When the wheel of circularity does not turn

There has been much enthusiasm about the approval of the European Circular Economy Directive. I agree that it’s a good thing and that European States must adapt quickly. But the Directive is fundamentally about waste recycling, without any substantial measure about “how to prevent the production of waste”. If the objective of this measure was, to quote the Italian Minister of the Environment Costa, “To propose a vision projected into the future”, I am truly sorry: conceiving the Circular Economy as a system based solely on separate waste collection and recycling is, alas, the PAST!

It is certainly right to simplify rules that today, in some cases, make it impossible to recover excellent materials only because of an archaic visions of industrial processes. Bureaucracy regarding waste management, often born with the noble objective of combating its illegal disposal, has followed the fate of every bureaucracy: it became a Kafkian monster, struggling with whom is exhausting and costly. Moreover, likewise with any bureaucratic process, it complicates the life of the honest and is ineffective at hindering criminal activities. 

Therefore it is very well to help the individual company to recover as much as possible from waste for the present and remove obstacles to the reuse of some materials that it is currently illegal to put back in the production cycle. It is also important to invest in adequate facilities for the recovery of these secondary materials, with technologically advanced and environmentally safe treatments.

However, our industrial system, in order to deal with the challenges of the present and the disrupting innovation coming from global competition, needs much more.

The circular economy is NOT the recycling of waste, if not minimally. It is a systemic issue and it concerns the way in which society and its economy are conceived and function. We need to make a huge cultural effort to help companies expand their vision and innovate their business models. For example, we will have to decrease the sale of products while increasing the provision of services; we will have to design products to be made by innovative processes (I think of Additive Manufacturing, for example) with renewable and sustainable materials (in Sweden they have begun producing gears with cellulose based AM to replace steel ones). It is necessary to develop and accelerate research and innovation on the use of biological processes for the production of materials useful for satisfying human needs, such as fibers or polymers for multiple uses to replace materials of fossil origin. Finally, of course every object must be designed so that it can be easily recycled in its entirety, something which will require the radical conversion of some industries, with investments and courage.

All this shift must have a solid background of economic-financial and social feasibility, to be sustainable over time, therefore the rethinking of business models and distribution chains: it is ultimately about social and market innovation. Society must become sustainable as a whole so that humanity can survive. “High level” politics tells us, with Pepe Mujica, the former President of Uruguay, that we must learn to think as a species, no longer as Nations. Science also tells us the scale of the change that is necessary, but “low level” politics is too cowardly dull to take the warnings seriously and act.

At the level of the individual company, the circular economy can only translate into its processes and relative innovation. However, the business world needs to shed the CSR-derived misunderstanding that calls “sustainability” support to the local soccer team or the occasional missionary in Africa. Companies need to embrace actual sustainability, that is embedded in every process, starting from the decisional and strategic ones. I recently read with relief and some satisfaction, in the report of an interview with head of CSR of IREN (an Italian Multiutility) Ms Selina Xerra the following statement: “Sustainability is a way of doing business”. I couldn’t agree more; I also deem very important that this simple truth comes from the world of multiutilities, medium-large, semi-public companies, with great influence and often operating in sensitive sectors.

I believe that we also need a deontological effort on the part of us consultants who propose ourselves to companies for sustainability: we must become more intellectually honest and tell “bread to bread and wine to wine”, as we say in Italy. We must stop calling such trivial initiatives as trifling savings or charity “sustainability”. I recently read in the sustainability report of a large Italian food company the replacement of light bulbs with LEDs praised as the advanced “energy sustainability” strategy of the firm. All right that you do it but, for goodness’ sake: it’s the very least! Not to mention the small or large sports sponsorships, which constitute for many companies the withered “flagship” of the CSR.

We must instead support a great effort of detachment from past beliefs and wisdom in the leadership of our companies so that they can play the game of sustainability towards circularity and be up to the task.

When a company calls us with a very common request, “We want a more sustainable packaging for our products”, in 99% of cases they haven’t considered the “no packaging” option, which is the most sustainable of all. Why? Because, from top to down, the current focus is all about how to recycle waste once it is generated, without considering the business model, its logistics and distribution. We need a business culture that is more oriented towards partnerships, systemic work and knowledge sharing. Of course if everyone thinks only of his own piece it is difficult to get out of the logic of “recycling waste”. If I want to consider the “no packaging” option, I have to talk to my clients and discuss with them how they display and sell the products: we have to innovate together, and to do this we must know how to generate mutual benefits. It is the development of a new culture that we must foster and accompany.

What else does the industrial system need, in addition to courage and entrepreneurial vision, for this quantum leap?

For example, we need well-funded & public basic research, i.e. publicly owned universities and research centers working with companies in the development of new technologies. But the basic knowledge, and the main technologies, must be shared in order to become a patrimony of the system: the myopia of knowledge control and ownership stifles businesses and perpetuates industrial dwarfism. I recently read of Elon Musk’s decision to share Tesla’s patents in “open source”. I do not know if it is a matter of substance or a PR stunt, but it would not surprise me if such a visionary entrepreneur knew that it is often more costly, and less rewarding, to protect the past knowledge than to invest in developing the new one. In the meantime, I notice that GM is designing its first electric pick-up with open source Tesla technology. I see an advantage for Tesla, much larger than royalties, in this: do you too?

We furthermore need a streamlined and efficient State, present and authoritative where it is needed and inconspicuous where it hinders. It has to provide society with high-level services and infrastructures, investing in the society’s future by exploiting its peculiar capacity to sustain long-term returns. About this, most likely, the European budget parameters should be revised in the qualitative direction.

We need the courage to cut unproductive public spending when it is used as an instrument of electoral propaganda and consensus capture. We need a colossal effort of public education, so that the sustainability of the system becomes everyone’s priority and a widely shared objective. This only can provide politics with the heart, and some determination, to steer society in the right direction. A sustainable and circular society is also, for example, one in which the elderly are precious dispensers of experience and knowledge to be injected into the system in a spiral of growing wisdom, not uncomfortable and angry rejects that no one wants to see anymore. It is also a society in which the State is not asked to free us completely from the responsibility of our life, health and well-being, to be readily betrayed when it is time to do our part by paying taxes.

We need sustainable mobility plans that bring efficiency and health in our journeys. Policies for sustainable mobility must be the result of long-term visions, shared across political parties, so that investments can go towards infrastructure and innovation in the industry. They must be supported at local level by competent urban decisions that are consistent with the global strategy, even if we must know that the urban disaster of the last sixty years cannot be remedied in a single generation.

We need energy policies encouraging energy saving and efficiency first of all: it is true that the Sun provides a huge amount of energy to the Earth, but no human system of energy capture and transformation is without impacts, thus to use renewable energies just to continue happily to increase energy consumption is just foolish.

About energy strategy, and the consequent infrastructural networks, this cannot be done by ideology or only with technology. When a society decides what it wants to do with energy, or develops a new energy technology, it makes a definite choice for its future that has a global influence. It is the task of high-level politics, informed by competent technical science, supported by a mature and responsible electoral body, to discuss and propose future scenarios of society.

This, and undoubtedly more, we need for a real development of the circular economy: a vision of the future and long-term choices that give direction to the development of the whole society. 

Are we ready for this or do we still want to delude ourselves of being circular because we know in which bin to place the empty milk bottle?