Written by Fabien Hammerer, 5REDO CTO.
Businesses routinely evaluate risks and opportunities before starting new projects. They weigh potential gains against costs to make informed decisions. Circularity initiatives—such as shifting from oil-based virgin materials to recycled or bio-sourced alternatives—are no exception. Before making these transitions, conducting a life cycle assessment helps quantify the environmental and financial trade-offs. Some circular projects, like finding partners to reuse waste, may have minimal impact on logistics. Others, however, can significantly alter manufacturing processes and introduce risks that must be managed.
The growing environmental crisis is changing the landscape of risk assessment. Typically, risk assessments compare new projects against a “status quo” scenario, assuming stable conditions. But climate change is already destabilizing this business-as-usual model. Extreme weather events like hurricanes, droughts, and floods are increasingly disrupting global logistics. They lead to cost volatility and resource scarcities that affect essential business inputs.
For example, in 2021, severe flooding in Germany and China forced temporary shutdowns of major factories. This affected supply chains for chemicals, electronics, and automotive components worldwide. In the U.S., lumber prices spiked nearly 400% during the COVID-19 pandemic. This was partly due to wildfires and unpredictable weather affecting timber production.
Other climate-related risks, equally critical for business owners, include:
- Innovation and Competitiveness: Companies that delay transitioning to circular practices risk falling behind as competitors innovate toward sustainability.
- Regulatory and Compliance Risks: Environmental regulations are tightening, with mandates for transparency and accountability around emissions, waste, and sustainable sourcing.
- Brand Reputation: Consumers increasingly value environmentally responsible brands. Companies slow to act risk losing customer loyalty.
- Increased Insurance Costs: As climate risks intensify, insurance premiums for climate-vulnerable assets and operations are rising.
- Access to Capital: Investors are prioritizing companies with strong sustainability strategies, which impacts financing opportunities.
- Legal Risks: Lawsuits related to pollution or carbon emissions are becoming more common, exposing businesses without proactive strategies to financial and reputational damage.
As a result, the risks and rewards of a circular business model—where resources are reused, recycled, and sourced locally—should not be compared against a risk-free baseline. Instead, the comparison is now with an uncertain status quo, one increasingly vulnerable to climate-driven disruptions that are likely to escalate over time. Shifting to circular practices can help businesses stabilize costs, strengthen supply chains, appeal to eco-conscious consumers, and address the risks mentioned above—all while building resilience in an unpredictable climate.
In today’s climate, the choice is not simply whether to change, but rather which risks to prioritize: the calculated risks of integrating circularity, or the compounding risks of sticking to a traditional model that may no longer be sustainable. For business leaders, this means making strategic decisions that not only address immediate challenges but also position their companies for resilience in an unpredictable future.
As environmental disruptions continue to shape the business landscape, the risk of inaction may ultimately outweigh the uncertainties of change. Now is the time to evaluate the cost of adaptation versus the growing cost of the status quo.
The climate crisis isn’t waiting—why should you? Start your circular economy journey today with our Circularity Integration Service.
Originating from Barcelona, Laia’s educational journey led her to pursue secondary studies in the south of France. Her Bachelor’s degree in Economics and International Management allowed her to develop an analytical mindset. During her Master’s in International Business and Management, she engaged in numerous research study cases and actively participated in the creation of different business plans. This helped her develop an ability to critically analyze and address the strategic challenges that companies encounter.
Andre has over 5 years of industry experience in project management, polymer and composite processing, materials characterization, and product development. He earned a Bachelor’s degree in Chemical Engineering from the Federal University of Santa Maria, Brazil, and a Ph.D. in Materials Science and Technology from the Federal University of Rio Grande do Sul, where he focused on Polymer and Composite materials. In 2012, he founded a design and manufacturing company specializing in biocomposites made with natural fibers, which he successfully sold in 2015.
As an expert in sustainability, life cycle assessment, circular economy, and green chemistry, Nicolas possesses valuable skills and knowledge that can assist companies in developing and implementing sustainable and environmentally-friendly business models. They can achieve this by utilizing eco-friendly materials, improving manufacturing processes, reducing waste and hazardous chemical use, and advocating for the use of safer and more sustainable alternatives.
Karan is an experienced professional who has worked in multiple geographies and roles along his career. He holds a total of 10+ years of experience in manufacturing operations, and has focused his efforts towards finding solutions for waste recovery and making recovery economical for industries. 
With several years of research experience in France and Canada, Fabien lends his expertise and passion for enzymology and microbiology to 5REDO’s sustainability innovation plans. 
With her significant hands-on experience in developing and characterizing biological and chemical systems, Vicky plays a key role in 5REDO’s efforts toward developing novel products and technologies that offer improved circularity and sustainability to the industry and society. 
As a recent graduate of chemical engineering from the University of Waterloo, Kyle brings his passion for impactful innovation and his experience with novel recycling processes to 5REDO to support our technology development initiatives. 
As our Senior Research Scientist, Hormoz draws on his eight years of industrial and nine years of academic research experience in the areas of polymer science and engineering to develop new solutions for advancing circularity and sustainability.
Shauna is a freelance journalist that covers a wide range of topics, including health, education, the environment, travel, lifestyle trends, and more. She holds a Master of Journalism from Carleton University, and a Bachelor of Arts (Honours) in Global Development from Queen’s University.
By leveraging her expertise in life cycle analysis and process engineering, Ophela helps 5REDO to take a holistic approach to the development of circular solutions and technologies. 
As the co-founder of 5REDO, Forough brings her expertise in supply chain management, business operations, inventory control, and revenue management to support the implementation of circular solutions within different industry sectors.
With a passion for driving change and creating impact, Mahdi co-founded 5REDO to promote circular economy principles in Canada. He’s an alumnus of the 2021 Ellen MacArthur Foundation’s ‘From Linear to Circular Programme.’ Mahdi played a pivotal role in developing and managing the University of British Columbia’s (UBC) Circular Economy Seed Funding program, fostering partnerships between companies and academic researchers to co-create circular solutions.