Google Saving Millions Via Materials Reuse
Kate Brandt - Google
Current Issue
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During the 20th century, global raw material use rose at about twice the rate of population growth. Society’s demand for resources is already equivalent to what 1.7 Earths can provide. And the World Economic Forum estimates that by 2030 we are going to have 3 billion new middle class consumers. These sobering statistics highlight the pressing need to reevaluate the economic model that has been in place since the industrial revolution.

At Google, we believe global businesses should lead the way to driving a 21st century model in which people’s lives are improved while reducing dependence on primary materials and energy from fossil fuels. And we believe this can be done in a way that makes business sense, providing economic return, community benefits, and a restored natural environment.

In 2015, Google established a goal to embed circular principles into the fabric of our company’s infrastructure, operations, and culture. To achieve this goal we are focused on three strategies: Utilizing energy from renewable sources, designing out waste from our operations, and thinking in cascades.

Today we are the largest corporate renewable energy purchaser in the world. We’ve signed contracts to purchase 2.6 gigawatts of renewable energy — equal to taking over 1.2 million cars off the road — and this year we will reach 100 percent renewable energy for our operations.

In addition to our renewable commitment for our operations, we’re working to help our users adopt clean energy themselves with tools like Project Sunroof, which is now available in all 50 states and Germany, and uses Google 3D Earth imagery to calculate each roof’s solar energy potential to determine how much a home could save by installing solar panels.

We’ve also been focused on designing waste out of our systems. In 2016, across our 14 global data centers, we diverted 86 percent of waste from landfills and last fall we announced a new commitment to zero waste to landfill for all our data center operations.

A major strategy for achieving this goal is how we manage the servers that are at the heart of our data centers. These servers deliver your Gmail and favorite YouTube videos but they are also a great example of the power of deploying circular economy at scale.

First, we focus on maintenance. Google’s process for data center repairs enables longer life expectancy of servers. We aggressively refurbish and remanufacture components: in 2016, 36 percent of servers deployed were remanufactured machines. We also redistribute components through secondary markets and sold over 2 million units in 2016 alone. And 100 percent of what is left gets recycled. Through this approach, we are saving hundreds of millions of dollars per year and significantly decreasing the amount of virgin material needed to operate our data centers.

Our food team has also been looking for ways to reduce waste before food hits the plate, since feeding more than 70,000 people around the world breakfast, lunch and dinner is a pretty big undertaking. In April 2014, we formalized this effort by partnering with LeanPath, a technology that helps us understand exactly how and why food is being wasted in order to improve our process. Today we have 129 cafes participating in the LeanPath program across 11 countries. Since the start of the partnership, these efforts have saved a total of three million pounds of food.

As we know, to truly enable materials to cascade through the loops of the circular economy we must focus on what’s contained in the materials we are choosing. According to the Environmental Protection Agency, there are approximately 85,000 known chemicals in the world. 21,000 of them are registered on the Chemical Substance Inventory mandated under the Toxic Substances Control Act, and only six are federally regulated. That means the buildings in which most of us spend roughly 90 percent of our waking hours are built using materials with unknown impacts on human health and performance.

In 2016, Google and the Healthy Building Network launched Portico, a first of its kind building materials analysis and decisionmaking tool. For the first time, everyone involved in a construction project, from owners and designers to contractors and manufacturers, could work together to leverage the data in Portico to find healthy materials and improve indoor environments.

At a time when we recognize climate change and resource constraints as two of our most significant global challenges, creating effective solutions will involve a complex mix of policy, technology, and international cooperation. At Google we are working to utilize circular economy principles as a transformative strategy for people and the planet but we also know that we’ve only just begun to realize what is possible.


Kate Brandt is Google’s lead for sustainability and previously served as the nation’s first federal chief sustainability officer.

National, State Policies Drive Circular Economy
Mathy Stanislaus - World Resources Institute
World Resources Institute
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First, a quick primer of why a circular economy approach matters: the extraction of raw materials grew from 22 billion tons per year in 1970 to 70 billion tons per year in 2010. If this trend continues, raw materials could be required to increase by as much as three times by 2050.

