ZURICH - A recent report, "Circularity: No Time to Waste," published by ABB (ST:ABB) Motion, indicates a growing concern among industrial businesses regarding resource scarcity, with 91% reporting its impact on their operations. The study, conducted in October 2023, surveyed 3,304 industrial decision-makers across multiple countries, including the US, China, India, and several European nations. As a response to the challenges, two-thirds of these businesses plan to ramp up their investment in circularity initiatives over the next three years.
The scarcity of raw materials, energy, labor, and electronic components is driving up costs for 37% of companies, disrupting supply chains for 27%, and slowing production for 25%. Notably, energy, although scarce, is identified as the largest source of waste by a significant number of firms, underscoring the urgency for enhanced energy efficiency—a key factor the International Energy Agency (IEA) deems essential for achieving Net Zero emissions targets.
Despite the consensus on the need for circularity, the survey reveals a lack of a standardized approach and slow adoption of key practices. Only 8% of respondents view circularity as a company-wide responsibility, yet this group reports the most improvements in energy consumption, use of recycled materials, and carbon emissions.
Current circular practices such as partnering with waste management companies, adopting energy-efficient technologies, and promoting circular principles in the supply chain have been implemented by less than half of the businesses surveyed. However, 67% are incorporating recycled materials into their products.
The benefits of investing in circularity are becoming evident, with waste reduction and energy efficiency improvements being the most common outcomes. While concerns about initial investments persist, businesses expect long-term gains in process efficiency and cost management.
The survey also highlights a strong desire for increased regulation, reporting requirements, and government support for circular business practices. A majority of respondents believe that a circular economy spurs innovation and competitiveness.
Tarak Mehta, President of ABB Motion, emphasizes the critical need for a transition to a circular economy, both for environmental sustainability and business resilience. The report advocates for a holistic approach, responsibility at all organizational levels, and the adoption of new technologies and collaborations.
This information is based on a press release statement from ABB Motion.
InvestingPro Insights
As ABB Motion, a division of ABB Ltd (SIX:ABBN), spearheads the push towards circularity in industry, the company's financial health and market position offer additional insights for investors considering the long-term prospects of this initiative. According to recent data from InvestingPro, ABB Ltd boasts a robust market capitalization of $83.65 billion, reflecting investor confidence and the scale of its operations. The company's P/E ratio stands at 20.22, which, while indicative of a higher valuation relative to near-term earnings growth, also suggests that investors are willing to pay a premium for ABB's established market presence and future potential.
With the last twelve months as of Q3 2023 showing revenue growth of 8.99% and a gross profit margin of 34.75%, ABB demonstrates its ability to not only generate significant income but also to retain a healthy portion of it as profit. This financial vigor underpins the company's capacity to invest in the circular economy initiatives that are increasingly demanded by industrial decision-makers. Additionally, InvestingPro Tips highlight that ABB Ltd has seen a strong return over the last three months and has maintained dividend payments for 18 consecutive years, reinforcing its appeal to investors seeking stability and consistent returns.
For those looking to delve deeper into ABB Ltd's investment potential, InvestingPro offers numerous additional tips on the company's financial nuances, industry position, and stock performance. A subscription to InvestingPro is now available at a special New Year sale with a discount of up to 50%. To enhance the value of this offer, use coupon code SFY24 to get an additional 10% off a 2-year InvestingPro+ subscription, or SFY241 to get an additional 10% off a 1-year InvestingPro+ subscription, and unlock the full spectrum of insights that can inform your investment decisions.
This article was generated with the support of AI and reviewed by an editor. For more information see our T&C.