Five business benefits of shifting towards Industry 5.0 and its push for a circular economy
At a glance
This article is an abridged version of a PhD study by Suzie Batson, Market Leader – Digital Solutions, GHD Digital.
While many organisations continue to grapple with Industry 4.0 and its leap into digital transformation, Industry 5.0 is well and truly here. The shift in mindset represents everything we have learned from Industry 4.0 and combines it with a more purpose-driven way to do business.
Core to Industry 5.0 is moving away from the linear economy model of ‘take-make-waste’ and favouring circular economy models that provides the opportunity to change the way we value and perceive waste. At the core of this are key principles around designing out waste and pollution, regenerating ecosystems, recycling and upcycling products and materials.
Approximately 90 percent of the world’s data has been generated in the past two years alone. Big data and AI are closely linked, with AI being essential for humans to distinguish valuable insights from irrelevant information. The coupling of digital ecosystems with the human and environmental elements is the bridge enabling these Industry 5.0 principles. “An economy that works for people - where human well-being is at the forefront”.
"In order to remain the engine of prosperity, industry must lead the digital and green transitions." 1
With people, sustainability, and connection core to Industry 5.0, I’d like to share five benefits to businesses who choose to embrace this change, along with some success stories already in market:
1. Connected economy
By implementing circular economy principles, such as reusing, repurposing and resource regeneration, businesses can reduce their reliance on expensive raw materials and lower production/operation costs.
Technologies like AI, with its ability to automate tasks, and the Industrial Internet of Things (IIoT), using internet-connected devices and sensors, enable efficient and sustainable manufacturing processes. Practices such as optimising logistics and transportation systems, through to supply-chain analytics or using additive manufacturing to increase customisation – think shoes, laptops or other made-to-order items – that, in turn, optimise resource efficiency, minimise waste and improve operational resilience. Across construction, manufacturing, and mining and oil industries, wearable technology headsets are elevating on-site resilience. A connected workforce allows site activities to be conducted remotely by more experienced people from back office. Those who choose not to change risk becoming less competitive and out of step with what the market wants, and the social and environmental regulatory imperatives.
2. Enhanced brand reputation
Embracing the principles of Industry 5.0 and the circular economy can demonstrate a business's commitment to sustainability and social responsibility and enhance its brand reputation.
Although unsustainable in many areas, the mining industry is investing in technology and techniques to reduce its environmental impact where it can. We have been working with many of the key players in the mining sector in Australia to enable the roll-out of zero-emission mining vehicles. Diesel-powered haul truck fleets account for up to 80 percent of a mine’s emissions. A hurdle is overcoming interoperability barriers for charging electric fleets across mining companies and manufacturers. But once solved, potential future applications could extend into other sectors requiring high-power charging, such as rail, aviation, construction and marine industries.
Governments, communities, NGOs, shareholders and individuals are all calling on the industry to promote a more sustainable world. Multiple studies indicate that businesses that choose to take a more sustainable route improve brand value and reap the corporate social responsibility and financial rewards.
It’s worth noting, however, that ‘greenwashing’ is now a real business risk. Both the Australian Competition and Consumer Commission (ACCC) and the Australian Securities and Investments Commission (ASIC) have publicly announced a crackdown on misrepresentation. 2
3. New business opportunities
Industry 5.0 and circular economy practices can create new business opportunities, such as the development of new products and services, the creation of new revenue streams and the formation of new partnerships with other businesses.
A local success story, Precycle in South Australia, introduced the circular economy concept to home construction. It removes and recycles discarded building materials from home construction sites. While APR, also in South Australia, converts kerbside and industrial waste to make furniture for councils and residents, such as park benches, with almost no CO2 emissions, and now exports internationally.
The common thread between these businesses is the simple, yet impactful idea of considering waste as a resource source. Waste-to-energy plants take this idea one step further, creating electricity from waste – an emerging technology trend in Australia. Geographically remote Australia has much to gain from such a circular approach. If we don’t need to import resources, we’re not as susceptible to the global supply chain issues we’ve recently endured, and we’re part-solving the voluminous, growing landfill challenges.
4. Diversification
Barwon Water in Victoria is reaping the benefits of diversification. Working with the Colac Renewable Organics Network, it takes organic trade waste from the Australian Lamb Company and converts it into renewable electricity. It also uses solid waste leftovers from the process and converts them into valuable soil enhancers for agricultural purposes. 3
New business models, such as Product-as-a-Service (PaaS), support a circular economy where products are leased instead of sold. Think GoGet or other car-sharing services. As manufacturers retain ownership of the products and are responsible for maintenance and repair, it extends their life. PaaS models also make it possible to adapt capacity to changing demands, incentivising companies to create durable products and contributing to a decrease in waste.
Organisations can adopt the same innovative thinking and approaches to remain relevant and nimble, free from the financial burdens of investing in expensive infrastructure.
5. Regulatory compliance
As governments worldwide introduce new regulations and policies to promote sustainability and reduce waste, businesses that adopt circular economy principles and Industry 5.0 approaches can ensure compliance and avoid costly penalties. Even take advantage of new opportunities.
The engineering and construction industry is the biggest raw material user in the world. It seems sensible to consider that central governments will increasingly look to this industry to curtail its use and devise smarter ways. The sector can lessen its environmental impact by implementing a circular economy strategy while avoiding rising costs, delays and delivery disruptions, and other expenses related to volatile commodity markets.
Overall, there’s a compelling business case for incorporating the circular economy model into standard business practices and policy. Embracing Industry 5.0 and the circular economy can help businesses achieve more sustainable, efficient, and innovative operations while enhancing their bottom line, reputation, and competitiveness.
Meet Suzie
Suzie works closely with our clients and our team of data scientists, design thinkers, immersive digital consultants and innovators to deliver real-time actionable insights and solutions to solve wicked problems. As a passionate outside-the-box thinker, Suzie’s enduring relationships and deep understanding of clients and markets is underpinned by her lifetime commitment - to make a positive difference to people and our planet. With a Doctorate in the circular economy under way, Suzie is a regular contributor to thought leadership articles on Industry 5.0 and the circular economy.
Her rich experience of over 20 years supporting clients and their customers across the environmental, engineering and professional consulting industry, spans water, transport, telco, energy, defence, the built environment, economic development and the not-for-profit sector. A strong advocate and champion of inclusion and diversity, Suzie is our Women in GHD Digital (WING) global sponsor.