At the same time, over half of the yearly material inputs into industrial economies become waste within a year, with a $4.5 trillion annual loss of value by 2030. Moreover, recent studies have concluded that a circular economy approach could reduce the gap of achieving the Paris Agreement by 50 percent.

While the economic and environmental promise of a circular economic approach has been getting some traction in the United States, what are realistic near term policies to accelerate such a transition? The U.S. Business Council for Sustainable Development is working with Ohio, Tennessee, Michigan, and Minnesota to advance secondary materials transactions.

However, the definition and interpretation of whether an interstate transfer of secondary materials is considered a transfer of feedstock for manufacturing or for waste management has become a barrier to secondary materials utilization. For example, Ohio’s regulations differ from adjacent states. One immediate activity is to harmonize the definitions among adjacent states to foster secondary materials markets, with the necessary transparency requirements.

A regulation adopted by EPA in 2014, the Definition of Solid Waste Rule, is intended to incentivize the utilization of secondary materials in manufacturing while protecting against mismanagement in the recycling system. The rule removes certain materials from being designated as a hazardous waste to foster reuse back into the manufacturing production process from which it was generated (e.g., closed-loop recycling) and remanufacturing of chemical solvents. Separately, the rule also clarified that the recycling of metals is for the purpose of producing valuable products.

The rule is projected to save as much as $59 million per year. The remanufacturing of solvents alone is projected to reduce greenhouse gas emissions by as much as 344,000 metric tons of CO2 equivalent per year. Having states adopt this rule, and expanding the number of materials covered under this rule, would accelerate the reuse of secondary materials in manufacturing, save money, and further reduce greenhouse gas emissions.

More than 20 states now have “extended producer responsibility” laws for e-waste in an effort to shift some of the end-of-life burden of electronics to the manufacturers. However, the EPR systems have not resulted in the recovery of high quality metals and minerals as feedstock for remanufacturing into electronics products. Currently, while a ton of mobile phones contains about 200 to 300 grams of gold, only 10–15 percent is recycled.

Investment in technology and automation in recycling infrastructure to recover high quality metals and minerals is not occurring with the absence of economies of scale cited as a factor. Moreover, EPR’s cost allocation system has not acted as an incentive for manufacturers to change design. China’s version of EPR has a target of 20 percent recycled content in products including electronics by 2025. Accomplishing this target will require higher quality systems for recovery of metals and minerals from electronics. Could such a target create market drivers to promote investment and innovation for higher quality recovery in the United States?

Tax incentives can drive action. In December 2015, Congress passed into law a permanent charitable giving tax incentive for donating food and extended it to pass-through entities. The tax credit has been cited by food manufacturers as a critical factor to overcome concerns regarding the cost of food donation and liability risks. It has resulted in a substantial increase in food diverted from waste.

Sweden has introduced tax breaks and other fiscal incentives to promote maintenance and repair of durable consumer goods, and as such encourage extending the lifespan of products. A targeted tax incentive tied to a level of product’s recycled content could drive design and investment.

One last and potential far reaching opportunity is carbon pricing. As state-based carbon systems develop, such as California’s pending carbon market system, credit for use of secondary materials (e.g., products using recycled steel avoid approximately 75 percent of CO2 emissions as compared with using steel produced from virgin ore) would assist in financing secondary materials recovery systems and as incentive for product design.

Establishing a public-private process to prioritize policy actions and to establish an implementation strategy would tangibly advance the promise of a circular economy.


Mathy Stanislaus is a senior fellow at World Resources Institute and senior advisor to the World Economic Forum focusing on advanced circular economy policies and strategies globally. He headed EPA’s solid waste office during the Obama administration.

The Circular Economy in Action
Thomas Singer - The Conference Board
The Conference Board
Current Issue
The Circular Economy in Action

The companies best prepared to reap the benefits of a waste-free society will be those that understand that the traditional linear model of resource extraction to disposal is ultimately unsustainable. Leadership businesses are powering the transition.

