As the global economic system has evolved over the last 150 years, technical innovation, during the second half of the 20th century, has helped to drive down the cost of resources and significantly improve our society’s welfare. However, the predictions of the 1972 Club of Rome “Limits to growth” report became reality early in the 21st century. Economic growth no longer outpaces the increase of material cost, and with the acceleration of digital technologies new revenue models have emerged.Leading businesses in the Netherlands are taking up the challenges these growth limitations have created. Businesses, collaborative platforms, innovators, governments and joint initiatives throughout the country, see the circular economy as the next business opportunity. The Netherlands now claims the title of “Circular Hotspot” due to the fact that these key economic players have set their focus on creating circular awareness.
The Netherlands is taking a leadership position in the establishment of circular principles. As a circular hotspot, we need to continue to expand our efforts, providing proof points to support our proposal for Next Level investment to the new Dutch cabinet. Our progress will also provide concrete support to the European policy for the development of a circular economy. And the ultimate prize: when we succeed in the realisation of more circular business cases, our exports will get a boost – that creates jobs and a future for all Dutch people that we can be proud of!Hans de Boer Chairman VNO-NCW
To understand the current status of the circular economy within the Netherlands’ largest organisations, as well as to trigger awareness and educate companies on the economic advantages of this new way of thinking, Accenture, Circle Economy, Duurzaambedrijfsleven and MVO Nederland have initiated the Circular Economy Index. As the first index of its kind, we aim to conduct this research on a regular basis, continually improving, and using it to drive awareness and document our collaborative progression towards a circular economy. Because what is not measured, is not managed.We invite you to read the report and become inspired to discover your own circular advantages! On behalf of the Circular Economy Index Research Group,
[cta link="http://www.circle-economy.com/circulareconomyindex" ]Download the report[/cta]
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Today at the London Business & Climate Summit, Circle Economy and international consultancy Ecofys have called for a rapid transition to a global circular economy to meet the ambitious Paris climate agreement. According to an estimate by the two organisations, circular economy strategies may deliver emissions reductions that could cut the 1.5 °C emissions gap in half.
Graphic: Circular economy can contribute to reducing the emissions gap, source: Ecofys/Circle EconomyThe emissions reduction commitments made by 195 countries at the COP 21 Paris Agreement, are not sufficient to limit global warming to 1.5 °C. To reach the 1.5 °C ambition it is estimated that additional emissions reductions of 15 billion tonnes CO2e per year need to be achieved by 2030. Circle Economy and Ecofys estimate that circular economy strategies may deliver emissions reductions that could basically bridge the gap by half.
“The momentum from a circular economy can provide a basis for the transition to a low carbon economy with secure sustainable economic growth and prosperity for all. To reduce the risk, companies need to find new ways of doing business. The sooner this is accomplished, the less disruptive and more cost-effective the transition will be,” - Preeti Srivastav, Project Director of Corporate Climate Action at Ecofys
Circle Economy and Ecofys have issued a white paper that informs on key strategies to move to a circular state. It also highlights existing circular examples in the world today. The white paper will form part of a further comprehensive analysis of the new climate agreement and targets and circular economy’s contribution to the same. The white paper and initiative were launched today at The Business & Climate Summit in London where institutional Business and climate leaders are working together to deliver real climate action.
“The research clearly shows that there is a massive role for the circular economy. Not only as the ‘missing part of the puzzle’ to make our Paris targets achievable, but also as a practical and scalable approach to decouple unsustainable material use from prosperity. This makes the circular economy a vital addition to the mix of solutions to address climate change. We urge companies and governments to embed the circular economy in their climate strategies and policies, and prompt the next wave of climate action through circularity.” - Andy Ridley, CEO, Circle Economy
Circle Economy and Ecofys will support both companies and governments to amplify the circular economy contribution to climate change and in translating the Paris Agreement from a diplomatic settlement between countries into a catalytic instrument for the real economy.
