Transition towards circular economy – a major systemic change

Moving away from an extractive and linear economic system towards a regenerative and sustainable circular economy requires a fundamental change to the global economic system. Production and consumption must become more resource-efficient, and it is up to policy makers to create the right conditions in which a circular economy can thrive. These were some of the key take-home messages from the Nordic Council of Ministers’ Circular Blueprints Gameshow at the World Circular Economy Forum (WCEF 2017) in Helsinki.

By Páll Tómas Finnsson

Time for a system that rebuilds natural, social and economic capital
The Nordic countries have made the transition to a circular economy a priority in their work to fulfil the ambitions of Agenda 2030 and the UN Sustainable Development Goals. The Nordic Council of Ministers was one of the organisers of the initial World Circular Economy Forum, which was hosted by the Finnish Innovation Fund Sitra in Helsinki on 5-6 June 2017. The event gathered more than 1500 people, including many of the world’s leading experts on the circular economy.

“Up to now, the economy has been extractive and linear, meaning that you extract something from the ground, turn it into a product, sell it to the customer, and then it gets discarded after use,” said Jocelyn Blériot, Head of Public Affairs at the Ellen MacArthur Foundation, in his keynote address at the Circular Blueprints Gameshow. “It’s fair to say that this model has had its successes. It has lifted billions out of poverty and given a lot of people access to material comfort. However, the pressure on the resources and the systems that sustain us is increasing. It’s time for a system change.”

“We’re talking about transitioning to a system that doesn’t generate value by extracting and depleting, but instead looks at rebuilding natural, social and economic capital.”

Circular design and pricing of externalities
According to Blériot, the key to this transition is to design pollution and waste out of products and manufacturing and put costs on the negative externalities of production and consumption.

“The objective is to keep products and materials in use, so that the embedded value of labour, materials and energy is kept in circulation,” he explains. “The transition is also about revealing and pricing out the negative impacts. Putting cost on externalities would quickly increase focus on eliminating them.”

Sweden has had success with pricing externalities and creating incentives for increased reuse and recycling of products and materials. As an example, the country recently introduced tax reductions on repairs of white goods and cut VAT on repairs of bicycles, clothes and shoes from 25 to 12%. Carbon tax was introduced in Sweden in 1995 and is now the highest in the world.

“Nordic countries are prepared to take the lead on these issues and show the world that the transition to a circular economy is possible, profitable and leads to better conditions,” says Per Bolund, Swedish Deputy Finance Minister and Minister for Financial Markets and Consumer Affairs. “Some economists would argue that the carbon tax would have a negative impact on our economy, but we can actually show them that this is not the case. On the contrary, carbon pricing spurs innovation and new ideas. Sweden is not in any way negatively affected by this.”

Finland launches national circular economy road map
In close co-operation with the Finnish Government, the Finnish Innovation Fund Sitra recently issued the world’s first national road map to a circular economy: Leading the cycle – Finnish road map to a circular economy 2016-2025. The document defines the steps required for the country to transition to an economy where economic growth and the wellbeing of the citizens are no longer based on wasteful use of natural resources. Fifty organisations and more than 1000 stakeholders from throughout Finnish society were engaged in the process of designing the road map.

“We must change the paradigm of our economy so that we can live off the annual yield of the globe,” says Kimmo Tiilikainen, Minister for Housing, Energy and the Environment in Finland. “Today, we’re exceeding the regenerative capacity of our natural resource base, and this has to change.”

Tiilikainen highlights Finland’s proud forestry tradition as an example of sustainable management of a valuable natural resource.

“In Finland and the Nordic countries, we have a long history of sustainable forest management. Our idea has always been to use less than the maximum annual yield, because the forests provide many different services. They maintain biodiversity and control the water cycle, and provide us with recreational opportunities. Material use is only one part of the bioeconomy,” he says.

Finland has set the ambitious target to double the value of the bioeconomy within 10-15 years.

“To achieve this, we’re investing more in research and development to find new value-added ways to use this valuable renewable material, e.g. for textiles, biochemicals and biomaterials to replace plastics.”

Sustainable and circular textiles
The textile and fashion industry was represented at the Gameshow by Ellen Larsson, Sustainability Director at Swedish fashion brand Filippa K. The company is renowned for its sustainability efforts, and is currently adopting the principles of the circular economy in all its operations.

“We’ve been working with sustainability for years but got to a point where we realised that using more sustainable fibres or reducing the environmental footprint of the production just wasn’t enough,” she says. “We realised that we needed to rethink everything we do.”

Filippa K’s approach is to address circularity already in the design phase, considering not only the choice of materials and design, but also the garment’s entire lifecycle, including the possibilities for repair, reuse, recovery and recycling.

“The longevity of the garment is important, but we also need to know what happens after it’s been used, repaired or remade,” Larsson explains. “How do we recover it, is it going to be recycled into new textile fibres or into another material, or is it going to be compostable?”

“The real challenge for our industry is to get the whole ecosystem to engage in this holistic, lifecycle-based approach, to find the solutions necessary to achieve the circular model.”

Circular economy is a means to ensure wellbeing and quality of life
The participants in the Circular Blueprint Gameshow also addressed the circular economy from a more global perspective, as a means to promote sustainable development around the world.

“In the global south, and particularly in Africa, we have three key challenges: ensuring food security, ensuring nutrition security, and creating growth and jobs for young people,” said Alice Kaudia, Environment Secretary for the Government of Kenya. She is Co-Chair of the Global Green Growth Knowledge Platform and the Climate and Clean Air Coalition, CCAC.

“There are lots of opportunities for partnerships between the Nordic countries and Africa,” Kaudia said at the event. “Most African countries are just in the process of writing their circular economy strategies. Partnerships on circular economy research, business and innovation would be very useful in the implementation of these strategies and action plans. We need to share knowledge, technology and innovation.”

The Circular Blueprints Gameshow was produced by Green Exchange for the Nordic Council of Ministers. Watch the entire session here.

“Up to now, the economy has been extractive and linear, meaning that you extract something from the ground, turn it into a product, sell it to the customer, and then it gets discarded after use”

Jocelyn Blériot, Head of Public Affairs at the Ellen MacArthur Foundation

“We must change the paradigm of our economy so that we can live off the annual yield of the globe”

Kimmo Tiilikainen, Minister for Housing, Energy and the Environment in Finland