Circular Economy in Practice #5 – Making Room for Creativity & Entrepreneurship in Our Cities [Bonus]
When preparing the series earlier this year, we talked to Bas de Leeuw, Managing Director of the World Resources Forum, to discuss the way cities approach Circular Economy, and review key steps they need to take to set the stage for success. We publish here the interview in full so you can enjoy some bonus content on themes we already touched on. The episode touches on economics, innovation, decoupling growth from resources use, taxation, the role of government, and last but not least… adopting a positive attitude.
Check out the Circular Economy series page for complementary resources & bonus materials.
Produced by Camille Duran
Coordinated by Han Nguyen
Published by Linnéa Hultén
Senior Editors Eleen Murphy & Joshua Burguete Kirkman
Transcribed by An Ha
Music Credits: License by Ins. Green White Space.
CAMILLE DURAN (CD): One quick note before we start: The other day I was having a coffee with a friend who is a heavy podcast listener – like I am – and she made me realize how most podcasts out there always feel the same, sound the same, from one episode to the other. Even the best rated, the most famous podcasts in the world follow the same format always. Same kind of music, same tone. You already know what it’s going to sound like when you press play. Just the content will be different. I talked with the team about this and we agreed that we should challenge ourselves on this. Try to make each episode feel different, sound different.
From a one-to-one interview episode in a crazy location to a deep story narrated over inspiring music or a debate roundtable from a live event, we should be able to surprise you. At least, we’ll try, hard.
Alright, onto the show.
CD: Today is different. It’s a bonus episode. Why a bonus?
Well, in preparing this series about Circular Economy – which is not over. We had a very productive discussion with Baas de Leeuw, who is Managing Director of the World Resources Forum.
You heard him a few seconds in episode 4 of the series, briefly setting the stage for our interview with EU Vice President Jirky Katainen, and that was before I entered the tattoo shop.
There was more we wanted to share from this broad exchange with Mr. Bas De Leeuw. In this interview, we touched on different topics including economics, innovation, decoupling growth from resources use, taxation, the role of governments and last but not least… the positive attitude, baby.
You’re listening to The Green Exchange, episode one-two-three-four, five! of our series about Circular Economy in Practice: Making Room for Creativity & Entrepreneurship in Our Cities.
ACCELLERATING THE CIRCULAR ECONOMY – BUSINESSES NEED TO INNOVATE TO STAY IN THE GAME
BAS DE LEEUW (BDL): Hello, Bas De Leeuw
CD: Hello Bas. It is Camille. How are you?
BDL: Hi Camille, I’m fine.
CD: If you’re ready we can jump right in, starting with a short introduction maybe? Just so the audience can get a sense for who you are and what the World Resources Forum focuses on.
BDL: Okay. My name is Bas De Leeuw. I’m Dutch national, working in Switzerland. I am the Managing Director of the World Resources Forum, which is a multi stakeholder platform advancing resource productivity worldwide. We work on resource efficiency, we work on green economy, circular economy, everything actually that businesses, governments and NGOs are working on together to make this world a bit better place.
CD: And by training, are you an economist?
BDL: Yea, I am an economist. That’s right.
CD: It’s a real pleasure to have you, I have a few questions for you as you can imagine, and you know we are trying to get practical in this series so the focus is very much on activating or accelerating a transition towards circular economy.
I don’t think we need to discuss the big picture anymore. Anyone with good common sense will agree that if we consume less resources, build products that last longer and reorganize our infrastructure and business models, we’ll probably be in better shape as an economy. We’ll probably be happier as human beings and most importantly we’ll be able to look our children and grand children in the eyes. You see what I mean?
BDL: Yea, sure.
CD: I am wondering how do you approach this idea of transition at the Word Resources Forum?
BDL: Well actually the word transition is already sort of like difficult work, sort of like giving the impression that something very special is going to happen and we need to be ready for it and that it will be a long period of people and companies that are not getting it and will not do it. I mean resource efficiency, circular economy is adapting to the resource constraints in the world which your economy, which something happens everyday.
Of course, when you live in a dynamic world, in a competitive world, as soon as you start to do something better, then there are businesses, actors, that do it quicker than any others. They see it quicker than the others. Some of them will keep sitting on the fence. That’s normal. That’s economy. You have winners and you have losers.
