MARKETING AS THE CATALYST OF THE CIRCULAR ECONOMY TRANSITION

Written for session 10 – Circular economy, a model to follow

The way we consume has put our natural ecosystem under tremendous pressure, requiring organizations to focus the sustainable transformation beyond carbon (i.e., carbon myopia). Organizations and society need to increase circularity from 7.2% today to 80% by 2050 in order to meet planetary boundaries. Immediate economic returns are often the reason that prevents organizations to engage, whereas the inaction or insufficient action on climate change will inevitably lead to greater cost to the global economy.

Overtaking this challenge includes solutions like creating value chains that embrace circular economy, which entails to operate a significant cultural shift across all population segments. Therefore, while implementing circular economy strategies has a major impact on the industrial engine, marketing plays a crucial role in making this transition happen and supporting sustainable brands.

The need to transform now to earn long-term competitive advantage

The constraints we face today are unparalleled, and the future trends may appear even more pessimistic. Supply chain disruptions, price volatility for energy and materials, geopolitical tensions, resource depletion and customer backlash are among the key challenges that necessitate a paradigm shift in our approach to consumption and production.

However, these challenges also present an opportunity to reshape the way we work and create long-term value, which is increasingly encouraged by new regulations and public founding (like the Inflation Reduction Act, the Circular Economy Action Plan or the European Critical Raw Materials Act). Hence, many industry leaders, start-ups, and new market entrants across sectors have recognized the potential of the circular economy to generate new revenue streams by leveraging business models that go far beyond recycling (e.g., product as a service, product life extension, sharing platforms, sell and buy-back, repair and maintenance services, second-hand platforms). According to the WEF, circular economy has the potential to generate $4.5 billion in economic benefits by 2030 where technologies will be a key enabler.

Circular economy is an ecosystemic transformation that will take time. Thus, those who will start their transformation now, will create the standards of tomorrow and earn outstanding business benefits regarding their resilience, competitiveness and desirability.

The Customer in the Circular Economy

Globally, 45% of consumers say they are keen to buy exclusively from brands that concentrate on circular and sustainable practices. However, building trusted relationship in this area is a difficult task in a world where all companies are scrutinized and rightly or wrongly accused of greenwashing. For marketing, it means finding the right levers to generate traction instead of detractors during these moments of truth.

By leveraging scientific data and information from the IPCC, marketers can build a compelling brand storytelling that combines creativity and science to envision the world of tomorrow. Success in the acceptation of sustainable alternatives entails to move from promoting consumerism to shaping sustainable lifestyle (i.e., providing tailored use-based services at the right time) by

• Supporting products and services development to offer environmentally friendly alternatives accessible, affordable, and valuable to consumers. 53% of consumers cite their unwillingness to compromise on convenience as a reason for not taking some actions.
• Creating new user experience throughout the product lifecycle that would work as a market differentiator against products that will be more and more standardized. For instance, 64% of consumers are interested in recycling, 62% in reselling used products, 54% in repurposing old products.

A New Paradigm for CMOs

Since the circular economy will become mainstream, the terms “sustainable” and “circular” cannot longer serve as market differentiators in the long run. That’s why embracing product-as-a-service models, is a unique opportunity for marketers to foster intimate relationships with customers and tailor services to their evolving needs.

In this new paradigm, CMOs must play an advisory role to activate the entire ecosystem by leveraging market intelligence and data to overcome the information gap by

• Assisting CEOs and the rest of the C-suite in rethinking experiences, products, and business models.
• Connecting designers, engineers, and product teams to create an experience that maximizes product and material use while meeting customers’ interests in zero-waste and durable products.
• Building transparency and trust to help customers, partners, and investors make informed decisions (e.g., through better product labelling, clear communication).
• Augment employees’ engagement and infuse a sustainability-centric culture by continuously informing about circular practices and success stories.

Finally, CMOs should embrace technology, such as generative AI, to support them as brand managers by

• Rethinking anything that is insights based (communication, research, product and brand referencing)
• Accelerating and customizing content production for service provisioning
• Developing educated communities around brand ambassadors on social media

For instance, in our recent report on social intelligence for climate action, we identified that nearly 30% of the population (i.e., nearly 20 million people) showed negative emotions regarding sustainability. Understanding this frustration and engaging customized conversations is in that case the first step making a change and taking real action with these individuals.

Marketing’s role in the circular economy transition is pivotal for building resilient brands. In an era where sustainability and circularity become the norm, marketing must create new brand storytelling and play an advisory role for all organization’s stakeholders. With a focus on market intelligence and data-driven decision-making, marketing can shape the experiences, products, and business models that will drive the circular economy forward. Together, marketing and the circular economy can create a more sustainable and prosperous future.