Thomas SingerThomas Singer is principal researcher in the Sustainability Center at The Conference Board, a global business research organization. Singer is the author of numerous publications, including Business Transformation and the Circular Economy.

By 2030, the global middle class will comprise an estimated 5.4 billion people, more than doubling in size from its 2010 total. As a result, companies can expect more consumption and greater demand for the raw materials that go into making countless products. For businesses, the increased purchasing power of a bigger middle class undoubtedly brings good news, but the scenario also brings challenges.

The companies best prepared to reap the benefits of this scenario will be those that understand that the traditional linear economy is ultimately unsustainable. The conventional, age-old approach can be defined as a take-make-waste model, in which raw materials create products that ultimately end up in landfills, waterbodies, or are otherwise disposed. Alternatively, companies that hope to remain competitive in this brave new world should begin paying attention to — and enacting attributes reflective of — the concept of the circular economy. Such a model aims to keep products, components, and materials at their highest utility and value at all times. At its simplest level, the circular economy is about finding ways to decouple economic growth from the use of limited resources.

While a concerted effort by companies can help surmount this demographic challenge, the current way of doing business undoubtedly lacks the efficiency to handle the pressures of an extra three billion middle-class consumers. A surge in demand for goods will stress natural resources and raw materials — ones already over-exploited, such as minerals, oil, water, and lumber. Even greater competition for these resources may cause significant price shocks for raw materials and may disrupt existing supply chains. Consider that “water crises” has appeared in the World Economic Forum’s list of top five global risks in terms of impact in each of the last five years. Continuing down the take-make-waste path will expose companies to significant procurement and supply chain risks, as the resources they depend on grow increasingly scarce.

For most companies, the aforementioned challenges tend to fall into the oblivion of the long-term-risks category. To be fair, some companies with robust strategic planning functions take long-term risks such as these into serious account. But for most, short-termism rules the day. What some call “quarterly capitalism” often sidetracks issues that go beyond a fiscal-year timeframe.

However, while the demographic and resource-use trends fall more into the long-term category, several short-term pressures are making some companies rethink the sustainability of their models. Consider the notable shifts in the types of products and services in growing demand by consumers. Surveys find that almost half of Americans would spend more money on purchases if they could have a guarantee of ethical and responsible manufacturing practices. Two-thirds of global online consumers express willingness to pay more for products and services from companies that make positive environmental and social impact a priority (an increase from 50 percent in 2013). Admittedly, consumer demand for sustainable products is a notoriously tricky trend to measure — does sentiment translate into purchases? — but the overall signals are encouraging.

The most significant pressures for companies to incorporate circular economy attributes into their business strategies are actually coming from other businesses. And these are current, immediate pressures, not future forecasts. Dell, for example, finds that it is not uncommon for requests for proposal from commercial and public-sector customers to include sustainability criteria, which in some cases can account for as much as 15 percent of a bid. As more and more companies establish sustainability goals — such as waste reduction or energy-efficiency targets — these companies become increasingly interested in products and services that can help meet those outcomes. This was a key realization for Kimberly-Clark: some of its disposable and hard-to-recycle products (such as nitrile gloves and single-use garments) stood increasingly at odds with the sustainability goals of its customers. This realization led to the development of the company’s RightCycle project, a circular economy initiative aimed at converting these hard to recycle products into useful new items.

As Dell and Kimberly-Clark have found, pressures from evolving customer needs are nudging companies to rethink their business models and consider alternatives to wasteful linear versions. In a recent survey by The Conference Board, one-third of company executives agree that, compared to three years ago, their companies prefer to be offered services that extend the lifetime of a product rather than having to purchase a new one. A similar percentage of respondents agree that their companies are now more likely to use a model based on pay-per-use of a product. These trends have spurred the launch of several circular economy pilots and business models, including remanufacturing and product-as-a-service businesses, among others. The implications are significant: Companies need to prepare themselves to meet these changing customer dynamics or face the real possibility of becoming irrelevant and going extinct.

