Circularity vs Sustainability

What is the difference between circularity and sustainability?

This is a common question among supply chain and sustainability-focused professionals. It is also a question that you might be having as you participate in New York City’s upcoming virtual Circular City Week event.

Here is a short guide on the difference and how these concepts can help you save your company millions of dollars.

First, the definitions:

Sustainability: Meeting the needs of the present without compromising the ability of future generations to meet theirs.

Circularity (aka circular economy): An economic system that focuses on renewal and on gradually separating economic growth from the consumption of finite resources.

As you can probably tell from these two definitions, sustainability is a much more general term. Circularity is often put under the umbrella of sustainability, especially within corporate environments. Both sustainability and circularity efforts aim to benefit businesses, society, and the environment. They also both have an emphasis on cost savings and include the entire supply chain of a business.

Sustainability and circularity differ the most when it comes to the end of a product’s life cycle. Sustainability efforts may support a linear system, in which raw and technical materials continue to end up in landfills at alarming rates. Consider an organic t-shirt; the cotton is grown in a way that limits chemicals from entering the natural environment, reduces water usage, and might even be certified as Fair Trade. However, at the end of its life, when it is worn out and full of holes; it will most likely still end up in a landfill.

Alternatively, circularity was inspired by nature and always aims to eliminate waste through turning an existing product into a completely new product or by creating a product that can return to the earth. An example of products that were made with circularity in mind would be shoes made from biodegradable pineapple leaves or a t-shirt that was made from plastic bottles. Sustainability efforts may incorporate circularity into their supply chain, but it is not always the case.

All sustainability initiatives can help supply chain managers reduce costs and mitigate risks within the supply chain. These benefits vary depending on the industry and the company. As an example of what this might look like, here are some number and benefits around Intel’s sustainability initiative:

  • Water savings: Intel has built on-site water reclaim facilities which between 2018 and 2019 saved 45% of water costs in Israel and 30% of water costs in the United States.
  • Energy efficiency: Since, 2012, Intel has invested $200 million in global energy conservation projects, which has saved more than $500 million.
  • Human rights: Since 2014, Intel has remediated $15 million to their suppliers’ workers in response to violations of their anti-slavery and human trafficking expectations. Ongoing assessments have impacted more than 38,000 workers in Intel’s extended supply chain and suppliers have reported reduced business risks, better and larger pools of candidates, and higher worker retention.
  • Waste management (circularity initiative): Intel’s supply chain managers in Ireland and Israel have reduced waste management costs by 50% through recycling and recovering manufactured-related waste.

Circularity gives the added benefit of not only saving money, but also increasing value by redirecting materials that were previously considered waste. In 2019, Intel’s Oregon facility returned more than 600 tons of metal plating waste to their supplier facilities, where it could continue to produce value within the metals commodity market.  

These new value streams can come from existing sustainability efforts. Two decades ago, Intel was treating ammonium wastewater to prevent nitrogen from ending up in the local wastewater treatment facilities. The byproduct of this treatment was ammonium sulfate and was originally being directed towards an offsite wastewater treatment. However, in 2013, Intel realized that they could redirect ammonium sulfate to fertilizer manufacturers, an initiative that created value for a byproduct that was previously considered waste.

Unlike sustainability, circularity has an added emphasis on innovation and renewal. The word “sustainability” has been criticized for its focus on maintaining our existing economic system, which relies on finite resources. Circularity is appealing because it acknowledges the natural world’s limitations around economic growth and seeks to create value from existing raw and technical materials. While economic initiatives that seek to benefit society and the environment are all steps in the right direction; it seems financially wise and more climate and people conscious to add the idea of circularity.

As a supply chain or sustainability-focused professional, where can you create more circularity? Who can you partner with to create value around a resource that has traditionally been considered waste?







Share it!

Share on facebook
Share on pinterest
Share on twitter
Share on linkedin