— Anh NGUYEN
Over the past few years, we have observed different levels of efforts from industries and businesses to reduce their environmental impacts: using recycled or organic or biodegradable materials, enhancing products’ recyclability and durability or developing better waste management systems.
Yet, it is also important to keep in mind that no amount of effort to fix a faulty system could result in a significant result. The absurdity of single-use packaging cannot be solved by some (very complex and costly) changes in materials. For example, bioplastic or paper straws still require a lot of resources (water, paper, etc.) even though the material is considered more “environmental-friendly”.
The limitations of the “green economy”
Many are excited over the notion of a “green economy”, yet it is not without limitations. A study conducted by BCG has pointed out the scarcity of raw materials required for the “green economy”. Some examples are:
- the shortage of recycled plastics (45% of the demand for recycled PET will not be met by 2025)
- the shortage of mined materials for batteries such as lithium, nickel, and cobalt (less than one-third of what will be required to meet the demand in 2030)
- or the shortage of sustainable cotton (only 21% of cotton worldwide was grown sustainably in 2018, while most major fashion brands have committed to using 100% sustainable cotton by the end of 2025).
In the same direction, researchers at INSEAD pointed out the downsides of some major practices in the “circular economy”. Some examples are:
- the limitations of recyclability (e.g. recycling and reusing “can have even greater environmental impacts than production using virgin resources”; or a perfect recycling process is practically impossible as the volume and diversity of different recycled materials increase),
- the limitations of durability (e.g. customers insist on taking advantage of new design features and technology and will discard the less-updated yet durable products anyway),
- the limitations of renewable materials(e.g. substituting bamboo for plastic still issues intensive chemicals usage),
- or the limitations of alternative usage models (e.g pay-per-service companies like Uber and Lyft admits that they’re making traffic congestion worse in cities, explained by the rebound effect).
It is important to list out and keep a critical eye on these limitations and challenges. Some of the practices indeed have bigger and more durable impacts than others. Some can be categorised as Optimisation, while others are true Reinvention attempts.
Optimisation vs Reinvention
The distinction lies in the idea that Optimisation is based on the existing system – with the same historical products or processes. Whereas Reinvention means rethinking the whole business activity in all its aspects – from downstream to upstream ends – while taking environmental constraints as important design inputs.
For example, replacing plastic bags with craft bags for shopping in large-box supermarkets such as Carrefour or Intermarché is an Optimisation attempt – replacing one material with another while staying on the same single-use basis.
Meanwhile, the pivot of Umicore from a historical mining and smelting company in Belgium to one that refines and recycles precious metals in the 2000s required radical changes across their whole business, which can be rightly considered Reinvention.
In the next part of this article, let’s examine our dominant business and usage models in our times, including single-use, single-buy and individual use, and at the same time, suggest alternatives that could allow the complete reimagination of these business models.
Reinvent our failures of design: single-use, single-buy and individual use
Single use or disposable
Single-use or disposable products are those that last for several months maximum (e.g disposable air filters).
The challenge here is to expand these products’ lifespan, not for several years in use, but potentially for good. Why? Because the effort to design something that lasts for a limited number of years is equal to that of designing something that lasts indefinitely – but the result is radically more meaningful in the latter case.
For example, instead of designing an air filter that lasts for 12 months to replace the current design of 3 months, a company can aim to design a washable air filter that (in theory) can last indefinitely.
The question now is how companies can monetise products that last indefinitely. It is tricky because:
- One) companies haven’t acquired the expertise to produce this new product design (a manufacturing problem)
- And two) companies might have acquired the expertise to produce but not yet the expertise to distribute (a distribution problem)
Let’s take a look at the first case – the manufacturing problem. In 2021, Australia’s Minderoo Foundation produced a “Plastic Waste Makers Index” report, concluding that half of the world’s single-use plastic waste is made by just 20 companies. How can ExxonMobil – one of these 20 companies – reinvent its business model, including technical & manufacturing expertise in transforming petroleum into disposable plastics, to become an entirely new company?
As for the second case – the distribution problem, when parts of the products must be changed to reduce the environmental impact. One interesting example is Gilette, who started selling durable razors in 1895 before turning to disposable razors.
To get back the previous model of durable razors, the company does possess the expertise in-house. Modifications, therefore, can be made with the handle of the razors, turning away from the unrecyclable plastic part while continuing to sell metal razors, which must be collected to recycle later.
In the same direction, initiatives such as buying groceries in bulk in stores such as La Vie Claire, Biocoop; or delivery service using reusable containers by Loop, and partnering up with conventional supermarkets such as Carrefour are the first step in redesigning parts of a product/service to reduce the usage of disposable elements.
Single-buy products potentially last indefinitely, but customers tend to want/own several of them, for example, clothes, shoes, kitchenware, etc.
In July 2021, 50 French PMEs in the textile and fashion industries signed a petition, asking the industry to be more regulated. As they willingly try to minimise their environmental impact by using more environmentally friendly materials and reducing energy consumption, there is no strict law applying to the whole industry, and other companies operating solely on a cost-based strategy are not penalised. This is one of the weak signals, predicting a more systemic change in the future.
That being said, there are different levels of transformation that companies can aim at, with the most radical model being that there will be no newly produced products but a circular usage and repairing of existing ones.
Several established companies in the textile and fashion industry are aiming at this level of transformation, for example, Kering’s investment in Vestiaire Collective – a second-hand market for luxury clothing, or La Redoute and their initiative of La Reboucle, a peer-to-peer second-hand market.
With the rise of third-party second-hand markets such as Leboncoin with a volume of $7 billion transacted or Vinted with $1 billion transacted in only eight years, there is indeed an opportunity to seize on monetising the existing products, turning away from single buy to circular buy.
Individual-use products are ones that potentially last indefinitely but are not often in use. Example: electronic household appliances, vehicles, or to a greater extent, household spaces.
Platforms such as Uber, Getaround, Blablacar or Airbnb have become classic examples of monetising not often used, non-productive products or spaces of a household. These platforms have succeeded in creating a disruptive marketplace – creating new suppliers and customers by monetising smaller supply units (e.g. dividing the house into small rental units such as a room or a sofa for a short period).
The same principle applies to electronic household appliances. Tool rental platforms such as Bricolib or Allovoisins or Kiwiiz are a few of hundreds of examples of a business model where individual use products can be shared between households in a given neighbourhood. In contrast, these platforms monetise on transactions.
Established companies can yield interesting insights by studying these two-sided platforms, first by asking how to divide historical products or services usage into smaller rental units between historical customers.
Grand challenges such as climate change and environmental degradation demand solutions from a different scale. Optimisation efforts, though necessary, are no longer enough. A Reinvention mindset is needed to create more exciting and exhaustive solutions to meet ambitious environmental objectives.