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Resource efficient business models - the £80bn opportunity

New research shows that using more resource efficient business models could generate billions in cost savings, and the government has called on businesses to take the lead.

New research shows that using more resource efficient business models could generate billions in cost savings, and the government has called on businesses to take the lead. 

The report from the Aldersgate Group of business leaders focuses on business trials that show greater resource efficiency could deliver significant economic benefits to the UK.

26 trials from the EU-funded REBus project, conducted across the UK and the Netherlands, tested a range of different resource efficient business models in businesses, including:

  • Service systems: Providing a service based upon delivering performance outputs rather than selling products
  • Hire and leasing: Delivering a longer term approach to product durability by leasing out products for return after use
  • Incentivised returns and re-use: Encourages customers to return used items for refurbishment and re-use

  • Long life: Designing products to be more durable and more sustainable.

The benefits of these business models to businesses include alternative income streams, increased customer loyalty and brand reputation, more control over sourcing and use of raw materials, and stronger relationships across supply chains. 

Commercial success

In total the pilots have delivered nearly £5 million in financial savings, reduced materials consumption by over 62,000 tonnes and cut greenhouse gas emissions by nearly 2,000 tonnes. 

Successful projects include a move from IKEA to use its own shrink wrap waste to partly replace virgin plastic in one of its products. 

Meanwhile, the Dutch Ministry of Defence has set up a textile recovery programme for its military personnel whereby old clothing gets used in re-used in products such as wall insulation, car door panels and blankets.

Steve Wallace, director of the Aldersgate Group, said: “The businesses involved in REBus have demonstrated that resource efficiency can lead to commercial success. Theirs is an example that others can follow.

“The pilots demonstrate that resource efficiency makes business sense, and that there’s a double-win given the environmental benefits that coincide with the financial gains.”

Collaborative effort

Based on the results from the pilot projects, the Aldersgate Group has calculated that adopting resource efficiency business models across key sectors, including electrical and electronic products, textiles, construction and ICT, could benefit the UK economy by £76.9 billion.

Speaking at the report’s launch on 31 January, deputy director of Defra, Chris Preston, outlined that the government would take action through extended producer responsibility (EPR) requirements, product design standards and incentives to increase demand for recycled materials, but the private sector would have to take the lead.

“While we can see the benefits of a resource efficient economy, it isn’t always clear how these models can be scaled up. Sometimes, it doesn’t make sense to have a circular business model until you have a circular economy to support it”, he said.

“In responding to this challenge, business is absolutely critical. Business has to take the lead.”

Access support

Businesses in Greater Manchester can benefit from specialist eco-innovation support through the Business Growth Hub, while those in Lancashire, Cheshire, Cumbria and Merseyside can get support from the Centre for Global Eco-Innovation.