Aguascalientes, Ags., June 25, 2023.— Aura Andrea Díaz Duarte, Ph.D. in Administrative Sciences, is a specialist in research topics within the circular economy, sustainable marketing, and eco-innovation for the business performance of our Panamericana.
Over time, numerous concepts related to sustainable development management have emerged; what is new is the growing interest in its necessary implementation across various spheres: the economy, politics, society, and the environment. Conventional economic models are known as “linear models,” in which business decisions focus on the efficient use of resources with the primary goal of meeting market needs and generating profitability.
Similarly, circular business models—which arise from the study and implementation of the circular economy—focus on meeting market needs, but they also incorporate a crucial element: extending to the fullest extent possible the useful life of all resources involved in the process of satisfying that need, whether through the development of a product or a service.
In this article, Dr. Aura Andrea Díaz Duarte shares her insights on the importance of the circular economy and its profitability in business.
Dr. Aura is also the Director of the Academy of Business, Law, Computer Science, and Soft Skills within the School of Economics and Business. She runs her family business, which has been in the market for more than 30 years in the fields of sales and electrical construction.
Circular Economy: From Sustainability to Business Profitability
Over the past fifteen years, the circular economy has been gaining momentum as a science applied to business models beyond just industrial or production contexts; in other words, a wide range of possibilities is emerging for implementing the circular economy in the administrative aspects of business. Much of the conceptualization of these circular concepts in business administration has been supported by the Ellen MacArthur Foundation, which bases this circular model on three pillars: “take, make, and disassemble.”
Its goal is to eliminate waste that is harmful to the environment by promoting the use of products with natural components— known as “nutrients”—that can be reabsorbed into the biosphere without causing harm; similarly, with regard to technical components, it promotes the three-pronged approach of “reuse, repair, and recycle,” developing technologies with a longer life cycle.
Klein, one of today’s leading scholars on sustainability in economic development, has developed a framework of functional dimensions within a company that can be used to measure the level of adoption or resistance to the implementation of circular business models. He divides this framework into internal processes and operations, organizational changes and strategies, internal drivers, and barriers to adopting the circular economy.
An important first step toward adopting a circular business model is to analyze internal drivers and identify internal barriers to its adoption. The main barriers include a lack of knowledge about sustainability issues, a lack of financial resources within the company, a lack of investment in training staff on circularity, a lack of cooperation, dialogue, and exchange of experiences within the company’s sector, inflexible internal processes, a lack of interaction with suppliers, and a lack of adequate guidance for making business decisions based on a framework of indicators for circular business models.
However, the influence generated by incentives for adopting the circular economy within the business model strongly counteracts any potential barriers that may exist. These incentives focus primarily on the commitment of managers and executives to promoting a corporate philosophy centered on sustainability; externally, government laws and regulations that favor companies operating under circular models can serve as a significant incentive. Pressure from competitors and customers themselves becomes a decisive driver for changing, to the extent possible, the use of resources throughout the supply chain in a way that minimizes environmental impact—or, better yet, leads to an improvement.
Given the growing popularity of the term “circular economy” as a sustainable and profitable business option, the doctor notes that “companies have a responsibility to conduct an internal analysis of their position within their environment, how their decisions affect or promote sustainable development and environmental stewardship, and how suppliers and all those involved in the distribution channels for any good or service must work specifically to shift their raw materials, processes, and administrative practices to strengthen product life cycles and always strive to align their decisions with the well-being of the environment.”
