Sitting in a typical session of a strategy creation class, the first question a professor asks to their students when analysing a case study is what could the specific company under study do to "sustainably" make money. For people that are trained in sustainability matters the obvious answer is at least three-dimensional: economics, social and environment. However, if you are sitting with people that have no train in these matters, the answer is uni-dimensional: money. And so it is for the well trained professor.
Sustainability in a company oriented environment is completely the opposite to what it means to the concerned environmentalist or policy maker: it is solely to make money indefinitely and as much as you can. Therefore, when you try to communicate the message of sustainable development to this key stakeholders' group, businesses, the receptors might get confused and fall into what behavioural scientists have called the confirmation bias: they believe you are talking about how to keep making money because that is what a sustainable business means to them.
If we want to avoid this and start a conversation about what we call sustainability, a change in language might be required. A new concept that correctly highlights the principles behind the "environmentalist" definition of sustainability is needed to convey the message to this specific audience and circular seems to do the job. Using the term circular when speaking to businesses may be more effective when bringing the message of acting sustainably. Instead of asking "is your business sustainable?" asking "is your business circular?" could avoid the answer "yes, we are making loads of money" and hope for a "yes, we have a closed-loop business" or "no idea what you are talking about, tell me more". This could keep the conversation going.
Of course this means we need to make sure that being circular is not only about being environmentally friendly, but socially responsible and still make money our of it. For what it has been written in the last three years it seems it does, but a consensus is needed regarding the meaning of this new concept in order to start bringing the "non-educated" audiences on board of what we call sustainability.
It has been almost a month since we started sharing thoughts, ideas and opinions about circular economy through this channel and we have received very encouraging input. As you might know our aim is to help the circular economy become the business as usual scenario because we absolutely believe it is the right approach to sustainable development. We have started by spreading the word about it, sharing with people what it is, explaining why and how does it work and by learning from experts all the details about it.
Now we are starting a new stage in this path that we believe will contribute more to our aim. As of today you will find two new sections in our website: connection and opportunity. In the first section we want to identify companies and people that are becoming circular to help them connect in the near future and work together to bring the circular economy to scale. In the second section we want to know what opportunities for learning and sharing are out there regarding circularity and innovation so we can help individuals interested in becoming circular innovators find them.
We will continue curating and creating content that is useful for circular and non circular professionals in the hope of positively contributing to a sustainable world. We would like to have contributions from people working on the topic and hear from newbies what is needed to accelerate the transition towards a Circular Economy so we will be contacting interested people to join us.
Finally, thank you for the comments, retweets, follows, unfollows and messages. Keep it coming.
When talking about the circular economy many people automatically think about increasing recycling rates as the only way to achieve a zero-waste economy. And these people are not only common citizens concerned with environmental crisis but they are also government officials, businessmen and researchers. Some experts in the area have already raised this concern in the media when the European Union issued its communication on circular economy last July pointing its bias towards recycling options which is not what is at the heart of this proposal.
As pointed out in the most popular report about circular economy developed by the Ellen Macarthur Foundation in 2013, recycling should be the last option when aiming to close the loop. Even the European Union in its definition of the waste framework directive has recycling as a step to be taken after prevention of waste and reuse/repair activities. One of the main reasons for this, in our opinion. is that by recycling we only recover materials and energy and not something very valuable: knowledge.
Three elements are used when producing something: materials, energy and information. The latter is included in all the stages of product development: idea, development, manufacturing and launch. This information comes in the form of technical specification, aesthetics, materials information, etc. For example, car tires have materials as rubber that has to comply with specific requirements; energy is also contained in them and not less important, they have information incorporated which is more evident in the design aspects of it. When they are turned into energy we are certainly recovering energy but we are losing both materials and information.
Another example is related to recycling of critical materials contained in electronics. Today we are aiming to recover gold and copper from wasted products by dismantling them and putting these materials through the whole production process again. Dismantling a complex product as tv sets or smartphones to just have access to critical raw materials means wasting energy and knowledge that was invested in the first place in terms of design, technical aspects and functionality. A different story would be if we reuse, remanufacture or refurbish these devices: information and materials would be saved and only some energy would be used in the process.
The circular economy aims to change mindsets, to move from a material-based economy to a value-based society where people satisfy their needs through things, but things are not the needs. The job that things perform is the important feature, what they can do and what people can do with them. As an economist might put it: we have to move from a rivalrous definition of goods to a non-rivalrous one if we want to make the transition. Therefore we need to think about closing the loop by not only saving materials or energy but also information, and maybe adding information to that material/energy base as ecosystems do.
