Making a New Turn
At a Glance
Successes and Actions
- Industry-wide first calculated assessment of circularity
- Decision made to change soft bag to 100% recycled fabric material
- Reusing spare parts or donating returned Hilti fleet tools
The construction industry, which is a very resource-intensive industry, accounts for about 50 percent of the raw materials used worldwide per year. Most of these resources are used for buildings and infrastructure with a very long life, where reuse and recycling are usually complex.
The circular economy aims to detach economic success from linear resource consumption and to use resources carefully so that no valuable materials are lost. This kind of business management promises us not only ecological benefits, but also provides new impulses for our business activities.
The principles of the circular economy are well in line with the Hilti values that the company has always practiced. We already laid the foundations for a functioning circular economy in the past. For example, we have always relied on innovative products and services with high quality and long service life. We have established a supply chain for the return of used products and have a global system of repair centers where more than 800 employees enhance our knowledge of the wear and tear, durability and recyclability of our products every day. We focus our business on the entire life cycle of our products and innovate along the entire value chain.
Our goal is to lead the industry in circularity.
Principles of the
We understand circularity as generating maximum added value with a minimum use of virgin raw materials. The concept includes much more than just recycling. A circular company:
- Already thinks about the use of recycled materials during product design and strives to ensure these materials and all installed individual parts will remain reusable in the future
- Minimizes the use of water and energy as well as the amount of production waste
- Relies on quality and repairability as well as the idea of access to rather than ownership of a product, so that products remain in use for as long as possible
- Establishes business models that require products to be returned at the end of their useful life
Our products are to a large extent made of materials with a high recyclability. We aim to make greater use of this potential in the future, by making more conscious design decisions on material choice.
Our production is already on a good level with regard to waste prevention and resource efficiency. We have continued to expand this by fully converting our global production facilities to renewable electrical energy in 2020, for example.
Business model and usage
The biggest differences between tools and consumables are in our business model. In our tools business, our fleet management lays the foundation for the concept “product as a service”, a basic principle of circularity that helps our customers to achieve more with less.
End of life
We also see a positive effect of our fleet business at the end of the product life cycle: With free and convenient pickups from our global network of reverse logistics, we were able to collect more than 1.3 million tools, batteries and chargers from our customers worldwide in 2020, which were either reused or recycled. Our tools have a high proportion of steel, copper and aluminum, meaning that more than 70 percent of the tool's mass can be recycled virtually indefinitely for a variety of applications.
The use of recycled materials in our products is well above the global average of eight percent. The metals we use play a key role, which already contain a significant recycling share today.
We see another important prerequisite for the circular economy in the form of our fleet management. With this comprehensive business model for a long-term usage agreement for our tools, we extend control over our products beyond the end of the life cycle. Already at the start of the contract, we optimize our customers' tool park to ensure that they have the right number of tools to meet their needs. For any short-term usage needs, fleet customers can use rental tools from our pool for rental and hire tools or that of one of our partner companies from the rental industry. If the fleet tool park is dimensioned correctly, the tools should have reached their maximum service life at the end of the fleet agreement. If the tools have remaining usage potential at the end of the contract, we offer contract extensions beyond the standard terms in some markets. Our high tool collection rate allows us to assess if it is possible to remove high-quality spare parts for repair in accordance with the respective local regulations or to donate tools for a charitable purpose where they continue to generate value, albeit in less intensive situations than when used by construction professionals. If no reuse option is possible, we give the tools to our authorized recycling partners to ensure that the materials enter recycling channels.
The topic of circularity is anchored in our business units, production and logistics, all of which contribute initiatives for improvement. At the beginning of the reporting year, we created a project team in our Tool Services business unit to consolidate, challenge and advise the activities of the operating units. Regular steering committees inform the Executive Board directly about the progress made in this program and can set steering priorities.
This is how we measure circularity
There has not been any standardized internationally recognized framework for the measurability of circular economies until now. To advance this measurability, we were the first company worldwide to use and develop the new CIRCelligence method with Boston Consulting Group (BCG). CIRCelligence, co-developed by BCG and the Dutch non-profit organization Circle Economy, makes circular economy and progress in it measurable. Based on this, we evaluated our entire product portfolio in terms of both quality and quantity in the circular economy.
The qualitative assessment provides information about the current efforts and the maturity of the control system with regard to the latest findings in the field of circular economy. A company achieves grade “A” if it has implemented the latest findings in the field of circularity in all its business areas. With a grade “F”, the activities and instruments for the implementation of circularity are not yet fully developed. The qualitative evaluation accordingly helps to evaluate how structured the circular economy is implemented in a company.
