Today we will talk about green management and circular economy. Green management is the way in which companies tackle environmental problems and try to turn these problems into business opportunities. And the circular economy is the number one frontier for green management to date. There are a lot of companies that are interested in the opportunities offered by the circular economy, and this concept is becoming more and more attractive for managing. But what is the circular economy and how managers can deal with the opportunities offered by this new approach? Well, a lot of time ago, twenty years ago or more, Michael Porter already said something about the circular economy without mentioning it- It was back in 1995 and he said, dealing with things that were concerning competitiveness of companies, not the environment, but he said every pollution flow, every consumption of natural resources made by a company, if it doesn't go into the final product that is sold on the market, is a loss of efficiency. It is something that makes the company lose a value that has been paid to buy this natural resource or to buy the material that is lost into the environment through pollution. So the idea is that if I save natural resources, if I avoid and prevent pollution, then I'm going to gain an economic benefit from that. The circular economy today, a very fashionable and up-to-date concept, bases on this very old theory of Michael Porter. If I am a company, and I want to take the best out of the circular economy, what I have to do is to try to save resources, or to recover, reuse, recycle the material that otherwise is going to be lost. It doesn't go to the final consumer, so it doesn't get any value from the market. Until a very few years ago, the traditional model by which companies operate for their production process was 'take, make, dispose', a very linear approach. They took everything they need from the environment. They didn't care if resources were available or not. They used these resources to manufacture their product. And in the end, they threw away whatever they didn't need any more. Now, the idea is that the linear model becomes a circular one, and a circular model allows companies to consume a lot less resources because resources are not available anymore in an infinite amount, and they recover and recycle material they don't use for the product instead of throwing it away. This is done by several strategies that the company can adopt in the different phases of a lifecycle of a product. When I need to manufacture a product, I need to get resources with my supply chain. I need to carry out production processes. I need to have a packaging from my product. I need to transport my product on the market and sell it on the market, and then the consumer is going to use the product, and throw it away at the end of its useful life. All these phases imply the generation of waste. If the company are able to prevent this waste, or they are able to reuse or recover this waste, turning this material into useful inputs for other production processes or for their own production process, that's how they are able to carry out a circular process. So let's imagine a perfect circle by which everything that is used by companies is also given a value by reusing, recovering, and recycling waste. Is the economy today working like that in a perfect circular way? Not yet. We have some companies that manage to operate in a circular way, and they're saving a lot of money by doing that. The question is, can all the companies, even the smaller ones, be able to approach their production processes and their strategy in a perfectly circular way or not? Well, let's see now some example of companies that have been able to get some real successful story by managing their processes in a circular way. Let's consider, for example, a very well-known motorbike manufacturer, Piaggio. With his Vespa, Piaggio was able to launch a new product that is based on some components derived from a very difficult to recycle plastic. So they were able to get an economic advantage because they used a secondary raw material and benefit for the environment because those plastic were going to be very difficult to be disposed of. Or let's consider Carlsberg Group, a very well-known beer producer. They launched on the market a new way of distributing beer with a very light keg. In that case, they didn't materialize the product, so they used a lot less material for the packaging. It was so less harmful for the environment to transport the keg around the world to sell the beer, and also the keg was totally recyclable in such a way that the plastic was going to be recovered. Or take into consideration the last example, H&M. H&M is taking back the used clothes from its consumer, and this consumer get a discount for the clothes they take back at H&M to buy a new product. This is a very strong incentive not to throw away the clothes and to get money from a recycled product. Then if we have so many successful case histories of circular economy approaches carried out by companies, we should ask ourselves, why not all companies are already today operating in a circular way, recovering old materials they can recycle from the environment or using less resources? Reason is that there are a lot of barriers, unfortunately, for the circular economy to be adopted by companies. First of all, we have some technical barriers. It means that solutions are not always already available or are very costly to be able to recycle materials, or secondary raw materials are not available at all on the market of a high quality. Second, we have legislation barriers. It is not always easy for a company to reuse something that is classified as waste. And now, we have many many barriers related to the market. Are we sure that consumers are ready to accept products that are made of recycled materials? Then the good news is, in the end, that if a company is able to overcome these barriers, it can get a lot of advantages on the market. Circular economy appears to be very convenient. From an efficiency point of view, it makes the company save a lot of money, and also, it makes the company more competitive with respect to the other companies operating in the same sector that are not able to get the same advantages using a circular approach.
