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We have a global money system that must grow in order to survive, even if the real economy does not. Everything in nature is subject to deterioration, but money is immune to this. On the contrary, we have an interest-based economic system that is devouring nature in the name of growth. If this conversion of nature (commonwealth) into money happens at a rate faster than the rate of interest, then from a financial perspective everything is fine – although not necessarily from an ecological/social perspective. However, we are reaching the limits of our resources. So perhaps the end of growth in the real-world economy has arrived?

Is it possible to create a sustainable economic system when its very existence is based upon economic growth? Where does growth come from and how can we design our fundamental monetary structures to create wealth without growth?

Last Friday Pakhuis de Zwijger was most certainly the birthplace of some cutting edge thoughts and ideas about the circular economy. What fundamental institutions, such as government structures and social networks do we need to facilitate a circular economy? During a workshop about circular money, some of the key components of a circular economy were linked to our money system. This resulted in a joint awareness that with our current monetary system the circular economy is and will continue to be hindered. The workshop was lead by Elisa Achterberg, project manager of Circular Finance at Circle Economy. Experts in the panel were United Economy, Social Trade Circuit Nederland, Alliander.Martine Groenewegen shared her knowledge on the development of innovations in biobased and circular economy.

Two masterminds groups of 40 participants with diverse backgrounds put their minds together in an attempt to create alternative monetary systems, aiming to find solutions to facilitate a sustainable circular economy.

Eight different circular money systems were designed during the workshop. In some of the design systems, speculation was abolished to prevent money leakage to virtual – speculative – economies and money accumulation. In others, local economy activities were stimulated through introducing a 0% or negative interest rates. One brilliant design took creation to the next level and appointed the earth itself as a bank. In other designs blockchain technologies were introduced to take care of the administrative tasks together, instead of a centralised institution.

The outcome was a stream of interesting and inspiring ideas to draw further upon as we take more concrete steps to make a circular economy happen. One goal that recurred in all the system designs: the inevitable necessity to reconnect money with nature and the real economy. For thousands of years, before it took a life on its own, money was just a tool instead of an end on itself. And now, by an energy-fuelled fate we arrive at the point where we have to match the flow of money systems with the flow of intelligence within natural systems.

Driven by the outcomes of this session, Circle Economy continues to expand this topic and create pathways for applying new monetary systems. Solidair systems to turn the circular economy further into reality and stimulating collaboration.

We invite you – we challenge you – to join us in the conversation. Please share your thoughts with us on this topic and be part of our journey towards a circular economy.

The Challenge

Dutch aWEARness provides 100% recyclable uniforms and corporate wear for businesses and organisations. Aiming to continuously cycle clothing throughout its lifecycle, Dutch aWEARness aims to create a business model which allows for shared ownership of materials throughout the value chain. However, no financial structure currently exists to accommodate for shared ownership of a product.

The Approach

At the moment Dutch aWEARness remains the owner of the clothing but this is not a sustainable, long-term solution. Therefore they envision sharing the ownership of the garments with other users. In such construction, costs, as well as risks and returns, are also shared, which is likely to be the strongest incentive to keep the materials cycling throughout the product’s lifecycle. To make this a reality the company’s various financial partners explored the contours of the financial value chain.

“Dutch aWEARness is a company that invests in design for reincarnation”

- Rien Otto, CEO, Dutch aWEARness

In a shared value chain, which provides shared ownership of materials and information, financing for the entire chain rather than a single company is necessary. In such a system an innovation at one point in the chain will benefit all chain partners, therefore creating leverage to share risks and benefits. So-called “chain investment”, is a way of operating that can be a main driver for the collaboration and optimisation of the circular economy.

What's Next?

Due to the insights gained from this case study, Circle Economy will continue to explore how chain investment can be structured. Further questions will be explored such as, “What are the trade-offs, challenges and advantages of investing in a value chain as opposed to a single company?”

The report “Money makes the world go round”, published by the FinanCE working group of the Ellen MacArthur Foundation features further information on this case study.For more information about the report please contact elisa@circle-economy.com

The Challenge

Wanting to reinvent the way we do laundry Bundles developed a business model that focused on selling washing cycles instead of washing machines. By attaching a device to their washing machines the company is able to maintain ownership of the machines while monitoring their usage. Statistics gathered from the machine are displayed on the Wash-App, which provides the customer with insights into the overall cost of doing their laundry, including energy, water and detergent consumption. This pay-per-use model not only reduces the costs for the customer, but also extends the life of the machine. However, by introducing this new way of doing laundry a different way of structuring long-term financing was required.

