The Course for Companies to Gain First-Mover Advantage in a Circular Economy Society

"Circular economy? We are working on recycling. Our recycling rate is among the best in the industry."
I was shocked to hear such a response from a Japanese company. The concept of "Circular Economy" is advancing primarily in Europe and the United States. In Japan, there are still only a few companies that understand its true meaning and are working on it with confidence.


First, let's review the definition of the circular economy as provided by countries and governments.


"A new approach to economic activity as a whole that seeks to maximize the value of resources and products, reduce resource input and consumption, and minimize waste generation, while also considering the impact on competitive conditions, moving away from the current economic and social model of mass production, mass consumption, and mass waste" (Ministry of the Environment, 2023 White Paper on the Environment, Circular Economy, and Biodiversity). As the name "Circular Economy" suggests, it goes beyond recycling to reduce waste and emphasizes a shift to a system that makes effective use of stocks throughout economic activity and creates greater added value.


The SDGs are no longer a distant future, the commoditization of DX is rapidly spreading, and carbon neutrality is on the rise. The next major trend in management, highlighted in this context, is the circular economy. There is no intention of disputing this. However, what is the reality? Although the outline of the definition is clear, it is undeniable that in corporate management, the term often precedes its real substance.


As mentioned at the beginning, there is a misunderstanding that "Circular Economy = Recycling," and there are concerns such as, "There is no economic rationality," "There is no benefit to being the first," and "Nothing will change if only one company takes the initiative." If we were to describe the current state of the circular economy without fear of being misunderstood, it would be that "The more we try to face it honestly, the more fantastical ideals (utopias) come to mind."


The future of the circular economy is...