Circular Economy – Investing in a future for Europe

19. 1 .2021, Nele Feldkamp

Circular material flows are not only better for the environment than linear models, but also hold many advantages for the economy and companies. Laura Beyeler explains exactly which ones and what companies should look out for when implementing circularity. She is a doctoral candidate at the TU Berlin researching circular economy and sufficiency strategies and is a part-time consultant at Who is Nik. Projektlabor GmbH.

Europe wants to become climate neutral. Preferably by 2050, that's what the European Commission’s Green Deal sets out. This deal includes a roadmap with the following goals:

  • By 2050, no more net greenhouse gas emissions are to be released.
  • Economic growth is to be decoupled from resource use.
  • No one, neither people nor regions, will be left behind (1).

With the Green Deal, the European Commission demonstrates its willingness to invest in sustainable models for the future and thus stop or slow down the increase in global warming (2). Moreover, the goals of the Green Deal not only encompass the environmental need for a greener future, but also incorporate economic and social considerations to enable Europe to pursue a resource-efficient and future-oriented growth strategy.[1]

Concrete fields of action for achieving the targets and thus for European climate neutrality can be found in the Green Deal. One of the central measures mentioned is the "promotion of a more efficient use of resources through the transition to a clean and circular economy" (5).

The circular economy [2] has been a much-discussed topic for a number of years now, and although it has received much approval, it has not yet been applied across the board. In Germany, for example, the Circular Economy Act (Kreislaufwirtschaftsgesetz, KrWG) has been in place since 2012, which follows the principle of human and environmentally friendly waste management, taking into account technical, economic and social aspects [7].

Laura Beyeler, a doctoral student at the Technical University of Berlin on the topic of circular economy and sufficiency strategies and part-time consultant at Who is Nik. for the development of an environmentally friendly circular economy for packaging in Switzerland, explains why the topic of circular economy not only makes sense for the environment and society, but also represents an opportunity for companies.

Laura, what advantages arise for companies that integrate circular resource flows?

Laura Beyeler: "For companies, for instance, new networks can emerge. New value chains create a new type of collaboration, which can strengthen cooperation towards sustainability. New synergies also emerge that can lead to competitive advantages or are simply good for the environment and society.

There are also economic benefits. A company can distinguish itself from the competition and use efforts toward a circular economy as a competitive advantage. However, a distinction should always be made here between honest efforts and greenwashing. Moreover, doing nothing and continuing to act in an environmentally harmful and socially unjust manner is not environmentally or economically sustainable. In the long term, the costs for a company will be much higher than the current investment costs for sustainability.

The circular economy model is an attractive concept for business because it offers many concrete strategies for implementation at the corporate level and enables organizations not only to pay attention to resource-efficient production, but also to ensure the reuse of resources along the entire value chain.

At the policy level, further legislation to strengthen the circular economy is also likely to be implemented. If the economy does not act itself, strict bans or high taxes are conceivable. Companies that already act today could be exempt from taxes, for example, or will enjoy an advantage because they already comply with the new standards and laws. This is also a clear competitive advantage for companies that integrate circular economy.

Moreover, according to the EU and the Ellen MacArthur Foundation, circular economy should lead to millions of new jobs and significantly increase national GDPs (8). So, if green growth is the goal (another exciting topic), circular economy can lead the European economy to sustainable growth."

And what do companies need to consider if they want to make their products circular?

Laura Beyeler: "There are many strategies a company can consider designing circular products. Which circular economy strategy from Reduce to Recycle best fits the company's business model and goals varies from industry to industry. In my opinion, there is no best practice, but there are many innovative ways to design circularity at the corporate level. It is certainly important that a company does not just consider one strategy, for example recycling. The majority of manufacturers or fillers of packaging, for example, limit themselves to recycling targets. They try to produce their packaging in a recyclable way and, if possible, integrate secondary materials into the new packaging. All major food companies, for example, have formulated such recycling targets by 2025 and are also well on their way to meeting them (9).

Circular Economy Systems (Ellen MacArthur Foundation)

Formulating and considering solely recycling goals is far from sufficient and will not advance the circular economy:

First, recycling is the last priority in the descriptions of the circular economy concept. Before that come many other strategies that favor reduction, repair, or reuse of products or parts of products. In the packaging industry, for example, the quantities of packaging should be reduced before recycling. To reuse instead of disposing is also a circular solution, which is feasible for packaging.

Secondly, a company cannot implement a circular economy alone. If all of a company's packaging is 100% recyclable or biodegradable, but there is no proper collection system or recycling infrastructure in the sales markets, circular production is not worthwhile, unfortunately. The circular economy requires a new type of collaboration and networking between companies and stakeholders within the same industry or ecosystem (10). Accordingly, a company needs to work together with stakeholders along the entire value chain to secure the closing of loops. It even requires lobbying to influence policy towards strengthening the circular economy, as the circular economy can/must also be shaped with policy instruments and new societal goals."

Sources:

(1) European Commission, 2020. Ein europäischer Grüner Deal: Erster klimaneutraler Kontinent werden. Available at: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_de.

(2) European Commission, 11.12.2019. Was geschieht, wenn wir nicht handeln? PDF DokumentAvailable athttps://ec.europa.eu/commission/presscorner/detail/de/fs_19_6715.

(3) Süddeutsche Zeitung, 04.03.2010. EU-Kommission stellt Gesetzesentwurf für Klimaneutralität vor. Available at: https://www.sueddeutsche.de/politik/eu-green-deal-1.4830586.

(4) Riegert, B., 04.03.2020. Greta Thunberg findet die EU zu lahm. Available at: https://www.dw.com/de/greta-thunberg-findet-die-eu-zu-lahm/a-52636374.

(5) European Commission, 2020. Ein europäischer Grüner Deal: Erster klimaneutraler Kontinent werden. Available at: https://ec.europa.eu/info/strategy/priorities-2019-2024/european-green-deal_de.

(6) European Parliament, 07.01.2021. Kreislaufwirtschaft: Definition und Vorteile. Available at: https://www.europarl.europa.eu/news/de/headlines/economy/20151201STO05603/kreislaufwirtschaft-definition-und-vorteile.

(7) Umweltbundesamt, 06.11.2020. Abfallrecht. Available at https://www.umweltbundesamt.de/themen/abfall-ressourcen/abfallwirtschaft/abfallrecht.

(8) Ellen McArthur Foundation, 2015.TOWARDS THE CIRCULAR ECONOMY Economic and business rationale for an accelerated transition. Available athttps://www.ellenmacarthurfoundation.org/assets/downloads/TCE_Ellen-MacArthur-Foundation_9-Dec-2015.pdf.

(9) Ellen McArthur Foundation, 2020. The Global Commitment 2020 Progress Report. Available athttps://www.ellenmacarthurfoundation.org/assets/downloads/Global-Commitment-2020-Progress-Report.pdf.

(10) Bauwens, T., et al., 2020. Circular Futures: What Will They Look Like? Ecological Economics 175 (2020). https://doi.org/10.1016/j.ecolecon.2020.106703.

 

[1] The European Green Deal does not meet with universal approval. Environmental groups and the German green Party in particular do not think the goals of the deal go far enough (3). Climate activist Greta Thunberg is also disappointed by the plans. After all, she says, climate neutrality would have to be achieved far sooner in order to meet the Paris climate protection targets (4).

[2] Definition of Circular Economy:

"The circular economy is a model of production and consumption in which existing materials and products are shared, leased, reused, repaired, refurbished, and recycled for as long as possible. In this way, the life cycle of products is extended." (6)

‐ Nele Feldkamp

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