Reimagining an Industry-Wide Paradigm Shift Toward a Circular Economy

The use of raw materials, including biomass, fossil fuels, metals, and non-metallic minerals, is expected to almost double between 2017 and 2060, increasing from 89 gigatons to 167 gigatons.

These staggering numbers stem from the predicted spike in consumption created by the combination of a growing population and higher per capita income. If this consumption spike comes true, there will be massive consequences on our planet.

Increasingly socially conscious consumers, employees, and citizens have expressed disapproval over the consumption and production model, which is powered by the economic business practices of the industrial age: “take, make, waste.” Managing the waste aspect of this industrial age approach requires even more resources and energy that in turn contributes to increased emissions and hazardous environmental issues. It’s literally waste creating more waste!

There is a clear case to shift from linear models to a more sustainable, circular business model of “resource, recovery, reuse.” According to the Ellen McArthur Foundation, of which SAP is a contributing member, the implementation of circular business practices could reduce up to 45% of carbon emissions and 90% of wasted materials.

Businesses are listening. Concerned by the potentially negative impacts on their operating costs, brand reputation, and employee retention, many companies are sharing bold aspirations and investments to reduce waste and emissions across their supply chains. These investments are also a generational opportunity to create innovative business models that can drive new sources of growth. Whether the industry is consumer products or agribusiness, technology offers the most effective way to achieve circularity at scale. There are three main ways that technology can enable circularity.

First, a business must start by eliminating surplus from its own operations to keep products and materials in use and regenerate natural systems. An inspiring example of this is &ever, a Hamburg-based farming company offering vertical farming solutions in cities with limited space. It uses SAP Business Technology Platform to optimize production and manage the needs and capacities of its farms to help ensure minimal waste in its own business processes.

Second, a company can reduce waste by gaining detailed visibility into material flows across its supply chain and that of its immediate trading partners. GreenToken by SAP offers an effective solution to aid in this process. The solution is supported by blockchain technology and provides a new level of transparency into raw material supply chains. This unique offering goes beyond tracking the final packaged good and provides visibility into the sourcing of all raw materials, including plastics, agriculture, and metals. Innovative solutions like GreenToken make sustainable sourcing and purchasing feasible and accelerates the transition to a circular economy.

Third, a business can activate circular practices by addressing specific problems and opportunities throughout its industry business network. For example, with the aim of reducing the use of single-use plastics across an entire industry cluster, SAP launched the Plastics Cloud, a new global marketplace for suppliers of recycled plastics and plastic alternatives. Through SAP’s involvement in the World Economic Forum’s Global Plastic Action Partnership, we are piloting this innovative technology solution through close collaboration with the Ghanaian Ministry of Environment, Science, Technology, and Innovation. In a country where only five percent of plastics are recycled, the Plastics Cloud reimagines the production, use, and reuse of plastics, helping the environment and improving the lives of Ghanaian waste pickers.

I am excited about the potential SAP has to help businesses run more productively, revolutionize their business models, and deliver growth to realize the vision of a circular economy across industries.

As business leaders, we must embrace sustainability as a business priority. This requires embedding sustainability across our business processes, using it as selection criteria for our vendors, and inspiring an industry-wide paradigm shift. Together, we can be on the forefront of a future with zero waste, one with a circular economy that thrives not at the expense of people and planet, but in unison.

Learn more about our efforts to productively manage limited resources by attending the virtual SAP Sustainability Summit.


Julia White is chief marketing and solutions officer and a member of the Executive Board of SAP SE.