[cta link="http://circle-economy.com/climatechange" ]Download the report[/cta]
The City of Glasgow is on the road to becoming one of the world's first circular cities. The city has taken its first steps in creating a stronger more sustainable economy by completing the Circle City Scan. Commissioned through a partnership between Glasgow Chamber of Commerce, Zero Waste Scotland and Glasgow City Council, an analysis of the city’s material flows was executed by Circle Economy.
This pioneering study of Glasgow’s economy, identified leading industries through which the city’s economy can become more ‘circular’ and defined implementation strategies and opportunities for the region’s business community. The goal of the Circle City Scan is to pinpoint areas in which the city of Glasgow can benefit from new collaborations, create market opportunities and increase profits, while reducing the city’s environmental impact. The resulting report highlights sectors in which circular business models can be applied and specifies strategies to accomplish the practical and scalable implementation of these circular solutions.
The real benefits of the circular economy, recognised by Glasgow, is that it allows economic growth, prosperity and security by reducing the city’s unhealthy and harmful dependency on scarce natural resources. Circular thinking will inspire companies to increase their raw material efficiency by keeping the resources they use in circulation for as long as possible and to recover products when they are no longer being used by the consumer to act as inputs in a new cycle. Glasgow sees this new approach as a solution to create improved product quality, economic growth, jobs and ultimately a future proof, more resilient city.
“This study has brought into focus how the Chamber can support local businesses, and champion the circular economy in Glasgow to ensure it becomes an important part of the overall commerce in the city.’’ - Alison McRae, Senior Director of Glasgow Chamber of Commerce
An extensive analysis of the city of Glasgow’s economical and political landscape showed that the healthcare, education and manufacturing sectors are pivotal to maintaining the city’s welfare. Combined, they provide 117,500 jobs and a quarter of the city’s total economic value. By mapping the city's resource flows from consumption to waste, the food and beverage sector was identified as having the greatest circular potential. The report offers a practical and scalable roadmap to implement pilot projects within this sector and identifies several circular strategies that have the potential to boost employment opportunities and strengthen Glasgow's economy.
Practical examples illustrated in the Circle City Scan include the implementation of heat recovery methods of local bakeries and breweries, resulting in a reduction of resource use. The food and beverage sector uses over 34.000 tons of biomass every year and generates over 2.000 trucks of waste. By valorising the city’s waste streams additional revenue streams are added to Glasgow's economy and CO2 emissions are reduced. A practical example of this is the use of bread waste, a staggering 200.000 slices of bread are wasted daily in Glasgow, to create green gas, compost or even beer. Applying circular strategies in the city’s food and beverage sectors creates income, jobs and ultimately reduces carbon emissions.
"Glasgow shows leadership and vision by exploring the opportunities of the circular economy. The city’s desire to transform results from the Circle City Scan into tangible and practical pilot projects highlights their frontrunner status and serves as an example for cities around the world." - Andy Ridley, CEO of Circle Economy
To ensure that the strategies identified in the Circle City Scan are implemented, Glasgow Chamber of Commerce is now reaching out to businesses throughout the region to illustrate the business opportunities that these ‘circular initiatives’ provide. The next step is setting achievable goals and creating local partnerships to implement the four most promising pilot projects identified.
[cta link="http://www.circle-economy.com/glasgowcirclecity" ]Download the report[/cta]
The Circle Cities Program addresses where and how circular strategies can be implemented within cities. It illustrates practical and scalable circular opportunities that create jobs, increase resource efficiency and stimulates economic growth. To learn more about our Circle Cities Program please click here.
If you are interested in learning more about our work with the City of Glasgow or our Circle Cities program please contact our Director of Programs, Klaske Kruk (klaske@circle-economy.com)
A great synergy exists between SkyNRG and Circle Economy since both organisations are dedicated to build and encourage the development of sustainable business models. Together SkyNRG and Circle Economy will explore opportunities to make the aviation sector more circular.
