Rounded thinking

in the circular economy

The way we consume resources has enormous implications for our planet in the years ahead. Fossil fuels and materials are running out, but there seems to be ever-increasing demand for energy and goods as the aspiring middle-class grows around the globe. The ‘circular economy’ is a concept which uses natural resources in a more sustainable and intelligent way. Read how Philips is leading the way in promoting a new philosophy which encourages more effective and efficient use of resources.

Planet, people and profit:
understanding the connections

make use and return, circular economy infographic

The ‘circular economy’ is both a philosophy and a concrete business plan. The ‘circular economy’ aims for 100% renewable energy and zero waste to landfill. To make this happen, new jobs are created in the recycling, repair, refurbish and service industries. It’s a concept which has been gathering steady momentum in recent years and it improves  the ‘triple bottom line’ of the environment, humankind and profitability.

In essence, when an economy becomes circular, resources are used much more effectively. It moves us from a linear ‘take, make and dispose’ model to one in which the materials loop gets closed and products are regenerated. The aim is to stimulate growth without hurting the natural world and damaging valuable ecosystems.

Materials, components and products get re-used in this circular world. And value is created through cost savings and the development of new market opportunities.

Circular economy is a trigger for innovation that requires a new generation of materials as well as development and production process."

- Frans van Houten, CEO of Royal Philips

A shared vision for the future

As a major multinational with a reputation for innovation and early adoption of new trends and technologies, Philips understands its responsibilities to the planet and to local communities. It also sees the huge business potential of the circular economy concept. That’s why it has embraced the restorative principles of the circular economy and has become a strategic partner of the Ellen McArthur Foundation, which was founded by the renowned British sailor in 2010.

At the World Economic Forum in Davos, Switzerland, three years ago, the Foundation launched the CE100 as a way of promoting the circular economy and connecting established businesses with emerging innovators and regions.

40 year cycle for circular economy infographic, Philips Lighting Future Office

The impact will be huge: an estimated annual economic benefit for Europe alone of € 1.8 trillion* by 2030."

* Source: McKinsey – Growth within: A circular economy vision for a competitive Europe.

Anton Brummelhuis, a champion of sustainability at Philips Lighting, says we are just in the early stages of the phenomenon: “We can see this as a period of transition. Moving from a smoking population to non-smoking population took 40 years. Sustainability as a generic topic is also a transition of 40 years. We’re in the early adopter phase with the circular economy now".

A change in culture:
from ownership to managed services

Consumer attitudes and preferences are changing fast. Many people realize exactly how unsustainable traditional economic models have been in a world where resources are fast running out. Understandably, they are now looking for an alternative.

One of the big themes of the circular economy is a move from ownership of products which need replacing to the introduction of a managed service. Though this trend is already visible in the consumer domain (AirBnB, Uber), Anton Brummelhuis, Philips’ Sr. Director Sustainability admits that the idea of ownership is still engrained in some businesses.

“These concepts require a change in thinking,” he says, “as well as in actions and in roles and responsibilities. Some people don’t like to change, but the clear trends show that we’re moving in this direction. The sharing economy is on the rise.”

He points to consumer brands such as Spotify and Netflix to demonstrate that, to millennials, the idea of ‘ownership’ is irrelevant.

Putting principles into practice:
Light as a service

Brummelhuis is quick to point out, that currently, 40% of all lighting is inefficient, but it still needs to be paid for. Technologies are outdated and there are hidden costs, but that’s changing as light is provided as a service.

40% of all lighting is ineffcient infographic, Anton Brummelhuis, Philips Lighting

Smart lighting is an intriguing example of the circular economy principle, as it’s possible for businesses to install long-lasting LEDs, with Philips maintaining ownership and providing managed services to extend lifetime and performance. In this win-win scenario, the customer can take full advantage of the newest solutions, while delivering reduced energy costs and savings in operations due to less maintenance and lower depreciation.

Second-hand market places offer the possibility of capturing new value from used parts and luminaires. And when the service period is over, lighting products can be refurbished or recycled, becoming part of a fresh materials loop.

We can offer a LED solution with lighting that is monitored and controlled. The net result is that for the same operational costs, we can offer better quality of light and the energy savings and extended lifetime help to pay for the initial investment."

- Anton Brummelhuis, Philips Lighting

Taking
responsibility

Managing waste was originally the responsibility of the government. Then the onus shifted to the consumer through proactive recycling. Now the trend within the EU is towards making the producer responsible for the end-of-life of the product.

When Philips creates lighting, the design is modular, suited for easy disassembly and control. That way, you exchange the weakest parts first. “The circular economy means to preserve the value of installed bases and stretch the lifetime,” says Brummelhuis. “You postpone new investing cycles.”

It’s a logic which is only going to gather more and more supporters in a world of scarce resources. The last word is probably best left to the CEO of Royal Philips, Frans van Houten. “Perhaps five hundred years from now, people will look back and say it was the Circular Economy Revolution that ushered in a new era of wisdom and prosperity.”

Philips lighting circular economy infographic

Perhaps five hundred years from now, people will look back and say it was the Circular Economy Revolution that ushered in a new era of wisdom and prosperity."

- Frans van Houten, CEO of Royal Philips

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