Manufacturers Are Embracing the Circular Economy
Although manufacturers view energy as a scarce resource, more than 40 percent say it’s their biggest source of waste.
Photo courtesy ABB Motion
Manufacturers are increasingly thinking about the impact of their operations on the environment and on scarce resources—not just because it’s the right thing to do, but because it makes economic sense, as well.
Now, a new report from ABB Motion, “Circularity: No Time to Waste,” is putting some data behind that trend. The survey reveals that 92 percent of industrial businesses in the U.S. are feeling the effects of resource scarcity, prompting 67 percent to increase their investment in circularity initiatives within the next three years.
Raw materials are seen as the scarcest resource, followed by labor and electronic components. Resource scarcity has led to increased costs for 39 percent of businesses, as well as supply chain disruption and slowdowns in production capacity. Despite energy being an increasingly scarce resource, more than 40 percent reported it as their biggest source of waste. This highlights an urgent need for greater energy efficiency across industry, something the International Energy Agency says will be a critical lever in meeting net-zero carbon emission targets.
Conducted by Sapio Research in October 2023, the global survey gathered responses from 3,304 industrial decision-makers across 12 countries, including 400 respondents in the U.S. Respondents represented a range of industries, such as energy, metals, chemicals, oil and gas, marine, mining and utilities.
While there is optimism about investing in circularity, the survey identified obstacles to immediate progress. For example, no single definition of “circularity” was accepted by the majority of respondents. Also, only 14 percent saw circularity as a companywide responsibility, but this group experienced the highest level of improvements across key circularity metrics, such as energy consumption, use of recycled materials, and carbon emissions.
The survey also revealed limited adoption of many important circular practices with the U.S., including partnering with waste management companies, incorporating energy-efficient technologies, and promoting circular principles in the supply chain. Encouragingly, 81 percent are using recycled materials in their products to some extent.
Investing in circularity has already led to measurable benefits, including waste reduction (44 percent) and energy efficiency improvements (49 percent). Although some businesses express concern about the upfront investment required, many anticipate long-term improvements in process efficiency and cost control.
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Most respondents (84 percent) agree that the circular economy encourages innovation and drives competitiveness. They also support increased regulation and reporting requirements and want more government support for adopting circular business practices.
“The pressing need to transition to a circular economy has never been clearer,” says Tarak Mehta, president of ABB Motion. “Our current way of life is depleting resources at an unsustainable rate, contributing to emissions and climate change. Embracing circularity is not only essential for safeguarding our environment but also for enhancing business resilience.
“This survey highlights the importance of taking a holistic approach, instilling responsibility at all levels of the organization, and embracing new technologies and collaborations. While there are challenges to overcome, businesses that fully embrace circularity see significant benefits, from cost control to improved reputation. We must act now, to make circularity the norm in global industries. There is no time to waste.”
To consult the full report: https://social.abb/circularity-report.
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