With the effects of climate change, dwindling resources, and population growth—and their societal consequences—materializing as steadily growing realities, enterprises must explore new opportunities to conduct their operations in a sustainable, environmentally friendly manner. But while pursuing sustainability can be complicated, doing so can ultimately benefit business. 

“At SAP, we believe there should be no trade-off between profitability and sustainability,” Alex Karim, Sustainability Principal at SAP, told attendees at a recent ASUG webcast, titled "The Transforming Effect of Circularity on Business and Society."

Focused specifically on the topic of circularity—otherwise known as the “circular economy”—the May 25 webcast laid out various ways in which this holistic business method can not only improve an organization's sustainability metrics but also drive business value. 

Karim also discussed how SAP and its suite of sustainability solutions enable customers to embrace circularity and become more intelligent, sustainable enterprises. Here are three key insights:

Circularity 101

Karim spent much of the webcast dissecting the principle of circularity, and how it can be applied to business in productive, successful ways. In simplest terms, circularity is about eliminating waste. Our current economy—which Karim noted is “linear”—creates an enormous amount of waste; there are obvious examples, such as plastics and food waste, but Karim also pointed out that clothing, chemicals, and high tech industries are also susceptible to generating waste.

With only a finite amount of resources on Earth, circularity as a concept revolves around finding ways to reduce waste by reusing and recycling resources, as opposed to simply disposing of them. According to Karim, circularity is a “whole new value system.” Due to the monumental nature of its scope, circularity has multiple stakeholders in a business.

“In a business format, circularity affects everyone,” Karim said, before laying out how properly implementing the concept necessitates the involvement of employees from the finance, manufacturing, sales, marketing, IT, procurement, and supply chain sectors of a business.

Karim laid out three pillars every enterprise needs to successfully transition to a circular business model: monitor, measure, and act:

  • Monitoring: Business leaders should understand the evolving regulations their enterprise must adhere to, along with any voluntary agreements the organization has made publicly. For example, SAP set a goal to become carbon neutral by 2023 and to reach net-zero emissions by 2030. Monitoring also means keeping a finger on the pulse on market and societal factors. Today's consumers demand more sustainable operations from companies. 
  • Measuring: Enterprises must have a concrete understanding of the material flow necessary to produce their products—along with the impacts of those flows across the supply chain. Related to this, companies also must keep track of the material composition of their products. 
  • Acting: Companies must integrate circularity into their business processes, making it a core part of their organization.

Benefits of Circularity

Circularity has sustainability benefits. Tracking the flow of materials helps companies to not consume too many finite, scarce resources—many of which are over-encumbered by current market demand. Karim also stressed throughout the event that there are enormous business and financial benefits to implementing circular economy practices.

From a financial perspective, circularity—and the general practice of using less—brings to bear “a whole new class of business,” according to Karim, driving efficiency across operations. Additionally, enterprises embracing circularity gain a competitive advantage by expanding their customer base, improving customer relationships, and increasing profitability. Growing revenue streams, driving down costs, and helping organizations to maintain compliance with emerging laws and regulations, circularity drives business value in multiple forms.

How SAP Helps Customers Transition to Circularity

In recent years, SAP has focused on enabling sustainable operations through its software offerings. Karim touched on specific ways SAP solutions can help customers embrace circularity and make it a key part of their business.

GreenToken by SAP, a chain-of-custody blockchain solution, gives organizations greater insight into managing complex raw-material supply chains while providing customers with greater visibility of material sources. In doing so, it offers companies new levels of transparency in their supply chains and incentivizes collective action and innovation on the part of both companies and their customers. Eastman, in the midst of its own digital transformation journey, is partnering with SAP to pilot the GreenToken technology.

Circularity is also enabled by SAP Responsible Design and Production, a cloud solution that calculates extended producer responsibility (EPR) obligations, plastic taxes, and corporate commitments to optimize material choices. With the software, customers can monitor the increasing needs of their businesses while complying with regulations and voluntary commitments. It also provides them with a deeper understanding of the implications of societal demands on product and packaging design. SAP Responsible Design and Production gives customers the ability to measure the materials consumed to make products and packaging. Finally, it gives customers the tools to act, providing actionable insights into how businesses can better eliminate waste and reduce, reuse, and recycle materials.

You can watch the full webinar and hear specific attendee questions about integrating circularity into business—and how SAP can help—by registering and watching the webinar on-demand here.

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