Analysis of Circular Economy in Unilever: Benefits and Practical Application

The report is grounded on the analysis of the concept of circular economy which deals with the sustainable use of resources for the purpose of creating sustainable operations. The organization which is taken into consideration for the analysis of the circular economy concept is Unilever. The ways by which Unilever has been able to implement the circular economy concept in its supply chain is analysed in the report. The benefits that are provided to the organization due to the implementation of circular economy is also analysed in the report in detail. This has helped in understanding the importance of circular economy on the operations of an organization.

Running head: ANALYSIS OF CIRCULAR ECONOMY
ANALYSIS OF CIRCULAR ECONOMY
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Executive Summary
The report is grounded on the analysis of the concept of circular economy which deals with
the sustainable use of resources for the purpose of creating sustainable operations. The
organization which is taken into consideration for the analysis of the circular economy
concept is Unilever. The ways by which Unilever has been able to implement the circular
economy concept in its supply chain is analysed in the report. The benefits that are provided
to the organization due to the implementation of circular economy is also analysed in the
report in detail. This has helped in understanding the importance of circular economy on the
operations of an organization.

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Table of Contents
Introduction....................................................................................................................3
Description of the organization......................................................................................3
Operations and concepts of circular economy...............................................................4
Drivers of circular economy.......................................................................................7
Economic drivers.......................................................................................................7
Social drivers..............................................................................................................7
Environmental benefits..............................................................................................7
Practical application of the circular economy................................................................8
Business model of the company.................................................................................8
Operations and the supply chain of the company......................................................8
Benefits provided by circular economy to Unilever................................................10
Conclusion....................................................................................................................10
References....................................................................................................................12

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Introduction
Circular economy is a major alternative to the traditional linear type of economy in
which the resources are kept in use for the longest time. The organizations which implement
the concept of circular economy aim at extracting maximum value from the various resources
that are available for them. The resources are used for the purpose of regenerating the
services and products at the end of the service life. This can be defined as a regenerative
system in which the resource input, waste, the energy leakage and emission are minimised by
the closing, slowing and narrowing loops of materials (Andrews 2015). This process can be
achieved with the help of preservation, long-lasting design, reuse, repair, revamping and the
closing of the recycling loops. The major advantage of the circular economy is that the
achievement of a sustainable world does not always require a change in the lifestyle of the
consumers or the loss of revenues of the company. The circular business models have proved
to be profitable in nature like the linear models and consumers are also able to enjoy the same
type of products (Blomsma and Brennan 2017).
This report will be based on the analysis of the concept of circular economy and the
ways by which this concept is practically used in the modern organizations. The drivers and
the benefits of circular economy to the organizations and the consumers will also be analysed
in the report.
Description of the organization
The organization that is taken into consideration for the analysis of circular economy
is Unilever PLC which is a British-Dutch transnational organization which operates in the
sector of consumer goods. The headquarter of the company is locate in London in the United
Kingdom and Rotterdam in Netherlands. The products that are offered by the company
include, drinks, food, personal care based products and the cleaning agents. The sector in

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which the organization has its operations in the FMCG or the fast moving consumer goods
section. Unilever is also considered to be one of the oldest multinational company and the
products that are manufactured by the company are available in more than 180 countries in
the world (Bocken et al. 2016). Unilever is said to own more than 400 brands and the
turnover of the company in the year 2016 was more than 50 billion Euros. Some of the major
and famous brands of the company are, Axe, Dove, Knorr, Magnum, Rexona, Surf and
Sunsilk. The company is dual listed in nature which consists of the Unilever PLC in London
and Unilever N.V. in Rotterdam. The company is known for using the concept of circular
economy where the resources are used in a recyclable manner. The organization has been
using the resources that are available for its operations in the process which supports the
circular economy (Ellenmacarthurfoundation.org. 2018).
Operations and concepts of circular economy
The concept of circular economy is based on the redefinition of growth and the
focussing on the positive benefits to the society as a whole. This entails the decoupling
economic activity in a gradual manner from the consumption of the limited resources and
designing of waste out of the entire system. This process is supported by the transition to the
renewable sources of energy, the circular models of businesses which helps in the building of
the natural economic and the social capital as well. This process is based three major
principles which are, designing out pollution and waste, keeping the materials and the
products in use and regenerating the natural resources (Franklin-Johnson, Figge and Canning
2016). In the process of circular economy, the economic activity builds and then rebuilds the
health of the overall system. This concept further recognises importance of the economy
which needs to work in an effective manner at all the scales for the large and the small
business organizations. The transition to the circular economy not only relates to the
adjustments that are made for the purpose of reducing the impact of the linear economy. This

