With more governments and individuals taking resource scarcity and environmental degradation seriously, the 20th-century model of “take, make, dispose” is no longer seen as tolerable, let alone sustainable. Amidst countless approaches now being taken to reduce manufacturing waste and environmental impacts, the idea of a circular economy has proven to be among of the most influential.
Rather than relying on endless extraction and consumption, circularity encourages businesses and other major institutions to reimagine products, services, and value chains with both longevity and resource efficiency in mind. In a way, this idea harkens back to the days before mass manufacturing, when there were major efforts at all levels to recover and repurpose materials in products that reached their “end of life.” However, with the benefits of modern technology and insights, the potential for cost savings and reductions in environmental impact can be more profound, even as regular people’s access to commodities is increased.
The idea is certainly not new, and many businesses and governments have played around with it over the years. However, the case for embracing circularity has never been stronger. It’s no longer just startups with environmental and social goals who are into the idea, but regular businesses as well. The recent availability of such strong incentives as carbon credits and circular economy financing have caused even traditionally resource-hungry sectors like manufacturing, retail, construction, and even leading-edge electronics to slowly move towards a circular model.
In Singapore, profits and green business methods are being knit closer thanks to an increasing array of publicly-funded incentives. With private financial institutions starting to pitch in, it would be a mistake for local businesses to ignore the potential of circular models. When you’re ready to take your first steps, use this practical guide to keep your move sustainable.
1) Map Your Supply Chains
Before you can redesign your business for circularity, you’ll need a clear understanding of where your materials come from, how they’re used, and what happens to them after. This process, often called “material flow mapping” or “material flow analysis,” helps you identify key inefficiencies as well as opportunities to recover or extend the life of resources.
While chiefly an issue of procurement and operations, as a general rule, it’s a good idea to involve all departments across your organisation in this exercise. The more detailed your resource map, the easier it is to spot low-effort areas where circular principles can be applied most effectively.
2) Design for Repair, Longevity, and Reuse
Building for single-use or rapid planned obsolescence has been de rigueur since at least the early 20th century, when the Phoebus cartel conspired to shorten the lifespan of lightbulbs. However, consumers have become increasingly wary of products that are built to fail, even when they come at lower prices. Given this, there is a real demand for products that are both durable and repairable.
Aside from wasting fewer resources, an approach focused on repairability and durability also supports a variety of circular pathways. Such an approach allows for refurbishment, remanufacturing, or modular upgrades that can give your offerings a longer useful life. It can also open the door to new revenue streams, such as repair services or certified second-hand product sales. “Brand love” can also increase as products are able to serve their owners for far longer.
3) Shift Towards Product-as-a-Service Models
Instead of selling products outright, many retail-focused businesses are now adopting subscription or leasing models. Already, such services as furniture rental, industrial tool leasing, and cloud-based software-as-a-service are gaining popularity among SG businesses.
Because product-as-a-service keeps ownership responsibilities with the business, better maintenance and resource usage are incentivised, effectively increasing the lifespan of products and keeping them away from premature ends in landfills.
4) Recover Value from Waste
Speaking of landfills, a good deal of usable materials ends up in landfills each year. In Singapore, where landfill space is limited and waste management is under increasing scrutiny, structured resource recovery at business sites can massively save on procurement costs, all while improving environmental performance metrics and compliance. The National Environment Agency (NEA) offers insights into waste minimisation and recycling strategies that can make a major difference when deployed at your business.
5) Optimise Reverse Logistics
If you’re taking back used products or materials for refurbishment or recycling, you’ll incur costs for these activities. For that reason, having a reliable and cost-effective reverse logistics system should be part of any such initiatives. In these cases, rethinking your delivery networks to enable efficient collection, return, and reintegration into production loops will be necessary.
While building this infrastructure can seem daunting, it’s increasingly feasible thanks to third-party logistics providers and off-the-shelf digital tracking systems. If properly executed, reverse logistics can turn what would have been end-of-life liabilities into valuable returns.
6) Engage Suppliers and Partners in Circular Goals
No business model exists in a vacuum. As with any serious business initiative, a shift to a circular business model requires some cross-organisational collaboration.
Start by reviewing supplier contracts and sourcing policies. Partners committed to sustainable practices can go a long way in helping you achieve consistent circular outcomes.
7) Tap into Green Finance Opportunities
Circular business models are now eligible for a growing number of green finance instruments. Whether it’s sustainability-linked loans or transition finance, you can find state-owned and private financial institutions that can provide at least some of the capital needed to make a shift financially viable. Singapore’s financial institutions have taken the lead in this space, with a number of banks offering targeted support for all types of businesses.
Circularity Is Worth the Investment
Even in the best of times, a circular business model isn’t going to be a quick fix. It will inevitably require investing in new expertise, skill sets, and technologies, potentially at a much higher cost than simply going with the status quo—at least, for the time being. The long-term payoffs are substantial, with lower running costs, improved brand equity, and consistent alignment with both national and international goals.
If you’re planning to set up shop in Singapore, now’s the time to see what opportunities are in store. With the city-state and local financiers now going all-in on sustainability, businesses that embrace circular practices early stand to benefit, not just from preferential funding and regulation, but a future-ready market position in the region’s most powerful economy.