CD: Right. And I really feel, like, in many sectors, the cake they need to share is about to become much smaller. In terms of volume of sales, for instance, as we discussed with Vice President Katainen earlier in the series, designing for longevity, reuse and repair, the sharing economy and product as a service are trends that are threatening the high margins global companies that dominate the market today. Those companies have built empires on the throw-away society, global supply chains and cheap production.
Now that the game is changing, they need to adapt faster than everyone else because we, the people, are very keen on going with market ‘disrupters’ once they present attractive options to us. And if you look at all those sharing economy apps that are putting everyone off balance, well, they help us spend less, they help us spend better; and in addition to this, it has a positive environmental impact. So, I hope the big players see the storm coming or there could be some change on the job market soon.
BDL: Of course, if governments would do their jobs properly, something that is being advocated for decades, and start to make sure that labor becomes less expensive and material becomes more expensive then obviously the business case for circle economy is even bigger.
CD: Yeah, you’re probably referring to the ExTax discussion, we talked about it on the show last year and it is an ongoing discussion. What’s the latest progress? Can we hope for a different taxation system? Really?
BDL: The hope is that I think already two or three decades with economists that there will be a proper system worldwide, where the external costs of resources are being incorporated in the product prices.
Well, when I say worldwide that already indicates that it is a complex issue. You cannot do it as a country you cannot do it as a region alone, not even the big and wealthy region as Europe. Europe also has to pay attention to what their competitors are doing. So it is a long-term process. Some people get very frustrated and disappointed by the lack of progress. Of course, things could be done quicker than we see now, but you can also look at what is going on already and when you look in the Circular Economy Package from the E.U. then there are a couple of very promising measures activities proposed that at least go into the right direction.
CD: Yes, I agree. So, you mentioned the need for companies to innovate and shift as soon as possible to stay in the game. And I want to talk about this because if you ask me, there is a bit too much blah-blah-blah going on. And all big brands are at the circular economy conferences and innovation programs, giving great speeches, telling us about their great visions. But in practice, everyone knows that things could go much faster. I know that change takes time but I’m sure you noticed that when change is about bigger short term margins, it usually happens much faster than when it’s about starting to design for longevity for instance.
BDL: Industry- the business sector is of course very diverse not only big and small but also in the way they would like to respond to consumer markets and to their target groups.
There are many companies, particularly big companies, that want to be seen as pioneering, as leading society, partly because of corporate social responsibility arguments or branding arguments, and that’s of course good. But I think it would be unrealistic to expect that if there is no business case for really drastically investing in the circular economy, that all companies in the world that they would start to do that. So then once more you need to have the supports from governments taxes and subsidies. Also, to small and medium sized enterprises cannot be expected of course to invest in, let’s say, secondary materials when they know that they can get raw materials for half of the price.
FINANCING THE GREEN ECONOMY: GOVERNMENT ROLE AND THE CHALLENGE OF MARKET DISRUPTORS
CD: So, in terms of financing this transition or financing the shift, it needs to be facilitated by government and by subsidies, Right?
BDL: Absolutely, absolutely. And of course, there, I mean, the low hanging fruits where the business case is very obvious of course there is no support needed and businesses are already taking a good action. But there were the fruits are hanging a bit higher, you need to influence those framework conditions as a global governance.
CD: Right and one issue here facing the governments that want to set police targets is the lack of indicators and benchmarks, and I think that this is something that was mentioned in Davos last year.
How do we measure? How do we create those benchmarks also to steer investment decisions? What is the latest progress on that front and some of the thoughts you have on this?
BDL: The Circular Economy Strategy from the European Commission has a couple of interesting and challenging activities comprised. The key for having and agreeing on good indicators is, first of all, sort of a consensus among scientists, right?
Now the difficulty with scientists, and of course also the great thing about scientists, is that they tend to not agree on many things.
CD: A bit like economists.
BDL: [Laughs] Yes, they come from different schools and it is sometimes a bit difficult to have them agree on at least a couple of core indicators, the core approaches on the top of methodologies that could help business leaders and government leaders in this important issue. So, I mean, to have scientist researchers to talk each other that is important. That is one of the more important contributions to this world. As the World Resource Forum we are an independent platform and we are happy to offer that platform to all kinds of schools.
