In Denmark, both start-ups and more established companies have introduced innovative circular economy business models to the market. The companies do so because it has proven to be a sound business strategy that facilitates access to new markets, drives innovative solutions, and saves production costs e.g. on resource input.
New types of business models are developing rapidly. There is no one-size-fits-all, which is why there is such a large variety of circular economy solutions being introduced. However, some trends, such as product-as-a-service and the sharing economy, are changing our production and consumption patterns.Some companies are changing their business model from selling a product to selling a service. For example, VIGGA’s business model allows parents to lease organic baby clothing instead of having to invest in new clothing. In general, these business models allow the company to retain ownership of the product (and thus also the resource) and keep the product in the loop for reuse, re-manufacturing and extension of its life-time. At the same time, the customer pays for the use and not the ownership of the products, which saves both money and resources.
A circular economy is highly driven by the digitalisation and platform models that allow consumers to share and utilise available resources and assets. A circular economy therefore has a strong link to the sharing economy, where the focus is on accessing products rather than owning them. For example, the Danish car-sharing platform GoMore allows travellers to share their ride or share their car with others. Even though not all sharing economy products and services are necessarily related to circular economy principles, the sharing economy has transformed consumer behaviour, and is expected to have an even greater influence in the future.
Consumption patterns play an important role in the transition towards a circular economy. Without a demand from the customer, the companies cannot sell their solutions. The public sector’s significant purchasing power allows it to drive the demand for circular economy products and business models. For example, the City of Herning, located in Denmark, developed a guideline for reuse and circular procurement requirements for work clothing.
Another approach that can facilitate more circular procurement is using total cost of ownership as the basis for procurement decisions – i.e. not only considering the purchasing price, but also the operation, disposal costs and the potential future use and value. To help procurers calculate the total cost of ownership, the Ministry for Environment and Food has developed a number of practical tools and guidance material that can be used in the procurement of different products, leading to more resource-efficient products and financial savings in the long run (The Total Cost of Ownership tools are available at www.csr-indkob.dk (only in Danish).
These new business models benefit both citizens, the public sector and private companies by providing resource efficient solutions. For private companies, the new business models can help increase security of supply of resources, lower costs by reusing materials and pave the way for new business partnerships and markets. At its core, these new business models can save both resources and money.
A circular subscription concept
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