Is the circular economy just a buzzword? Or can we change future consumption with subscriptions?

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By Morten Suhr Hansen

”The circular economy is a solution framework that offers better growth while addressing the most pressing global challenges”

These are words from the founder of the Ellen MacArthur Foundation, an organization established solely to spread the idea of the circular economy. For many years, we have talked about this future economy as a utopia where our consumption patterns and business practices would change significantly. In the above quote, Ellen MacArthur promises that it will even offer better growth than traditional models.

But it seems that the radical changes are taking time. And only a few understand how significant a shift to a circular economy actually is.

However, certain industries are actively undergoing the transition. And the majority of them are doing so through subscription models. Because, if you are going to transform the way you offer products and services, without affecting the bottom line negatively, a new business model is needed.

With the Green New Deal, the EU is taking the first steps toward a circular economy. The commission for sustainable development is actively working on legislative proposals, action plans, and reduction targets. However, all these proposals need to be voted on in the European Parliament before they can directly impact European businesses. This is likely to happen around 2025. If the commission succeeds in implementing its plans, it will have enormous consequences for the responsibility that companies have to operate a sustainable value chain, offer repairs, and foster growth without a corresponding increase in resource consumption.

The leading industries are solving the issue with subscriptions

It does indeed sound like a significant task, and for most industries, it represents a genuine paradigm shift. However, there are already industries that are far ahead in embracing the future’s Sharing Economy and offering products in circulation.

The mobility sector is a notable example, especially within the automotive industry, which has recognized that future car consumption will be significantly different from today. This is evident in the progress of car-sharing concepts like GoMore and Kiinto Share, as well as “Car-on-demand” services such as GreenMobility and ShareNow, which have truly started to win over consumers.

In the tech industry, thoughts about Hardware-as-a-Service are also emerging, with concepts like Circular and myway offering computers, mobile phones, and tablets through subscription services to extend the lifespan of these products. However, there is still a significant breakthrough needed in this area, as consumers are still accustomed to purchasing expensive computers and phones only to replace them every 3-4 years.

In addition, industries such as the fashion and furniture sectors are undergoing a development to meet the future demands for more sustainable consumption. Progress is advancing rapidly, but concrete initiatives are still lacking from market leaders like H&M, Zara, and Bestseller.

Subscrybe looked in to the development of circular economy

It can be challenging to get an overview of how the circular economy is evolving. Therefore, my colleagues Niels Vestergaard and Monika Kjøstvedt have prepared a report that provides an overview of the current state of various industries. The report offers inspiration on how you can incorporate a more sustainable business model and also informs about the EU requirements that will soon become a reality.

Subscrybe and the Ellen MacArthur Foundation certainly agree that the path towards a more circular consumption involves subscription models. This is the only way we can extend the lifespan of consumer goods such as clothing, technology, and transportation without compromising on growth and profitability.

So if you want an update on the development of the circular economy, download the report here.