There is a need to set the bar higher in order to steer society towards climate-neutrality and sustainability. The pace of transformation is still too slow and RISE experts would like to see the country’s major stakeholders lead the way towards sustainable and circular business models.
– “If we are to achieve the climate goals and Paris Agreement, we can’t just keep taking such small steps. More radical changes are needed,” says Emma Rex, Researcher at RISE on the circular economy.
No later than 2045, Sweden’s net greenhouse gas emissions shall be zero. One way of lowering the consumption-based emissions is to transition to a better utilization of resources. In other words, we need to move from a linear to a circular way of thinking as regards everything from material flows to business models. There needs to be, for example, understanding that it’s not necessarily the product you are selling that matters, but rather, the benefits it provides.
– “Typically, this has to do with adapting current business models so that functions are leased, rather than selling a particular service or product,” she says.
But Emma Rex emphasizes that a circular economy is not the answer to everything. However, if the lifespan of products can be extended and if they can meet the needs of many people, along with it being possible to reuse the raw materials or components, we might actually reduce resource consumption by half, rather than just a few percentage points by, for example, having removed the plastic in one of the components.
– “In order to achieve change, there must also be customers who are setting requirements,” says Emma Rex, with one example of that being in the area of public procurement.
Advance planning needed for public procurement
In Sweden, purchases made as part of a public procurement process amount to approximately SEK 800 billion per year. It corresponds to nearly one-fifth of GDP and as such, is perhaps the most powerful tool that the Regions can use to influence the market. But to achieve that, advance planning is needed. Procurement processes that begin today will affect purchasing for many years into the future.
– “We need to be brave enough to really ponder the consequences of various goals and ask ourselves, how radically things need to change in order to get where we want to be. After that, the various stakeholders need to be engaged in dialogue. It won’t happen on its own, with business as usual. Action is needed now,” says Emma Rex.
We need to be brave enough to really ponder the consequences of various goals and ask ourselves, how radically things need to change in order to get where we want to be
Transformation creates business opportunities
Josefina Sallén, Focus Area Leader for Circular Transformation at RISE, says that there is a risk that many companies will miss seeing the business opportunities created as part of the transformation to a circular economy.
– “Small and medium-sized companies are not always so good at business intelligence. Frequently, it consists of what their salesforce sees and these types of changes take awhile before they affect purchasing, which means that neither do they impact a supplier’s salesforce,” she says.
Her experience has shown that dialogue instead occurs via partnerships, typically as part of entirely new business constellations. Suppliers who volunteer and want to be a part of it all, even if they don’t already have the finished solutions in place, are attractive to large companies interested in making the transition.
Companies not yet pondering the transition from product to service, with their sales currently outsourced, have a harder time navigating their way forward.
– “For many, the market hasn’t changed yet. Many companies are still making their living on delivering products that last a very long time. But actually, they are losing money on that because they are not participating in the secondary market, instead, putting all of their effort into increasing their market share. They’ve become accustomed to selling things only in a linear system,” says Josefina Sallén.
– “As a small company, the things you need to think about are which value chain, which needs solution and which partnerships am I in? For future business, where do I fit in?” she says.
Collaboration between competitors
Frequently, this type of insight arises in a RISE project. For example, Volkswagen and Volvo, found a way of collaborating with the indemnity insurance company, If, and its partner repair shops so that the company, Sculptur, could get involved by recovering the value of plastic in the outer casings of car bumpers. The material is now used in a new process to become 3D printed chairs.
– “This coalition of stakeholders and companies did not exist before,” says Josefina Sallén.