As the world moves towards a circular economy, businesses are starting to see the value in aligning their human resource (HR) management policies with these new principles. In a circular economy, materials and waste are reused or recycled instead of ending up in landfills, to conserve valuable resources.
In this article, we’ll explore how businesses can align their HR policies with the circular economy and discuss some of the benefits that come with doing so.
What is a Circular Economy?
A circular economy is one that is restorative and regenerative by design. It aims to keep products, components, and materials in use for as long as possible, obtaining the maximum value from them while minimising waste. Ensuring that waste products are reused or recycled back into the system instead of being disposed of, creates a feedback loop in which resources are constantly circulated and used over time.
This is contrasted by the traditional linear economy, where businesses operate by taking resources from the natural world, turning them into products, and then disposing of the waste at the end of the product’s lifecycle. This model may not be sustainable in the long term, as it puts a strain on the environment and depletes natural resources.
Principles of a Circular Economy
There are three key principles of the circular economy:
- Circular production
- Circular consumption
- Circular waste management
Circular production involves redesigning products so that they can be reused or recycled. Circular consumption means using products for as long as possible before recycling or disposing of them. And circular waste management refers to the act of recycling or reusing waste materials instead of sending them to landfill.
There are many benefits to the circular economy, including reducing environmental impact, saving energy and resources, and creating jobs. Additionally, it helps to promote sustainable development and improve economic resilience. On a micro level, organisations that adopt practices aligned with the principles of a circular economy may benefit from increased consumer goodwill. In a study jointly conducted by KPMG in Singapore and the Singapore Environment Council, it was found that 95 percent of individuals surveyed prefer to buy products with sustainable packaging. Additionally, 70 percent of the respondents believe that most of their purchased products could have used lesser packaging materials. Thus, by implementing sustainable production practices, firms can potentially improve how a significant portion of consumers view their brands. In the long term, this positive branding can fuel business growth.
To date, most businesses have been built around a linear model where profits are maximised at the expense of the environment. In order to adopt a circular economic model, businesses must rethink their operations to align with the new goals of conservation and sustainability.
One key area businesses can reinvent is human resource management. HR departments often operate based on traditional assumptions about growth which may not be compatible with a circular economy model. How can HR support its organisation to align with the circular economy?
The Role of HR in a Circular Economy
Adopting the principles of the circular economy requires businesses to rethink the way they use and dispose of resources. Human resource management plays a key role when they support by incorporating sustainable practices for a company to improve its environmental performance.
Ways That HR Can Shape the Circular Economy
To close the loop on resource use and play their part in creating a more sustainable future, here are three ways in which HR can help businesses adopt the ways of the circular economy.
1. Policies & Practices
HR can implement policies such as waste reduction goals, recycling programmes, and sustainable purchasing guidelines. Additionally, they can promote sustainability education and awareness among employees to help them make more environmentally conscious decisions in their day to day lives.
2. Sourcing of Products & Services
HR may choose more sustainable alternatives when sourcing products and services. Building relationships and transacting with vendors who mainly carry sustainably sourced products will help the businesses’ sustainability goals in the long term. This can be done by looking for products and services such as recyclable name badges and office supplies with minimal environmental impact throughout their life cycle.
Besides implementing sustainable procurement practices, HR can help businesses achieve more radical changes by executing corporate environmental, social, and governance (ESG) strategies. ESG strategies include metrics that take into account a broader group of stakeholders. By adopting such a strategy, companies can implement more comprehensive improvements and make changes where the most significant and effective outcomes can be achieved. However, formulating ESG strategies often require extensive knowledge about multiple fields to ensure that diverse perspectives and insights are considered. Thus, businesses often find themselves benefitting from working with firms such as KPMG, which provides ESG advisory services. With the help of these professionals, companies can better identify circular economy risks and opportunities in their existing operations and how best to leverage existing resources in their ESG strategy.
3. Workplace Culture
Based on a survey by BlackHawk Network, the use of the right incentives helped businesses attain a 79 percent success rate in achieving their determined goals. Hence, creating incentives for employees to adopt environmentally friendly behaviours can be considered when HR drafts up company policies to support a circular economic model. These benefits can include rewards for participating in recycling or conservation programmes. With incentives to encourage and reinforce the desired practices, it will go a long way in promoting a sustainable, environmentally conscious workplace culture.
To reduce packaging waste, employers can encourage employees to bring their own reusable bottles and lunch boxes to work instead of buying take-out. This can also be initiated by gifting a set of each to every employee to further promote the culture. By taking these steps, HR can effectively support an organisation’s transition to a new business model that aligns with the circular economy.