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also represents the shift which has been experienced which helps in building the long-term
resilience, generating economic opportunities and business and providing the societal and
environmental benefits (Geissdoerfer et al. 2017).
This model mainly distinguishes between the biological and the technical cycles. The
consumption takes place mainly in the biological cycles where the food and he biological
based materials are planned into the feedback system with the help of various processes. The
notion based on circularity has quite deep philosophical and historical origins. The idea
which is based on the feedback of the cycles in the real-world systems is quite ancient and
has been spoken about in many schools of philosophy. The digital technologies in the modern
business environment have the ability to support the changeover of a business organization to
the circular economy process. The circular economy based model provides huge number of
opportunities for the purpose of redesigning and rethinking the ways by which the products
are developed in organizations (Genovese et al. 2017).
The concept of circular economy is currently promoted by the EU and the other
national government as well. Many business organizations in the world are also promoting
this concept of circular economy in the market. The circular economy can also be considered
as a collection of various ideas from the different fields of study and the concepts. The
circular economy based concept and the practice has been established and further led by the
practitioners which includes, the policy makers, business consultants, the business
organizations and the business foundations. The scientific research which is based on the
circular economy is unexplored. The implementation of circular economy has been successful
due to the sustainable development based opportunities that it provides to the organizations.
This development is based on the ability of the companies to conserve resources for the
future generations (George, Lin and Chen 2015).

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The circular economy is a concept which has become popular among the business
organizations within the last few years. The usage of this concept has also grown a great deal
in many number of ways. The circular economy is defined with the help various types of
concepts and activities that are related to it in many different ways (Ghisellini, Cialani and
Ulgiati 2016). The seven major pillars that are related to the usage of circular economy in the
organizations are as follows,
 The materials are cycled at the continuous high values. The priority of the
process is based on the preservation of the material complexity with the help
of cascading the materials in the complex forms. The cycles are designed to be
of the length which are relevant on the human timescale.
 The energy is based mainly on the renewable sources. The system is designed
in such a manner which can provide the highest levels of energy efficiency
without compromising on the performance and the service output (Lacy and
Rutqvist 2016).
 The levels of biodiversity are supported and then enhanced by the human
activities. The major principle of the circular economy is based on the
preservation of complexity and the ecological diversity as well.
 The human society and the culture are preserved with the help of the
preservation of the natural resources in an effective manner. The maintenance
of the social cohesion and human cultures have also become quite important.
 The health and the well-being of human and the other species in the world are
supported by the implementation of this concept (McMullen 2018).
 The various human activities are able to generate value that are measured
beyond the financial benefits. The finite resources are used in a sustainable
manner.

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 The economic system is based on the various government systems,
mechanisms and the incentives which can allow to respond to the system
shocks and the crises that were faced by the companies.
Drivers of circular economy
Economic drivers
The economic development of the country and the organization in which the concept
of circular economy is implemented can be improved. The EU has been supporting the
concept of circular economy from the time of its inception. The concept provides effective
and pragmatic solutions to depletion of the natural resources for the functioning of the
modern organizations. The circular economy is thereby based on the paradigm shift which is
related to the change of waste to a resource for the company. The improvement of the
economic models is important for and thinking out of the box also plays a major role in this
case (Murray, Skene and Haynes 2017).
Social drivers
The contribution that is provided by the concept of circular economy to the
sustainability of the environment and the existence of human is a major social driver of the
concept. The transition phase from the linear economy to circular economy can be quite
difficult for the various organizations.
Environmental benefits
The process of circular economy can prove to be a major driver of the sustainable
development. The usage of the various virgin materials is reduced and the wastes of the
organizational processes are also reduced in the process. The sustainable brands and the
organizations are implementing this strategy in the various processes to create a sustainable
environment of their production. The government of the countries are also taking part

