What happens if you are a circular company in a non-circular world, or at least you try your best to be?
Over the past years, we have worked with multiple companies and organisations that are looking at their business and operating model to transform towards sustainable circularity.
Now, to start with, you might ask why we are talking about sustainable circularity. Isn’t circularity always sustainable? The simple answer is “no”. While in theory, the circulation of material should by default be circular, the market imperfections and the way our economic system is built, leads to a situation where circular business and operating models can lead to an adverse effect on CO2 emissions, biodiversity, and other sustainability factors. You might want to also have a look at some of the findings from a panel discussion we had some time back: https://www.taival.com/panel-discussion-circular-economy-vs-sustainability/.
Back to the point I was about to make. We have been supporting many companies on their path to sustainable circularity. What we found is that very often this transformation is not fully in the control of the company itself but requires a broader, systemic approach to succeed.
Let me give you some examples:
- CO2 emission trade and offset – let’s assume you leave your car at home most days and go to work by bike. Perfect, right, a lot of CO2 emissions saved. Let’s further assume you want to sell your CO2 emission savings to a company that needs an offset through a platform like puro.earth. Now the tricky question is, who owns the CO2 emission savings, you or your employer or the city that build the cycling path?
- Usage of recycled plastics – In theory, we want to use as many recycled plastics as possible. Unfortunately, that’s not always possible. While collecting packaging plastic is a good thing that can ensure the reuse of waste plastic, it is today often only possible to down-cycle the collected plastic to lower value use cases e.g., due to regulations for food packaging plastic.
- Bio-based raw material – Switching to bio-based feedstock is a favourable move when it comes to sustainable circularity. At the same time, bio-based material needs to be grown somewhere in a sustainable way and cannot lead to adverse environmental impacts such as deforestation of rainforests. We have seen this negative development with palm oil, and we should avoid repeating the same mistake twice. Furthermore, the use of agricultural land to produce bio-based raw materials will take away from the capacity that can be used for food production.
- Recycled Material availability – While the demand for recycled material is increasing, the supply of such material is still limited. For example, aluminium as an important and valuable material has seen a significant increase in demand for recycled aluminium while the supply has not equally been increasing. As a result, some industries and companies run into shortages and need to consider new ways of securing the required supply. The problem is further increased by the lack of understanding of which materials are used e.g. in a product, building etc. which complicates the collection and circulation of valuable resources. First initiatives of urban mining by introducing product passports and material marketplaces are ongoing to address the problem.
The list could easily be extended but I guess it makes the point very clear. For the world to move towards a circular economy and for companies to switch to a circular business and operating model, we need to make sure the required systemic changes are addressed and the different actors in the ecosystem are working towards the same goal.