The circular economy concept is not new. In fact, early versions of the concept date back to the 1960s, but regulation and national policies to promote this model remain in their infancy. To date, most circular economy initiatives remain voluntary and driven largely by individual corporate efforts, along with support from organizations such as the Ellen MacArthur Foundation. However, some recent and emerging regulatory activity related to the model highlight the need for businesses to continue to engage with policymakers on this front. Companies that stay on the sidelines may find themselves unprepared when forced to make changes to their business models, while companies that have been actively involved in circular economy thinking will have an advantage by anticipating regulation.

The most noteworthy regulatory activity is taking place in Europe. In December 2015, the European Commission adopted a Circular Economy Package to stimulate the EU’s transition to a sustainable manufacturing model. The package consists of an EU Action Plan for the Circular Economy that establishes actions and targets, including the development of standards for secondary raw materials and measures to promote reparability, durability, and recyclability of products. The package includes legislative proposals on waste, which set targets for reduction and establish measures for waste management and recycling. For example, the proposals set common EU targets for recycling 65 percent of municipal waste and 75 percent of packaging waste by 2030. The proposals also set measures to promote reuse and incentivize producers to put greener products on the market and support recovery and recycling schemes.

Several legislative proposals have already been delivered under the EU Action Plan. A few examples include a proposed regulation to create a single market for fertilizers made from secondary raw materials (such as recovered nutrients); mandatory product design and marking requirements to make it easier and safer to dismantle, reuse, and recycle electronic displays (such as computer monitors and televisions); and a proposal to amend the directive that restricts the use of hazardous substances in electrical and electronic equipment (the RoHS Directive).

In addition, several individual European countries are implementing roadmaps and national strategies to promote circular economy activity. For instance, last year The Netherlands and Finland released strategic roadmaps outlining their visions for the circular economy. The Hague’s roadmap includes a goal of a 50 percent reduction in the use of raw materials by 2030. Other countries have been at this for longer, with Germany having introduced a Circular Economy Act in 2012 and Denmark having laid out a national waste reduction strategy in 2013.

Regulatory initiatives focused on the circular economy have also emerged in Japan and China. Japan has had a version of its current Law for Promotion of Effective Utilization of Resources in place since 1991. Its regulatory efforts led to the creation of a number of circular economy indicators and associated targets, including measures of resource productivity and material recycle rate. Tokyo’s targets for 2020 include increasing resource productivity to 460,000 yen of GDP per tonne of resources used (up from the 2015 target of 420,000). The goal also includes increasing the overall material recycle rate to 17 percent (up from the 2015 target of 14-15 percent).

China first introduced circular economy issues as a national development strategy in its 12th Five-Year Plan (2011-15). They remain a significant part of the Five-Year Plan ending in 2020. One of the government’s targets entails increasing the reuse of solid industrial waste as a share of total waste from 65 percent in 2015 to 73 percent in 2020, and 79 percent in 2025. To further promote the growth of circular economy initiatives, in 2013 the government founded the China Association of Circular Economy, a national multi-industry organization. Among the group’s focuses are issues related to industry, agriculture, resource recycling, remanufacturing, and green consumption. In addition, as in the case of Japan, China’s statistics bureau has a number of indicators that the government aggregates to create a circular economy development index.

In the United States, EPA has adopted Sustainable Materials Management as a regulatory framework. Much like the circular economy concept, SMM is a systematic approach to using and reusing materials more productively over their entire lifecycles. The focus of SMM revolves around four primary objectives: decrease the disposal rate, which includes source reduction, reuse, recycling, and prevention; reduce the environmental impacts of materials across their lifecycle; increase socioeconomic benefits; and increase the capacity of state and local governments, communities, and other stakeholders to adopt and implement SMM policies, practices, and incentives. The Resource Conservation and Recovery Act sets the legislative basis for SMM in the United States.

At the supranational level, the circular economy represents a key element of the United Nations Sustainable Development Goals. While voluntary and non-binding, Goal 12 refers to “responsible consumption and production,” and includes a target calling for a substantial reduction of waste generation by 2030 through prevention, reduction, recycling, and reuse. This is particularly relevant for companies that are aligning their business strategies with the UN goals.