SkyNRG takes up a pioneering position in realising a long-term sustainable future for the aviation industry. They are specialised in supplying sustainable jet fuel from waste streams like used cooking oil. This alternative source for conventional jet fuel can offer CO2 emission reductions of up to 80%, compared to fossil jet fuel. SkyNRG has already achieved great success in supplying their sustainable jet fuel for example to the customers within KLM's Corporate BioFuel Programme for example. This programme was launched in 2012 and offers KLM corporate clients to reduce their business travel footprint by flying on sustainable jet fuel.
“Circle Economy and SkyNRG both understand that in order to realise a circular economy, engagement of all stakeholders, including governments, businesses, industry and end-customers, is crucial. We are proud to be part of the Circle Economy network and look forward to a successful partnership.”- Maarten van Dijk, CEO SkyNRG
“We are very happy to have SkyNRG on board. As the global leader for sustainable jet fuel, they are in the position to accelerate the transition to the circular economy in a practical and scalable way, in particular in the very important airline industry, where much progress is to be made.”- Andy Ridley, CEO Circle Economy
The creation of products and services requires the use of resources in the form of materials, energy, and labour. As a product is produced value is added as more materials, energy, and labour are utilised in the production process. Once the product reaches its end-of-use however, the value created during the production process is almost completely lost due to current waste management practices. Resources that could otherwise be recycled and reused are simply disposed of or incinerated. As a result, more raw materials are required in order to meet the ever growing product needs of consumers.
High value reuse within a circular economy restores products and preserves resources that have reached their end-of-use back to their original state to deliver the same or even improved functions. In this way, the value of products are preserved, reducing the level of risk and costs associated with raw material price volatility and scarcity.
The aim of high value reuse is to preserve the value of materials by:
Special thanks to our panelists who provided great practical examples of how they have integrated high value reuse strategies to their business models!
Circle Economy’s quarterly Deep Dives on sector or industry based topics are part of the membership offering. They are an excellent way to meet with other members, share insights, learnings and real life issues on dedicated topics, and contribute to creating business opportunities between members.
Interested in becoming a member?
[cta link="http://www.circle-economy.com/membership/" ]click here[/cta]
https://vimeo.com/167694724
“This is the first generation of people who really understand climate change, and the last ones who can really do anything about it.” - Former President of Ireland, Mary Robinson, quoted by Dilys Williams, Director of the Centre for Sustainable Fashion
For the three days, over 100 students, from 40 nations, gathered together in the dappled courtyards and halls of the The Royal Danish Academy to unpack and reinterpret the 17 UN Sustainable Development Goals. Their mission was to devise seven demands on the fashion industry, which would be presented at the Concert Hall, only two days later.
This was no easy feat, especially for a diverse group of perfect strangers. As facilitator for the circularity working group, Project Manager of Circle Economy's Circle Textiles Team, Gwen Cunningham saw, first hand, how they grappled to come to terms with these complex topics during the intensive workshop days. The driving questions emerged; can the fashion industry be a vehicle for change? How can we harness it’s spark, it’s creativity and it’s omnipresence, to address issues surrounding the environment, climate change, ethics and workers’ rights and welfare.
What rang clear was the total, unanimous agreement that the fashion industry was due for a major overhaul and that this next generation has no interest in inheriting the industry, as is. Their passion and unwavering clarity on the need for change kept the energy at fever-pitch and translated into powerful statements of intent, that industry judges called ‘presidential’, ‘eloquent’ and ‘purposeful’.
