Squarcular economics - overcoming external barriers when implementing circular economy
Updated: Mar 29
External barriers can disturb the process of circular economy implementation in the organization. It is necessary to understand them because this is the only option to implement healthy circular economy with success and positive results. In this article you will read how external barriers for industry will impede circular progress if we do not understand internal dynamics and their affects.
Table of Contents
External barriers for moving towards circularity
Activation and deployment of a vibrant, healthy, high-performing circular economy naturally meets both internal and external barriers. A healthy economy must first understand that circularity is not the domain of any one stakeholder, rather its health is defined by the collaborative efforts of many actors.
The European Green Deal has a central ambition “to mobilise industry for a clean and circular economy”. This is a logical ambition as industry is a significant contributor to national waste accruals. Whatever statistics you agree upon, it is probably fair to value industry waste contributions at 40%.
There is now a designed, tested and deployed materials management model that sets that 40% or that 40% can be transformed from waste to circular assets. Whilst a European ambition, our abstract title Squarcular economics predict that before industry can be mobilised, we must square some circles first.
In our publication ‘The four problematic squares that need to be solved to deploy healthy circular economics’ we presented how internal dynamics within industry must be addressed, this is even more relevant to the external. It is to economy in circular economy that we must address under the banner of reasoning or what are the reasons why industry should interrupt itself to transit.
Circular economy and the COVID19 pandemic recovery
At a growing pace industry recognises that post pandemic how we view the environment will in the medium term change how customers, investors and stakeholders view their brands when relating to sustainability and environmental social governance. Whether internal or external dynamics our mantra is that "the circular economy is not the domain of one”, rather in combination, circular success will arise when subjected to the contributions of the many.
It’s either an asset or it’s waste - medical manufacturer case study example
In a live industry case, a leading international medical manufacturer took the first step forward to embed smart waste technology with inclusive lean methodologies and supportive tools to transform old traditional waste practices in favor of the circular transition. Utilising system financial and predictive analytics, they invested in equipment, reskilled personnel, and allocated saved space where over the course of one year they designed out 45% of their waste in favour of circular assets.
In 2020, they recorded 74.3% assets to circular economy, 1.1% social enterprise, 9.1% defined waste to energy with the balance of traditional recycling and MSW waste.
Achieving both zero landfill and incineration, 2021 continuous improvement projects predict a raise in assets to the circular economy for 84%. Through advanced lean practices and by engaging with value chain partners, this company designs-out and delivers high quality materials to its value chain partners.
The European Waste Code Directive is problematic for circular assets
However, external barriers become visible at this juncture as regardless of quality and even 100% LCA chain visibility, such materials remain classified as waste under the European Waste Code Directive.
The European Union cannot have it both ways as this is an example of mobilisation but where the mobilised get no recognition rather barriers that state nothing to see here. EWC whilst it has its purpose for traditional waste, it in no way can be used as a measurement for circular assets as it is damaging in so many ways.
Looking through the eyes of those leaders who wish to deliver advanced sustainability, circular economy practices and concepts to their senior management. One quote that is relevant where a visionary EHS manager presented their circular case met the response, “but under the eyes of the law, it is still waste”.
Review of the European list of waste categories
The European Waste Code directive has its purpose but is not fit for circularity alone. Let us look at a code 15 01 02, with a description plastic packaging. The application of this code is solely waste centric and is minimal in its intelligence return to key stakeholders such as industry or governing authorities. For industry that is or wishes to mobilise to circularity, greater intelligence and data underpinning is essential to guide transformation.
Whilst maintaining EWC for materials that remain traditional waste industry treated, circular transition requires a new model that reflects materials as an asset rather than waste. This unique model exists placing United Nations Sustainable Goal 12 as its classification ,statistical and intelligence heart. Deep dive analytics that through network technology are easily deployed, informs as to circular asset capability but also informs all lifecycle vale chain partners because completion of successful circular loops is collaborative and not the domain of one.
This model characterises materials not based on one data-set, rather it is a collection of sets that are the ingredients for successful circular outcomes. The model embeds a hierarchy classification pyramid that is a roadmap driving materials on a continuous upward trajectory from landfill / incineration, generic recycling to circular economy outcomes sealed in Blockchain.
Circular economy is an economy which thrives on waste
Senior management want good news to support annual sustainability, CSR and ESG reports, recognition as in our example that 74.3% of waste had been eradicated in favour of the circular assets would draw their interest and their interest to support the EHS manager to deploy that model across their organisation. Be under no illusion, if mobilisation is true to its word, it must thoroughly separate waste from circular economy assets.
