Sustainability Innovations and Building the Circular Economy
An important topic focused on sustainability along the value chain was discussed in a recent cross-industry panel at the SAP Conference for Building Materials, Forest Products, Chemicals and Metals and Mining 2021. The conversation included thought leaders across various industries to discuss specifically how businesses can continue to be successful yet stay within the planetary boundaries. Fundamentally, industries such as steel, cement, plastics, mining, packaging and textiles, etc. are responsible for tremendous growth but also for high global CO2 emissions. These industries are playing a major role in changing the take, make, waste industrial system and transforming it into something more sustainable, thus aiming to create a closed loop low carbon system in the circular economy.
Progress creating a closed-loop, low carbon system
There is a high degree of collaboration taking place upstream across suppliers between industries. With this industrial symbiosis occurring, we are seeing a move away from the traditional supply chain and a look toward neighboring industries, understanding waste streams and looking at new ways to share plus determining opportunities for one industry to benefit another. Local partners & networks are critical when it comes to sustainability and making large strides toward the ultimate net zero carbon goal.
For example, Audi is supporting the Aluminum Stewardship Initiative that involves multiple stakeholders including expertise upstream from mining industries down to automotive manufacturers at the end of the value chain. Due to the nature of the parts creation process, 50% of the aluminum becomes scrap, however that waste now goes directly back to the supplier and is remelted and reused.
Important factors to consider when aiming for circularity
Creating new business models and partnerships is probably one of the most important elements to examine. It is important to ensure suppliers are delivering the agreed upon quality and standards that have been asked for, which leans into sustainability certification for the end product. There needs to be a high degree of trust in addition to having clearly defined standards of excellence and (alignment around comparable standards) in place to ensure the expectations are documented and there are checks and balances in place across the process.
Gerdau, one of the largest producers of steel based in Brazil, underscored the importance of collaboration as there are over 1K suppliers in Brazil alone and they are working collectively and trying to encourage the transition to a circular economy. To further illustrate, Gerdau was one of the leading companies involved in the launch of the Brazilian Circular Economy Hub, which is essentially a large ecosystem that brings companies, government and other organizations together to influence the circular mindset, identify common areas of interest, and facilitate negotiations to re-design industrial processes and promote new commercial relationships.
It’s important to recognize that each supplier may be at a different point in their sustainability journey but they can still play a part in the circular economy provided there are agreed upon measures in place to deliver consistency.
The impact of sustainability on product design
New business models, ways of thinking and ultimately product/solution innovations are evolving due to the sustainability focus and businesses working together cross-industry. Ultimately, many organizations have an overall sustainability strategy underway that is driven by decarbonization and aggressively working toward a goal to get to net zero within the next 30 years or sooner.
CEMEX, specializing in building materials and concrete, shared a great example of the evolution of product design. A new construction element was created to develop buildings in a much different manner, whereby structures can be constructed with a material that can grow vegetation. This was a collaboration between architects, plant experts, building materials creators as well as the software expertise to grow things in a controlled manner.
A sustainability partnership
SAP is committed to sustainability and helping businesses to achieve their goals, with 75% of all business transactions being touched by an SAP system, there is an opportunity for us to have a positive impact. For more details on our work in Sustainability see our community site.
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Thanks for the blog! very insightful.