Heidi Peltonen, Vice President, Sustainability
In an era where planetary challenges such as climate change and resource depletion loom large, the traditional linear economic model — take, make, dispose — is no longer viable, and the urgency of the situation demands a paradigm shift. We need to do more with less, and this is where circularity becomes crucial.
Circularity refers to economic models and systems that minimize waste and resource use by maximizing the lifespan of existing products and materials. It’s not just a more sustainable way of doing things, it’s a necessary one in order to rise to the challenges our planet is facing. And yet, our economy is becoming less circular, not more.
According to the 2023 Circularity Gap Report, a global circular economy could meet the needs of all people while significantly reducing current resource extraction levels, but we are trending in the wrong direction. The global economy is now just 7.2% circular, compared to 9.1% in 2018. Few people oppose basic methods of circularity, such as reuse, repair, recycling, and regeneration, prompting the question: Why aren’t we making progress?
The answer is complicated. In many ways, progress is occurring. New solutions and innovations for increasing circularity are being developed and scaled on a continuous basis. That progress, however, hasn’t caught up with the rate at which the world’s population and economy are growing. Moreover, many existing ambitions and initiatives around circularity lack an ingredient that is crucial to their success: tangible value.
Creating value with circularity: Lessons from Outokumpu
There are a number of ways to create value through increased circularity. For customers, circular innovation can deliver value by resulting in products with reduced carbon footprint and mitigated biodiversity loss, higher durability or reparability, more thoughtful design, and often even cost savings. For shareholders of an organization, the value can be found in material and waste reduction, increased operational efficiency, enhanced brand reputation and loyalty, and new market opportunities. All of these, as well as knowledge- and expertise-sharing, can also lead to value creation for a company’s supply chain partners.
At Outokumpu, these are not new ideas; circularity is fundamental to our business model, aided by the fact that stainless steel is infinitely recyclable. In fact, we’ve delivered many of the kinds of value mentioned above. For instance, relying on recycled material content for more than 90% of our production materials has helped us, along with our suppliers, to build an ecosystem for steel scrap while also allowing us to reduce the carbon footprint of our customers by over 10 million tons annually.
Besides leading the industry in circularity, we’re continuously exploring and implementing ways of decarbonizing our operations and supply chain, relying on both proven solutions like electricity from renewable sources, and more innovative ones, like the use of biocarbon instead of fossil materials in our production of stainless steel. All of our initiatives share two key denominators: they help us reduce the climate and nature impact of the stainless steel industry, and they create tangible value in the process for our customers.
Overcoming barriers in order to speed up change
Creating this kind of value may sound simple, but that is not often the case. Most organizations that struggle to provide value through their circular initiatives, after all, are contributing plenty of effort. When the results are slow to come, it’s often because of external barriers. For instance, in some industries, a lack of economic incentives paired with upfront costs of circular practices can make scaling difficult (as can gaps in technology and infrastructure); a lack of supply chain resilience can interfere with execution; consumer attitudes can be misaligned with real trends in purchasing; and an absence of regulatory standardization can hinder the development of circular markets. Of course, this is an incomplete list, and in some cases, many of these reasons can apply at once.
So, what is the answer?
Understanding these barriers — especially as they apply to your own organizations or potential value delivery — puts us on the right path toward increased circularity. Overcoming them, however, requires commitment on several fronts. Continued learning, innovation, and investment are all crucial, but there is more. We need to proactively develop new partnership ecosystems that leverage shared values and ambitions — as we have done with our Inner Circle® initiative. We also need to advocate for clear regulatory decisions on green transition that respect our planet’s needs while supporting innovation. Most of all, we must find ways to create more value through circular practices — for customers, partners, and shareholders alike — so that we can strengthen the foundation for a world that will last forever.
Outokumpu is joining COP28 with Finnish climate leaders to showcase how low-carbon stainless steel plays a crucial role in accelerating green transition. Read more about Outokumpu’s industry-leading decarbonization strategy, initiatives, and highlights.