Circular economy – it’s more than just recycling

It is good to see how politicians and companies are putting a lot of time and effort into exploring the circular economy in all its different forms. However, we still have a lot of room for improvement in Germany when it comes to implementation. German resource consumption is 30 percent above the global average.

This may not be surprising for one of the leading western industrial nations but we should understand that 40 percent of Germany’s greenhouse gas emissions can be traced back to the extraction and processing of raw materials. That's why we have to think about climate protection as well as resource protection as part of the circular economy and implement them rigorously. Other countries are much further ahead.

Our next-door neighbour France is a pioneer in many areas. For example, France has set central guidelines for environmentally oriented procurement. There is a repair index for consumers, cost advantages for ecologically designed electrical products and advantageous warranty requirements. In this way, France is doing more to promote the design and use of durable products.

First: with the necessary restructuring and it is an enormous task. Therefore, Germany must act with political ambition to establish a true circular economy. Market failures that hinder the circular economy must be clearly addressed. These include the fact that environmental costs and lack of investment in infrastructure or lack of transparency and weak standards are all things that are often externalised, meaning that they are not included in the prices of goods but borne by the general public.

Previous policy approaches have not been effective, they have not been able to release the brake blocks. Therefore, we expect an ambitious strategy from the federal government to catch up. This strategy is currently being developed at the Ministry of the Environment and should be presented in mid-2024.

A turning point would be, above all, binding resource protection targets within the framework of a Resource Protection Act, as we have it analogously with the German Climate Protection Act. But it is also important to sensitise society to the change and take them on the journey.

Companies should change their business models in favour of the circular economy; after all, transformation opens up many opportunities. The state should act as a role model.

Therefore, we expect an ambitious strategy from the federal government to catch up.

WWF tries to promote a circular economy on two levels. On a theoretical level, we collect and commission scientific studies and data. We inform companies, experts and political decision-makers and discuss with them the resulting fields of action and measures. We also educate consumers about the positive impacts and benefits of the circular economy to motivate them to take action. On a practical level, we develop and use tools and methods to help companies assess their circularity. Subsequently, we also help to develop and implement impact-oriented circular business models and goals.

In the CEWI project, for example, we brought together over 40 companies from the building and automotive value chains. Taking the building sector as an example: here we found innovative solutions with the companies in projects, thanks to which more used components and materials are used.

At the same time, we wanted to raise awareness for the preservation of existing buildings and sustainable construction. So we brought politicians and employees from the administration together with the companies to talk about the potentials and challenges of the circular economy for the building sector. For a functioning circular economy, the most diverse stakeholders must be brought together, and we see ourselves as bridge builders.

Digitization plays an important role in the circular economy. It promotes reuse and recycling, for example in the construction sector through digital product passports and supports circular business models such as "pay per use". Advantages are that it is easier to trace materials and products along the supply chain and have transparency about materials. In addition, companies can monitor the condition of products and optimise their use.

However, the downsides of digitalisation are often overlooked, especially the rebound effects. This means that resource savings do not necessarily lead to a lower overall environmental impact, as data transmission and processing require a lot of energy and data centres require a lot of resources, including rare earths.

We need to quickly switch to renewable energy and use energy more efficiently in data centres. Use less material overall, for example by relying on durable equipment. Circular economy business models that promote durability and repair are crucial here.

We need to quickly switch to renewable energy and use energy more efficiently in data centres.

Quite simply: because our planet only has finite resources, not unlimited. The escalating climate crisis and the rapid extinction of species show us how far we have already gone beyond the limit. Not only are we fuelling these with our current way of doing business, but we are also increasingly feeling the climate and nature-related risks to which we must find answers.

Droughts, floods, forest fires are increasing, while safe and resilient supply chains are decreasing. Ecosystem services that were previously taken for granted, such as clean water or high-yielding arable land, are becoming more fragile, more vulnerable to failure. I have to price this in if I want to continue to farm successfully in the future.

A circular economy is a way of making business models crisis-proof. It aims to use resources more efficiently, to use products for as long as possible, to reuse materials and to recycle. This protects the environment, reduces CO₂ emissions and decreases dependence on finite resources. The circular economy also offers economic opportunities and promotes innovation.

Collaboration with companies in this area is crucial to accelerate the transition to a sustainable economy while achieving positive environmental and economic impacts. We simply will not be able to afford not to have a circular economy in the future. As an entrepreneur, for example, I can plan, manage and efficiently drive this transition early on – and secure a competitive advantage from the outset.

We simply will not be able to afford not to have a circular economy in the future.

Companies need to change their business models, sometimes from the ground up. Financial market players have a decisive role in this. For the necessary structural change and the development of new business models in the circular economy, we need financial instruments such as loans with preferential conditions, special financing vehicles like "circular economy bonds" and adjustments in financial market regulation. 

Banks and financial institutions are predestined to accompany the real economy in its transformation. After all, managing climate and natural risks is part of the core of banking, as Mark Carney, former governor of the Bank of England, highlighted in his famous "tragedy of the horizon" speech. Furthermore, public-private partnerships are also crucial to mobilise private funds for circular initiatives. It is important that these funding mechanisms primarily benefit the upper R-strategies (reduce, reuse, repair, remanufacture, etc.) and do not only address recycling and waste-related measures.

Banks and financial institutions are predestined to accompany the real economy in its transformation.

First of all, it is important to be mindful of your actions and your environment. Every day there are many opportunities to implement circular economy in all areas of life. Use public transport and ride a bicycle instead of buying a second car. Buy fewer (new) things and also give used items a chance. Use things for a long time and, if possible, repair defective items instead of throwing them away. Avoid disposable products and go for reusable solutions. Reduce packaging by shopping at the weekly market. And in the end, also make sure to return products such as textiles and electrical appliances responsibly, for example by handing in old electrical appliances at the proper collection point. These are just a few small ideas on how each of us can make a contribution every day!