The Approach

Multiple challenges arose in the case of Bundles, the first being that the washing machines needed to be financed with a longer payback period, which put pressure on the company’s cash flows. Secondly, Bundles’ balance sheet continues to grow due to the fact that they maintain ownership of the washing machines throughout their entire life-cycle creating a capital demand. Lastly, there is currently no company which can remanufacture or refurbish the used washing machines making it very difficult to incorporate residual value into the machine’s lease contracts.

“We save our planet and simultaneously households save money”

- Marcel Peters, CEO

Owning a large fleet of assets is considered a capital tie-up for Bundles. To relieve them of this financial burden a collaboration with (institutional) residential real estate investors, who have financial means and a long-term investment strategy, was established.  A washing machine can be seen as a key service that home owners may want to provide to their renters. Through this collaboration, Bundles was able to access an existing real-estate rental market with pre-established customer relationships.

What's Next?

In order to strengthen the business case for the pay-per-use model the guarantee of residual value from the company’s suppliers would be very beneficial. The trade off between strong contracts with clients and the flexibility of such contracts needs to be balanced in order to optimize the possibility of financing new business models such as this. Additionally, increasing equity capital and factoring or securitisation of receivables would increase financing possibilities for Bundles. The report “Money makes the world go round”, published by the FinanCE working group of the Ellen MacArthur Foundation features further information on this case study. For more information about the report please contact elisa@circle-economy.com

The Challenge

Continued investment in a linear economy results in long-term, system-wide impacts and risks that have adverse effects on the economy, society and the environment. Moving towards a circular economy can generate value and reduce vulnerability against these risks.

The Approach

Circle Economy understands that a global standard is needed to help investors assess the resilience of their portfolios against circular economy objectives; while engaging with their investees to improve their circularity performance and create long-term value. The Circle Portfolio enables investors to review the circularity of companies in their portfolio allowing them to collaborate with investees to reduce risks, capitalise on new opportunities, and enable long-term growth in a circular manner.

By completing our online survey, Circle Assessment, companies are evaluated based on the extent to which they are pursuing and implementing various circular business strategies. The results of the assessment are used as an input into the Circle Portfolio to assess the overall circularity of an investment portfolio. This enables investment managers to identify areas in which they can improve the overall performance of their investment portfolio.

“The circular economy is unlikely to be delivered by individual firms alone. In order for it to develop meaningfully a significant number of like-minded players, in key sectors such energy, manufacturing, and technology, must stimulate sector-wide learning and sharing of best practices.”

- ACTIAM

Key Learnings

A large part of the development of the tool involved focusing first on the business model and the relationship between the partners. However, it was soon decided that a more lean-startup approach was required to first develop a version of the tool and let it organically direct the approach along with the business model. Following this approach and engaging with companies and investors has yielded a significant amount of insights including  new directions for the tool.

What's Next?

The creation of the Circle Portfolio involved presenting mockups of the tool to financial institutions to gain feedback and further insight regarding their needs. Input was received from portfolio managers at PGGM. Additionally, from initial reactions and conversations with ABN, AMRO, GRESB, as well as learning from the RACE Finance program, the tool was redesigned to better evaluate the extent to which circular economy strategies can enable investors to make smarter decisions. It also provides incentives for their portfolio companies to pursue circular strategies.

The Circle Portfolio is a useful tool to gather information about the circular possibilities and actions of potential investments. As a partner in the development of this tool, PGGM will use our network to create a community of financial institutions to further develop the circular analysis framework.”

- PGGM

The Challenge

In our current linear "take - make - waste" pattern, the everyday products that we use are contributing to the quick depletion of the world's natural resources, resulting in price volatility and unsustainable, future growth. Entrepreneurs must find ways to preserve value throughout their supply chains, design products with longer lifespans and take advantage of the possibilities of circular design. Products need to be redesigned so that they can be reused, remanufactured, and recycled with a goal of reducing the amount of waste that ends up in landfills or incinerators.

The Approach

Product design is the engine with which we can accelerate the transition towards a circular economy. Creating innovative products and exploring new ways to deliver services is a means for which circular design can come to life. Designers are the change agents for circular business within their organisations and play a key role in making the circular economy, a priority in future strategies.

Throughout a series of 3 day-long workshops, businesses, designers, and students join forces to create a roadmap to develop business through circular design. The workshop participants are taken on a journey through three stages, initiate, ideate, and implement. For designers there is a separate day long class in which they take the first steps towards redesigning a product of their choosing in a circular manner. At the end of the business track participants leave with a clear circular business proposition, a finalized feasibility check and a roadmap to implementation.

