When I started my working life, I was firmly convinced that high cost doesn’t need to be the limiting factor for sustainability. I searched every case for opportunities to share investments and yields throughout chains. So collaboration was the key to cool circular projects that could also be completed within budget. After fifteen years of experimenting, I can look back proudly on a number of great projects, but I’ve also regularly bumped up against the edges of the economic system. This is why I’m now daring to say something: when it comes to our economy, if we don’t change the rules of the game, we will never be able to reach the scale necessary to achieve our climate and circular goals.
If we look at the circular transition that’s happened in the Netherlands over the past five years, we can at least say that the word ‘circular’ has entered the average Dutch newspaper reader’s vocabulary. Yet the transition is still only off to a slow start, according to the Netherlands Environmental Assessment Agency (2021), among others. Most of the companies we can classify as ‘circular activities’ – such as clothing and bicycle repair shops – already existed long before the government-wide Circular Economy Program. We want to take that big step towards the circular economy, but our feet are secretly stuck in a swamp. We. Just. Don’t. Move. Forward.
Why is this? I do have a few ideas… 8, of course:
- We are obsessed with the technological side of the circular economy. We are collectively gawking at innovations – ones like a new material, a new recycling technique, and a device that can disassemble iPhones. But ask the average circular entrepreneur where the real challenge of the transition lies, and I’m willing to bet they say it’s social or economic.
- We’re stuck in the discussion about measurability. I would hazard to say that no measurement method is perfect. Why? Partly because in measuring circularity we often try to squash the sustainability challenges into one indicator and therefore forget to think logically. Partly because in each indicator, we try to bring out the circularity potential – whether it will be reusable or recyclable in the future – while the future scenario also depends on economic attractiveness and behavior. And because in all these measurement methods, we overlook the most important circularity strategy: Refuse.
- Our approach to the sustainability transition is too one-sided. For years, the climate has been our central focus, and collective efforts were aimed (and still are) at reducing CO2 through innovative techniques in the field of sustainable energy generation, storage and mobility. Government subsidies are therefore often aimed at these kinds of innovations (technical ones, of course!). Since we’re not looking at the transition integrally, we’re making short-sighted decisions.
- The Netherlands: polder country. Because of our continuous urge to gain a support base, we view things too much from the present, and too little from the future we want to achieve. The transition is now being held back by companies that know all too well that the transition is going to hurt them. We could do a much better job of putting that energy into naming the pain and helping those companies build a future-proof business model. The transition has losers, we cannot ignore that.
- Our perception of value is too narrow. Sure, Statistics Netherlands published the Broad Prosperity Monitor a few years ago, but almost every company is still judged on just one kind of value: financial. There are some CEOs of large companies who dare to swim against the tide – take Emmanuel Faber from Danone, for example – but they are severely punished for their long-term vision.
- We look at the risks of circularity, not the opportunities. In our previous studies into circular revenue models, it became painfully clear that when circular entrepreneurs go to the bank for financing, they are assessed on all the risks of circular entrepreneurship. In the pilot of the Green White Goods (Groen Witgoed in Dutch) project ten years ago, for example, I saw that we could set a monthly price of around 8 euros for a washing machine. But to scale up with a financier, the price increased to more than 25 euros! Because what if the tenant has a flexible contract – surely you don’t think the same device can be passed on to a new customer? What’s more, the risks of linear business – such as the expected price increase of raw materials (only available in Dutch)– are not recognized or included.
- We’re too focused on what is going well. We’re shouting about being the world’s model circular country – very un-Dutch of us. And, of course, I am very proud of all the beautiful circular companies and initiatives that have been grown on Dutch soil: Fairphone, MUD Jeans, Freement… I could fill this entire blog with them. But the bitter reality is that we ‘celebrated’ our Country Overshoot Day on King’s Day – 27 April. If we’re just maintaining our current consumption pattern with circular products, are we doing it right?
- We need a government with guts. I haven’t lost the idealism with which I started creating beautiful sustainable projects about fifteen years ago. I still believe many projects can be completed within budget if we work openly and transparently towards shared costs and benefits. But the idealism people need to put that goal above their own profit is not scalable. We really need to look at the rules of the game that are dominating our economic system. After all, when they were made, people were scarce, and we assumed raw materials were endless. We now know that this is reversed in reality, so it’s time to review the rules of the game. I respected how France made two daring decisions early this year: requiring a Reparability Index for electronic products and banning short-haul flights (only available in Dutch). If the French can do it, why can’t we?
If we want to initiate the transition to a sustainable, circular economy, we can’t dance around the hot mess any longer. The transition isn’t purely technical. The transition will have losers. But more importantly, if we want to make the transition fair and social, we must dare to look at the oh-so-scary rules of our economic system. Idealism might not be scalable, but if it’s economically attractive, circular business will be.