Then of course if some consensus is emerging, that needs to be very short and quick feedback between policy makers and researchers. Sometimes you can have great indicators, but if you cannot use them or if you cannot collect the data that you would need to fill them; it’s a wonderful academic exercise, but it will not change the world.
We are not yet there. There are many very promising initiatives. And I have good hope that in coming years that we will see some good progress, in particular of course because it is a big push for the whole circular economy concept, not only Europe but also in other parts of the world. And that trickles down in major research programs like H2020.
So, I mean experience has shown that once a topic is receiving good political attention, then the other actors in society follow the instruments, the tools, that are needed to achieve the goals.
CD: Interesting. One last question regarding the role of governments, because there are concerns regarding the market disruptions such as the sharing economy which as you know can be a very strong disruptive force. There is one concern that local governments cannot follow the pace of innovation in terms of regulating or permitting when those disruptive forces are coming to town. How are you thinking there? What are some of the practical actions that local government can take to make sure they don’t end up in a situation where a company like Uber is coming to town, creating chaos in the established system and sucking all the capital.
BDL: Well yeah. I mean of course the circular economy or the resource efficiency or the environment is one of the very important aspects in our society, but I say one that is not the overriding thing. In terms of that when an actor is doing something that is more resource efficient that we all need to support it regardless of the other factors.
I mean, of course security is an issue. Of course, labor is an issue. Safety is an issue. So new services are popping up as we speak in particular also helped by the wonderful progress of the ICT sector. There are a lot of possibilities in terms of bringing demand and supply to meet each other, but like all new services or new products, they have to be tested, it has to be analyzed and also here the government has to put in place modern regulation which fits all those in to all those new initiatives now being taken. Most of the regulations, obviously, date back from completely different world and lawmakers also need to innovate.
CD: If you had a room full of mayors and city staff and you were providing them with key recommendations on what they can do today – beyond the increasing recycling rate and all the business-as-usual incremental innovation – what would be some important moves they can start working on?
BDL: What you’re saying if you had a room full of majors and city officials, and we have full of them in our conferences! My golden advice for when you want to run a city app for circular economy and the resource efficiency is to create space for creativity and entrepreneurship so that new inventions can be put to your city, but not blankly. So make sure that you analyze what’s going on, what are the side effects, what are the impacts on your inhabitants. But be open for the circular economy and also appreciate the fact that it is a new concept under this name. It is not going back to the Middle Ages. Sharing, let’s say twenty, thirty, forty years ago almost meant a step back. If you are rich, you won’t share. Throwing away is a wealthy lifestyle. Nowadays, not just because of the changing attitudes in general but also because of the ICT and the new products and services design – sharing resources is cool and can be modern and can show that you are a wonderful city that cares, not only for its people but also for the surroundings and nature.
So, a positive attitude towards the circular economy and just know that you are not on your own and it you can always get help and advice from others in the world.
CD: Yea, this is a really, really good advice. Actually, we should put on some music in background. Ready? Here we go… Creating space for innovation to happen.
To finish, can you tell us what’s next on your front? What is the focus for the coming year?
BDL: I don’t know if your listeners know it, but we are at a very, very first phase of planning a huge event in Helsinki, June 5 to 6th, 2017, and guess what it is called?
CD: Say, the world goes circular?
BDL: Well almost, it’s The World Circular Economy Forum, we hope for more than one thousand participants. It’s organized as part of the celebration of the fact that Finland celebrates its one-hundredth birthday the organizer together with the SITRA, a Finnish Innovation Fund with UNEP – United Nations Environment Program and Nordic Council of Ministers. And that event will showcase circular economy best practices from all around the world. It will have a political session where we try to get the latest on not only what European Commission is proposing and is doing, but also all the other governments beyond Europe. So, when you ask me what is next, it is shaping a good and inspiring agenda for that event next year in June.
CD: Okay, can we come and produce a live talk show from there?
CD: I have you on record on this! [Laughs]
BDL: Right [laughs]. You’re welcome.
CD: Thank you very much for your time and congrats on the progress to date and we’ll be following, of course. And yeah, I feel we’ve advanced the discussion a little bit here.
BDL: Thank you so much Camille.
CD: All right I’ll speak to you soon.