5 Myths Debunked
The circular economy philosophy shows that companies can increase revenue, profit, and cash flow by adopting greener ways of doing business. Why, then, doesn’t every company jump immediately into circular methodologies? The two commonly cited reasons are: it will reduce profit; or, it isn’t a top priority.
Some of the reasons for adopting circular methodologies include: achieving better public relations; utilizing less resources; and taking action in line with company sustainability goals. ‘Greening’ a company can involve changes that lessen greenhouse gas emissions, use safer, non-toxic chemicals in products, protect ecosystems, or all of the above.
Although going green can help protect the earth’s natural systems—and remember, humans depend on these systems—many businesses believe this means bearing extra costs that can be difficult to absorb.
Myth #1: It’s Expensive to Make the Switch
Although it can be initially costly for a corporation to go green, the long-term profits are much greater. Adapting to sustainable and renewable options will benefit businesses in the long run. For example, switching to solar power means you’ll need to install solar panels. Although this involves upfront costs, as with any business expense, understanding your long-term ROI and seeking investment can reduce those expenses. In some locations, tax benefits are available, which help companies offset the cost of making the switch.
Remember: not everything needs to be done at once.
Prioritize the items that will provide the greatest return, then use the excess cash generated to invest in the next renewable option. Even switching energy suppliers—purchasing wind-power electricity, say, rather than conventional electricity from a petrochemical-fueled power plant—can reduce up-front costs while reducing dependence on commodity pricing that is subject to risky price fluctuations.
Myth #2: Using Green Materials Increases Product Prices
While in some cases, the switch to using green materials can lead to higher costs in your production process or elsewhere, this doesn’t take the full effects of the circular economy into account. Designing your products to use less material or making your product more repairable can actually decrease your total costs. With a limited supply of natural resources, the more dependent your company is on commodity pricing, the higher its risk.
Using nearly limitless recyclable materials can stabilize your pricing.
Although there are some raw materials that are more expensive now that they’re sustainably grown, reducing your dependence on raw materials in general will save you much more than the added cost. Consumers and corporations are also increasingly demanding sustainable products. By offering lower-margin products but selling more of them, you can outpace any margin percentage loss with margin dollar gain.
Myth #3: Going Paperless Means Data Risks
For some companies, a common method of going green is to minimize or even eliminate the use of paper. This can pose some perceived disadvantages: for example, if employees’ laptops are lost or stolen, sensitive information that may normally be kept in a locked paper file could fall into the wrong hands. And If companies don’t properly back up their computer files, a system crash could prove disastrous. However, most of this data is electronic anyway; the cost of increasing your data security is usually much less than the cost of hiring people to keep track of all those paper records.
Myth #4: Customer Backlash
Companies may intentionally or unintentionally make false claims regarding the environmental friendliness of their products, a process known as “greenwashing.” A product that insists it has “no added chemicals” for example, could be criticized for its choice of wording, since even naturally-derived ingredients consist of chemical substances. If consumers become aware that a company is engaging in greenwashing, the company may suffer harm to its credibility.
The key here is to say what you do and do what you say.
It’s important to be honest about what you are doing. Consumers are demanding more transparency. Technology means word travels faster, and it’s very apparent when companies don’t live up to their word. Companies that are honest and open about their efforts will thrive, while those that try to hide their non-sustainable practices will be called out.
Myth #5: Going Green isn’t Worth It
If increasing your revenue and decreasing your costs isn’t worth it, sure—if that’s how you feel! However, the circular economy looks at increasing revenue through increased customer loyalty, subscription-based revenue streams, and selling waste for other purposes. This not only decreases costs but also stabilizes them by using less materials and reducing reliance on shifting commodity pricing.
The competitive advantage of going green is huge.
Adapting to a circular economy early means you’ll have fewer barriers to entry than your competitors, and you’ll be first to increase profits and do business more sustainably. Companies that don’t make this a top priority will quickly find themselves at a major disadvantage.