These arbitrage opportunities are already creating so much value at the company level that the circular economy concept has clearly emerged from the shadows as a ‘niche’ approach. Given its potential value, however, the circular economy has only begun to scratch the surface. 

Substantial savings are possible at a company level, as an increasing number of reference cases demonstrate. Many companies as diverse as Ricoh, Philips, H&M, Trina Solar, and Vodafone are using different forms of circular arbitrage, and are able to capture more value over time. 

• Ricoh — Resource recirculation in the inner loop. Ricoh, provider of managed document services, production printing, office solutions and IT services, established the Comet Circle™ in 1994 as a catalyst for reducing environmental impact. It embodies the belief that all product parts, for example for copiers and printers, should be designed and manufactured such that they can be recycled or reused. The company established the GreenLine label as a concrete expression of its commitment to resource recirculation, with an emphasis on inner-loop recycling. GreenLine is now offered in six major European markets and has quickly become a success story because it increases customer choice, while also keeping pace with Ricoh’s new equipment sales. According to Ricoh, GreenLine has grown rapidly (5% from 2012 to 2013), now accounting for 10 to 20% of Ricoh’s unit sales in these markets and earning a margin one-and-a-half to two times higher than Ricoh’s new products. GreenLine products allow Ricoh to reach non-traditional market segments such as smaller businesses, and make Ricoh’s offers more attractive for traditional enterprise customers, which helps stabilize market share in a market with heavy price competition. In addition to remanufacturing, the company refurbishes and upgrades pre-owned machines.¹⁴
  
  For products that cannot be remanufactured, refurbished, or upgraded, Ricoh harvests the components and recycles materials (at local facilities). Ricoh is starting to explore crushing materials to ship back to manufacturing facilities in Asia for use in new component production. The company is on track to reach their targets to reduce the input of new resources by 25% by 2020 compared with 2007 levels, and by 87.5% by 2050, and to reduce the use of—or prepare alternative materials for—the major input materials for products that are at high risk of depletion (e.g. crude oil, copper and chromium) by 2050.
• Philips — Lighting as a service. Philips has a track record in the collection and recycling of lamps. For example, in the EU, Philips has a stake in 22 collection and service organizations that collect 40% of all mercury-containing lamps put on the market and with a recycling rate greater than 95%. In order to enhance collection of lighting equipment, Philips recently started to also sell lighting as a service. Philips says they can reach more customers if they retain ownership of the lighting equipment as customers don’t have to pay high upfront costs and Philips ensures the sound environmental management of end-of-life lighting equipment. It’s a new way for customers to achieve their sustainability goals: high lighting performance, high energy efficiency, and a low materials footprint.¹⁵
• Vodafone — Offering consumers access. Vodafone is one of the first movers in the ICT industry to capture the benefits of the ‘access over ownership’ business model with its Vodafone New Every Year/Red Hot and Buy Back programmes, which allow the company to strengthen their relationship with customers. Vodafone launched the New Every Year/Red Hot programme in 2013 and has been receiving very positive feedback from customers. The Buy Back programme is now being rolled out across all Vodafone markets, while New Every Year is  available in four markets currently (UK, Greece, the Netherlands and Ireland). Vodafone works with a business partner to take care of the reverse cycle network, in which most devices collected are transported to Hong Kong and China for sales in secondary markets.¹⁶
• H&M — Collecting clothing for reuse and recycling. Starting in early 2013, H&M launched a global in-store clothing collection programme to encourage customers to bring in end-of-use clothes in exchange for a voucher, an initiative also taken by Marks & Spencer with Oxfam in the UK. To manage downstream processing of the clothes H&M collects, they collaborate with I:CO, an apparel reverse logistics service provider, which handles the manual sorting for rewear, reuse, recycling or energy generation. I:CO’s biggest sorting facility in Germany employs 600 people, and the company also has plants in India and the US. Of the total clothing they collect, I:CO estimates the average share that they select for marketing as rewear—second-hand clothes that are sold worldwide—at 40 to 60%. At the next loop level, reuse accounts for another 5 to 10% on average: these are textiles no longer suitable for wear, which are cascaded into other products, including cleaning cloths, with very limited upcycling of fibres into textile yarns. Textiles that can’t be reused, 30 to 40% of the total on average, get a new chance as textile fibres or are used to manufacture products such as damping and insulating materials in the auto industry. When these three options have been exhausted, textiles are used to produce energy; I:CO estimates the share of clothes collected that go to the outermost loop of thermal utilization at 1 to 3%. Both H&M and I:CO have been working on increasing upcycling and functional recycling. H&M’s long-term aim is to find a solution for reusing and recycling all textile fibre for new uses and to use yarns made out of collected textiles in their products. The H&M surplus from the collection programme will be donated to the H&M Conscious Foundation¹⁷, where they will fund innovations in reverse capabilities and other areas linked to closing the loop on textiles. The main revenue streams for I:CO come from the resale of clothing, especially the high-value garments (including vintage), and materials cascading. For H&M, the benefits of the programme could possibly include greater in-store traffic and an increase in customer loyalty. For jeans, H&M partners with a supplier in Pakistan to close the loop on fibres. Collected end-of-use jeans are shipped to partner facilities to be crushed and respun into fibres to use as input to make new jeans (replacing 20 to 25% of virgin materials due to limitations in current mechanical recycling practices).¹⁸
• Trina Solar, one of the largest solar panel manufacturers in the world based in China, have started developing technologies and standards for recycling end-of-use photovoltaic modules in anticipation of the obsolescence of first-generation panels. The reverse logistics operation will mostly be located in end-usage countries. Glass will be extracted from the modules and used for other glass applications, while the electronic control systems will be treated as waste of electrical and electronic equipment (WEEE).¹⁹ This will allow the company to reap the benefits of secondary material value as well as remain compliant with regulations.

These results and those of the other products studied in detail in the two reports (see Box 1 below) point at significant materials productivity improvements if circular economy principles are applied to product design, business models, reverse cycle processes and/or other building blocks:

• Circular design, i.e. improvements in materials selection and product design (standardization/modularization of components, purer materials flows, and design for easier disassembly), lie at the heart of a circular economy.
• Innovative business models, especially changing from ownership to performance-based payment models, are instrumental in translating products designed for reuse into attractive value propositions.
• Core competencies along reverse cycles and cascades involve establishing cost-effective, better-quality collection and treatment systems (either by producers themselves or by third parties).
• Enablers for improving cross-cycle and cross-sector performance are factors that support the required changes at a systems level and include higher transparency for materials flows, alignment of incentives, and the establishment of industry standards for better cross-chain and cross-sector collaboration. Other aspects are access to financing and risk management tools, regulation and infrastructure development, and—last but not least—education, both to increase general customer awareness and to create the skill base to drive circular innovation.