What's Next?

Through shared knowledge and inspiration, key partnerships are formed to develop new products, services, and business models based on concrete challenges. By providing a safe and creative environment in which businesses and designers can apply circular business strategies to current, real life cases, they can take the first steps in implementing their circular business ideas.

Are you interested in learning more about the CIRCO framework or signing up for an upcoming workshop?

[cta link="http://www.circle-economy.com/events/circo-workshop-creating-buiness-through-circular-product-design/"]Register today![/cta]

Why

Business norms are changing, as fashion companies seek to incorporate circularity into their business models. One such method of incorporating circularity is through service-based business models. Offering a product as a service allows a company to regain control over a product’s lifecycle- facilitating reuse, repair and appropriate recycling. Releasing ownership, for a consumer, defies typical consumerism behaviour and misdeeds.

How

To map the developments in service-based business models in the fashion and textile industry, Circle Economy partnered with SITRA, a Finnish fund that was commissioned to promote Finland’s economic growth, to conduct research on business models in the fashion and textile industry.

What

The broad research was conducted and case studies were established to provide an in-depth analysis of industry’s best practises with a goal of developing a roadmap to successfully guide the business model transformation process for companies looking to explore service-based strategies.The research consisted of three parts:

• A global scan of ±250 different business concepts in the field of servitization and circularity.
• Ten deep dive cases, which represent the most promising and innovative service-based business models & circular strategies today (GStar Raw Recycled, Filippa K, Nudie Jeans and more).
• A business model framework, which acts as a lens through which we can categorize the different models that emerged from the research.

The textiles team are available to present and discuss these findings and to explore what service-based models or circular strategies can mean for your business. For more information please contact helene@circle-economy.com.

[cta link="http://www.slideshare.net/SitraEkologia/servicebased-business-models-circular-strategies-for-textiles" ]Download the report[/cta]

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What's Next?

The core purpose of this report is to inspire Finnish textile companies to identify opportunities and successfully develop new business models with circular principles. Additionally, it will be utilised as a launching pad for a series of lectures or workshops on sustainable innovation and servitization, within the Finnish textile industry, to engage fashion brands in a meaningful way. https://youtu.be/honzZssgqBo

The Challenge

The textiles industry has a significant impact on the environment due to its land, water and energy intensive operations. With an ever increasing need to decrease our reliance on natural resources; the transition from virgin to recovered and upcycled cotton is becoming a necessity. For example, one kilogram of virgin cotton requires over 13,000 litres of water. In comparison, one kilogram of recovered, upcycled cotton requires no additional water, farming, processing, or dyeing than when it was first produced and generates no additional greenhouse gasses.

“Closed loops in textile industries are closer to reality than many would think. The improving techniques of mechanical recycling and the endorsement of global brands and retailers, that realise the important potential for profit making, push the practices of high value recycling to become the new standard for the textile and fashion sectors.”

- Isaac Nichelson, Chief Sustainability & Marketing Officer, Recover Textiles

The Approach

Recover has been recycling post-industrial clipping waste for over 70 years, however this recovery stream accounts for only a fraction of overall textile waste. Four generations of research and development in textile recycling has led to some impressive technical advances that make the quality of Recover’s upcycled yarn comparable to virgin, at a competitive price and with a fraction of the environmental impact. Different textile streams (post-industrial, pre-consumer, and post-consumer) require different considerations such as logistics, security and recycling processes. Together with Circle Economy, Recover aims to explore the high-value recycling possibilities within these waste streams, and develop new, scalable, closed loop solutions, through a series of practical implementation projects.

https://vimeo.com/114698289

These ongoing pilot projects, with pre and post consumer textiles, aim to develop a model that is both replicable and scalable in the long term, while maintaining the high standards that Recover has set. Circle Economy and Recover are developing this model through the following collaborative projects with industry: Reblend High-Value Recycling Project, Reshare High-Value Recycling Project, and G-Star High-Value Recycling Project.

What's Next?

With this project, Recover aims to extend it’s expertise of recycling to pre and post consumer textiles, to develop new closed loop solutions for the industry. Such changes can create a system whereby products, fabrics and fibres are infinitely and effectively cycled through connected loops allowing for continued fibre consumption without the depletion or destruction of resources and ecosystems, on which we are dependent.

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As a part of our member community, Recover shares in our ambition to make the circular economy a reality.

Are you a changemaker? Learn more about this global network of innovators by clicking the link below.

