“Old” and “new” circular economy

This article is based on Roberto Zoboli’s speech during “Re-Think Forum”.

Roberto Zoboli, during “ReThink Circular Economy Forum”, introduced some key elements to understand the Circular Economy, by distinguishing between “Old” and “New” Circular Economy.

Some of the elements described in this article are coming from studies developed by the Inter-University research center called “SEEDS” – Sustainability Environmental Economics and Dynamics Studies – of which Catholic University is a member. Università Cattolica is also a partner of the European Topic Centre on Waste and Materials in a Green Economy, that develops studies and researches for the European Environment Agency (EEA).

In particular, Università Cattolica has contributed to the drafting of three reports for the EEA which include both technical and informative aspects:

In 2019 the fourth report of the EEA on the Circular Economy will be published.

New behavioral patterns

The idea of implementing the Circular Economy can force and orient the whole economic system towards new behavioral models. That means to move towards what the community like and what the community wants to prevail, from a sustainable, environmental and social point of view. 

The OECD’s conceptual scheme is useful to frame the Circular Economy, it underlines three different levels of possible actions:

  • The closure of the resource flows: best known as the “recovery and recycling process”, where the waste system has an important role, but it also includes the re-use and re-manufacturing of products;
  • The slowdown of the use cycle: the elongation of the lifespan of products and the contrast of the fast aging, compared to what it is logical by the technical point of view and acceptable at the social level;
  • Shrinking of the use cycle: the efficient use of resources by avoiding wastage and by producing more items with the same quantity of resources and materials, with an extended focus on design and “sharing economy”.

A fundamental driver to reach these three purposes is coming by the European Directives on waste, which defines ambitious goals in the recycling field and that refers to the extended responsibility of the producer. They have also defined the plastics strategy, which is leading to a reduction in the use of the single-use plastic and is rebalancing the difference between separate collection and the effective recycling of plastic packaging.

Another important driver for developing the Circular Economy is the cultural and communicative aspect. In Europe, studies and researches developed by the Ellen MacArthur Foundation had a great impact. For example, the concepts and the flows summarized in the diagram below became one of the references about the Circular Economy. This suggests that culture can be one of the most important drivers for spreading the Circular Economy and the importance of Corporates in the application of the Circular Economy.

By Ellen MacArthur Foundation

“Old” and “New”

Regarding the concept of “Old” and “New” Circular Economy, it is important to underline two elements. The first one is that the concept expressed in the first level by the OECD is a building block of the “Old” Circular Economy and it is already incorporated in the manufacturing processes. In some industrial sectors, waste is a productive input. For example, the European paper industry, in which the recyclable paper became the main source of fibers (46% in 2015), and a main portion of the paper industrial system is composed by those corporates operating as recyclers.

This evolution derived from European politics, in particular, packaging politics, which led to a large volume flow of secondary low-cost materials and to a change in the productive structure of the paper sector.

In Italy 75% of the industrial waste undergoes a recovery process of materials (even if, there is no information about companies that use these materials) and the revenue of the recycling industries in 2015 was estimated to be 34 billion euros, with 80.000 employees. 

In industries subject to the Extended Responsibility by the Producer, the transformation of the supply chain that maximizes the reuse of materials, have already occurred, for example, in the metal, in the automotive and in the electronics sectors.

It’s a process that we can define as consolidated. The packaging system is one of the most evident examples of this transformation, where CONAI have been operating since 1997, the percentage of recycling reached in Italy is 67% during 2016.

The “Old” Circular Economy is ready, and it will grow up more and more thanks to three elements:

  • The thrust of the European policies;
  • A stronger cultural inclination
  • A good economic potential.

In Europe are produced 2,5 billion tons of waste every year and 48% is sent to landfill sites.

The target is that landfill sites will be no more necessary, reaching “zero landfill”, which means a strong materials flow, about 1,2 billion tons every year, could be brought to be reused by the industrial system during the next years.

The “New” Circular Economy includes the switch from the circularity of the materials to the circularity of corporates, organizations, economic and institutional agents which become the main protagonists of this change. It will bring a circular logic in the existing business models and the birth of new businesses that use technologies and organizational systems that do not yet exist.

There are three trends:

  1. The alignment of big corporates that incorporate in a fast way the circular logistics;
  2. The birth of micro circular and innovative business models carried on by small corporates and startups;
  3. The flow of new ideas and projects resulting from the research, in particular, the European one, as drivers of new paradigms.

As regards small and medium-sized enterprises, it is evident that there are interesting areas, such as the “bioeconomy”: the green chemistry can provide us interesting innovative surprises in the next years.

We must keep in mind that, these business models raise a number of barriers that are typical of the most radical innovation and startups, their implementation at large-scale could be particularly complex. Another important issue is the strong focus on the research stimulated also by the European funding in the past years: since 2015, the Horizon2020 Program has funded 61 projects linked to Circular Economy for a total amount of 345 million euros and currently, there are other 16 budget lines on the Circular Economy research. The real question is how vital and real this new Circular Economy is. According to Zoboli, only corporates can answer this question.

Francesco Castellano

Francesco Castellano holds a Master degree in Business Administration, and he has gathered almost twenty years of experience in research, finance, consulting, and business management. During this time, he was engaged in different types of projects as a consultant at Bain & Company, launched Uber operations in Turin, and worked in the FP&A department at General Electric.Lately, he founded To... Read more

Francesco Castellano holds a Master degree in Business Administration, and he has gathered almost twenty years of experience in research, finance, consulting, and business management. During this time, he was engaged in different types of projects as a consultant at Bain & Company, launched Uber operations in Turin, and worked in the FP&A department at General Electric.

Lately, he founded Tondo, a cluster of organizations focusing on spreading Circular Economy approaches and concepts, and supporting companies in the transition to a clean and circular future. Francesco is also the ideator and coordinator of the Re-think Circular Economy Forum, a format of events organized in many different locations in Italy showcasing the most relevant Circular Economy solutions.

Francesco has been a guest speaker at different universities and events, like Federico II University, Bocconi University, LIUC - Cattaneo University, Pavia University, Padua University, Catholic University, IPE Business School, 24ORE Business School, Campus Party, Torino Stratosferica, Visionary Days.

Francesco is passionate about Circular Economy, Cleantech Innovations, Venture Building and Entrepreneurship.