Circular Change — An insight into the circular economy from Slovenia
Last week I had the pleasure of attending the 3rd International Circular Change Conference in Slovenia — the country is extremely beautiful, with gorgeous green landscapes and extremely friendly people — it is truly a hidden gem within Europe.
Slovenia is also emerging as one of the European nations leading the way in developing a circular economy and the conference coincided with the publication of the Slovenia National Circular Economy Roadmap, bringing together a diverse group of circular economy stakeholders to discuss key topics on the circular economy agenda both for Slovenia and across Europe. Here are some of my insights from Slovenia:
The circular ecosystem is growing fast
The circular economy remains a small community, led by a few countries; but its growing. The Netherlands and Finland are leaders when it comes to circular thinking, with both nations demonstrating progress in delivering their national circular economy roadmaps, with a flourishing ecosystem of circular economy start-ups alongside growing interest from their respective financial sectors. Slovenia are not far behind. Their roadmap is written in detail while the size of the country, with just 2 million people, is perfectly suited for testing a circular economy model at a scale that is manageable for implementation. In addition, it was exciting to see similar initiatives launching, with Austria and Norway both beginning to build their own circular futures. This national focus, alongside wider international frameworks such as the UN SDGs and the EU Circular Economy Action Plan, provides a great approach that should be replicated further in the future.
Plastic and Fashion are key areas for circular innovation
Plastic and Fashion are emerging as key areas of circular economy innovation. Plastics, driven by the widespread impact of recent publicity campaigns, as well as the inherently wasteful and linear model that the plastics industry represents, (just 14% of plastic is collected for recycling according to Ellen MacArthur Foundation), have been factors in accelerating this agenda. While the benefits and technical capabilities of plastic should not be forgotten, this focus is well directed and can have a significant impact on industry.
Fashion has also been fueled by widespread media coverage, but growth in the awareness of circular fashion has equally been driven by the rapid advancement in material innovation, particularly focused on sustainable alternatives for materials (in Slovenia, a dress made of Apple Skin leather was on display) and the implementation of new and innovative fashion business models, focused mostly on secondary materials and renting. The progress in these industries will enhance the viability of the circular economy and hopefully support wider industry expansion.
Collaboration is critical if we are to continue progress
This is perhaps slightly overdone, but collaboration in the circular economy is imperative if we are to take this momentum and progress towards a more circular system. Evidence of previous success was clear in Slovenia — their roadmap has been directly informed by the learnings of The Netherlands and Finland, while early progress in Austria has been informed by the circular strategy being implemented in Scotland. This idea of collaboration must continue, and leading countries should inform others in terms of how to design their roadmaps and, more importantly, they should also share key learnings around the issues they face during implementation of action plans. I would also encourage leading countries to share their knowledge with emerging economies, where circular economy should be used as a strategy to enable sustainable economic growth.
While there was great cause for optimism, the conference also raised a number of questions and it is very clear that there is a long way to go before we start making a demonstrable impact on our current linear economic system.
Here are the key areas in which we will need further effort to enable circularity:
Show me the money — we need to see the business case
As I stated in my previous article, the circular economy has the potential to be wholly disruptive as it presents a lens in which sustainability is no longer seen as inhibitive to business but is actually a strategy to do business is a more efficient, environmentally friendly and profitable way. This view is widely accepted, with the circular economy linked to a huge value opportunity on a global and local scale — Accenture state that the circular economy could be worth $4.5 trillion to the global economy by 2030, whilst EMF state that a circular economy could add €0.6 trillion per year to the European economy by 2030. While we have seen some examples of companies displaying rapid growth using circular business models, take Rent the Runway — renting high end fashion for a fraction of the cost of buying it; or GEM, a Chinese multinational using urban mines to access high value materials and rare metals, we are yet to see wholesale business model transformation in multinationals that is moving beyond the pilot, or small-scale implementation stage. To enable this, we need to see companies or organisations performing a value driven, business case evaluation of new circular business models to understand their profitability and environmental impacts. This insight will help build confidence in the circular economy and will help move the thinking from theory and projection into reality.
We need to engage the financial sector
Money will make the world go circular. While we have seen some engagement of leading financial institutions on circular economy topics, as well as some highly successful venture capital funds focused specifically early stage circular economy businesses, such as Circularity Capital and Closed Loop Partners, there generally remains very little engagement from the financial sector. This must change if we are to successfully implement company or government led strategies and I would recommend action across three areas:
1. Build knowledge of circular economy theory and models — a greater effort must be made by banks to build knowledge of circular economy theory and business models in the financial sector, enabling an improved understanding of how new business models will impact financing.
2. Develop the business case — the more evidence based business cases that can demonstrate the financial viability of the circular economy the better. We should work to develop these across industries on specific use cases to tangibly demonstrate the opportunity to banks.
3. Provide regulation that enables a circular economy — the current finance model is geared towards the linear economy. So long as financial incentives and taxes are aligned with this approach, circular economy progress will be inhibited. We should make more effort to engage governments in this approach, taking learnings from the limited number of examples, such as Sweden, which has provided tax breaks on repairs to tackle the throwaway culture.
Design for circular economy
The more I work in the circular economy, the more I am growing to realise the importance of design. Design for repair, design for disassembly, design for reassembly — these are all functions of design that must be applied across industry to enable a circular economy. Its value cannot be overstated and both governments and businesses can play a role to support this. For business, design must be the primary consideration and the starting point for companies seeking to adopt a circular economy model. For government, regulation around design criteria for key products would help enable circularity — take for instance the design of plastic products, which are highly complex, variable and lack global consensus or protocol which inhibits their end of life reuse or recycling.
Beyond roadmaps— building an action led circular future
The Circular Change Conference was a wonderful event that was a celebration of the progress that has been made in driving the circular economy over the past few years; it was also a humbling reminder of the huge challenge that lies ahead. It provided further evidence that we are entering a new phase of circular economy progress, one that must move beyond theory and projections to become more action led and evidence based. Slovenia has taken a small step towards this future — we need many others to do the same.
