​Circular economy, the necessary step towards sustainable business

One of the main challenges facing executives today is how to make their business more sustainable. Some time ago, sustainability stopped being an auxiliary attribute and began to direct the business models of market-leading companies. In this sense, today we realize that the most important advances are achieved thanks to themes and activities linked to the concept of circular economy. This is the simplest and most direct strategy to reduce the waste of resources – since its operations extend to the entire value chain – and generate new business opportunities.

Circular economy is much more than waste management. The concept encompasses keeping resources in use for as long as possible, minimizing their disposal, using them as efficiently as possible, recovering and regenerating products and materials throughout their life cycle. The model requires substantial changes in terms of technology and, mainly, behavior from all of us.

To achieve this, circular thinking should not be limited to a company’s internal operations. An active circular economy concept must consider the product, the process, the use and its reuse system from conception. It should encourage companies to think not only about their individual production stage, but rather, consider the entire value chain for their development, use, disposal and reuse of products.

The circular economy is a relevant trend mainly in the transport, agriculture and construction sectors. In the transportation sector, trends in connectivity, autonomous driving and the rise of electric cars should enable mobility service providers to offer coordinated transportation options.

Changes in the agriculture chain would probably be less disruptive. Innovations in information technology systems can facilitate precision agriculture and create the opportunity to coordinate fully digitized supply chains, which reduces the amount of food waste along the entire chain.

Furthermore, changes can lead to greater resource efficiency and also regenerative agricultural practices, which allow for better nutrient cycling, including integration with technologies from other industries. One of them is packaging, with the use of biodegradable plastics to package organic waste - which allows for composting and reuse of nutrients.

Finally, in the construction chain, we are already seeing the influence of new technologies, such as 3D printing and industrial construction processes in the factory, which means that from the development of materials we seek to save resources such as water and energy, for example. The construction sector is also changing due to new forms of residential distribution, shared offices and remote work.

The concept of circular economy affects companies, products and services in different ways. With its capacity for innovation, the chemical sector plays a fundamental role when it comes to new solution processes. BASF, as the world's leading chemical company in innovation, is no stranger to global trends and, therefore, has developed two tactics that are being used in South America. They are: Keep it Smart (Keep the Process Smart) e Close the loops.

Keep it Smart It is the intelligent use of solutions to increase the efficiency of processes throughout the chain and make products more effective. An example of this is BASF's Verbund concept. The system creates effective value chains from basic chemicals to high-value products such as pigments and crop protection products. To produce this variety of solutions, co-products from one plant are used as raw materials from another. In this system, chemical processes consume less energy, create less waste and, as a consequence, preserve resources.

The tactic Close the loops refers to waste and co-products that are transformed into resources that can be reused in the same process or modified to contribute to different processes. An example of this is the reuse of precious metals recovered after the end of life of automotive catalysts, which can be used again in the production of catalysts or other products.

The transition from a linear economy to a circular model brings significant changes to the business models and activities of many industries. The degree and speed of "circularity" will depend on the pace of technological development, regulatory incentives, new business models, availability of investment and the willingness of consumers and the business sector to change their behavior.