Dec 21, 20223 min read

Circularity at Klarna – An interview with Alexandra

Klarna K logo

by Klarna

We sat down with Alexandra Colac from the Klarna Sustainability Team to learn about Circularity and to understand how Klarna contributes to circularity and sustainability.

Tell us more about you Alex. What is your role and what have you done before joining Sustainability at Klarna?
I joined the Klarna family in January 2022. Before joining Klarna I was part of Zalando’s sustainability team where I focused on strategy and led a sustainability brand assessment framework for its brand partners. My work revolved around sustainability, mostly focusing on social compliance, human rights and sustainable supply chains primarily in the fashion industry. At Klarna I’m responsible for life cycle assessments, sustainability metrics and helping consumers to find relevant information about sustainable products and brands.

 

What is the Circular Economy?
I think the best way to think about it is a process or approach where we need to rethink the way we currently produce and consume. The circular economy is a system that is restorative by design. At the core of it is the concept of waste – materials and products never become waste, but retain their integrity and are kept at their highest value for as long as possible.

 

What does Circular Economy mean in the context of Klarna? And why is Klarna focusing on this?
Today only 9% of the world’s economy is circular and it is estimated that the potential benefit from converting the remaining 91% is around $4.5 trillion. We know that the circular economy represents the largest wave of consumer and business transformation. Demand for second hand is increasing, and the market is projected to double in the next 5Y, reaching USD 77B.

At Klarna we are uniquely positioned to help consumers maximize the use of products and can help them shop for pre-owned items.

One objective within our approach to sustainability is to encourage circular shopping. Our aim is to provide consumers with reuse options, to resell, donate, or recycle pre-loved items and empower them to minimize waste and extend the life of products through circular services. One can divide the circular economy into different phases: design and manufacturing phase, more specifically how can we rethink the design and use materials to eliminate waste , use, re-use-phase and lastly closing the loop phase, where we’re looking at how to dispose a product (e.g. recycling, decompose).

When looking at the Circular Economy process flow we have identified two stages, the Use- and Reuse-phase where Klarna can support the industry to transition to a circular economy. Taking a t-shirt as an example, the Use-phase looks at how we can take care of the product through actions such as care, repair or restyling. This is where we see the greatest potential to impact consumer behavior. In the Re-use-phase we’ve already fallen out of love of our favorite t-shirt so we need to look into ways to resale, donate or other ways to prolong the life of the product. At this stage we not only have the opportunity to engage our consumer, but also our retails partners.

 

So how does it look in practice?
First I would like to highlight that the consumer is at the center of all the work we have been driving so far. Transitioning to a circular economy requires a transformation of our consumption system, which is the reason why an informed consumer can play an important role. That is not only great for the planet but also for consumers’ wallets – as circular services often save money. We help consumers to find circular services of retail partners through our app. We just launched the “Shop Circular” collection that showcases circular services that our retail partners offer to consumers.

 

Saving money? How?
Now more than ever, evidence shows that consumption patterns change especially when faced with a global recession and the cost of living crisis. Preowned shoppers save nearly $150 a month, or $1,760 a year, on average, by buying secondhand items. By giving consumers more options to find pre-owned products we help them save money. Further, by making resale opportunities of recommerce partners more visible directly in our app, we can help consumers generate value from their past purchases.

 

How does Klarna help consumers to participate in circular services?
We will mainly focus on educating consumers by providing them with tips and information on how to take care of their products and by encouraging them to buy second hand products and enable them to extend the life of products by providing resale opportunities.

 

How does that look in practice? What has Klarna been working on so far?
Recently we launched a “Circular Shopping” collection in the Klarna app that allows shoppers to discover brands providing circular services such as preowned products, repair and recycling services. My vision is to add circularity features throughout our ecosystem to promote buying used items, reselling them, as well as additional components like where to find repair centers or how to up-cycle previously bought items. Earlier this year we partnered with Sellpy and Klarna’s Fashion Director Emila de Poret and launched a campaign, “Shop smarter”, with the purpose to inspire shoppers to think more sustainability and consciously about their shopping. We created a lot of exciting content to help to edutain people around selecting, buying, caring and selling more consciously. See the video here. Further we continuously partner with brands to promote circular shopping such as in a multi-brand campaign featuring brands that offer pre-owned products across various verticals like fashion and consumer electronics.

 

Klarna Circular Collection

 

What are some of the biggest challenges and opportunities for companies when it comes to transitioning to a circular economy?
The positive impact of the circular economy is clear but it comes with challenges as well as it requires changes at scale for businesses, consumers, regulators and society. I think one of the biggest challenges is the fact that the concept still lacks an universally accepted definition which leads to not having clear indicators and KPIs in place to encapsulate all aspects of circularity. Another critical aspect are the supply chains which will have to change drastically from changing suppliers, production countries to the way products are being designed and made.
An essential step to transition to a circular economy is about how we produce and consume. Transitioning to such a model allows companies to get creative and innovative. A few examples of companies bringing new circular solutions to life are: AMP Robotics (artificial intelligence for recycling), Resortecs (dissolvable stitches that improve clothing recycling), Serendipalm (a regenerative supply chain alternative for palm oil).

What excites you the most about sustainability at Klarna?
My journey in sustainability started on the ground visiting factories where I learned about manufacturing processes, their environmental impact and their social, health and safety effects on workers. From there I moved on to a fashion company where I had the opportunity to influence the work we did with suppliers and factories. From there I continued my career at a large e-commerce retailer where I supported brands to improve how they approach sustainability in their supply chain.
Given Klarna’s reach I am excited to apply my expertise beyond the fashion industry and help define how we communicate about sustainability across all industries.
With our vision to become a single destination where consumers can carry out all of their online shopping, I think Klarna is uniquely positioned to take a stand regarding sustainability. We’ve already embarked on this journey by showcasing sustainability attributes to consumers on product and brand level – and I believe we can go further by collaborating with retail partners in the sustainability space.

Want to discover our Circular Collection?

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