Do you see risks? The circular economy turns them into opportunities

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A road with the text start now

It takes a lot of work to start a vegetable garden. First you have to do the research, then you have to make several trips to the garden centre, and then you need to spend time with your hands in the dirt. But the result is worth the effort: in the end, you have your own mini-economy. It’s sustainable, because it’s organic. It’s cyclical, as it produces new crops every year. Your compost makes fertile ground for your next gardening project. You could say we want to create the same thing, but on a wider scale – a circular economy. In this respect, the Netherlands has a green thumb. In fact, we are an example to the rest of the world.

Take on the circular challenge. Experiment with new propositions and innovate in small steps. ABN AMRO helps you move forward. Richard Kooloos Richard Kooloos Head of Sustainable Banking

Waste is so twentieth century

In my previous blog, I described how we are suffering from commodities obesity. We are buying far too many things, gluttonously consuming our shrinking supply of natural raw materials and using massive amounts of energy. All of this is not only upsetting the balance in our environment; it is also affecting global politics and the economy. If we don’t start doing things differently, we can kiss our things and our growing prosperity goodbye. The solution? The circular economy: an economy in which one person’s waste is another person’s high-value commodity. One in which we maximise an energy-neutral way of life: at home and at work, and everything in between. The first shifts are emerging – the circular economy has started to put a dent in our currently linear model.

The budding circular economy

We are becoming ever more aware of our bad habits when it comes to production and disposable products. The change is happening all around us, and increasingly so in recent years. Words like ‘recycling’ and ‘organic’ have appeared on nearly every page of Dutch lifestyle magazines, sustainable packaging has been introduced and the first companies have started making their products more easily recyclable. There’s something brewing, although it’s hard to say whether this is the product of a hype or a promising presage of a transition to the circular economy. At any rate, these are favourable developments. But there’s plenty of work to be done, and we all have to do our part.

We see the way forward…

The Netherlands takes the climate problem remarkably seriously. The country’s commitment is reflected in the plans of local government, the abundance of sustainable initiatives and the commitment of business. The courts have also raised the bar: in a recent case against the state, the judge ruled in favour of climate watchdog Urgenda and required the government to raise its carbon reduction target to 25%. This was the world’s first climate case ever! The business world is equally motivated, and the first circular companies are starting to mature. That’s great news – we want more. ABN AMRO is doing all it can to make this happen. But there are also plenty of competitors – not in what we want to achieve with the circular economy, but in how to get there.

…but there are some obstacles on the road

The road to a circular business or economic model is a bumpy one. It isn’t free – new wind and solar parks, energy-neutral production and equipment for recycling raw materials cost money. Most companies’ reserves can’t cover these costs. Investing in new technologies is also quite a bold move, as innovations could prove to be short-lived fads – and that’s a waste of money. And high volatility caused by fluctuating commodities prices doesn’t exactly make life easy for businesses. Cynics are having a hard time getting on board. Which is understandable, but the optimists among us understand that there are very real benefits to be reaped.

So, let’s take a look at how we can make it happen and where it already is a success. Don’t just see the risks, but above all look at the numerous opportunities presented by the circular economy and the innovations it produces. If we use them often and well, we can accelerate the transition to a sustainable economy. This will save us money in the long run, because most new technologies can be adjusted to scale and widely used. In the Netherlands, innovations are in full bloom, because the Dutch like a bit of innovation and aren’t afraid to experiment.

The Netherlands: enterprising to the core

Trade, competition and the endless drive to excel are in our blood. If something is happening, we want to be in the front row. An example: windsurfing had only just recently been introduced in the Olympic Games, and who took gold? A Dutchman. In business, too, we have the same enterprising spirit. Our agricultural technologies and water management are state-of-the-art, we are at the forefront of waste processing and make connections rapidly because we are used to bridging small distances. We are also an adaptable people. Scarcely hindered by traditions, the past or religion, we adopt the best things from abroad and incorporate them into our own culture.

Chameleons that anticipate the future

So when a new technology conquers the market, we get in on the ground floor and start experimenting with it. If it looks promising, we adopt it on a broad scale. We have the greatest internet density in the world, accept mobile banking without batting an eye and regularly hold international Bitcoin conferences in Amsterdam, and Daimler rightly decided to market the electric Car2go cars in the Netherlands. Not bad for a small country like ours.

Powered by Dutch Technology
We are committed to progress and are consistently developing technology. I’ll give you three examples of excellent circular hotspots, Dutch networks that really work: a 3D printing stronghold in the Dutch province of Brabant; an entire ecosystem of super-innovative small business around ASML; and FloraHolland, one of the world’s biggest flower auctions, surrounded by an intricate web of knowledge institutions, sustainable businesses and investors. In each of these networks, entrepreneurs work together symbiotically, benefiting from and strengthening one another. With combined forces they all have strong competitive positions, giving the Netherlands added weight on the global market.

Park 2020, Silicon Valley’s circular stepbrother

We are showing the world how to go circular, especially with initiatives like Delta Development’s Park2020 project. Together with cradle-to-cradle pioneer William McDonough, Delta Development built the first circular office buildings a few years ago. Now the green gurus are working together with Schiphol Real Estate, the city of Haarlemmermeer and the Ellen MacArthur Foundation to set up labs where numerous local businesses can experiment with circular propositions. They’re building a network they can use and fall back on, exploring where opportunities lie and sharing their successes and failures with one another. That’s a smart approach, as it means you don’t have to throw all your weight into a new market and run the risk of wasting time and money. You can innovate in small steps and by learning from others, who sometimes know more than you do.

Taking a new tack

ABN AMRO believes that’s the way to go. Work together to strengthen your competitive position. Innovate creatively, so that no-one can copycat you. And start small, like the transition to the circular economy. Get on board now and you’ll hitch a ride on developments that are set to experience an enormous growth spurt. Although we cannot yet make firm predictions, I would venture to say that the circular model will trigger a radical change, the impact of which we are unable to understand at this point. Just look at how that happened with the mobile phone. Back in the 1980s, when the first cordless phones were introduced, did you foresee a future in which we are umbilically attached to our smartphones?

Small steps, giant leaps

Take on the circular challenge. If you miss the boat, you’ll be on your own. Experiment with new propositions. Don’t stand around at the edge of the pond, wondering how cold the water is. Jump in, swim around, check out your opportunities and dive for them. Innovate in small, rapid steps. See whether it works and build on your innovations. You’ll increase your chances of hitting it big. But, how do you start? By building up a network. Talk to other parties, like ABN AMRO. Gather together your own group of clever people, innovators and investors who don’t have cold feet. Together we can fast-track the transition to the circular economy. None of us has the one and only solution, but together we’ll get there. Join the club!

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