Frederic Godomel is the Executive Vice-President for Energy Management at Schneider Electric.
The global landscape for sustainability is ever-changing, with regional policies and targets being the new focus for government decision making. Despite this, significant strides have been made in the energy transition. For example, one climate think-tank reported that in 2024, the EU generated more electricity from solar than from coal. This isn’t the only reason to be cheerful. The EU Commission recently signaled hope to the battery industry with its EU automotive action plan.
And while policies like that one are useful for helping to spur business investments and to promote change, there has been a real sense of climate leadership from many organizations. This reflects the findings of EY’s survey into CEO attitudes last year, with over half saying sustainability was a bigger priority than it was the year before. Business leaders understand this can be a challenging path, but it’s one they’re willing to be on.
With political uncertainty continuing and businesses looking to juggle short-term priorities with long-term investments in sustainability, the path to net zero isn’t a smooth one. Alarmingly, global circularity dropped from 9.1% in 2018 to 7.2% in 2023. We can’t afford to be going backward. If anything, circularity should be raising the agenda for all of us.
According to a 2024 report, "Moving towards a more circular economy could increase competitiveness, stimulate innovation, boost economic growth and create jobs (700,000 jobs in the EU alone by 2030). Furthermore, redesigning materials and products for circular use would also boost innovation across different sectors of the economy.”
So, the value is there, but how can companies make the most of this opportunity?
Breaking The Take-Make-Waste Cycle
Circularity aims to eliminate waste, preserve resources and reuse materials, contrasting sharply with the linear "take-make-waste" model that we are more accustomed to. The disposable coffee cup is one of the most day-to-day items where this process is viewed. Raw materials like paper and plastic are extracted, made into coffee cups and then tossed once the drink is finished. According to research, most disposable coffee cups in the U.K. are not recycled.
This puts into sharp focus the scale of the circularity challenge. Transitioning to a circular economy could reduce material use by 70%, optimizing resource utilization. So, how can businesses become more circular?
Designing For Longevity And Reliability
If you follow our business' circularity framework, the first step is eco-design, focusing on product reliability and longevity. Designing for circularity means creating products that are used better, longer and again. Businesses should shift from traditional sales to an as-a-service model, offering rental, repair and support services. This extends product lifecycles, reduces waste and creates new growth opportunities.
Responsible Sourcing And Smart Manufacturing
The principle of "use better" involves responsible sourcing to optimize manufacturing and minimize waste. We aim to use 50% recycled materials by 2025 and recover 99% of waste at more than half of our sites. We’ve seen positive impacts through utilizing machine learning-enabled prototyping, smart planning and GenAI-driven maintenance to boost productivity while driving down resource consumption.
The impact of smart factories on this move to "use better" shouldn’t be ignored. Expanding smart factory networks, like those in Monterrey and Shanghai, has helped us enhance productivity while reducing resource consumption.
Lifecycle Extension
The second principle, "use longer," involves condition-based repair, digitally enabled maintenance and equipment modernization. Implementing predictive maintenance through IoT sensors can further enhance the longevity of equipment, reducing unexpected downtimes and optimizing operational efficiency. This proactive approach not only conserves resources but also significantly cuts down on maintenance costs over time.
The final principle, "use again," encourages recirculating products, parts and materials. While the whole product may not be suitable for reuse in the same way, it’s often possible to reuse elements—or broken parts can be replaced for more modular fixes. This, again, can help to extend the life of an asset.
Building A Circular Business Growth Framework
Adopting circularity is not just about environmental protection; it's a powerful business tool for cost savings and growth. Circularity differentiates businesses, creates new value streams and ensures compliance with future regulations. We’re seeing legislation such as the EU's Circular Economy Action Plan make circularity a necessity.
Businesses that embrace circularity now will lead the way, gaining a competitive advantage and ensuring they’re one step ahead of future regulations.
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