The circular economy is the order of the day. The text I bring here was inspired by a publication by Business Council for Sustainable Development (BCSD) Portugal, entitled “Circular synergies” and in the WBCSD document, already translated, entitled “Circular transition indicators V2.0”, publications whose reading I highly recommend to readers.
Henceforth, only an intelligent community will be able to fully apply the operating principles of the circular economy. Let's look at some central aspects of this relationship.
The transition to the circular economy
Urban management, an industrial park, an agricultural and/or agro-industrial cooperative, the main value chains or chains of a region, a forest intervention zone, a tourist village, in all these cases, and in many others, we should ask if we are before circular and collaborative intelligent communities in the sense that the European Commission gives them to “close the cycle”, according to the European circular economy package presented in 2015.
The concept of circular economy is not new, it is closely associated with the area of industrial ecology and product life cycle analysis. An immense challenge that involves technology, innovation and imagination for new business models. Moving from a linear economy to a circular economy implies that the waste produced by economic activities is nil and that we are creative enough to identify profitable and truly circular business models. Therefore, the transition to the circular economy involves major changes and implies:
– The ability to think about the design of products in an ecological way, in order to use less natural resources and to provide a future use of those same products in other equipment;
– The possibility of promoting industrial symbiosis, which transform a waste into a by-product so that it enters the production process of another product, thus avoiding sending quantities to landfills and promoting, at the same time, the recovery of waste;
– The initiative to identify new businesses associated with the rental of equipment instead of its purchase, repair, restoration, collection of surpluses, among others;
– Knowledge of new business models at a financial level, so that it is possible for investors to invest and lend capital to these activities with stocks and profitability different from those usually considered as good business;
– A system of incentives that induces economic agents to move from a linear to a circular economy.
In 2020, the European Commission adopted a new Action Plan for the Circular Economy within the framework of the European Ecological Pact. Frans Timmermans, executive vice president of the European Ecological Pact, said the following: “If we are to achieve climate neutrality by 2050, preserve our natural environment and strengthen our economic competitiveness, we must create a fully circular economy. Today, our economy is still almost entirely linear, and only 12% of materials and secondary resources are reintroduced into the economy. Many products break down too quickly, cannot be reused, repaired or recycled, or are designed for one-time use. There is enormous potential to be exploited for both businesses and consumers.”
The Commissioner for the Environment, Oceans and Fisheries, Virginijus Sinkevicius, stated, in turn: «There is only one planet Earth. However, by 2050, the world will consume as if there were three. the new plan it will allow us to integrate circularity into our lives and accelerate the ecological transition of our economy. We propose decisive steps to change the process at the top of the sustainability chain — product design. Future-oriented actions will create opportunities for businesses and job creation, grant new rights to European consumers, take advantage of innovation and digitization and, as in nature, ensure that nothing is wasted.”
The Action Plan for the Circular Economy presented in the framework of the Union's industrial strategy proposes measures aimed at the following objectives:
- Products placed on the EU market are designed to last longer, easier to reuse, repair and recycle and contain, as much as possible, recycled materials in place of primary raw materials; restrictions will be imposed on single-use products, premature obsolescence will be tackled and the destruction of non-traded durable goods will be prohibited.
- Consumers will have access to reliable information about the repairability and durability of products to help them make environmentally sustainable choices and will also benefit from a real 'right to repair'.
– The action plan is concentrated in sectors where the potential for circularity is highest: an initiative on circular electronics to extend the life of products, a new regulatory framework for batteries, new mandatory requirements for packaging and micro plastics, a new strategy for textile reuse, circularity in buildings, replacement of packaging and catering items for reusable products.
One of the first steps for companies towards the circular economy is to know their performance in terms of circularity, through the adoption and monitoring of key indicators appropriate to their sector. Only then will it be possible to set a baseline, set goals and monitor progress in your transition to circularity, identify circular opportunities and linear risks, respond to customer and investor requirements and develop new businesses.
In this sense, the World Business Council for Sustainable Development (WBCSD) and 30 associated companies developed Circular Transition Indicators that help answer questions such as: how circular is the company, how do we set goals for improvement and how do we monitor improvements resulting from our circular activities?
The indicators are a simple tool, transversal to all sectors and value chains, comprehensive and flexible, complementing the efforts made by companies in the field of sustainability. The version that the WBCSD has just released is already version 2.0, with indicators that version 1.0 did not contain, namely, circularity of water, financial performance associated with circular performance and guidelines for the bioeconomy.
The Basic Features of Smart Communities
There will be no circular economy without intelligent communities, as they are the ones that ultimately validate business and community decisions about the greater or lesser circularity of material goods and services. For this to happen, it is essential to gather some basic conditions or characteristics of “available and potential intelligence”. Let's look at some of these features:
– CIs are 4C communities: ICs are 4C, knowledge, collaborative, circular and creative communities.
– CIs are communities of linear risk and circular opportunity: ICs are communities that aim to reduce linear inflows in the life cycle of their reference products and take advantage of the opportunity to reintroduce recovered and recycled waste into the production process.
– ICs are 5R regenerative communities: CIs are 5R communities of reduction, recycling, repair, reinvention and reuse of resources and waste.
– CIs are communities of access and service rather than ownership and ownership: ICs are communities that progressively replace ownership of a good with access to the service that this good provides; this dematerialization saves resources and increases circularity.
– ICs are communities with a longer life cycle: ICs are closed-loop communities, against planned obsolescence, and for the recovery and reintroduction of resources and materials.
– CIs are communities that link the city and the countryside: CIs are communities that link city and countryside through biophysical and ecological infrastructure, networks of green corridors, rehabilitation of habitats and ecosystems, and provision of ecosystem services.
– ICs are more dematerialized and distributed communities: ICs are more digitized and distributed communities, with more flow and less population stock, but with more distance solutions through imaginative articulation between online and offline communities.
– ICs are communities that internalize externalities: ICs are communities that assess the impacts of their external effects, mitigating the negative effects and promoting convergence and taking advantage of the positive effects.
– CIs are territorial and cooperative communities: ICs are communities that, in their collective actions, favor integrated operations of a local and territorial base, where cooperation between agents and the role of the actor-network are crucial.
– CIs are communities of circularity, certification and reputation: CIs are communities where brand images respect and value circularity, certification of processes and procedures and the reputation of their good practices.
Final Notes
There are several challenges that companies face in the transition to the circular economy, namely, the adoption of new technologies, new design solutions, new materials and reformulation of value chains and new business models (for example, for businesses more based on access and usufruct and less in possession).
The urgency of the transition has never been more evident. Linear business models can be profitable in the short term, but over time they expose companies to market, operational, regulatory and business risks. Through circular business models, companies can accelerate their growth, improve their competitiveness and mitigate different types of risks. That is why this is one of the main challenges of the decade 2020-2030 and of the European Ecological Pact.
In December 2017, the “Action Plan for the Circular Economy in Portugal” was launched, which constitutes the country's level of ambition to improve the use of resources and to implement a circular economy. In this context, BCSD Portugal, as an association of companies with an active role in the implementation of measures that promote sustainable development, intends to continue to promote the theme of industrial symbiosis in partnership with other associations, companies, universities and public entities. Only by working together will it be possible to create a national by-product exchange market with effective expression in the respective market.
Author António Covas is a retired Full Professor at the University of Algarve
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