How Businesses in the Service Sector Can Implement a Circular Economy

The concept of a circular economy (CE) has been gaining traction in recent years as a path towards a sustainable future. But not all companies recognize the need for change. Those in the services sector, in particular, often assume that their environmental impact is lower compared to companies in the manufacturing industry, for instance.

This needs to change because sustainability depends on our collective transition from a linear economy to a CE model. And service businesses can play a key role in driving that change. Using the right framework, it’s possible to start making improvements.

The circular economic model

Most companies today operate using a linear economy. Under this model, companies take raw materials to make products used and then thrown them away at the end of their lifespan. Not only does this deplete resources at unsustainable rates, but it also creates ever-growing problems of waste buildup.

The CE model attempts to solve this problem by design. Business operations must intentionally be conceived as restorative and regenerative. This goal is accomplished by seeking to prolong the service life of goods and products, recover waste, and repurpose it into a useful form, with multiple value creation points.

The hidden impact of services

The emphasis on how raw materials are extracted and sourced, discussions of CE and sustainability in general, often skew towards manufacturing. After all, manufacturers are the ones who respond to demand and increase the production of goods. They also tend to have a glaring lack of consideration for how waste products can be repurposed.

On the surface, figures such as greenhouse gas emissions seem to reflect this bias as well. In the UK, industry accounts for 72% of total emissions.

However, this picture ignores the fact that the service sector itself is a significant driver of industrial processes and energy consumption.

Take that into account, and the share of emissions is more balanced, with services responsible for over 43%. In terms of waste generated, it’s not even close. Services drive up to 86% of waste production with construction included.

The industry also has a mitigating factor in that its material flows are simpler, making it easier to manage them once a CE model is implemented. This task can be complicated for service companies, especially if they are spread out across multiple sites.

business report printed out

Deploying CE in services

Research has shown that CE can be successfully deployed in service companies using a framework that involves backcasting and eco-design. This technique develops normative scenarios from a feasibility standpoint while incorporating environmental considerations into product or service design.

Leaders of an organization have to sit down and rethink their vision, identifying opportunities to add value and seek alternatives along the supply chain. Those top-down changes will take time to be then implemented and tested.

At the same time, existing measures for sustainability can be further refined immediately. For instance, if you plan to upgrade office workstations to NUC PCs to take advantage of lower energy costs, you have to consider where the old machines will go. Can they be sold to a company or institution that will continue to use them and eventually responsibly dispose of them?

The difficulties involved with implementing CE in a service company reflect the challenge our society faces. It’s a complex problem, and you often end up having to consider the practices of suppliers and partners you work with. But we all have to start making these changes moving forward, not just on the manufacturing side but in the service companies that utilize their products.

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