Picture by Gianluca Mazzarolo from GM Creative Studio
“Thank you for the work you do- the students’ ideas are changing the game” - Angela Snow, Senior Director, Global Design, Culture and Community, Nike
During a productive evening of workshops, networking, and panel discussions including Claire Bergkamp, Head of Sustainability and Ethical Trade at Stella McCartney, Angela Snow, Senior Director of Global Design, Culture and Community and Nike and Caroline Kahn Manager of Product Sustainability at Nike three core take-aways emerged:
Picture by Gianluca Mazzarolo from GM Creative Studio
“This idea of a sustainable ‘journey’ is killing us. It’s not a journey, it’s a mission’ - Linda Greer, Scientist, National Resources Defence Council
Fighting Summit fatigue, we forged our way to the largest and the last event of the week; the Copenhagen Fashion Summit. Over 1.200 attendees, from 52 countries joined, including senior sustainability leaders from G-Star, Nike, Filippa K, Stella McCartney, H&M, as well as noted individuals such as Suzy Menkes, Renzo Rosso and Vanessa Friedman.
With such a vast and specialised audience, the risk of preaching to the converted was high. Nike and Patagonia emerged as clear highlights, sharing commitments to circular solutions, with Hannah Jones confessing that she ‘never knew she would love waste so much!”.
Livia Firth was a solid favourite too, bravely calling attention to the ‘elephant in the room’; the fast fashion business model on which we still depend. “Because the impact, the pace, the volume and the economics pre-ordained by this current business model – will not get us to the point we want to get to: one where producers are in partnership with brands, rather than in servitude to them.”
Yet as her passionate voice reverberated from the walls of the concert hall, we were left wondering where is the discussion in these moments? What good is a lone speaker at a lonely podium, when what’s desperately needed, and repeatedly called for throughout the course of the day, is industry collaboration, critical conversation and clear consensus?
Indeed, the highlight was the rallying cry of the next generation who boldly demanded change, and outlined solution-driven actions. You can read their entire manifesto here. May we not only listen and learn but take action.
Beyond Green is an annual symposium on the future of fashion, organised by Circle Economy and the Amsterdam Fashion Institute. It uses the collective power of students and industry players to tackle critical issues throughout the fashion system; allowing for new and established minds to come together and push the boundaries of what we know, and realize what we dare to imagine.
'Many companies want to take the next step in sustainability, but are not sure how to go about it. Beyond Green is a very necessary model that not only inspires industry to take action, but demonstrates what that action could look like through real business examples, and interactive workshops with students. The event got my adrenaline pumping and opened my eyes to new possibilities for my company'.
- Kirsten Zwart, Queen of Sourcing, Kings of Indigo
Photo credit throughout: Nina Albada Jelgersma
This first edition, held on the 13th of April, explored ‘The pace of the industry’, and challenged our polarized conceptions of 'fast' and 'slow' fashion. Do these terms refer to speed or quality? Does 'fast' necessarily mean unsustainable? How can 'slow' turn a healthy profit? Must we choose between them?
The first to arrive, toting backpacks packed with laptops and notebooks, eagar fashion students entered the room padded in comfortable layers, clutching coffee cups from the nearby Boterham cafe. Industry leaders promptly followed, appearing a bit lighter and less caffeinated - a mix of local entrepreneurs, notable brands and seasoned sustainability experts. As the curtains closed, seats were taken, and silence fell on the now, anticipatory audience.
What followed was an inspirational start to the day; Helene Smits (Founder, Stating the Obvious) took to the stage to introduce the day’s three keynote speakers, each seeking to explore ‘The Pace of the Industry’, the theme of this edition of Beyond Green.
‘The rhythm is self-inflicted. We can step out of the current system. There are other options to explore’
- Gwen Cunningham, Project Manager Circle Textiles, Circle Economy
Setting the context for what’s to come, Circle Economy’s Gwen Cunningham, began by showing a series of abstract images from photographer Aaron Tilley. These adrenaline-inducing scenes perfectly captured the critical moment of history that we find ourselves in. She explained, ‘we are moving away from a past that doesn’t work for us anymore, and freefalling into a future that is not yet defined’. We are challenged to use the adrenaline of such a moment- to feel the urgency to act and get ahead of the change. Gwen went on to outline five moments in the past year that have brought the topic of pace to the surface; Li Edelkoort’s ‘Anti-fashion Manifesto’; the departure of Raf Simons and Alber Elbaz; the impact of climate change on retail sales; the hijacking of fashion week by social media and the alignment of the runway and retail in the United States. In doing so, she posited that the time for change is ripe in the fashion Industry, that new rules apply, and that we can be a part of their making.