The quantitative assessment provides information on the actual status of circularity, mainly measurable by the mass of resources used. A value of zero percent means that materials and products are handled in a linear way at all stages of the value chain. A value of 100 percent signifies full implementation of circularity. Whether this state can be achieved depends primarily on the available technologies; it is often not yet fully feasible today. The methodology divides the value chain into five areas, from input to end of life (see graphic below). A variety of aspects, including energy consumption, collection rates and the inherent recyclability of the products, are taken into account in the calculation. In the calculation, we distinguish between tools and consumables (i.e., fasteners and inserts), because the two areas differ fundamentally: For example, although we can and do take back tools at the end of their productive life, taking back fasteners is currently very difficult given their relatively small mass as well as the significantly longer life of buildings and their change of ownership.
- Input: The use of recycled materials in our products is well above the global average of eight percent. The metals we use play a key role, which already contain a significant recycling share today.
- Product design: Our products are to a large extent made of materials with a high recyclability. We aim to make greater use of this potential in the future, by making more conscious design decisions on material choice.
- Production: Our production is already on a good level with regard to waste prevention and resource efficiency. We have continued to expand this by fully converting our global production facilities to renewable electrical energy in 2020, for example.
More information: Environmental Protection and CO2
- Business model and usage: The biggest differences between tools and consumables are in our business model. In our tools business, our fleet management lays the foundation for the concept “product as a service”, a basic principle of circularity that helps our customers to achieve more with less.
- End of life: We also see a positive effect of our fleet business at the end of the product life cycle: With free and convenient pickups from our global network of reverse logistics, we were able to collect more than 1.3 million tools, batteries and chargers from our customers worldwide in 2020, which were either reused or recycled. Our tools have a high proportion of steel, copper and aluminum, meaning that more than 70 percent of the tool's mass can be recycled virtually indefinitely for a variety of applications.
2020 – The starting point of our roadmap
This initial analysis has shown that our activities to date are above the global average in the circular economy, and that we can realize further potential by institutionalizing our efforts. Based on our methodology, we have defined clear priorities to focus even more on circularity in the future. For example, we want to continue to drive the growth of our fleet management and at the same time optimize it with regard to circular principles. In addition, cooperation with our global recycling partners will play a greater role in the future.
We already implemented the first initiatives on our roadmap in the year under review:
Evaluation of our circular economy
This year, we determined a calculated evaluation of our circular economy with a methodology used for the first time in the world. As one of the first companies in the industry, we are making this evaluation transparent. We will monitor our quantitative and qualitative progress every year and based on it prioritize our initiatives.
Institutionalization of principles of the circular economy
We will raise the bar for the development of our key figures and integrate the institutionalization of principles of the circular economy more into our business processes and decisions. Our focus will thereby be on product design and procurement. We are already consistently integrating the findings from our global repair centers into the development to make products easier to repair. For example, we have begun to disconnect the electronics from plastic switches. Since the switch is damaged more often than the electronics, we can replace the much smaller switch instead of the entire electronics, saving valuable materials and transport costs.
Reduce packaging of products
We will reduce packaging of products and in the supply chain. For example, through recyclable packaging systems in logistics or the intensified use of recycled materials. As a first success, we decided in 2020 to change our Hilti soft bag by using 100 percent recycled fabric material, which will save up to 600 tons of virgin plastic per year – the equivalent of about 50 million PET bottles. We have also started testing to increase the amount of recycling in our tool cases without compromising the quality and typical Hilti recognition value.
Meaningfully reused returned Hilti fleet tools
We have meaningfully reused returned Hilti fleet tools after their first service life. Our team in France has pioneered the use of selected spare parts for reuse after repairs of Hilti fleet tools. In compliance with our high-quality standards, almost 30,000 spare parts have been recovered, which would otherwise have been recycled. This corresponds to more than five tons of valuable materials. Due to good customer feedback, we will continue to increase the number of approved spare parts for Hilti fleet tools in accordance with the respective local regulations. In addition, we have donated still functional and refurbished fleet management tools worth more than CHF 1 million in the USA to Habitat for Humanity and other charitable organizations in 2019 and 2020. In our market organization in the Czech Republic, we donated used, but for less demanding use still functional tools to four schools as part of the “Tools for Schools” program, thus supporting future electricians, engineers or business owners.