Gaia blog

Money talks in circular economy

26.01.2015

The public and private sector need to find common ground soon – otherwise Finland’s opportunities in circular economy may be lost.

There is a wide consensus in Finland that we are in a unique position to make a profit in circular economy. Finland has a wealth of biomass, a high level of education, understanding, innovations and traditionally also an ability to make decisions. The core of circular economy – how to make more from less – is embedded in the Finns’ DNA.

It is also clear that the global demand for circular economy business models is growing. The pressure to diminish our dependence on chemicals, fossil fuels, and rare and harmful materials continues to increase. This will create new business and challenge us to develop existing products and new service solutions.

Circular economy is still often seen as a question of waste disposal. Too often the subject is weighted down by controversy and conflict before real public discussion even begins. However, circular economy is an issue that reaches far beyond mere waste disposal and recycling. Bioeconomy and circular economy are as much about resource efficiency as they are about waste disposal solutions. One person’s waste is another’s raw material.

As competition tightens, every organisation from florist shop to energy giant must justify its existence again and again. Operations need to be managed and run better and more sustainably. Companies must rethink their business logic. What used to work, may not work any more.

Finnish organisations need to consider in a deliberately selfish manner, what is worth concentrating on, where they can be forerunners and where they can find business.

Sustainable business solutions may create entirely new business models. In chemical leasing, for example a chemical company doesn’t sell farmers its products but fertilising services. Instead of trying to sell as much fertiliser as possible, the company is responsible for the optimal fertilisation of fields. This brings added value to farmers, clients, the environment and the entire society.

Many organisations still resist the idea of circular economy, and the public and private sectors don’t always see eye to eye on it. Particularly waste issues are a source of disagreement. What we need is a strong, shared information base and a better picture of the quantity and quality of waste and by-products, among others. Reasonable discussion is only possible if information is available to all participants. The public authorities could provide open, high-quality data for common use because the only way forward is open and honest cooperation.

Finland still invests in waste incineration. If it continues to grow its incineration capacity, it may not be able to reach the goal of recycling 70 percent of all municipal waste. Incinerators may also remain underused when the demand for different materials grows in the future. Public investments must be considered as carefully as private ones. Decisions concerning waste disposal should take into account the impact of the investments on local economy – jobs, services, tax income and business chains. The strength of circular economy is in its multiplicative effects: solutions that help even the customer’s customer to succeed.

The criteria for public procurement should follow this line of thinking, because public investments and procurement can create markets for circular economy solutions. Companies connected to circular economy need a strong signal that encourages them to invest and develop their business. This would also create jobs in the private sector.

First and foremost, companies would get much needed business references from their home market – showcase projects to build their brand. And what would follow from that? Export opportunities, jobs and wealth.

Pasi Rinne

Chairman of Gaia Group

The column is based on an article published in Kierrossa magazine 2/2014

Pasi Rinne

Chairman of Gaia Group

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