On May 16, AmCham members held an unusual joint event to offer case studies of Puma SE (PUM.DE) and Colgate-Palmolive Company (CL.NYSE) – both companies that implement the “circular economy” in managing raw materials, products and the supply chain to mitigate climate change. Here, one of the organizers describes the event and what participants learned about this tricky but vital concept.

Should waste be seen as a resource or a raw material? How can the end of a product life cycle be linked with the beginning? And is it even possible in Asia’s complex supply chains?

Businesses, governments, and corporate leadership around the world are putting increasing pressure on supply chains to reduce waste, increase recycled material in production, and apply the principles of circular economy.

In the first joint event by AmCham’s Energy, Environment, Social & Governance Committee and Apparel, Footwear & Supply Chain Committee, Anne-Laure Descours, Chief Sourcing Officer, Puma and Shashank Singh, APAC Sustainability Lead, Colgate-Palmolive, examined the implications for business leaders in the region and offered insights into how circularity works in practice. The event, Accelerating Circular Solutions in Product Development: Levers for Change, was moderated by Apparel, Footwear & Supply Chain Committee member Catherine Cole, Sustainability Consultant, B Purpose Bureau.

Harry Li, Founder of Circular Economy (Hong Kong), says, “Circular Economy is usually defined as value optimization of materials and stakeholders for creating positive impacts in ecosystems.” According to the OECD, circular economy is based on three principles, driven by design: eliminating waste and pollution; circulating products and materials (at their highest value); and regenerating nature.

Puma’s Descours explains: “Climate is fairly easy to define, but circularity is complex as it touches every part of the business. Some aspects are under a company’s control, including waste, durability, and design. However, incorporating the social aspect can be more difficult, and accessing reliable data can create additional challenges.” For this, multiple parties need to be involved, including customers, suppliers, consumers, regulators, and civil society.

Colgate-Palmolive’s Singh agrees with this assessment. “Our aim is to keep the material in circulation as long as possible at the highest value possible. To do that we need to be able to see where the waste is. We control the design and manufacture, and there we can see it. But talking about recycling the material after use, or keeping it in the value chain, we need to collaborate with many other parties.”

Key drivers for change lie in designing the product for circularity and in engaging with partners along the value chain.

With circular design in mind, Puma introduced an initiative in 2022 to create replica football jerseys based on polyester recycled with RE:FIBRE technology. In 2024, official PUMA football replica jerseys including those for the Euro and Copa América tournaments will be manufactured using RE:FIBRE recycled materials that were made of old garments and factory waste rather than only recycled plastic bottles.

Colgate’s branded products include toothpaste, brushes, and mouthwash bottles. Singh points out, “Bottles are the easiest because PET bottles are the most recyclable. They’re relatively standard. Toothpaste tubes are a bit harder.” The company recently took a major redesign initiative with the introduction of a new approach to toothpaste tubes. Previously, the tubes were made with multiple materials, making them difficult or impossible to recycle. The newly-designed tubes are made with a single material, High Density Polyethylene (HDPE), the same plastic used for detergent bottles. Recycling the tube alongside HDPE plastic bottles requires no extra steps.

Singh explains: “We made the technology open, and we set goals for all the countries. We are a mass brand and we have a lot of influence over the supply chain, but each country is different.” For example, in Australia recycling is owned by the government, while in other countries in the Asia Pacific region it is partially owned by the government and partially by other entities. Colgate began with Australia to generate acceptance and awareness of the recyclable tubes, collaborating with local consortia on consumer awareness.

For fast-moving consumer goods, this type of collaboration can create the conditions for success. In the United States, Colgate-Palmolive created a consortium with others to create a critical mass in which 85% of the material in the market is recyclable. In California the team reached more than 90% and is currently investing heavily in advocacy in India to make this type of success possible.

Collaboration also proved indispensable for Puma when it introduced its first biodegradable shoe. Descours highlights that this project requires collaboration both up and down the supply chain. “Chemical companies are our key partners, because Puma can’t do it alone.” After use, “shoes are tough because you need to dismantle them first. You need a biodegradation facility, and it takes 18 months.” Rather than collaborating only within the garment industry, Puma also collaborates with other industries in the fast-moving consumer goods sector, to better understand their systems.

As a procurement, supply chain and logistics hub, Hong Kong plays an important role at the intersection of design and manufacturing. Paradoxically, however, for Hong Kong residents, achieving a circular economy at the local level is still out of reach. One complication is the size of the Hong Kong market; additionally, virtually all consumer goods are imported. While the new Municipal Solid Waste Charging Scheme may cause some changes, waste segregation is still far from universal in the SAR. Hong Kong lacks local recycling facilities but must abide by China’s restrictions on the import of raw waste.

Singh points out waste segregation as crucial to the success of any circular economy initiative. “Waste segregation is the most, most, most important. You need the right infrastructure, and consumer acceptance.”

This, in turn, impacts the commercial viability of a circularity initiative. “Sustainability functions only when it is commercially viable,” Descours comments. “When we combine higher material costs with inflation, we risk moving consumers backward into unsustainable products.” Meanwhile, the scale of the waste issue: 12 years ago, the garment industry was producing 50 billion garments per year, while today it is 100 billion.

Descours points out that regulatory change is a key driver for circularity because it brings brands into the sustainability space that were not previously involved. “In China, we have Tier 1 suppliers who are now reusing waste for the first time, and it is because of regulatory change. China is putting in huge infrastructure for waste, and we need their support. Meanwhile, places with limited resources like Bangladesh are very committed and are coming up with very creative solutions. We need to give all of them enormous credit.”

Regulatory change must take into account the local situation in each market and look at the full value chain rather than one part of the chain. “We need regulatory support on both sides including the supply side. This includes not only waste collection, but, for example, requirements to include recycled materials in the product. In India this is already underway.”

Ultimately, building circularity is intimately connected with business management. “There are three types of projects,” Singh comments. “Whether it’s already a viable business, a regulatory requirement, or purpose-driven by the company’s own commitments, each one needs a different strategy. If it’s the first one, then we go ahead. If it’s a regulatory requirement then we do it and invest. If it’s the third one, it needs top-down support and data to back it up.” As the availability of data continues to challenge all of these, Colgate is now putting together tools to better measure decarbonization in its supply chain, since “projects with better data are projects that get implemented.” The situation may change soon. “Technology and virtualization are changing the regionalization of manufacturing,” says Descours. “At the same time, the approach to sustainability has changed. It is getting more important because the average age of our employees is 30 and the younger employees care; one of our criteria for recruiting employees is their commitment to sustainability. It used to be an expert-to-expert conversation. Now everyone, including accountants, communications teams, and HR, are involved. It is something where everyone has a role to play.”

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