So, what does circularity mean in practice for startups? Circularity reaches far beyond just recycling and refers to a transformative approach to business that is restorative and regenerative by design, as defined by the Ellen MacArthur Foundation. Unlike the linear economy where raw materials are used and discarded, a circular economy closes material cycles to reduce waste and improve resource efficiency.

Circularity doesn’t just refer to the materials used either, it encompasses everything required to complete a process. For example, startups making asset decisions must consider the durability and repairability of technology for its entire lifecycle, with a set plan for maintenance and upgrading throughout. For startups, adopting circular principles delivers both environmental benefits and business advantages like new revenue streams and enhanced competitiveness. But the most important reason for startups to consider circularity from the outset is environmental responsibility.

Digitalisation for all

Achieving circularity however requires a high-level of digital capabilities that reaches all the way back to product design and integrates seamlessly into complex supply chains. Startups should consider the following:

• Digitalising supply chains to help manage complexity: digitalising supply chains is key for transparency and traceability, both of which are then key when re-thinking traditional, linear supply chains. Developing a reverse logistics system to take back products from your regional operations, customers, and partners – and to ensure the quality and availability of those products – requires a digital and connected supply chain
• Design for circularity (eco-design): during the design phase considering factors such as material selection, durability, repairability, and recyclability is essential to ensure circularity is implemented. Industrial companies need to spend the time investing in research and development to create products that can be easily disassembled, upgraded, or recycled while maintaining the highest quality standards
• Collaboration and partnerships: transitioning to a circular economy cannot be done alone. Collaboration among various stakeholders, including suppliers, customers, waste management companies, and recycling facilities is essential to aligning interests across the complete industrial value chain

It can be overwhelming for startups looking to enter the market with their first product or scale up. These capabilities may seem exclusive to large enterprises that have the budget to explore them, but this isn’t necessarily the case. Partnering directly with technology providers can provide support and guidance and they can also give advice that puts sustainability and scalability at the core of the business from the start.

Supported sustainability

Circularity is essential to efficiently reducing the pressure on the environment and improving the security of raw materials, and with 45% of global greenhouse gases able to be addressed through a circular economy, startups can take the opportunity to lead the sustainability charge and position themselves as impact makers.

Circularity and sustainability are all-encompassing and aren't only tied to new technology or digital capabilities. Startups on the circularity journey can leverage free sustainability courses to develop a robust understanding of climate science and how to take action with a decarbonisation strategy.

Pathway to circularity

While circularity can feel like a daunting concept for young businesses, there are practical steps that will simplify the journey:

1. Eco-design

Before production starts, the design stage should prioritise durability, repairability, and recyclability, building sustainability as part of the business’ DNA. Those same factors should also be considered for any startup exploring robotics, machines, or production facilities

2. Build collaborative networks
Startups that want to lead on sustainability should seek like-minded organisations that can be part of the supply chain, ensuring they share an outlook on circularity with their products or services

3. Leverage digital tools
Advanced capabilities can be accessible to businesses of all sizes with the right partnerships, building a platform to monitor, optimise, and scale circular practices as a business grows

4. Educated and engage
Circularity is not achievable in a single business; it requires understanding and investment from all members of the workforce and supply chain. Startups should seek out circularity learning while communicating often with stakeholders and customers

Schneider Electric is committed to empowering businesses of all sizes and specialisms to effectively use every energy or material resource, representing a complete partner for startups that want to trade on sustainability principles and contribute to the collective global decarbonisation. Schneider Electric has developed dedicated online sustainability training for its partners and is now inviting the entire supply chain to enrol. Sustainability School Chapters 1 and 2 are available for people who want a better understanding of climate science and how to take decarbonisation seriously.

This article originally appeared in the January/February 2025 issue of Startups Magazine. Click here to subscribe