resources by implementing a closed-loop production process that’s both restorative and regenerative. But why is this important for business and business education?
We spoke with Professor Joseph Sarkis at Worcester Polytechnic Institute (WPI) to find out more.
Learning about the circular economy isn’t just for engineering and environmental students
“There are many possible ideas for developing new industries and business models in this environment,” said Sarkis.
With huge opportunities for business students to increase their awareness of sustainability within a business setting and become forward thinkers in what is a very critical time for the environment, it’s becoming more important than ever that business schools continue to adapt and refresh their curricula.
In fact, the circular economy is a focal point of Professor Sarkis’ research as well as the MS in Supply Chain Management and MS in Operation Analytics Management at Worcester Polytechnic Institute. In his research, Professor Sarkis stressed the importance of studying the circular economy:
“Circular economy practices have been very important for industry. Some of these practices are required by regulatory policy; some by community and customer pressures.
“It can also be important as one of the only ways for some industries to do business in the future as resource scarcity becomes a serious problem. There are also competitive pressures – where others can benefit greatly and become more competitive if businesses fail to keep up with some of these latest practices.”
MS in Supply Chain Management and MS in Operation Analytics Management students are able to learn about the various circular economy practices from a variety of perspectives, including general management, marketing, and operations. This is in addition to developing an in-depth understanding of more traditional business elements such as finance, marketing, managing, and operations.
“It’s imperative that we do this because it is a very important topic not only theoretically, but practically,” said Sarkis.
“There are many new cases where brand-name companies have made the circular economy part of their operations and strategies,” he explained.
Businesses have the power to protect resources and support the environment
“The interesting thing about all this work, and a mantra throughout my career, is that companies, entrepreneurs, and communities can do well financially by doing good by saving resources and limiting environmental pollution and waste,” said Sarkis.
One simple yet effective example of the circular economy, which can be easily implemented into practically any business is ‘servicitization’.
Sarkis explains: “What if, instead of buying goods, consuming them, and then disposing of them, all goods were leased? That we only lease a service. Instead of buying a computer, we lease it instead, and at the end of its life it’s taken back (circular) by the company it’s leased it from.”
With renting replacing purchasing products and services, businesses are encouraging closed-loop recycling where they’re able to increasingly lengthen and widen the use of such products and services. New business models like this can be particularly lucrative as the cost of materials decline overtime.
“What if we do this for our clothes? The system has to be set up where we not only buy, but return – circularity – back to the manufacturer or retailer. The material source for future products can be managed easily. The model would not be about trying to sell products that can be used quickly, but products which can be taken back and updated,” explained Sarkis.
Reaping the benefits on both a financial and social scale
Many argue that there is no simple or quick-fix solution to sustainability issues, yet the circular economy is a model that’s used frequently within manufacturing and construction, as well as business.
Despite a report by McKinsey & Company in 2015 outlining the circular economy could generate a net economic benefit of $1.8 trillion by 2030, the uptake for implementing circular economy business models remains slow.
However, momentum is gathering, particularly in the mindset of consumers determined to make more ethical and sustainable choices. As a result, businesses need to act fast if they are to stay relevant and up-to-date in a world that’s increasingly aware of sustainability issues on both a local and global scale.