If we focus our efforts on just recycling, we will be losing the information that many people have put in designing and producing products which means wasting time and resources. The right approach from a circular perspective is that of the inner circles as explained by the Ellen Macarthur Foundation and many others working and thinking about circular economy.
One of the main reasons why we are talking about the Circular Economy today is because of material insecurity. This term is connected to the fact that many materials that are used in consumer products and things making up our physical world are critical. Different people have raised this issue over the past years and since 2010, the European Union has specifically identified what are these materials.
For the European Union (2014) a material was defined to be critical taking into account two aspects: supply risk and economic relevance. The first one is defined as the concentration of a material supply in a country with poor governance which could lead to unstable supply. The second element depends on the uses of the specific material and how important these uses are to economic mega sectors.
What are the most critical materials from an European perspective and who are the bigger suppliers?
Many of us are not familiar with these names but almost everybody uses something that has some of these materials inside. For example, according to Namibia Rare Earths Inc company only Rare Earths Elements are used in camera lenses, hydrogen storage, electric motors for hybrid cars, color tv screens, shielding in nuclear reactors or steel production. As it can be seen, uses are very different but very relevant for our today's life style. Other critical materials for Europe, that are not that exotic for the common citizen are natural rubber, pulpwood and swan softwood.
According to the European Union there are three groups whose demand is going to grow very strongly in the coming years: niobium, gallium and Heavy REE. Niobium is used as an input in the aviation and aerospace industries (USGS, 2014). Gallium, on the other hand is used in the electronic industry, especially for smartphones and not so high tech uses such as mirrors (USGS, 2013). Heavy REE are used also in a range of applications that you can find here.
Why is material insecurity driving Circular Economy?
If these materials are not readily available in a raw state then where should businesses look for them, one might ask. The obvious answer would be to look at the products that are made of them. So, if we want to reduce the material insecurity of the European industries that use these materials, a transformation needs to be implemented: reduce supply from external sources and replace them within the economic activity.
The answer to these to tasks is given by the Circular Economy and by a circular approach to innovation. Elements such as reuse, remanufacturing and recycling have to be incorporated in the development path that is to be followed for a future where critical raw materials are not a restriction for value creation within society. These approaches reduce use of materials, replace other materials, creates value from non-material activities and allows an economy to work under sustainability principles.
For people working on sustainability issues, the ones concerned about global problems such as climate change, water shortage or biodiversity loss, the Circular Economy is not new. It is the compendium of all the principles and reasoning environmentalists have been discussing for the last 30 years. However people in business, innovation and the entrepreneurship sectors are only starting to see it as a feasible option given the current economic, political and societal trends that scream change (JWT, The circular economy, 2014).
This new interest in the ideas behind the Circular Economy is inspiring because these actors are the main drivers of change in a society, they are the ones that drive systems innovation. Lots of “ink” has been devoted in the last year to define the Circular Economy. And big efforts to translate all the scientific information into a language closer to these new actors have been taken by non profit organisations and consulting firms that see in the Circular Economy as a revolution. Most of this information is directed to big players and consumers but there are two segments that are also an important part of this revolution: Small and Medium Enterprises and Entrepreneurs. Here we address them and present a summary of what the Circular Economy means and the opportunities it creates.
As a starting point here we present the drivers of this new vision of the economic system, based on the summary done by JWT Intelligence (2014), the Ellen Macarthur Foundation (2012) and Accenture (2012, 2014):
Other resources: http://www.plan-c.eu/bmix/
I come from a developing country, the one that holds 10% of the world’s biodiversity in just a tiny space of land, so it seemed natural for me to become an environmentalist. I studied economics, environment and development. I became a professional conservationist but always from an integral perspective: helping people protect their environment while enhancing their livelihoods. What I did was helping donors in identifying opportunities to help communities improve their livelihoods while protecting natural resources. I began working on this 10 years ago when legislation support and willingness were on the rise. However, in the last 2 years things have changed and the new government instead of thinking about how to use our resources sustainably, decided that mining and extraction were the best options for achieving development in a country such as mine. Why did they decide that? Well I think it was because commodities became as valuable as gold and that meant lots of money for the economy, and money equals development. Very simple.
In the meantime,, environmentalists working on biodiversity conservation with communities had to deal with an additional threat to biodiversity besides unsustainable livelihood practices: big companies not only looking for oil but also coal, copper and gold. And because of a tragic "coincidence" these minerals seem to be buried exactly under the most diverse and fragile ecosystems.
