The Future of the Circular Economy: The Climate Rising Recap – Harvard Business School

Advancing Circular Economies Aligned with Sustainable Development Goals

Leading companies such as Apple and Adidas are adopting circular production models that emphasize repurposing products for resale and minimizing waste, directly contributing to several Sustainable Development Goals (SDGs), including Responsible Consumption and Production (SDG 12) and Climate Action (SDG 13). Insights from the Climate Rising podcast, hosted by Harvard Business School Professor Michael Toffel, highlight innovative approaches to scaling circular economies.

1. Reju’s Patrik Frisk: Leveraging AI to Optimize Inventory and Production

Reju transforms discarded polyester blend apparel into new polyester, preventing textile waste from reaching landfills and incinerators, supporting SDG 12 and SDG 13. Traditionally reliant on manual sorting, Reju is developing infrastructure with conveyor belts and optical scanners to enhance efficiency.

• CEO Patrik Frisk emphasizes the role of Artificial Intelligence (AI) in aligning production output with customer demand.
• AI integration is anticipated to provide competitive advantages by optimizing inventory management and reducing waste.

2. Vytal’s Fabian Barthel: Sensor Technology to Promote Container Reuse

Vytal has implemented a “borrow-and-return” system for food containers across over 20 countries, including the US, fostering sustainable consumption patterns (SDG 12) and waste reduction (SDG 11). Customers have 14 days to return containers or are charged to keep them.

• Return rates exceed 99%, demonstrating effective resource conservation beyond traditional deposit schemes.
• The system thrives in closed-loop environments such as college campuses, reducing waste management costs.
• Future plans include deploying sensor technology to incentivize returns in open environments, e.g., offering merchandise or drink vouchers at events.

3. ThredUp’s James Reinhart: AI to Enhance Resale Shopping Experience

ThredUp facilitates the resale and recycling of clothing, promoting sustainable consumption (SDG 12) and responsible production. Partnering with nearly 50 brands, the company has expanded into “resale as a service.”

• AI is being integrated to improve product search and customer experience by automating attribute tagging.
• Prototypes include AI-assisted customer input for goods and outfit creation combining ThredUp inventory with personal wardrobes.
• This innovation accelerates sustainability by extending the lifecycle of apparel and reducing textile waste.

4. Ikea’s Karen Pflug: Embedding Circularity and Long-Term Sustainability

Ikea, through its parent company Ingka Group, incorporates circularity into product design and business strategy, aligning with SDG 12 and SDG 13.

• Example: The Billy bookcase has been redesigned for easier disassembly and repair.
• Investment in RetourMatras supports mattress recycling, leveraging favorable policies in the Netherlands.
• Ikea advocates for policy changes to reduce landfill and incineration reliance.
• Financial model reinvests 85% of revenue into the business and 15% into its foundation, enabling generational thinking and sustainable decision-making.

5. Closed Loop’s Lauren Rodriguez: Infrastructure and AI Driving Circular Economy Growth

Closed Loop Partners invests in businesses that enable circular economies, addressing SDG 9 (Industry, Innovation, and Infrastructure) and SDG 12.

• The Closed Loop Infrastructure Fund supports municipal waste commissions in acquiring equipment to improve recycling collection and processing.
• AI and robotics are expected to create new opportunities, particularly in managing electronic waste (e-waste), which is increasing with expanding server farms.
• Investment in Molg, a company using autonomous robots to disassemble electronic devices, facilitates recovery of valuable components for reuse.

Conclusion

The initiatives discussed demonstrate how circular economy innovations contribute to achieving multiple Sustainable Development Goals by reducing waste, promoting sustainable production and consumption, fostering innovation, and encouraging policy advocacy. The integration of AI and sensor technologies further accelerates these efforts, offering scalable solutions for a sustainable future.

1. Sustainable Development Goals (SDGs) Addressed or Connected

1. SDG 12: Responsible Consumption and Production
   • The article focuses heavily on circular production models, waste reduction, and recycling efforts by companies like Reju, Vytal, ThredUp, Ikea, and Closed Loop Partners.
2. SDG 9: Industry, Innovation, and Infrastructure
   • Use of AI, sensors, and advanced technologies to improve production, inventory alignment, and recycling infrastructure.
3. SDG 11: Sustainable Cities and Communities
   • Closed-loop systems in communities such as college campuses and cities, and municipal waste management improvements.
4. SDG 13: Climate Action
   • Reduction of waste and landfill use contributes to climate mitigation efforts.

2. Specific Targets Under Those SDGs

1. SDG 12: Responsible Consumption and Production
   • Target 12.5: Substantially reduce waste generation through prevention, reduction, recycling, and reuse.
   • Target 12.2: Achieve sustainable management and efficient use of natural resources.
2. SDG 9: Industry, Innovation, and Infrastructure
   • Target 9.4: Upgrade infrastructure and retrofit industries to make them sustainable, with increased resource-use efficiency.
   • Target 9.5: Enhance scientific research and upgrade technological capabilities of industrial sectors.
3. SDG 11: Sustainable Cities and Communities
   • Target 11.6: Reduce the adverse per capita environmental impact of cities, including waste management.
4. SDG 13: Climate Action
   • Target 13.2: Integrate climate change measures into policies and planning.

3. Indicators Mentioned or Implied to Measure Progress

1. Return Rate of Reusable Containers
   • Vytal’s reported return rate of more than 99% for reusable food containers is an indicator of successful reuse and waste reduction.
2. Volume of Materials Recycled or Repurposed
   • Reju’s production of new polyester from discarded apparel and RetourMatras recycling one million mattresses indicate measurable recycling outputs.
3. Adoption of AI and Technology in Production and Sorting
   • Integration of AI to improve inventory alignment, product tagging, and sorting efficiency as described by Reju, ThredUp, and Closed Loop Partners.
4. Investment in Circular Economy Infrastructure
   • Closed Loop Infrastructure Fund’s financing of municipal waste equipment and investment in robotic disassembly technology are indicators of infrastructure development.
5. Reduction in Waste Sent to Landfills and Incinerators
   • Implied by companies’ efforts to divert materials from landfills and incineration through circular models.

4. Table: SDGs, Targets and Indicators

Source: library.hbs.edu