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The Challenge

Roughly one billion tires are removed from vehicles annually, creating around 13.5 million tons of solid waste. Waste tires, also known as ‘End-of-Life Tires’ (ELTs) contain a significant amount of valuable high quality carbon black, typically between 20 and 25% of the total mass. The standard way of producing black carbon is very polluting, but it has a high surface-area-to-volume ratio, which makes black carbon widely applied as a reinforcing filler in tyres and other products. Around 60% of the produced carbon black is used for tyre production, the remainder in technical rubbers, but also as pigments in paint, plastic and ink.

“Tens of millions of tires are burned annually, wasting massive amounts of valuable carbon black. Petroleum is used for the production of new carbon black. Black Bear thought of something smart.”

- Martijn Lopez Cardoso, CEO, Black Bear Carbon

The Approach

Black Bear has developed a highly innovative process enabling the recovery of high quality carbon black from waste tires, thereby providing a sustainable solution for a problematic waste stream and preventing pollution related to the production of furnace carbon black. Black Bear offers a commercially attractive proposition given its high quality and lower production costs compared to furnace carbon black.

Key Learnings

As a young, innovative organisation in a conservative industry, Black Bear experiences several challenges in implementing a circular business model. In the first place, although many potential customers are keen on adopting a green alternative, it takes dedication and perseverance to move through the lengthy approval procedures in large and established organisations. We have found that building a trusted brand and sharing (independent) test results have been key drivers for success.

Secondly, many circular business models require significant funding. In our case, moving to commercial scale required a €10m investment in plant construction. We have found the process of attracting investors rewarding, yet very time intensive. A key takeaway is to present an excellent business case, with circularity as a bonus.

Finally, Black Bear sees constraints in current regulations. The assumptions of the current regulation are still based on the old linear thinking and tries to protect society from the “evils of waste”. We have to rely on governments to change these regulations, creating a more favourable regulatory climate, but this will take time and pioneers to lead the way.

What's Next?

Carbon black, when successfully retrieved from waste tires, may be re-used as an equally acceptable replacement for virgin furnace carbon blacks. Applying this circular business model has great advantages for companies active in tire processing and rubber manufacturing by reducing waste processing costs, use of and expenditure on resources and by drastically reducing negative environmental impacts.

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As a part of our member community Black Bear Carbon, shares in our ambition to make the circular economy a reality.

Learn more about this global network of changemakers by clicking the link below.

[cta link="http://www.circle-economy.com/membership/" ]Tell me more[/cta]

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We are pleased to announce the completion of the first phase of the Circle Assessment pilot project, with our partner ACTIAM, a responsible asset management organisation with support of one of their portfolio companies, Smurfit Kappa, a leading corrugated and paper-based packaging company. Continued investment in a linear economy results in long-term, system-wide impacts and risks. Moving to a circular economy is increasingly recognized as an opportunity to reduce risk and uncover new growth opportunities. However, while a variety of tools exist for measuring and quantifying sustainability topics and Environmental, Social, and Governance (ESG) factors, no tool currently exists that provides a comprehensive framework for circularity and specifically quantify how circular organisations are.To address this, Circle Economy developed the Circle Assessment to establish a global standard to help investors and companies assess where organisations can create value by following the principles of a circular economy. Via an online survey, the Circle Assessment measures organisations against circular objectives and provides recommendations for how to capitalise on opportunities to adopt circular focused business practices. As one of the launching customers of the assessment, ACTIAM desired a more comprehensive assessment for circularity and the ability to dive deeper into the non-financial criteria beyond the ESG scores they use currently. ACTIAM stated that “we are interested in deploying this assessment to multiple companies within our investment portfolio in order to identify leaders in the realm of circularity and reward them accordingly.” ACTIAM approached Smurfit Kappa for the pilot program to enable positive engagement with them on the topic of the circular economy.Smurfit Kappa’s reaction to the completion of the first phase was that “we were happy to support by testing the tool and providing feedback on the tool itself and how companies can interpret circularity in their businesses.”As the data is gathered from more companies within their portfolio, ACTIAM will have the opportunity to identify the key change makers and boost engagement with those investees that need help achieving circular objectives through our Circle Portfolio. This tool will provide investors with an overview of their portfolio and illustrate where each company lies in regards to the circular objectives measured during the Circle Assessment.With both ACTIAM and Smurfit Kappa’s feedback, the Circle Assessment has made significant strides towards becoming a global standard for evaluating a company’s circularity. We plan to engage in additional pilots with companies and partners to further test and refine the tool. If you are interested in learning more about the Circle Assessment or would like to participate in the pilot program, please contact shyaam@circle-economy.com.