Designing our products towards a circular economy

As the economy continues to grow with rapid urbanization as one driver, there is a growing demand for more products, which, in turn, means more raw materials need to be extracted, and more waste is produced.

We strive to deliver the best circular solutions on the market by developing innovative circular business models with our customers and suppliers.

Our ambition is to drive this change by refining how we design our products. Examples include increasing recycled content in the raw materials in our products and collaborating with our customers on new business models, such as takeback, remanufacturing, and refurbishing.

Danfoss’ Rethink-Reduce-Recirculate approach drives the innovation and development of our new products.

'Rethink' entails changing the business model and the way a product is offered to the market. This can include changes to the design of the product or the business model so that, for example, a service is offered instead of a product. 

'Reduce’  involves decreasing material and energy consumption or switching to greener alternatives during the manufacturing stage, the sourcing of raw materials, logistics and packaging operations.

'Recirculate' involves ensuring products and materials are used as much as possible before their end of life. This approach involves two aspects; one focuses on products and parts recirculation through reuse, refurbishment, remanufacturing, or upgrading, and the other on materials through recycling. 

We have developed the Danfoss Circularity Framework that centers on these principles and incorporated ten circularity strategies. Together with our newly developed Sustainable Design Guide they will support our engineers in developing new products and will guide improvements in our existing portfolio.

The Danfoss Circularity Framework and approach is supported by a newly developed toolbox, to accelerate the integration of circularity into our new product development. The toolbox includes:

  • Sustainable Design Guide: operationalizes the Danfoss Circularity Framework, providing guidelines and practical examples for implementation
  • Danfoss RE:CIRC tool: assesses the sustainability of a product, supporting our R&D teams to identify high-impact design improvements
  • Green Materials Guide: circularity and carbon data on materials and applications to inform our materials choices
  • Carbon Footprint tool: calculates the lifecycle carbon footprint of potential products
  • Circularity Index tool: measures the circularity potential of products
  • Sustainable Packaging tool: assesses the sustainability of packaging options

In 2023, we ran more than ten pilots internally to test the toolbox and educate our team. The toolbox will enable our product development teams to compare the effects of product design choices on circularity and decarbonization, such as materials consumption and carbon emissions. The tools will be validated by an external third party and used to further measure our progress against the targets.


Our circularity targets for 2030:

  • More than 80% of newly developed products are covered by the Danfoss circularity approach.
  • 25% increase of circular business revenues by 2030 from a 2023 base year.

Collaboration with customers

Collaboration across the entire product’s life cycle is key in order to drive change on circularity. This is why one of our targets for 2030 focuses on customer collaborations, as we see them as an enabling factor towards this journey.

In Danfoss Power Electronics and Drives, this is achieved to a great extent by the DrivePro offering. In Danfoss Climate Solutions we have initiated several projects and partnerships with the intention of creating value as well as reducing environmental impact through the recirculation of our products and materials from customers. We have signed an agreement with Beijer Ref, where Danfoss as a manufacturer, and Beijer Ref as a wholesaler will drive the circular economy transition.  

We aim to increase customer collaborations even further in the future.

"We are very pleased with the renewal of our partnership, and together with Danfoss, we look forward to implementing this new and ambitious sustainability plan. In the last decade, The European Commission has established several policies to encourage circularity, and it is of great importance that we continue to support this sustainable transformation."

- Christopher Norbue, CEO, Beijer Ref

Reducing waste and resources

We are continuously improving the efficiency of our manufacturing, reducing the waste produced, and ensuring proper recycling. We also find alternative raw materials that have reduced environmental impacts or come from waste.  

While it is still early days, we have initiated small-scale pilots on plastics and packaging across Danfoss to build learnings and assess the potential to scale. Examples include the replacement of plastic foam packaging with cardboard for our VLT® drives products, the replacement of single-use plastic package fills with paper-based alternatives, and collaborations with customers taking the first step in introducing returnable packaging solutions in Mexico. In 2024, we aim to set packaging targets and continue to scale the most promising pilots.

First Movers Coalition

In November 2023, Danfoss announced our commitment to the First Movers Coalition (FMC). The goal of the Coalition is simple: Send a clear demand signal to accelerate emerging climate technologies in order to decarbonize the world’s heaviest emitting sectors.

Danfoss made the commitment to purchase at least 10% (by volume) of low-carbon primary aluminum by 2030. Additionally, we committed to ensuring that at least half of all aluminum used is composed of secondary aluminum by 2030.

Joining the First Movers Coalition goes hand-in-hand with our aim to be our customers’ preferred decarbonization partner. To bring products to market with a lower carbon footprint, we will continue to expand collaboration across our value chain.

About the First Movers Coalition:

  • 90+ leading global companies
  • A partnership between the US State Department and the World Economic Forum
  • Represents EUR 14bn in annual demand, the world’s largest demand signal
  • The seven hard-to-abate sectors covered by the
    FMC accounts for 30% of total global emissions

Recirculating products and parts

Keeping products and materials in use for as long as possible by ensuring their durability, maintenance, repair and remanufacturing, can help reduce environmental impacts and consumption of virgin resources.

Through the digital service DrivePro®, Danfoss Power Electronics and Drives offers an array of services with a focus on circularity – such as exchange, retrofit, preventive maintenance, and repair – which have the potential to extend the lifetime of products, save virgin resources, and reduce CO₂ emissions. The DrivePro® service package is currently offered in 56 countries and markets and covers 95% of the segment’s product portfolio. DrivePro® is built to prolong and eventually close the loops of material circles. Refurbishing returned drives can make a significant impact, especially for industries grappling with the scarcity of virgin resources. 

In India, the refurbishment of Drives started at the production facility. The drives received from our customers are cleaned, inspected, and refurbished to the original quality and performance specifications. Danfoss uses advanced manufacturing practices to ensure that refurbished products provide a like-new performance. We are looking into establishing standardized procedures in order to scale the project to other regions in the coming years. Remanufacturing a drive can save up to 90% of virgin material used and 88% of manufacturing carbon emissions. 

Refurbishment and reuse of drives is established practice in other Danfoss sites such as the Haiyan factory in China. In Danfoss Power Solutions in Brazil, we are piloting the expansion of our aftermarket service parts replacement program. The pilot program consists of three options: Maintenance, basic retrofit, and complete core replacement. S90 pumps are remanufactured to their original performance specifications through state-of-the-art salvage techniques, adhering to strict reuse guidelines, using advanced manufacturing systems, and following robust quality control. The newly remanufactured Danfoss S90 pumps then re-enter the supply chain with their lifecycle restarted, and ready to be installed.

Remanufacturing is one important lever for meeting decarbonization and circularity objectives. It represents an example of identifying a new business opportunity to continue to increase our aftermarket sales while maintaining high standards of quality of the products we provide to our customers. Remanufacturing products goes beyond simple repair as it is the re-engineering of products and components to as-new condition with the same or improved level of performance as a newly manufactured product.

Danfoss Power Solutions offers a repair and remanufacturing service for many products. This service is available in selected locations in the US and Europe. In the US, there is a focus on piston products (pumps and motors) and valves.

Annual Report cover 2023

Annual report 2023

Our integrated annual report gives our stakeholders a holistic view of Danfoss’ business, value drivers, strategy, governance, and performance. It combines key information on our financial, sustainability and ESG-related performance.