“In order to speed up the changes necessary in our industry and make those changes as relevant as possible, we need to collaborate with all stakeholders, both existing and future. Beyond Green brings all relevant parties together, and puts the right questions on the table. Discussing future solutions with students gives both insight and inspiration. Their views and perspective can help us to steer changes in the right direction, and make them more strategic and pertinent. Together we can transform and shape tomorrow’s fashion industry.”
- Elin Larsson, Director of Sustainability, Filippa K
Next up Elin Larsson, Director of Sustainability at Filippa K took to the stage to outline the company’s circular approach, which can be viewed as a new definition of ‘slow’:
The most striking and inspiring about Filippa K, is their bold trial and error approach. Their holistic plan of action has been achieved through multiple well-calculated baby steps, that add up to an impressive whole. Larsson so rightly stated, inertia is the biggest danger of all, and ‘once you are aware, either you do something about it or not, but you are still responsible.’
“Fast might not be the worst thing about fast fashion- it’s just the way that we organise it”
- Martijn van Strien, Founder, Post-Couture Collective
Lastly, Martijn van Strien, Founder of Post-Couture Collective, shared his vision for a ‘faster than fast’ approach, stating boldly that ‘sometimes fast is just better’. Post-Couture Collective offers an alternative to today’s fashion system, fuelled by an open-source mentality and 21st century technology, the company creates minimalist pieces that are specifically developed as downloadable patterns, to be produced on a lasercutter and assembled by the end user. While such a system could presumably encourage high speed, impulsive production and consumption, it also involves consumers in the production process of a garment and this experience has the potential to incite ‘emotional’ durability.
Van Strien’s media fuelled presentation, carried attendees through three variations of the topic; fast (the current state), faster (made to order, shared ownership, and maker movements) and fastest (body scanning, 3D printing, laser cutting, and virtual reality). He believes that “these methods will eventually allow us to create something new everyday, without having any damaging effects.
In the afternoon workshops, industry and students worked alongside each other to design future models for specific segments of the market, while considering the aforementioned challenges and opportunities that come with fast and slow models of production and consumption.
“Beyond Green was exciting because of the very inspirational speakers and the mix of people from the industry and fashion students. I thoroughly enjoyed connecting with people with the same interest in sustainability and exchanging ideas and thoughts.”
- Jasmin Hammermayer, Fashion & Management student, AMFI
Expert external moderators and dedicated AMFI staff led vivid discussions and guided the participants using custom workshop materials. The result was a series of innovative business concepts ranging from the teen-oriented Vodaclothes, a fast fashion, lease-to-recycle brand included in your monthly phone bill to Wedenim, a members-only club, where basic, unisex denim is amended, treated and customized by local denim specialists, to tech-savvy Changeables, high-quality, durable clothing, equipped with downloadable nano printing technology.
To view the full length keynote presentations please use the video player below.
Special thanks to Nina Albada Jelgersma for capturing photos from this great event! Click on any of the photos below to check out the event photo gallery.
[gallery link="file" size="medium" ids="10450,10449,10448,10447,10446"]
Beyond Green is an annual symposium on the future of fashion, organised by Circle Economy and the Amsterdam Fashion Institute. It uses the collective power of students and industry players to tackle critical issues throughout the fashion system; allowing for new and established minds to come together and push the boundaries of what we know, and realize what we dare to imagine.
