Article by Edwige Cavan
The material cost savings of transitioning to circular business models in the European Union (EU) could reach $630 billion. As opposed to the linear economy – following the “take-make-use-waste” structure – the circular economy business model adopts the “reduce-reuse-recycle-repair-refurbish-regenerate” structure. The circular model of production and consumption strives to limit the quantity of natural resources used in production, extend the life expectancy and usage of products, generate the least amount of waste, and regenerate nature. Figure 1 illustrates the benefits businesses can realize through participating in a circular economy.
The New European Circular Economy Action Plan
In 2015, the EU adopted the Circular Economy Action Plan (CEAP) with the aim to support the transition of the EU economy from a linear to a circular model. In 2020, a new CEAP was unveiled. It includes measures on key products: electronics and information and communication technology (ICT), batteries and vehicles, packaging, plastics, textiles, construction and buildings, as well as food, water and nutrients. It also addresses the issue of waste and supports an EU market for secondary raw materials.
How can your organization integrate and promote circularity?
There are several ways businesses can integrate circularity into the business models and production and consumption practices.
Embrace circular design
Circularity starts with timeless design and green sourcing. This means, 1) design long-lasting solid products with recycled or natural materials; 2) manufacture products that are repairable and recyclable; and 3) adopt circular business models based on leasing or sharing.
Minimize resources
Being circular means minimizing resources and minimizing waste as well as using renewable energy. In many sectors, such as healthcare, minimizing resources and waste can be achieved through planning for non-emergency acute care, limiting unnecessary procedures, and building more environmentally sustainable facilities.
Maximize usages
Reprocessing materials, refurbishing, and remanufacturing are circular practices that maximize usage and minimize waste. In the building industry, for example, source reduction or waste prevention should be considered more often. Construction and demolition (C&D) materials such as wood, concrete, metals, glass, and plastics can be given a second life and/or be recycled. Rebuying C&D materials can lower construction and renovation costs, boost the local economy, and preserve local architectural and historical character.
Innovate and educate
Adopting circular economic principles also means innovating. Smart solutions for packaging or transportation should be adopted to maximize space utilization and minimize use of resources. Initiatives supporting cross-industry collaboration projects for waste management could be a key step toward more circularity. Finally, promoting circularity can be achieved through educating consumers and raising awareness among different stakeholders.
Financing Opportunities to Support a Transition Towards Circular Business Models
Funding programs aimed at supporting the transition to a circular economy are available at both the EU and member states levels. For example:
At the European Level
Horizon Europe: The EU’s key funding program for research and innovation offers funding opportunities for sustainable and circular management and the use of natural resources.
The EU Cohesion Policy 2021-2027: This regional policy offers investment opportunities contributing to more recycling, improved waste management, resource and energy efficiency, strengthening the bioeconomy, novel solutions in product design, new business models, and the creation of green jobs.
The LIFE Program 2021-2027: The EU’s circular economy and quality of life sub-program aims at facilitating the transition toward a sustainable, circular, toxic-free, energy-efficient, and climate-resilient economy.
At the National Level
Environmental protection under the DBU: With a particular focus on small businesses, the environmental protection program of the German Federal Environmental Foundation (DBU) supports projects contributing to environmental protection.
KfW Development Bank: The bank helps SMEs to carry out investments related to the energy transition and climate investments through low interest rates for loans.
KMU-innovativ: With this program, the German Federal Ministry of Education and Research (BMBF) supports innovation measures in SMEs, especially in the field of R&D, production systems and technologies, including interdisciplinary projects in the raw materials industry.
These funding opportunities can help you take part in the transition towards the sustainable management of our planet’s resources while improving your performance and reducing your costs.
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