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actively in the successful implementation of the concept of circular economy (Parida and
Rönnberg Sjödin 2017).
Practical application of the circular economy
Business model of the company
The concept of sustainability is the key to the success of the business model of
Unilever. The new business model which has been developed by the company has
sustainability at the heart of the operations. The company has pledged to have environmental
impact of the products and the sales of the company are also being planned to be doubled.
The organization further needs to provide a report in an annual basis related to the
improvements that have been made in the achievement of the goals. The demands of the
consumers of the FMCG company need to be fulfilled (Planing 2015).
The environmental impact that is caused by the products in terms of the usage of
water, greenhouse gas emissions and the waste of the production processes need to be
reduced. The improvement of the health and well-being of more than one billion people in the
world is the main aim of the new business model that has been designed by Unilever. The
creation of value in the environment and the sustainable consumption of resources is also
based on the new model of business that will be used by Unilever. The company is further
aiming at rising the profits in the industry with the help of sustainable operations in the
environment. The business model of the company is thereby based on the improvement of its
operations in the environment and the rise of its profits as well (Pomponi and Moncaster
2017).
Operations and the supply chain of the company
Unilever has been working closely with the organization named Ellen MacArthur
Foundation for the proper implementation of the concepts of circular economy in the various

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organizational processes. The concept related to circular economy is considered to be a way
out from the wastes that are generated by the organization. The circular economy is also able
to deliver growth for the business leaders in the circular economy. Unilever is an Anglo-
Dutch organization which operates in the sector of consumer goods. The major goals of the
partnership between the company and the foundation is to unlock the various economic
opportunities that are provided by the process of circular economy (releases 2018).
The major emphasis areas of the partnership are, progress of the pilot projects to
develop the Fast Moving Circular Goods, to develop the assets and the resources that are
required to scale the changes across the business. The association with the stakeholders of the
industry to catalyse the systematic change towards the circular flow of plastic packaging
materials.
The packaging of products is a major part of the production process. The use of
plastic for the packaging related purposes have caused some major issues in the environment.
Unilever has thereby taken steps to introduce sustainability in the supply chain by using the
concepts that are based on the use of recyclable plastic for the packaging of products. The
organization is committed towards transforming the use of the plastic packaging for their
products within the year 2025. Unilever wishes to lead the way towards the successful
application of the circular economy based concept in the packaging of the materials (Winans,
Kendall and Deng 2017). The company is one of the brands which has been able to make the
plastic package based commitments. The organization has also taken essential steps towards
the reduction of plastic wastes that are caused by the production and packaging process. The
company has thereby made important changes in the supply chain which has led to the
increased use of recyclable materials for the purpose of packaging the products in an effective
manner (Pomponi and Moncaster 2017).

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Benefits provided by circular economy to Unilever
Unilever had made the commitment to use 100% recyclable materials for the
packaging purposes within the year 2025. The company has further demanded collective
action from the other FMCG companies to take similar actions related to their production
based processes. The company is leading the way towards a circular economy which is based
on the sustainable operations. This step has been taken by the company for the purpose of
reducing the amounts of ocean waste which has led to many issues in the lives of the fishes
and other ocean creatures (Parida and Rönnberg Sjödin 2017). The company has three major
commitments that are related to the successful implementation of circular economy by
Unilever which are,
 To ensure that all the plastic packaging is made with the help of reusable
materials.
 To renew the membership in the Ellen MacArthur Foundation for the next
three years.
 To invest in the proving and then sharing with industry (releases 2018).
The weight of the package that is used by the company is also aimed to be reduced so
that the company can benefit from the versatile materials that are used for providing benefits
to the customers. The organization has been able to lead the way of the implementation of
circular economy in the FMCG sector which has helped in the improvement of its reputation
in the market. The other companies have also benefitted hugely from the various processes
that have been implemented by Unilever to maintain sustainable operations (Pomponi and
Moncaster 2017).

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Conclusion
The report can be concluded by stating that the organizations in the modern business
environment need to implement the concept of circular economy so that the operations can be
sustainable in nature and the effects of the operations on the environment can be reduced.
Unilever has implemented this concept in a successful manner and further has been able to
improve its operations in the market. The company has been able to lead the way in the
process of successful application of circular economy in the organization. This has helped the
company to improve its operations and lead the way for organizations in its sector.

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