Driving the circular economy forward as a “resource circulation service provider”

SMFL has been promoting the 3Rs—Reduce, Reuse, and Recycle—to achieve an environmentally conscious, sustainable future.

With regard to Recycle, the Ferris wheel is but one of the many projects undertaken by SMFL’s expanding recycling business. In the field of renewables, SMFL is dismantling and recycling wind turbine blades and has begun recycling solar panels—800,000 tons of solar panels are expected to be discarded in Japan by 2030. The company is also recycling lithium-ion batteries used in personal computers and electric vehicles (EVs).

As for Reuse, SMFL’s website, RE-MACHINE, a platform for purchase and sale of preowned machinery, supports the company’s burgeoning reuse business. Indeed, SMFL is recognized as a leader in this rapidly expanding field. And focusing on Reduce is group company SMFL Rental, whose business encompasses the rental and sharing of IT equipment, including PCs and network gear, as well as measuring equipment.

Business centering on the emerging circular economy has naturally evolved from 3Rs-based business. SMFL has been engaged in solar, wind, biomass and other renewable energy projects, all of which contribute toward the achievement of carbon neutrality, but such projects alone cannot achieve a decarbonized society. At several points in the life cycles of products, from manufacturing to use and final disposal, significant amounts of CO₂ are emitted. With a view to curbing these CO₂ emissions, SMFL launched its business centering on the circular economy.

In April 2023, SMFL established the Circular Economy Promotion Working Team, a Company-wide cross-functional organization. Unlike the 3Rs approach that does not entirely eliminate waste, the circular economy by definition eliminates the final disposal of waste. The strategy is to evolve the 3Rs so as to transition to a thoroughly environmentally friendly recycling scheme. The concept of the circular economy emerged around 2015 and has been gaining traction worldwide ever since.

To advance the circular economy concept from the theoretical to the practical realm, SMFL aims to establish a circular economy ecosystem encompassing not only collaboration among SMFL’s business units and departments and other Group companies, as well as with shareholders, and customers, but also extending to external companies through industry associations. To publicize this collaborative endeavor, the company is promoting the SMFL Circular Economy brand.

The unique business model SMFL has developed to cultivate this brand is the SMFL Circular Economy Model 2030. Based on its various capabilities as a provider of credit services, SMFL owns and manages, through leases, subscriptions, etc., products and equipment for companies while also offering consulting services to them via Circular LinX, a joint venture with AMITA Holdings, an enterprise with expertise in the design of social systems, including waste recycling, consultancy, and environmental assessment and certification services.

Furthermore, by deploying assetforce, its proprietary SaaS (Software as a Service) platform, SMFL provides a mechanism for streamlining the lifecycle management of customers’ products and equipment. The company is also pursuing digital transformation (DX) of its leasing business.

What SMFL has in mind can perhaps be best understood by using the metaphor of the blood circulatory system. The process of recovering and recycling used resources is analogous to the role of the veins in the human body whereas the flow of goods from manufacturers to their customers is analogous to the role of the arteries. SMFL is promoting the circular economy by focusing not only on “arterial solutions” that support manufacturers but also on “venous solutions.”

SMFL views the circular economy as the paramount theme for resolving social issues. In its medium-term management plan covering for the three years to fiscal 2025, SMFL is addressing four topics, one of which involves stepping up efforts to resolve social issues. When it comes to activities for realizing the circular economy, SMFL aspires to a leadership role.

The Ministry of Economy, Trade and Industry forecasts that the circular economy in Japan will constitute a market worth 80 trillion yen by 2030, rising to 120 trillion yen by 2050. The concept of mottainai, an expression of regret for waste, suffuses Japanese culture, with its traditional emphasis on treating things with respect and using them for a long time. SMFL believes there is still plenty of room for improvement. This is certainly true from a global perspective. The United Nations predicts that the world’s population, which topped 8 billion in 2023, will increase to 9.7 billion by 2050. The amount of resources needed will increase accordingly. When one considers the big picture, “planetary boundaries,” which refer to the limits of Earth’s self-regulating ability to accommodate human activities, come into play, meaning there are boundaries within which humanity can continue to develop and thrive on Earth and that we overstep them at our peril.

Given these circumstances, in pursuing a circular economy, SMFL aims to change the mindset of customers and, by extension, consumers. “Nothing is thrown away, and there isn’t anything to throw away” expresses a moral imperative that should be heeded. Globally, we have a long way to go. As a “resource circulation service provider,” SMFL is committed to hastening the emergence of the circular economy by encouraging a shift in awareness among its corporate clients and consumers in pursuit of the sustainable society to which we all aspire.