'Many companies want to take the next step in sustainability, but are not sure how to go about it. Beyond Green is a very necessary model that not only inspires industry to take action, but demonstrates what that action could look like through real business examples, and interactive workshops with students. The event got my adrenaline pumping and opened my eyes to new possibilities for my company'.
- Kirsten Zwart, Queen of Sourcing, Kings of Indigo
Photo credit throughout: Nina Albada Jelgersma
This first edition, held on the 13th of April, explored ‘The pace of the industry’, and challenged our polarized conceptions of 'fast' and 'slow' fashion. Do these terms refer to speed or quality? Does 'fast' necessarily mean unsustainable? How can 'slow' turn a healthy profit? Must we choose between them?
The first to arrive, toting backpacks packed with laptops and notebooks, eagar fashion students entered the room padded in comfortable layers, clutching coffee cups from the nearby Boterham cafe. Industry leaders promptly followed, appearing a bit lighter and less caffeinated - a mix of local entrepreneurs, notable brands and seasoned sustainability experts. As the curtains closed, seats were taken, and silence fell on the now, anticipatory audience.
What followed was an inspirational start to the day; Helene Smits (Founder, Stating the Obvious) took to the stage to introduce the day’s three keynote speakers, each seeking to explore ‘The Pace of the Industry’, the theme of this edition of Beyond Green.
‘The rhythm is self-inflicted. We can step out of the current system. There are other options to explore’
- Gwen Cunningham, Project Manager Circle Textiles, Circle Economy
Setting the context for what’s to come, Circle Economy’s Gwen Cunningham, began by showing a series of abstract images from photographer Aaron Tilley. These adrenaline-inducing scenes perfectly captured the critical moment of history that we find ourselves in. She explained, ‘we are moving away from a past that doesn’t work for us anymore, and freefalling into a future that is not yet defined’. We are challenged to use the adrenaline of such a moment- to feel the urgency to act and get ahead of the change. Gwen went on to outline five moments in the past year that have brought the topic of pace to the surface; Li Edelkoort’s ‘Anti-fashion Manifesto’; the departure of Raf Simons and Alber Elbaz; the impact of climate change on retail sales; the hijacking of fashion week by social media and the alignment of the runway and retail in the United States. In doing so, she posited that the time for change is ripe in the fashion Industry, that new rules apply, and that we can be a part of their making.
“In order to speed up the changes necessary in our industry and make those changes as relevant as possible, we need to collaborate with all stakeholders, both existing and future. Beyond Green brings all relevant parties together, and puts the right questions on the table. Discussing future solutions with students gives both insight and inspiration. Their views and perspective can help us to steer changes in the right direction, and make them more strategic and pertinent. Together we can transform and shape tomorrow’s fashion industry.”
- Elin Larsson, Director of Sustainability, Filippa K
Next up Elin Larsson, Director of Sustainability at Filippa K took to the stage to outline the company’s circular approach, which can be viewed as a new definition of ‘slow’:
The most striking and inspiring about Filippa K, is their bold trial and error approach. Their holistic plan of action has been achieved through multiple well-calculated baby steps, that add up to an impressive whole. Larsson so rightly stated, inertia is the biggest danger of all, and ‘once you are aware, either you do something about it or not, but you are still responsible.’
“Fast might not be the worst thing about fast fashion- it’s just the way that we organise it”
- Martijn van Strien, Founder, Post-Couture Collective
Lastly, Martijn van Strien, Founder of Post-Couture Collective, shared his vision for a ‘faster than fast’ approach, stating boldly that ‘sometimes fast is just better’. Post-Couture Collective offers an alternative to today’s fashion system, fuelled by an open-source mentality and 21st century technology, the company creates minimalist pieces that are specifically developed as downloadable patterns, to be produced on a lasercutter and assembled by the end user. While such a system could presumably encourage high speed, impulsive production and consumption, it also involves consumers in the production process of a garment and this experience has the potential to incite ‘emotional’ durability.