Besides this, the materials being extracted are not the best for the environment either, given its current state. For example the coal extracted from the Andean mountain range, goes to dirty energy production; gold, well, it goes to the teeth of some eccentric singer who thinks it looks good in his mouth. Not vital at all if I may add. But the consequences of this extraction are permanent both in social and ecological terms.
What could we do, working with extremely limited resources against billion size companies that can come to these remote places and just offer a couple thousand dollars and buy the land from people, increasing their income but forcing them into unhealthy urban settlements that seem to be an indicator of development. In my case, I concluded that not much. If businesses do not understand the importance of the environment, if they keep on just extracting, extracting and dumping and dumping there is not money that can protect ecosystems and communities. At that moment I decided that the economic model needed to really change. A crazy idea, especially in a developing country which is just doing what countries before us did, following the path to development.
I knew something could be done because I have seen how developed countries had been recently recognising their mistakes and are doing something about it so I decided to do some research and I found my master in Industrial Ecology. I had never heard before about the term but what I read in the MIND homepage was exactly what I was looking for: a way our economic model could move from a linear model to a closed loop one. But this is just one of the newer programs and here I want to list all the options curious environmentalists or aware recent graduates have to deeper understand the challenges, opportunities and requirements a transition to a circular economy entails from an industrial ecology perspective:
Master in Industrial Ecology at University of Leiden and TU Delft (MSc), The Netherlands: according to its website this program “trains students in analysis, methodology, design, and implementation of societal activities, with the aim of minimising the environmental impact of these activities while maintaining their functionality”.
Master in Industrial Ecology at Chalmers University of Technology (MSc), Sweden: in the website it is stated that “the program aims to equip students with the competencies, knowledge and tools needed to analyze environmental impacts and resource constraints, to suggest and develop measures and to plan, lead, evaluate and follow up the effects of measures related to for example product development, land and resource use, energy systems, and large-scale urban planning processes.”
MSc in Industrial Ecology, Norwegian University of Science and Technology, Norway: as it is presented in its website, the program “focus is on state-of-the-art methods for environmental systems analysis and strategies for policy and management, as well as on the application of such strategies and methods to critical systems.”
Master of Science in Industrial Ecology and the Environment, Mahidol University, Thailand: As it is stated in their home page, “the Programme aims to prepare graduates who have a high competency in industrial ecology and environmental management to meet the demands of industry, government, consultancy and public sectors. It will provide a comprehensive understanding of various facets that comprise industrial ecology, urban ecology, and environmental management, how they interrelate with each other and how integrated approaches are often necessary to achieve the desired results.”
Erasmus Mundus Master in Industrial Ecology, University of Leiden, TU Delft, University of Graz, Chalmers University, Asian Institute of Technology, Rochester Institute of Technology and Waseda University, Europe: the aim of this joint program is “to offer an international and interdisciplinary Master's programme at the highest level, which allows the participants to make an essential contribution to understanding and proposing solutions to problems in order to support the transition towards a sustainable society.”
This is not an exhaustive list but rather a first collection of programs that are already contributing to this transition. Please add any other programs you think need to be mentioned here.
Many of the new comers to the European Union are still discovering all the options and opportunities there are to bring the Circular Economy to a reality. Here, it seems to be a million ways to overcome some of the barriers for transitioning to a Circular Economy that have been already identified and presented in a previous post. One example of tools that help overcome them is the Horizon 2020 program:
“Horizon 2020 is the biggest EU Research and Innovation programme ever with nearly €80 billion of funding available over 7 years (2014 to 2020) – in addition to the private investment that this money will attract. It promises more breakthroughs, discoveries and world-firsts by taking great ideas from the lab to the market. Horizon 2020 is the financial instrument implementing the Innovation Union, a Europe 2020 flagship initiative aimed at securing Europe's global competitiveness.” (1)
In the own opinion of the European Commission this program is strongly related to Circular Innovation. Here we present what components of a Circular Economy could have more funding opportunities under the Horizon 2020 program and which specific subprograms are more relevant for initiatives towards a Circular Economy.
The top elements of a Circular Economy with more opportunities:
The bottom elements of a Circular Economy with less opportunities
On a more detailed level, if we look at the specific subelements of the different levels of innovations, here are the champions under the Horizon 2020 program in terms of funding opportunities:
While the possible losers would be given the fact that they are not cover by as many programs as the above mentioned :
Under this scenario product/service and process innovations are more relevant than systems innovation which in our opinion is at the heart of the Circular Economy. The first two might yield results faster but if they are not set in a broader changing context, uptake will be slower and transition will take more time to happen. If not under the Horizon 2020, the European Commission needs to find sources for this landscape level changes in order to facilitate the transition to the new model.
