The Nordic Market for Circular Economy 2019 (Interview)
SB Insight: « You have talked about including equality as a dimension within the circular transition. Can you expand shortly on why? »
Equality is as important as circularity according to the latest predictive model: the Nasa-funded HANDY (post-Meadows’ Limits to Growth) model. In a nutshell, it indicates that our societies will have to be genuinely socially equitable and genuinely environmentally circular should we wish to see humanity flourish on our dear planet. This means that an economy that increases the circularity of the way we manage resources and energies is great but not enough. An equitable circular economy – often referred to as the “Circular Economy 2.0” – is not only preferred, but according to Nasa, it is a must.
In this period we have this amazing window of opportunity where we can redesign our economic model. And, for once, any individual can take part of the rebuilding of a more human, more respectful model, not only to and with Nature, but also to and with the people. So why not see this challenge as an amazing opportunity to reinvent ourselves beyond just this economic-environmental relationship?
Linearity is not just about resource being scarce. There are so many scarcities everywhere from a single-currency world, to the way our organisations function to the inability of access of our economic system to the last billion people on the planet. Do we really want to just build a ‘circular’ world for ‘users’ and ‘consumers’, or given the challenges ahead, shouldn’t we also be part of the equation?
Today we know businesses perform better in markets that are highly equitable. You know better in Nordic countries. So let us redesign a model which is both ‘circular’ aligning ourselves with Nature’s best innovation, and ‘equitable’ designing a framework accessible to all. The challenges of this planet can only be solved if you embed the people and respond to their needs. And guess what, there is nothing more versatile and flexible as a service-based economy!
SB Insight: « In your experience, are there any characteristics of the circular transition that differs between the Nordic and the European level? In that case why? »
I have limited exposure to Nordic markets, even-though my proposed ‘Circular Economy 2.0’ was discussed at the conference of the same name last November 1st in Helsinki. It was co-organised by the Finnish (Sitra Funds) and the French governments.
National circular road maps drive the policy and business landscapes in each and every country. The beauty of the Circular Economy is that it has to be customised for each country depending on their stock of resources and flows of energies that can be captured within one’s geography. For Finland, priorities are on the food system, the careful management of sustainable forests, transports/logistics and common actions (legislation, research, citizens). While some topics could be common to several countries, like food system, transports and common actions, others are very specific: management of sustainable forests in the top two of the country priorities. So it could be difficult to compare regions or even countries, yet this is good news.
In general, the European Union makes great moves towards building up the foundations while countries are adopting new laws enabling more circularity (VAT taxes drop on repair activities, ban of single-use plastics, ban of toxic chemicals in agriculture). Yet, it is never fast enough given the projections and the challenges we face.
SB Insight: « What trends related to business models and best practices do you see/expect in the close future? »
I expect to see a shift from the past years that were mainly based on press releases and marketing exercises into a trend of pilot projects and genuine business cases on circularity. We need to move away from the circular economy narrow-minded perspective – where it is often compared with advanced recycling processes – into seriously move towards transformative innovation.
Best practices in my view are those away from recycling: in reduce, repair or remanufacturing loops. Recycling is a linear activity which will feed itself for decades to come. There is and there will be enough waste to recycle still. Show-casing real circular solutions where all resources have specific functions in a regenerative symbiotic model is a definite best practice we want to see more.
So the two trends to me would be the change in the way businesses talk about the circular economy and real pilots with proper investments being show cased.
SB Insight: « Which are the primary obstacles/barriers for companies in order to readjust and become circular today? »
Well, there are many barriers. They are financial, legal, logistical, human, fiscal, cultural and so on. Everything has to change at the micro, the meso and the macro levels. Businesses need the support of their governments, and vice-versa.
The most difficult issue here being in my view leadership. Piloting circular projects in a world where costs and prices are in the wrong places is a very difficult convincing exercise. Collaboration becomes key here as one entity cannot succeed alone. Riversimple is an amazing example when it comes to create a public-private ecosystem of enablers that – together – overcome regulatory barriers, lower investments with performance contracts building a mobility service based on what the consumers have been asking for.
Being a leader in those times is what we need, but it ain’t easy until such time we have proper frameworks to succeed. And as we say, to every barrier there is an opportunity waiting…
SB Insight: « Which are the primary incentives from the company perspective in order to readjust and become circular? »
Reputation and goodwill. We know from the past that companies genuinely walking the sustainability talk have always performed better, so that the same will apply now with the circular economy. And it does not always mean changing your entire structure, at least to start with. Take the example of Bundles with Miele. The versatility of a start-up was key here to bring Miele in the circular economy space under controlled investments. Now that they have tested the market gaining experience at low risk, they could gradually invest into next steps, be it the washing machine redesign or the additional services around the machine ecosystem.
Another way to test the circular opportunity is to look at creating take-back loops, offering to collect a product or repair it in-store or via a repair partner. This is a low hanging-fruit opportunity that could help you engage with your customers and understand what they expect from such a service. Knowing better your customers by increasing their in-store visits can only be a win-win for all: you save the environment by avoiding the product to be landfilled, you get to know better your customers and reasons why they come to have their product repaired instead of just throwing it away, you have the opportunity to investigate how to ease their life further while with you.
Small changes like such new offering could lead to customer behavioral change and in-house innovation coming from your employees, if not more. Providing training on the topic of the circular economy to your employees and inviting them to identify low-hanging fruit opportunities is also a simple and easy way to spur innovation and surely increase employees’ loyalty.
Knowledge is the best strategy to increase your resilience!
SB Insight: « Which policy initiatives are you most eager to see at the European level? »
Any initiative that would see us move away from the European Union relying on more recycling into leading us to being less reliant on it would be great. Recycling is a linear economy concept since it relies on waste creation to survive.
Policy makers have to focus their work now on enabling businesses to redesign projects so that they use less material and access energy differently, to build a culture of repair and to invest heavily in the remanufacturing space. This would lead to factories coming back to Europe, not to feed the world, but ourselves, locally at human scale.
Repairing, reusing, redistributing, refurbishing and remanufacturing rely far more on human employment than recycling activities. They should be preferred as they create local virtuous loops. And – as advocated in a Circular Economy 2.0 where equality is critical too – new kinds of genuine jobs are needed within our societies. New tax regimes such as Ex-Tax are a response to rebuilding economies where we are part of the equation for success.
Interview – extract from « The Nordic Market for Circular Economy 2019 »