Circular economies: a new industrial model, not “business as usual”

The move from linear business models to circular ones is an exciting development. More and more companies are rejecting the “business as usual” model by maximizing the value extracted from resources and reusing them to generate new products as well as by improving efficiency which enable cost savings in raw materials, labour, energy, water, waste and emissions.

Articles on the circular economy are being more widely discussed in business groups. As a result, new policies are being integrated into company strategies and promoted as benchmarking tools.

I was recently invited to an industrial plant operated by the carpet tile manufactures, Interface, in Scherpenzeel, The Netherlands, where I joined in discussion with industry leaders, government employees and stakeholders from financial markets and other organizations. At the top of the agenda was the question of whether Europe’s industries can transform into “circular” businesses. Could the US-owned Interface be used as a prototype for a new industrial model in manufacturing sector in Europe?

In my interview with Rob Boogaard, Acting CEO & President EMEA, he explained how important it has been to provide economic, social and environmental goals within the company. As a listed company standing up for long-term sustainable development Boogaard says that Interface “has many eyes” on it. “[But] using the Natural Step system conditions, we have gradually increased our ambitions.”

As of January 2014, Interface has been operating on 100 percent renewable energy (both electricity and gas) and using 100 % re-circulated water in its manufacturing processes in Scherpenzeel. It has also managed to send zero waste to landfill. These are impressive achievements for the facility and a significant step towards “Mission Zero”, the company’s pledge to eliminate any negative impact on the environment by 2020 and, in doing so, become a restorative enterprise.

This mission is the result of the vision and strong leadership of Interface’s late founder Ray Anderson. The principle was established in 1996 and, by 2013, the company’s European manufacturing plants located in Sherpenzeel, the Netherlands and in Craigavon, Ireland  had reduced their greenhouse gas emissions by 90 percent and their water consumption by 87 percent. In this context, the political objective of a 40 percent reduction in greenhouse gas emissions across Europe by 2030 does not seem particularly ambitious. It sounds more like a new, achievable definition of “business as usual”.

To aim beyond the status quo, company managers must raise their expectations and take on more ambitious goals. In Scherpenzeel I also spoke with CEO of Lavery Pennell, Greg Lavery, who has undertaken the challenge of developing a new industrial model for Europe. In a new report he presented at the meeting, Lavery demonstrated how European industry can increase its profits by 9 percent and create 170,000 new jobs through energy efficiency and increased use of renewable energy. All of this can be achieved while simultaneously reducing greenhouse gas emissions by 1,200 metric tons (or 14.6 per cent of Europe’s total).

With experience from my own values-based consultancy Respect, which uses the principles of both the Natural Step system conditions and circular economies, I have seen how important it is to use companies like Interface as an example of best practice. The organization’s process of change provides a business model that can apply in all market-driven companies, whether listed or not. Circular models can become standard practice and, in doing so, use efficiency in the name of both profits and environmental sustainability.

@KajEmbren

 

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