360 sustainability: Steps businesses can take to implement circularity

Businesses that adopt circularity now will not only proactively prepare to comply with future regulations but also position themselves as leaders and build a competitive advantage, writes Frédéric Godemel, EVP of Energy Management at Schneider Electric.

The political picture for sustainability remains volatile and fragmented across regions. Despite targets and goals changing, we’ve seen steady progress in key areas of the energy transition. For instance, climate thinktank Ember has found that the EU made more electricity from solar than coal in 2024, and its progress in wind and solar has helped them avoid €59 billion in fossil fuel import costs. There have also been breakthroughs with electric vehicles, as a record high of 17.1 million were sold globally in 2024.

This progress, while mandated by some policies, has been driven through business action. After all, the shift is not only beneficial to the planet but also for people and profitability. Research from Gartner underscores this – in 2024, it found that 69% of CEOs view sustainability as a growth opportunity. Consequently, two-thirds of Fortune’s Global 500 companies have now made substantial commitments to tackling climate change across their total value chains.

However, we cannot afford to lose momentum. To reach our sustainability pledges, we must turn our attention to circularity. Alarmingly, the share of global circularity fell from 9.1% in 2018 to 7.2% in 2023. Yet, during this period, resource consumption continued to accelerate and we have consumed a staggering 500Gt of resources – 28% of all materials used by humanity since 1900, concentrated in just the last five years.

If circularity is an indicator of environmental progress, we must take bold action to achieve our sustainability targets and continue driving meaningful change.

Discarding the ‘take-make-waste’ economy

Circularity is an economic model that aims to eliminate waste, preserve resources and reuse materials. A stark contrast to the linear ‘take-make-waste’ model that our current economy is built upon.

Take the life of a bottle of water, for example: oil is drilled from the earth and refined into polyethylene terephthalate – take. Then this is moulded into bottles that are filled with water – make. Finally, they are consumed once and then discarded – waste. Just 12% of the world’s plastic bottles are recycled, and meanwhile, the 88% of remaining bottles are tossed into a landfill, where they can take up to 450 years to decompose.

This unsustainable pattern of consumption significantly contributes to greenhouse gas emissions and biodiversity loss. Transitioning to a circular economy could drastically reduce the materials we use by 70%, creating better resource utilisation. So, how exactly can a business become more circular?

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It all starts with the design

According to the Schneider Electric circularity framework, the first consideration for achieving circularity is to adopt eco-design, which directly impacts our product development and innovation. This means creating products for reliability and longevity, rather than quick disposal. Designing and innovating for circularity enables our products to be used better, used longer and used again.

Building on this foundation, businesses must evolve from a traditional and transactional sales approach to an as-a-service model. To support this shift, companies should consider supplementing sales with rental, repair and support services. This simultaneously extends product lifecycles, reduces waste and creates new growth opportunities. By offering second-hand tech and trade-in programmes, companies can meet demand for affordable, eco-friendly options. This model reduces waste, boosts customer loyalty and drives long-term profits.

Optimising resources through responsible sourcing

The first principle is to use better, which calls for the responsible sourcing of materials to optimise manufacturing and minimise waste. For instance, sourcing best-in-class materials ensures reduced environmental and social impact throughout the supply chain. Schneider Electric products are currently made with 32% recycled materials with the aim of reaching 50% by the end of 2025. In addition, more than half of our sites recover 99% of waste, demonstrating our commitment to using better.

We are also expanding our smart factory network, with two recent facilities in Monterrey and Shanghai. Both sites utilise machine learning-enabled prototyping, smart planning and GenAI-driven maintenance to boost productivity while driving down resource consumption. This commitment to sustainability and operational efficiency has been recognised by the World Economic Forum who have designated both factories Lighthouse status.

Circularity demands that companies address sustainability in their total value chains. Sustainable supply chain programmes have already been launched in various sectors, such as global healthcare, the semiconductor industry, as well as mining, materials and minerals. These programmes help companies responsibly source materials, reduce emissions and eliminate waste at every link.

Extending product lifecycles

The second principle is to extend the lifespan of products and use them longer. Businesses must anticipate the need for equipment by opting for condition-based repair, digitally enabled maintenance and equipment modernisation. Reparability and circularity services, such as Schneider Electric’s EcoFit, can extend asset life by up to 25%.

In fact, our customer ArcelorMittal reconditioned 13 MV switchgears, avoiding the reprocessing of 26t of material, saving the equivalent of 170t of CO2. Refurbishing existing equipment instead of discarding it reduces waste and emissions while conserving resources.

The third and final principle is to use again. This concept encourages businesses to recirculate products, parts and materials within the economy; effectively refurbishing and reselling assets that have reached the end of their initial use. Schneider Electric’s Altivar drive sends damaged modules to our repair centres for testing. Once refurbished, products come away with the same warranty as new ones, achieving up to 80% savings on resources, energy and emissions.

Building a circular business growth framework

Adopting circularity is not just about protecting the planet – it’s a powerful business tool that drives cost savings and growth. By embracing circularity, businesses can differentiate themselves, create new value streams and stay ahead of an increasingly competitive market.

Moreover, global climate and environment regulations will make circularity a necessity, rather than a choice. The EU, for instance, has introduced some of the world’s most comprehensive policies, such as the Circular Economy Action Plan, the Ecodesign for Sustainable Products Regulation (ESPR) and the Corporate Sustainability Reporting Directive (CSRD).

So you see, circularity isn’t just the right thing to do; it’s the smart thing to do for any forward-thinking organisation.