The report, called ‘European industry in the 21st century: New models for resource productivity’, is based on interviews from fourteen companies which have already incorporated circular economy principles in their supply and production chain, reducing their exposure to risks. The report warns that low carbon and oil prices have led to low commodity prices and as a result, businesses lack incentives to replace virgin resources with recycled materials.
Jill Duggan, director of the Corporate Leaders Group on Climate Change (CLG) said: "The price incentives are all wrong. It is often cheaper to use virgin materials rather than use recycled materials or re-use of existing products”. “We really need to think about the price incentives for virgin materials. This report is hopefully the start of a conversation”.
It is also analysed how smart design practices can enable resource re-use or product repair. The report also illustrates examples of how businesses are switching to service-based delivery models to enhance resource productivity, and underlines the cultural shift that has seen millennial consumers move away from traditional ownership models. According to statistics from the European Commission, waste prevention, ecodesign, reuse and other relevant measures could bring net savings of €600 billion. Said measures would reduce greenhouse gas emissions by 2 to 4%.
Mrs Duggan comments: "The benefits in terms of being less exposed to resource price volatility or scarcity are considerable”. However, she adds that there is also an increasing consumer pressure too. “We are starting to see zero waste markets and the interest is particularly acute amongst younger people. If you want to keep millennials engaged you will have to act”.
The report also analyses case studies of leading business in the circular economy transition, like the Finnish Stora Enso which has launched an innovative concept of ‘industrial symbiosis’, where its waste resources can be re-used or repurposed by other industries.
Seppo Parvi, CEO of Stora Enso urged for stricter policies, such as ‘eco-design’ and public procurement requirements that will prioritise materials and services with low carbon footprint. Also, she highlighted the barrier that is imposed by some accountancy rules, which continue to favour product sales over services. She suggests that removing the VAT on the repair of white goods is a very simple measure with immense impact on the circular economy thinking.