The circular economy starts with shopping differently

60 seconds:The circular economy: What we’re doing and what you can do yourself Watch the video

Reusing and repairing things rather than throwing them away. We all support the idea, but we collectively still aren't doing it nearly as commonly as we could. In fact, the average amount of domestic waste per head has almost quadrupled since 1950. The first requirement for the change from a linear to a circular economy: a different mindset. And you can help, by shopping differently, and hiring and sharing more. We as a bank do our part to accelerate the transition as well, for example by lending money to circular investors.

What is a circular economy, exactly?

Circular is the opposite of linear. In a linear economy, people harvest resources, make products out of them, and then throw away the products once they're broken or no longer wanted. On the other hand, in a circular economy, products don't get thrown away. All materials get recycled instead, for example to serve as resources for new products. Product lifespans aren't aimed to last “from cradle to grave” but from “cradle to cradle”.

Are you sure that would really work? Isn't that a bit of a hassle?

We're quite sure it would work! If you think about it, humankind has been living in a largely circular economy for a long time. Your grandmother's generation used to darn the holes in their socks, and mend threadbare trousers with patches. Farmhands would go down the street to collect people's leftovers and food waste. It was fed to cattle, not binned. Rag-and-bone men scavenged the clothes that were truly worn-out beyond repair, and then there was the scrap dealer to bring your broken metal items to. All in all, recycling was far more commonplace sixty years ago than it is now. And don’t forget that the size of the world economy then didn't even come close to what it is now; mankind didn't yet have a need for all those raw resources. But over the past few decades, without us really noticing, we’ve morphed into a throw-away society. Buying a replacement just seemed more convenient than repairing or recycling things. But we didn't stop to think about the immense amounts of waste, pollution and irreversible environmental damage we were causing.

Source: report What a Waste 2.0, A Global Snapshot of Solid Waste Management to 2050, Urban Development series, World Bank

Worldwide, less than 20% of all waste gets recycled or composted
Source: report What a Waste 2.0, A Global Snapshot of Solid Waste Management to 2050, Urban Development series, World Bank

But how do we go about it?

Of course it isn't easy to take apart and recycle complex products such as electronics. In addition to the technical challenges, you have to be careful not to release any toxic substances. So let's tackle the problem at the root: today’s manufacturers designing products in such a way that it's hard to extract and recycle the resources. Carpet tiles, for instance, consist of as many as twenty different materials. As circular consumption and circular production go hand in hand, why don't they choose a simpler design for carpets and other stuff? In this regard ABN AMRO sets an example with Circl, our fully circular pavilion in the Amsterdam Zuidas area. All the components and construction materials of circular buildings can be reused when the time comes for them to be demolished.

The circular economy's business model: product as a service

One way to facilitate the transition to the circular economy is the practice where manufacturers keep ownership of their products. For example, when your light bulb breaks, your lamp's manufacturer sees that the broken bulb is replaced (and recycles the old one). That's the “product as a service” model in a nutshell. A kind of hiring or leasing as an alternative to ownership. Of course, that's a circular flow model, which is different from what we as a bank are accustomed to. In the banking sector, the value of a company used to be largely defined by their inventory and buildings. Instead, when issuing loans, we'll focus in future on the value of their customers' subscriptions. You can find more information about how this works here.

Sustainable financing for circular businesses

We’re issuing more and more sustainable loans. One of our goals for 2020 is having financed 1 billion euro's worth of circular company assets, spread among at least 100 clients. Some of those will be circular companies that work with the product as a service model, but we're very interested in companies that apply other circular business models, too.

What can you do to help?

You could perhaps borrow or hire things more often, rather than buying and owning them. And if your sofa doesn't look too good anymore, why not have it re-upholstered instead of buying a new one? Thank you for helping to bring about the transition to the circular economy.

How does the bank get its circular products?

Our circular products range from the furniture in our bank offices to the way we've set up our boardroom, and from coffee to soap – just to name a few! Our purchasing department is a frontrunner when it comes to buying sustainable and circular materials and items, making sure to invest in products that can be reused or recycled when we're finished using them. But it doesn't stop there. To encourage our suppliers to think circular, we examine with them the impact of the products they supply to us to see if they can be made more sustainable. We bring large parties in contact with agile, sustainable start-ups to accelerate the transition to sustainability. Ultimately we're aiming to create market momentum for circular entrepreneurs.

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Jan Raes

Jan Raes

Sustainability Advisor +31 (0)20 383 1753