European Waste Code (EWC) or other regional waste directives if immoveable has unintended consequences by impeding innovative solutions, to shorten LCA value chains and more importantly simply suck the economic viability out of circular transition as per this concrete example case.
Waste legislated or directed within EWC subjects organisations to unnecessary scrutiny by local and regional governing bodies who remain rigid in their enforcement duties whilst blind to the benefits and logic.
Quality assets that have been harvested by industry are forced in many regions to be directed only to waste facility licenced premises where unnecessary contamination can be a hazard. Quality materials, some arising from clean room environments must use carriers with governing waste licences, all combine to diminish the economic value argument for sustainability leaders.
Under the lens of an external barrier the case is simple, a material is either a circular asset or it is waste. But how can you distinguish and what about moral hazard. Extracting a circular asset from waste must be accompanied by the highest level of governance, traceability, and characteristic definition.
SMART circular economy needs SMART technology
Company deployed of smart technology digitally embeds each lean managed material with a green identification card that was flourished with measurable data and information. Each movement of an asset was recorded in system with complete chain visibility to final regenerative destination. Each transfer was sealed in Blockchain to ensure visibility, efficiency and trust supported by evidence packs that if subjected to scrutiny are robust and accurate.
As stated, EWC has its place, but technology solution gave them a parallel model that if enacted would only aid to legally and visually separate assets from waste and by result, enable sustainability leaders to deliver clear message and value proposition to their top tier managers that by embedding design-out lean management there is now a new value proposition.
What are the pros of proposition value in circular business models
Proposition value has multiple advantages:
lower waste costs,
higher asset revenue
and high-level data with intelligence to flourish annual,
CSR and ESG reporting.
Relaxation of EWC once sealed by the Blockchain trust model is a catalyst to value chain ecosystems. The adoption of critical thinking to design-out waste immediately removes the term waste in favour of asset and that assets instantly declare value. To mobilise industry the number one consideration is the value proposition. The value proposition must be inarguable and that is the duty of economy in circular economy if we are to get many off the fence to participate.
The effects of relaxation do not impact industry alone, it affects their value chains. EWC rigidity makes its often difficult for smaller players to engage directly with large industry organisations. With compliance first policy adherence, smaller players who can deliver high performance circular asset management simply cannot gain access as perceived risks outweigh value proposition.
It is a regular occurrence where those smaller players receive materials not from the direct source, rather via a traditional licenced waste company who determine sell prices and terms and where generally there is a lack of equity balance. Whilst it is they that are deploying their regenerative skills, this more often remains unseen to the original industry source. Inequity is emboldened where supplies can be halted on a whim over price or an argument with regard to quality continuity.
The circular economy needs supply chain equity, short transport distances and most importantly of all visibility to engage collaborative lean management throughout chains ensuring that quality is retained and presented to the next partner to conclude with a healthy regenerative outcome.
EWC barrier to industry mobilizing
If governing authorities recognise that EWC maintenance is a major barrier to industry mobilisation, that understanding could be tested within a Blockchain controlled project. The construction of national circular asset platforms will identify circular assets by their characteristics, source locations, value chain participants with flourished disclosure as to circular regenerative outcomes.
Provision of statistical data to such platforms connects a unique materials classification pyramid under the lens of United Nations Sustainable Goal 12 with top-down success tiers from Circular Economy – Circular Reuse – Social Enterprise – General Recovery – Waste to Energy – Incineration & Landfill. Whilst assets would be removed as waste classified, smart technology can retain parallel statistics for EWC and European Recycling/disposal Guidelines.
Circular economy happens when mobilisation is present
Mobilisation is about critical network thinking, barrier removal, innovation equity, trust and risk mitigation. The construction of national circular platforms that are interoperable, connect with other regions is the accelerator to reduce industry waste by 40% and a rapid vehicle for Green Deal success.
Circular economy health is confronted by additional 2 external barriers forces such as the bane of linear economics and a perceived lack of network technology to connect all stakeholders. This we will discuss in our next publication on squarcular economics.
Change meets barriers and barriers manifest internally within organisations and externally where stakeholders are disconnected. Drawing a circle requires a starting point where stakeholder inertia drives continuous loops and acceleration to viable and healthy circular economy that is not about gloss, rather data driven facts resulting in real impact on the ground.