Van Strien’s media fuelled presentation, carried attendees through three variations of the topic; fast (the current state), faster (made to order, shared ownership, and maker movements) and fastest (body scanning, 3D printing, laser cutting, and virtual reality). He believes that “these methods will eventually allow us to create something new everyday, without having any damaging effects.
In the afternoon workshops, industry and students worked alongside each other to design future models for specific segments of the market, while considering the aforementioned challenges and opportunities that come with fast and slow models of production and consumption.
“Beyond Green was exciting because of the very inspirational speakers and the mix of people from the industry and fashion students. I thoroughly enjoyed connecting with people with the same interest in sustainability and exchanging ideas and thoughts.”
- Jasmin Hammermayer, Fashion & Management student, AMFI
Expert external moderators and dedicated AMFI staff led vivid discussions and guided the participants using custom workshop materials. The result was a series of innovative business concepts ranging from the teen-oriented Vodaclothes, a fast fashion, lease-to-recycle brand included in your monthly phone bill to Wedenim, a members-only club, where basic, unisex denim is amended, treated and customized by local denim specialists, to tech-savvy Changeables, high-quality, durable clothing, equipped with downloadable nano printing technology.
To view the full length keynote presentations please use the video player below.
Special thanks to Nina Albada Jelgersma for capturing photos from this great event! Click on any of the photos below to check out the event photo gallery.
[gallery link="file" size="medium" ids="10450,10449,10448,10447,10446"]
‘Money makes the world go round’, the new report on financing the circular economy, provides directions for overcoming financial barriers that circular businesses encounter. Answers lie in collaboration throughout the value chain and creating financial instruments to invest in a chain or network of businesses rather than in a single business. This way, risks and rewards can be shared and incentives to collaborate arise with the aim of creating a circular chain in which all participants earn a piece of the pie.PGGM took the lead in organizing the working group FinanCE, consisting of PGGM, Intesa SanPaolo, Rabobank, ING, ABN AMRO, EIB, EBRD, Circularity Capital, RSM Erasmus University, Ellen MacArthur Foundation, KPMG Luxembourg, Banking Environment Initiative of Cambridge, Circle Economy and Sustainable Finance Lab.The FinanCE working group was founded in order to understand the implications of the circular economy on business models and corresponding financing of circular business. The motivation behind this is the need for funding of circular business in order to take off and accelerate the transition. The report identifies opportunities for financial institutions to learn how to recognize and to invest in the winners of the future. The most important opportunities are
As part of Nederland Circulair! the researchers from Sustainable Finance Lab and Circle Economy conducted various case studies in order to understand the financial barriers that various circular businesses face. The circular economy consists of a number of new business models, which they found to be easily categorized into three categories:
All business model categories have their own financial consequences. The report specifically addresses financing issues in Circular Use Models, in which the earning model consists of retaining ownership of the products and selling the service of using them. The issues that were found concern the need for increased working capital (i.e. buying machines with a longer pay back period), which challenges cash flow-based financing. Additionally, contract-based financing becomes very important with these shifts in ownership and responsibility. What makes these business models different from already existing product-service-systems is the shift in underlying products (for example low capital (non-) consumables) and B2C markets. Consequently, there exists a need for financial solutions and ready to use product-as-a-service contracts for low capital products and B2C markets. Moreover, predicting the success of this new product-market combination is difficult, meaning the risks for investors are unclear and therefore perceived as high.Circle Economy and Sustainable Finance Lab believe this report is just the beginning. Now that the challenges are clear, the aim is to make those first circular deals by creating the necessary conditions and financial- and legal structures to invest in circular business and chain collaboration. Support by a more diverse financial landscape is crucial and can be increased reinventing equity- and debt instruments and by including innovative financial technologies (blockchain, peer-to-peer lending, crowdfunding platforms etc.). We believe it is time to pave the way by designing financial structures that elevate long-term thinking and chain cooperation.
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