While regulatory activity continues to evolve, in many cases business pressures — not regulation — have driven companies’ circular economy initiatives. In fact, in a survey by The Conference Board of over 50 company executives, cost savings ranked as the number-one reason for pursuing circular economy initiatives, with 44 percent of respondents pointing to this motive. By comparison, only 6 percent of respondents pointed to regulation as the primary driver of their companies’ circular economy initiatives. The focus on cost savings is not all that surprising, given the expected future price volatility of raw materials. For businesses that rely heavily on such resources, circular models provide a hedge against volatile prices.

Along with cost savings, a key driver of companies’ circular economy initiatives is evolving customer preferences. As mentioned previously, the types of products and services customers are looking for are shifting, and several companies are looking to circular models to remain relevant. Waste Management, for example, had to revisit its business model to retain customers. Realizing in the 2000s that landfill volumes were dropping, and strongly sensing that market pressures were pushing customers to embrace different waste strategies, Waste Management paused to try to comprehend the future impact of these trends on the business. Were they just short-term? What was the risk of inaction?

Company leadership recognized that failure to quickly adapt to changing customer needs could put the firm at risk of becoming irrelevant. This realization catalyzed a shift in mindset — participating in the circular economy (or “cradle to cradle” thinking, as it was referred to at the time) was crucial for Waste Management to remain relevant to customers and their evolving needs. Today, the traditional landfill business accounts for only a small portion of the company’s revenue, as more and more customers pursue zero-waste goals. “Green services,” which include recycling and environmental consulting, account for as much as half of Waste Management’s revenues.

The company’s early focus on circular economy initiatives centered on ways to reduce, reuse, or eliminate materials, particularly by looking at byproducts and waste materials from large customers. For example, one of Waste Management’s early initiatives involved working with U.S. auto companies to capture waste materials, such as scrap metal, and return them back to the production loop by finding new uses for the material — a traditional closed-loop initiative. Today, these initiatives have evolved to move Waste Management further up the value chain, collaborating with product designers and manufacturers to learn how their work affects the ability to capture products at their end of life.

The company works closely with designers to identify materials that either have a lower environmental impact or greater value, and can therefore be used in closed-loop initiatives. By going further up the value chain, Waste Management influences purchasing decisions and works side by side with designers to identify their specific problems associated with waste — and engineer them out. The company’s circular economy focus has widened to look not only at capturing and returning waste materials to the production loop, but also identifying ways to produce items that are ultimately more recoverable. This shift to tackling waste reduction at the design stage — rather than at end of life — also aligns with the current focus of the EU Action Plan.

The core premise of the circular economy — finding ways to decouple economic growth from the use of limited resources — has inspired a number of business initiatives with significant revenue-generation potential. For instance, five years ago Philips embarked on a transformation process that resulted in a decision to embed circular economy thinking into its core business. As for the thinking, what has helped Philips stay in business for 125 years — through several periods of economic disruption — has been the company’s ability to adapt to changing needs. For instance, Philips believes that if the company wants to be around for at least another 125 years, it will have to shift the way it and other companies use resources, given that current levels of consumption will not be sustainable.

In the case of Philips, the company’s main focus on circular economy initiatives hinges on the notion of switching from selling products to selling services. For example, “light as a service” is one of Philips’ primary circular economy initiatives — a shift away from selling light fixtures to providing lighting solutions. The company sees this as a response to a clear customer need. On the one hand, it is about financial considerations — customers find it much easier to swallow operational rather than capital expenditures. It also helps Philips stay on top of the latest customer needs and learn about customer usage patterns. And it allows the firm to extend replacement cycles to longer periods. Anyone not convinced that circular economy initiatives contribute to business value should take note: Circular economy initiatives such as light as a service already account for about eight percent of Philips’s annual revenue, and the company plans to double this amount by 2020.

