The Circular Economy as the New Normal

Scaling Up The Circular Economy

Scaling up means creating more demand: an increase in the number of launch customers (governments, business, consumers) for circular products and services will make companies act and innovate. There is no bigger incentive for a company than customer demand. That is why it is important that circular solutions be seen as the default solution.

From Circular Offices To Circular Construction

Office furniture is a great example of circular economy, because it is already standardised. Soon linear office furniture will be the exception to the rule. This started initially with pioneers in the carpet industry. But cradle-to-cradle companies, such as Royal Ahrend and Steelcase, use 'ready for disassembly' as a design principle for their office furniture, and Desko's refurbished furniture has contributed to this shift in the office furniture market. This movement recently started in the construction sector. Examples are a cradle-to-cradle-designed town hall in Venlo and Park2020 in Hoofddorp. The town hall consists of materials and products that are not harmful for people and the planet during the production process, use, and future use.

The circular economy is new and, as with all innovations, the first steps are the most expensive. The linear alternatives are optimized, have a certain scale to divide the fixed costs of innovation properly, and can lean on established recurring cash flows and depreciated assets. Moreover the issue of linear products and services is that their 'true costs' in terms of the environment are not accounted for. 

Examples are societal costs and hazards of greenhouse gas emissions and particulate matter. Furthermore, one of the gravest barriers is that virgin materials are cheaper than secondary materials. There is currently no mature system in place that enables trade in secondary materials such as we see in the 'commodity market'.

Recent research by Utrecht University shows that the circular economy remains a niche market for now and entrepreneurs are holding back their investments until the frontrunners 'pull the chestnuts out of the fire'. The right scale can break this. Our suggestion is to launch the system change by starting with a number of ambitious projects within a few sectors. Make sure that stagnation and obstacles are known, and research where and how positive impact is possible within the supply chain. Make sure that incentives for participating organizations are visible (e.g. financial or innovative incentives). Within these projects it will be necessary to take some risks, and one individual player cannot take this risk alone.

"It will remain a problem as long as primary materials are more inexpensive than secondary materials. The profound cause is that the system does not account for externalities in current pricing models. A limited profit-loss model overestimates the profitability of linear business models and underestimates circular ones," says Martijn Lopes Cardozo (CEO Black Bear).