Balancingsustainability andbusiness through thecircular economy

19/12/2023

5mn

Circular economy: a way to balance sustainability with business

The circular economy is opening up new prospects to rethink consumption and tackle the twin challenges posed by the environmental transition and soaring prices. As more and more shoppers adopt practices such as buying refurbished and second-hand goods or repairing those that they already have, retailers need to embrace these questions and be part of steering the economy on the path to a more sustainable future.

It is a modern paradox. In 2023, 78% of people in France said that they had changed their habits in an effort to consume more sustainably, according to the GreenFlex-ADEME Sustainable Consumption Survey [1]. But an IPSOS poll in September 2023 found that purchasing power topped French concerns, taking 40% of votes and beating the environment, which 32% of respondents cited as their number-one worry [2].

Can sustainable consumption be squared with protecting purchasing power? The answer probably lies with another statistic from the GreenFlex-ADEME survey, which found that 84% of French people believe that companies and brands need to take real action to support sustainable consumption. [3]

Prioritizing steps to tackle overconsumption

Urgent action is needed. Overconsumption is depleting our natural resources, as illustrated by the Overshoot Day calculated by the Global Footprint Network. By 2 August 2023, humankind had already absorbed all the resources that the planet was capable of regenerating in one year. [4] That date advances with every passing year, underscoring the need to overhaul our consumption model.

Citizens are stepping up to meet the challenge. Sustainable consumption is soaring in Europe, where 47% of citizens say that they buy second-hand several times a year, and more than half specifically choose this option to avoid overconsumption. Refurbishment is another widely used solution, especially for electronic devices: 59% of French people are ready to buy a refurbished smartphone, for example [5].

Retailers have a vital role to play in this shift. Circular solutions are being developed in many sectors and are becoming more diversified. The second-hand market, which is worth over €105 billion globally, [6] is now attracting the interest of a wide range of retailers, including well-known brands as well as trailblazers such as BackMarket, which has offered refurbished electronic goods since its creation in 2014 and which has gone from strength to strength in recent years.

Home appliances companies such as Boulanger and Électro Dépôt now sell refurbished products. In 2021, sporting goods retailer Alltricks acquired TrocVélo, a website that sells refurbished bicycles.

When combined with split payments – 58% of people in France say that they are ready to buy sustainable products if they can pay for them in several instalments [7] –, these new sustainable offers are helping to anchor sustainable consumption in people’s minds and habits.

Do higher prices pose an insurmountable obstacle?

However, all this progress seems to be running up against a major hurdle: rising prices. Inflation was 2.9% in the eurozone in October 2023 [8], down from where it has been but still well above the average over the last decade. This has big consequences for household budgets.

Forced to make choices, Europeans may be turning away from sustainable products. In 2022, the percentage of shoppers who said they were concerned about sustainability fell for the first time since 2020, according to a study by Kantar. [9] While France remains on an upward trajectory, recording a 1% increase in “eco-active” consumers, it is the exception. In Spain, the number fell by 8%, for example.

Companies hold the key

Does that mean we need to draw a line under our environmental and sustainable aspirations? Definitely not. Companies have a responsibility to play their role to the full, providing impetus to find solutions to the climate crisis. Business models need to undergo a deep-seated shift to address the dual social and environmental challenge: consumption has to become more sustainable, reasonable, inclusive, and tailored to households that are hit hardest by inflation.

The circular economy could be the key to solving the problem. Combining concern for sustainability with improved purchasing power, it is seen by 66% of Europeans as a way for them to manage their budgets better.[10] Recycling alone allows France to avoid 20 million tons of CO2 equivalent annually. Worldwide, circular economy strategies could help to cut greenhouse gas emissions by 40% by 2050,[11] while helping households to lower their expenses.

This meeting of interests seems self-evident, but requires retailers to step up. Right now, 40% of Europeans say that they are not satisfied by brands’ efforts to uphold the circular economy.[5] Consumers are calling for greater promotion of circular products and services, more information about warranties, and 100% traceability. By getting to grips with these questions, retailers can advance the environmental transition, lift consumer purchasing power – and boost their own business.

[1] https://presse.ademe.fr/2023/06/16eme-barometre-greenflex-ademe-de-la-consommation-responsable-2023.html

[2] https://www.ipsos.com/fr-fr/70-des-francais-se-declarent-pessimistes-quant-lavenir-de-la-france

[3] https://presse.ademe.fr/2023/06/16eme-barometre-greenflex-ademe-de-la-consommation-responsable-2023.html

[4] https://overshoot.footprintnetwork.org/newsroom/past-earth-overshoot-days/?_ga=2.35039587.330665489.1700489173-1315470718.1700489172

[5] https://ec.europa.eu/eurostat/documents/2995521/17766951/2-31102023-AP-FR.pdf/f022293a-2e74-c01c-eb44-f97d68323faa

[6] https://kantar.turtl.co/story/whocares-who-does-2022-p/page/3/2

[7] Oney, « Baromètre européen du mieux consommer

[8] https://climatepromise.undp.org/news-and-stories/what-is-circular-economy-and-how-it-helps-fight-climate-change

[10] Oney, « Baromètre européen du mieux consommer

[11] https://climatepromise.undp.org/news-and-stories/what-is-circular-economy-and-how-it-helps-fight-climate-change

[12] https://www.oney.com/leconomie-circulaire-une-arme-pour-lutter-contre-la-baisse-du-pouvoir-dachat-des-europeens/