Design actions do not have many funding opportunities under the program, neither do logistics activities. Under the Circular Economy, design is considered a key element since at this stage of the value chain is when the enabling principles of sustainability and of circularity are incorporated into the product/service. Logistics is also a key activity since on it depends the ability of the economy to close the loop. Research and innovation are key for this two activities so the question is where does the European Commission think the resources will come from, to develop these new models and ideas.
These arrangement of opportunities for specific components of the Circular Economy could be explained by the subprograms of the Horizon 2020 and their relation to the Circular Economy components. The pillars that group the most opportunities for Circular Economy activities and innovations are:
The pillars less connected with the Circular Economy transition are:
Each of the pillars has subprograms that provide the funds for the projects. The main subprograms to support the innovations and activities needed towards a Circular Economy are:
Transitioning to a Circular Economy might be a dream come true for a lot of sustainability students, professionals, activist and for many people as well. News regarding the negative consequences of the linear economy are everywhere: climate change, deforestation, displacement, conflicts over resources, limited access to water, and so on. The drivers of these problems have been highlighted for a long time and action has not been taken yet. Many people are asking themselves why, for example James Greyson in this post, and answers are the same: is too costly, is too difficult, is too soon. Nonetheless, change is in the air and it looks round.
The Circular Economy is not an invention in itself, it is a clever name given by some savvy people to a specific way of thinking our world and our behavior which basically acknowledges the material limits of our world, the material-lessness of our well being and the complexity of how our world works. This way of thinking started a long time ago, but only until now people seem to be listening.
And a big sign of this, in our opinion is the fact that the European Commission has issued a communication package laying the ground for a transition towards a Circular Economy, to this new way of thinking. It is important to understand that this is only one step and many elements are still not fully developed (as Maxine Perella highlights here), but it is important to point out that one of the big players in the world economy, the European Union, is recognizing the relevance of a transition towards the Circular Economy. In this post we want to address two elements, the European Commission understanding of the Circular Economy and how they are thinking about innovation for the circular economy.
Just to summarize, for the European Commission, the Circular Economy:
Based on these arguments, and having in mind that there are different type of barriers that need to be addressed including technology, financial, information and cultural obstacles, the European Commission calls for Circular Innovation. Despite not using this term, the communication stresses the importance of a circular approach to innovation and provides examples of what it entails:
The Circular Economy is not new, their principles, ideas and proposals have been addressed long before 2014 when the European Commission launched its communication, however the actions that need to be taken are the novelty of this approach. How are we going to overcome the long standing barriers and obstacles that these approaches have faced in the past 40 years, is the key challenge towards a Circular Economy. The key question here is how are we going to manage the multilayered (product/services, processes, business models, systems) innovation process that is described in the communication and that is going to bring us all to a sustainable system; in other words, how are we going to implement Circular Innovation?
Some hints are provided in the section 2 of the communication which aims at setting up an enabling policy framework that will foster research, encourage investments and provide instruments to businesses and consumers for action. Here the actions proposed towards Circular Innovation are:
In the following sections, the communications emphasizes the role of waste and recycling in paving the way towards a Circular Economy but having in mind that this road will lead Europe to a zero-waste state, it is important to keep in mind the measures and incentives should aim to reduce waste to its minimum level. Avoiding perverse incentives should be at the top of the agenda.
Yesterday we attended the debate about igniting the Circular Economy into action organized by Waste Wise. After listening to James Greyson from BlindSpotting and Geraldine Brennan from the Centre for Indistrial Sustainability here are our main conclusions:
- Being circular means dematerialisation and substitution.
- Being circular means thinking in systems.
- Becoming circular entails radical change and radical innovations at all levels: products/services, business models, and systems.
- Becoming circular needs inclusion of all stakeholders and acknowledgement of their different roles (governments, small businesses, educators, companies and consumer groups).
Many more ideas were discussed in this event that shed light into what to do to make the circular economy happen.
Please find them in the link here:
If you are interested in the circular economy and are a social media champion this initiative will win your heart. The Resource Event team, one of the biggest events that promotes the circular economy in Europe curated the Twitter campaign #circular50 to find the most influential people on the social network regarding this topic.
If you want to know about circularity in our economy find the results here http://www.resource-event.com/circular50 .
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