In the computer game Minecraft, it’s easy. You design a structure, build it with the right materials and break it down when you’re finished. But the tablet you’re using to play your game on is not so easy to dispose of. Indeed, you may not want to throw the whole thing away. From a recycling point of view, you have a valuable source of raw materials in your hands. And there’s lots more lying about the house. Silver, platinum and rare earth metals worth tens of billions in households around the globe. Reusable materials that we must prevent from going to waste.
1) Make materials last
In a circular economy, you recycle raw materials already in use for as long as possible. That greatly reduces the amount of waste we produce. At the moment, most of the things you use daily are composed of a mix of materials, which makes recycling rather complicated. Like paper bread bags with a window panel made of plastic. Because of the plastic, they can’t go into the paper recycling bin and end up in the waste bin. Or take energy-saving lightbulbs. Because they contain mercury and metal powders, they cannot go into the bottle bank. It’s a global challenge: making products that are easy to recycle.
2) Large-scale recycling with respect for people
Already, our recycling efforts save millions of tonnes of steel a year. At the same time, though, we’re also saving millions of barrels of crude oil. After all, it takes 25% less energy to recycle steel than to produce it fresh. That’s a lot of energy. Meanwhile, here in Europe we’re taking an increasingly responsible approach to scrapping. Making it more in keeping with circular economy principles – the key one being respect for people. We no longer bat an eye at the idea of cars, weighing an average tonne a piece, being carefully taken apart and recycled. Because it’s been legislated for. But in other parts of the world, the situation is still quite different.
3) Dismantling ships, but not by hand
Look, for example, at the percentage of commercial vessels that end their days on the beaches of Bangladesh and Pakistan, where they are manually scrapped. A worthwhile endeavour: a scrapped ship yields ten thousand tonnes of steel – that’s ten thousand cars. Recycled steel covers as much of 30% of the total economic demand in Bangladesh. A sustainable industry, you would think. But one that does not yet fully live up to the circular economy model. Responsible working methods are not yet common in Bangladesh; there’s still room for improvement when it comes to respect for human rights. In 2013 the European Union introduced legislation for the scrapping of ships, which specifies that scrapping companies, whether they are based inside or outside Europe, will need to meet higher standards if they work for European customers.
4) Circular construction: from drawing board to production line
Stricter regulations and legislation are prompting designers to use less toxic materials and chemicals in their designs. Take car manufacturers, for instance. The past twenty years have seen more and more green designs coming from their drawing boards, which they also build using more sustainable methods. And then there’s 3D printing, a genuine revolution. Given its huge potential to make car production easier and cheaper, it’s no wonder that automotive giants like Honda and BMW are busily experimenting with this new technology. Making lighter and simpler parts, which in a later stage can be easily and safely recycled. In other words, following the circular economy principles. Analysts reckon the market for 3D printing equipment will be worth around a billion euros in 2015. ABN AMRO sees this reflected in the changing financing needs of its clients.
5) Circular business models need tailored financing
More and more clients are coming to us with a circular business model that they want to launch and need financing for. Too often, components are dumped or burnt as waste while the integrity of the raw materials they contain still represents a lot of value for our client. This has led them to look at new business models that include long-term agreements regarding raw materials. For example, about transport to and from the production site and the ownership of the raw materials.
For us at ABN AMRO it’s an exciting challenge to sit down with these clients and work out tailored financial solutions for their circular business models. Recently, for example, we published a report on ‘Circular construction’. On 26 March, ABN AMRO and Circle Economy will be organising a seminar called ‘Financieren van circulair vastgoed in de praktijk'.
Jan Raes is Sustainability Advisor at ABN AMRO, which first published this article.