Circular transformation, a world of opportunities.

December 7, 2021

by Gonçalo Faria* | originally published in Jornal Económico

In the last weeks, no topic has been as talked about as COP26, and there is no shortage of opinion leaders with opposing views on the results and the final agreement. In reality, we are all beginning to realize the scale of the transformation that we will have to face in the coming years and the need to rapidly accelerate a decarbonization that is only taking too long to become a reality. And the fact is that, with or without a COP, with more or less regulation, the business sector in general knows the direction of the actions it should take.

At the same time we are going through a phase in which supply chains are suffering one of the most disruptive periods of our generation, with threats of shortages of essential raw materials, long queues of ships waiting to unload containers, maritime freight prices at unimaginable highs and consequent price increases of raw materials and consumer products.

But what does decarbonization have to do with crises in supply chains? We could talk about the need to curb emissions in shipping and the profound change that this sector will face in the coming years with the reduction targets imposed by the European Commission, and the experiments of introducing green fuels such as hydrogen or ammonia. But there is another important decarbonization lever which will be the paradigm shift of our value and supply chains towards a circular future, with much shorter logistics and a huge reduction in the carbon footprint of the materials we consume.

If we consider only the primary production of metals, currently it represents around 7 to 8% of the global energy consumption. By moving to a secondary use, to a circular chain of reuse or recycling, energy consumption is reduced by a factor of 10. If metals are an extreme example, the need to redesign value chains and the way we consume and derive utility from materials/products, or how companies design this consumption experience, will be fundamental to achieve the much desired carbon neutrality. According to the Circularity Gap Report 2021, doubling the circularity of the global economy from 8.6% to 17% reuse of materials can reduce greenhouse gas emissions by 39%.

This circular transformation is creating very exciting economic opportunities for entrepreneurs and large companies and could have significant potential for increased employment. Entrepreneurs are already playing their part and the challenges of this deep circular transformation are the opportunities they are seizing. This is currently a very dynamic ecosystem, and examples are surely not lacking. Such as Waste Transformers who developed a containerized solution for the anaerobic digestion of organic waste for energy production and organic fertilizer, or Reath who developed a digital passport for materials to enable their Traceability.

We will need to give space to these innovative solutions, new business models and new technologies, and we will only achieve this in a collaborative way and by opening a path of dialogue and experimentation between the various stakeholders such as entrepreneurs, large companies, consumers, regulators and local entities such as municipalities or multilateral ones such as the United Nations and the COP26.

*Gonçalo Faria is Senior Account Manager – Client Success at Beta-i.