Ahead of the curve

Written by: Maxine Perella | Published:

An early pioneer of the circular economy, Professor Walter Stahel is respected worldwide for his views on how to add value to waste through making industrial systems more restorative by design. Maxine Perella caught up with him to find out more

Professor Walter Stahel is not only one of the most recognisable faces on the circular economy circuit, he also possesses one of the purest and most academic minds on the subject. Little wonder, as Stahel is widely credited with having coined the phrase 'cradle-to-cradle' back in the 1970s. Over the past 30 years, the Swiss architect has been influential in promoting a series of guiding principles around circularity which have helped shape the movement into what it is today.

RWW caught up with Stahel ahead of one of his regular speaking gigs in the UK, to find out why he felt global appetite for the circular economy was so high right now.

"For some time, national economies have not been able to satisfy people's expectations," he says before focusing on a series of trigger points: persistent unemployment and stagnant disposable incomes in industrialised nations combined with rising costs of living. Meanwhile, in developing countries, rapidly growing populations, a lack of job opportunities and environmental degradation have had much the same effect, with emigration often the result.

"Governments are trying to overcome this malaise with singular but uncoordinated policies. The circular economy is truly sustainable in the sense that it provides economic, ecologic and social benefits in a cross-cutting approach. It reduces waste volumes, GHG emissions and resource consumption, and at the same time creates local jobs at all skill levels. The business models of the circular economy – the reuse, repair and remanufacture of infrastructure, buildings and goods, and the recycling of materials – are not alien to common sense and people's own experiences," adds Stahel.

In the past, Stahel has been quoted as saying that the circular economy and cradle-to-cradle thinking hold the key to the future of mankind. What does he mean by that? "The circular economy is part of my vision of societal wealth and how it is measured," he states. Societal wealth, he explains, is measured in terms of natural, cultural and human capital as well as acquired working and manufactured capital.

Caring stewardship

"The circular economy is the optimal strategy to manage manufactured capital in synergy with human and acquired capital. It is key to the future of mankind because the principle behind any stock management is caring stewardship, which is normally associated with soft topics such as health, not the economy and management," says Stahel.

The professor adds that as the circular economy is based on preserving existing stocks and values, it should provide people with a sense of cultural identity. Because of this, he questions whether the current movement, which is very much being led by corporate interests rather than clear policy intervention, is heading in the right direction.

"In my opinion, the main obstacle today is the heavy taxation of work – human labour. Not taxing work, but taxing non-renewable resources instead, would give a clear signal to individuals to use their personal creativity and energy in order to create a better living, and to companies to search for resource-saving business models instead of 'bigger-better-faster-safer' new products."

A regional strategy

According to Stahel, the circular economy is inherently a regional or local service strategy. "Unlike global manufacturing, which enables a company to have one manufacturing plant and sell the same goods worldwide, activities of reuse, repair and remanufacture have to be done where the clients are located. If a big corporation has points of services in many local shops, it may successfully combine central activities with local rental and repair services," he says.

Adopting such an approach means companies can start to create a performance-led economy whereby they sell on the performance of the goods they make. This would naturally see consumers become users, accessing products and services as and when they need them. Emerging examples of such business models include Rolls-Royce selling 'power by the hour' for its jet turbines and Michelin selling tyre use 'by the mile'.

However, while the circular economy can slow down the speed of resource flows through an economy for manufactured stock, many products will still end up as waste. Undoubtedly the resource management industry has a useful role to play here, but it is still struggling to reshape itself to become an effective facilitator of circularity. Finding business models to reuse waste streams profitably is a huge challenge for the sector, Stahel notes.

Moving up the chain

"The challenge for the waste management industry is to shift the thinking behind its activities from zero-value waste to highest-value preservation, and move its revenue base up the value preservation chain. It will then be able to develop profitable business models by combining more labour-intensive processes such as non-destructive end-of-life goods collection and disassembly of goods with a profitable remarketing of used components."

It is perhaps not surprising that the professor feels scrapping the European circular economy package, much-lauded by those in the waste industry, was the right thing to do. He argues that the package represented a "step back" as it gave priority to material recycling – considered by many experts to be the least valuable resource loop. Stahel's hope is that any revised set of proposals will "marry the wisdom of the 2008 EU Waste Directive, and its emphasis on waste prevention, with tools of the circular economy".

So, which countries are ahead of the game right now when it comes to achieving circular progress on the ground?

Stahel points to those nations with a sufficient stock of manufactured capital and political will to boot. "For the past two years, China, the US and South Korea have each been investing in their remanufacturing industries and the underlying political frameworks," he observes before adding:

"Scotland and Sweden have moved ahead of the other European countries in the same period. In countries with a strong manufacturing industry, the circular economy is often seen as an undesirable competition to manufacturing when, in reality, it is complementary. Saturated markets are better served by a circular economy, yet to exploit the opportunities of novel technologies, such as life sciences and nanotechnologies, a country needs strong R&D-based manufacturing capabilities."

As the circular economy starts to scale up, investment remains a major barrier to commercialising any pilot work being carried out. Tackling this funding challenge is a pressing issue, but Stahel says he is encouraged by initiatives such as the EU Horizon 2020 research programme, which financed the first project on remanufacturing.

"I feel that private funds with the objective to help start-ups in general, and new ones looking to support business opportunities of the circular economy in particular, will become more easily available," he opines.

Making a convincing case

And let's not forget the wider picture. Winning hearts and minds across all tiers of society will be crucial if this agenda is ever going to become mainstream. Convincing both companies and people to make this leap of faith will require persuasive leadership.

"Ask only one question: can you make money this way? And if the answer is, 'I don't know', give the people in charge one year to come back with an answer," says Stahel.

"They will then have to build a pilot plant to study whether the idea is profitable and, if it isn't, to discover what needs to be changed."

So, what advice would the professor give to an organisation looking to begin this journey? Where are the natural starting points? "I would be a bad consultant to answer this question here," he replies. "There are numerous opportunities out there, but each one of them hides individual incentives, potential pitfalls and risks. Learning by doing is normally the cheapest way to move rapidly forward."

The Product-Life Institute

Formed in 1982, the Product-Life Institute is a not-for-profit, independent and virtual research organisation located in Geneva, and is the oldest consulting organisation on sustainable strategies and policies in Europe. It focuses on developing systemic approaches to producing higher real wealth, more regional jobs and economic growth while consuming considerably less resources – such as a 'functional service economy', based on an intelligent management of manufactured stock and the performance of goods and services, and seeing utilisation value as the central notion of economic value.

Five things I can't live without…

Network: A caring and supportive environment of family, colleagues and friends

Healthy climate: An inspiring and demanding working climate providing critical feedback to my (mostly uncommon) ideas

Sustenance: Healthy tasty food, clean water, good wines from sustainable sources, plus eight hours of sleep a day

Interactions: Humorous and playful interactions with the world around me, including conferences, seminars and old-timer rallies

Clients: The challenge of demanding, understanding and rewarding (potential) customers

Maxine Perella is a freelance journalist

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