I’m on the train on my way to Springtij – an annual sustainability forum on the Dutch island of Terschelling– and I’m reading a paper that was sent to me yesterday. Conceptualizing the circular economy: an analysis of 114 definitions. It’s interesting to see the different ways of thinking, but how does this help us take the next step? The sun rises over the fields of Flevoland, and my thoughts go back to two years ago.
Two years of Springtij
Two years ago, I was also on my way to Springtij. I had to facilitate a session with key Dutch thinkers in the circular economy. The goal was to formulate an unambiguous and measurable definition. After an intensive 24-hour session with a small group of 20 people, we reached a consensus: the noun circularity is about the high-quality reuse of materials, whereas the circular economy is a major holistic economic system. We didn’t reach a clear, measurable definition.
A year after this discussion, now a year ago, I led the session Circular Economy: hype or breakthrough? at Springtij. At the heart of the debate was the question of whether the circular economy would replace sustainability, or whether the concept would become a new way of thinking, able to make changes at system level. Despite my conviction that circular economy could lead to a breakthrough, the attendees thought differently: raising their hands, more than 80% of them viewed circular economy as a hype.
Why I believe in circular economy
Natural systems have been performing for hundreds of millions of years – all the waste produced is used as food for other organisms. Based on this parallel to nature, the Cradle-to-Cradle (C2C) concept became popular in the early 2000s. However, as the focus of C2C was primarily at the product level (materials + design), we lacked the step to the system level because our product value chains are now organized so linearly.
At Copper8 we believe in a model in which we add two dimensions to this (technical) C2C focus: a process-oriented dimension and a financial dimension. How do we organize circularity in the long term? And how does this result in a positive financial contribution to all parties involved? This model has been previously summarized by colleague Cécile in the article Circulaire economie: meer dan een verandering van vocabulaire (Circular economy: more than a change of vocabulary).
Circular economy gives us the opportunity to create, at the system level, the right preconditions for the necessary technical changes at the product level. This includes cooperation agreements between parties and the safeguarding of high quality reuse, among other things. It requires revenue models that work for all parties involved – because unnecessary product and material usage is avoided. And we can take that step if we are willing to do things differently to the way we have always done them.
An example: an organization invites tenders for its office furniture. This organization often has no need to own the furniture, but just needs its functionality. Reusable and reconditioned furniture can often fulfil this need perfectly. The contracting authority may choose not only to request the furniture but also to make agreements with suppliers for high quality recycling after the term of use. By requesting functionality, the contracting authority could be cheaper than if new products were being requested. High-quality recycling can be a new revenue model for the supplier.
Aside from my own belief that a circular economy can actually bring changes at system level, the aforementioned research has some interesting findings. It shows the enormous variation that has arisen since the introduction of circular economy by the Ellen MacArthur Foundation (2011):
- Nearly 80% of the definitions include a certain amount of ‘recycling’, while just over 50% of the definitions involve reducing the use of materials;
- Only 40% of the definitions name a system level on which a circular economy should function;
- Only 10% of the definitions mention sustainable development as an explicit goal of a circular economy;
- Just less than half of the definitions name economic prosperity as the main driving force for a circular economy; only 40% name ecological prosperity.
In addition to the numerical observations, the article makes two statements that touch me personally. The final sentence of the summary nailed it, as far as I am concerned: “… varying circular economy definitions may eventually result in the collapse of the concept.” As long as we are not sharp enough in wild statements being thrown around, circular economy becomes nothing more than sustainability 2.0: a nice story, but without focus and without a business perspective. Yet the concept has been developed to provide that concrete operational perspective.
The article also claims that consumers are one of the driving forces of circular economy. Consumers do indeed steer consumer goods with a relatively high turnover. However, because of their short life cycle, circularity plays a less important role in those product groups. This judgment ignores the incentive offered by the large number of business-to-business transactions. It is precisely these B2B product transactions that are suitable for applying circular principles, due to their volume and often predictable period of use. The scale of these transactions makes it possible for suppliers to effectively take action.
Back to the core question that keeps me busy: how do we go further? We have 114 definitions, a number of frequently returning principles, but above all a great diversity in objectives and system levels. What does this mean for the development of circular economy as a concept?
It is often said that “we must continue the discussion with each other.” This is obviously good, but does not get us any closer to practical implementation. In order to give the concept meaning, I am convinced that we have to put it into practice. On a project basis, show that other revenue models work on the basis of long-term value creation. At the system level, differentiate financial and fiscal incentives. And with new developments, focus on B2B transactions, to build towards the consumer market.
Do you want to get started? Then let your own, intrinsic ‘why’ be the driving force of all the decisions you make. Choose the scale at which you are active. Choose a few circular principles that connect to your ‘why’, and apply them to your project. In that way, first ensure long-term value creation. Then we can leave the definition discussion behind, and instead build it on practical examples. Meanwhile, we’ll be working together on an economy that creates value in places where it is valuable to us.
I’ve arrived in Harlingen and I look at the Wadden Sea under a clear blue sky. The water radiates calm. A seal is laying in the sun. The need for a clear definition of words is suddenly far away. And my personal why is clearer than ever.
Reference article: Kirchherr, Reike & Hekkert: Conceptualizing the circular economy: An analysis of 114 definitions. Resources, Conservation & Recycling 127 (2017) 221-232