Every time I see someone at our head office standing in a corridor and pressing a button on the lift display, it makes me smile. Most people have no idea why they have to select the floor outside the lift nowadays, rather than after they have got in. The reason is simple: the lifts are equipped with software that plots the most efficient route of four lifts up and down twenty floors. Not only is this cheaper, it also saves energy.
We need to be as smart as possible during the in-between phase until our economy becomes a closed circle.
Frits Lampe Procurement Consultant
The decision to install these sustainable lifts was made with significant input from the Procurement department. These types of projects are an opportunity for me to do what I enjoy most: thinking logically about ways to make processes smarter, more efficient and more sustainable. We are transitioning to a circular economy (CE), which means using smart designs and reusing materials to minimise the amount of raw materials that we waste. To me, that is efficiency in its highest form. ABN AMRO is applying the principles of CE more and more, and I admit that it is highly addictive. It is like rope skipping: it takes quite a bit of concentration, but once you get going you never want to stop. You discover that it is much more fun to join in than to watch.
The concrete face of sustainability
I first learned about CE some years ago from Jan-Henk Welink of Delft University of Technology. I immediately became excited: I saw at once how it could put a concrete face on an abstract theme such as sustainability. I invited Jan-Henk to give a talk at ABN AMRO, and his knowledge and factual understanding of circularity stirred the enthusiasm of my colleagues too. Our management was instantly convinced: ‘We’re going to use this.’ One of the benefits of working for the procurement division of a large company is that the culture is one of improvement. In this case, however, it was also a matter of the right people being in the right place at the same time.
Shortly after these initial talks I put together a presentation of my own and explained circularity to everyone at Procurement and Facility Management. Again, it met with enthusiastic response. Excited, our team went in search of the first projects where we could apply circularity. In 2013 we signed the Circular Procurement Green Deal, and agreed to launch at least two pilots in 2014. In the event this formed the basis for a total of 32 initiatives.
Seeing the world through circular glasses
My first meeting with Jan-Henk changed my view of the world, and ever since I have been amazed by consumer habits that everyone thinks are normal. We get money back for a crate of empty beer bottles, but not for a computer that is three years old: why is that? Why do people toss their smartphones into a drawer and forget about them simply because they are not the latest design, but everyone wants an antique sports car? Does the reason perhaps have something to do with design? I now see the world through circular glasses.
Getting used to the idea
Society probably needs to get used to the idea. Manufacturers have to realise that not every new model needs to replace the previous one, and that improving the functionalities of the old version is also perfectly acceptable. Consumers in turn should learn that they can use products even without owning them. I can already see my colleagues making the switch in their minds. Product managers are very good at identifying concrete possibilities for circularity – which is logical, since they are used to thinking in terms of new concepts.
We can still improve in so many ways. For example, it would be wonderful if IT people used their innovative capabilities to develop smarter and faster software that runs on old hardware. If you embrace CE long enough, eventually you will see possibilities everywhere.
Working together to achieve success
Our purchasers’ mindset is also changing. To be honest, our work has become more interesting as a result: for circular initiatives to become successful, we need to work together much more closely with our suppliers. We have to make very clear arrangements about taking back used items and guaranteeing life spans. This encourages our suppliers to start thinking about possibilities for reusing items and about material life spans. For example, if product innovation can halve the amount of energy consumed by our lifts, ideally the existing system would only need an upgrade. Simply remove old parts and replace them with remanufactured parts. I firmly believe that this is where we are headed with modular design.
As a large enterprise, of course, we have the ability to use our influence, if only on the proposals. Hopefully our suppliers understand that what we are asking from them comes from the best of intentions. Consider our arrangements about taking back materials when we have finished using them. At the moment, suppliers perhaps have difficulty with this. Yet by basing designs around reuse and simple disassembly, together we can make sure that the materials retain their value. We already have buy-back arrangements in place for our backup power units.
We need to be as smart as possible during the in-between phase until our economy becomes a closed circle. For example, it is becoming more and more common to make arrangements about warranties. We are doing this too, but with an explicit focus on product life span: the expected functionality. If a product breaks down before the end of its contractual life span, the costs of repair (labour and materials) are charged proportionately. These types of arrangements force companies to think about their product parts’ life spans and by extension seek to improve them through innovation.
A useful way for buyers to research products is Pre-Returnable Procurement (PRP). This method reveals the precise degree of circularity in the product’s supply chain and offers buyers the chance to make objective decisions. One of the information requests in which I am currently involved, for new carpets, uses the PRP method. Our understanding of circularity is improving with literally every new contract that we sign, and we have reached the point where we in fact advise our corporate clients on procurement using circular principles.
From used coffee grinds to snacks
The next step for us is to carefully assess the various initiatives and give even more concrete shape to circular procurement. The possibilities have become numerous, and some of the ideas are brilliant. For example, smart entrepreneurs are now using used coffee grinds to grow oyster mushrooms, which are then used as a meat substitute in deep-fried snacks. That is just amazing! ABN AMRO strongly encourages this way of thinking. Every day I work with likeminded people: not just my colleagues at Procurement and Facility Management, but also the experts of our own Sustainable Banking department. As a major enterprise we have a duty to lead by example, and at the same time give smart ideas a platform and make an impact.
Looking at the world through circular glasses is not as difficult as it might seem. Believe me, anyone can do it: it is as simple as rope skipping. If you want to find out more, visit the website of CSR Netherlands for useful basic information about the circular economy, or take a look at the ABN AMRO's Circular Economy Guide (PDF 4 MB).