Hewlett-Packard is another company that has benefited from innovative circular economy initiatives. The Internet of Things — essentially the interconnection of smart devices — has been a key enabler of the company’s circular economy initiatives. Take HP’s Instant Ink service, for example. By subscribing to this service, consumers’ internetconnected printers recognize when ink cartridges are low and HP then automatically ships new cartridges directly to the consumer. The new cartridges include return envelopes, enabling HP to close the loop by incorporating up to 80 percent of the plastics from returned cartridges into the manufacturing of new ones. The initiative’s direct-to-consumer model has also helped HP eliminate about 67 percent of materials used per printed page (primarily by eliminating the over-packaging retailers need for marketing and theft-prevention reasons). And since the costs of shipping cartridges to customers are now internalized, the product-as-a-service model incentivizes HP to maximize the amount of ink included in each cartridge, which also means that users need to replace Instant Ink cartridges less frequently.

For HP, much of the success of Instant Ink comes from the fact that the service addresses customer pain points. Notably, Instant Ink is marketed as an easier and more affordable option for consumers (customers can save up to 50 percent compared to purchasing ink from traditional outlets), and not as a circular economy or sustainability initiative. The service introduces sustainability benefits without pushing them as such to consumers.

Companies like HP understand that technology plays an important role as an enabler of the circular economy. Take 3-D printing as an example. 3-D printing has the potential to make it easier for companies to make production-ready parts on demand and locally, which can help extend the life of products and encourage design for repairability. This disruptive technology could potentially relocalize manufacturing.

Circular economy initiatives are not without their challenges. Companies that have launched successful pilots have done so only after overcoming multiple roadblocks and failed attempts. One of the biggest challenges in launching these initiatives comes from the need to align the interests and expectations of multiple partners along the value chain. Because circular economy initiatives often involve collaborating on the materials end and sourcing side, as well as with partners on the logistics of product take-back, disassembly, and reuse, ensuring open and transparent communication is crucial. These initiatives rarely succeed in silos.

The importance of close collaboration is unsurprising given the central role that innovation plays in circular economy initiatives. When The Conference Board surveyed global CEOs in 2016, two of the top three strategies they point to for meeting the Innovation and Digitization challenge relate to collaboration: engaging in strategic alliances with customers, suppliers, and other business partners and establishing a strong collaborative culture that encourages cooperation and coordination across functions and business units. The collaborative nature of circular economy initiatives means there is added importance in establishing partnerships based on transparency and trust. A lack of trust in partners is a major reason behind failed projects. When initiatives fail, either internally or with customers, it is often because of breakdowns in communication that result in stakeholders not being aligned about the shared risks and the shared value of the initiatives. While business partnerships matter, an overreliance on partners introduces a significant set of challenges.

Regulatory roadblocks can also present a significant challenge to circular economy initiatives. Specifically, inconsistencies in regulations across geographic regions and borders can add complexity and cost to these initiatives. Without uniform rules, something as simple as moving materials across frontiers can come at a high price tag and erode most of the economic value from business models that rely on product take-back systems. There is a clear need for addressing these regulatory issues at a policy level in order to prevent the unintended consequences of these rules from stifling circular economy initiatives. These challenges highlight the need for businesses to engage at the policy level.

The ultimate success of circular economy initiatives, much like the success of broader corporate sustainability initiatives, depends largely on having the support and buy-in from leaders who are willing to invest in them. This is not a simple ask: Obtaining buy-in from the brass ranks as the number one circular economy challenge companies point to, according to The Conference Board. But for companies that wish to remain relevant and competitive in the long term, this is an imperative. If there is one thing in common among companies that have successfully launched circular economy initiatives, it is that their CEOs and board members understand the concept, can connect it to business value, and can convey its value to investors, customers, and other stakeholders. TEF

COVER STORY ❧ The companies best prepared to reap the benefits of a waste-free society will be those that understand that the traditional linear model of resource extraction to disposal is ultimately unsustainable. Leadership businesses are powering the transition.

A Virtuous Circle
Mathy Stanislaus - Environmental Protection Agency
Environmental Protection Agency
Current Issue

CENTERPIECE ❧ We live in a material world. The unsustainable consumption of natural resources translates into environmental degradation and increased business risk. Economic growth and raw materials need to be decoupled. Fortunately, there is a path forward.