Miro Akuabo Osório, Senior Sustainability Consultant at Volkswagen Group Services and a member of the Sustainability Think Tank at The Lisbon MBA Católica|Nova, wrote an insightful opinion article for Jornal Económico titled “There has never been a better time to invest in Circular Economy.”

 

Circular economy has been around for a while and is a powerful value creating toolbox, while helping protect natural resources and social habitats. It can contribute to a higher resilience of economic zones, reduce stress in societal systems, and promote the adaption of industries and businesses to act towards nature restoration and regeneration.

 

Although it is not a perfect system, it offers new views on the way businesses create value. Value first, money second.

 

When understanding businesses and their supply chain as a flow of value, new and unexplored growth opportunities arise that can increase profit generation down the line. With business models seen as the architecture underlying each firms’ activities for creating, delivering, and capturing value, circular economy business becomes even more interesting.

Expanding the view on transactional producer-customer relationships by including other actors in the value chain such as business partners, second-hand users and refurbishers, allows innovation in processes, technology and business models – just imagine a producer running its own repair, recycling or reselling business as a trusted expert. Investments in innovation require an understanding of the value chain.

 

A strong competitive advantage shows for those who fully implement circular economy and the data that comes with it.

 

While circular economy was based on medium- to long-term targets before, it is now becoming a short-term imperative: The EU and its major players recognized the opportunities that come with the transition towards a circular economy, including increased control over resources, product quality, prices and independence from resource imports. This is also expressed in the new and groundbreaking reporting scheme for circular economy from the EU (CSRD/ESRS E5), by which companies will have to disclose clear ESG indicators, including targets, policies, actions, and metrics, to address impacts and measure actions, including on:

 

• Processes to identify and assess material resource use and circular economy-related impacts, risks and opportunities;
• Policies, actions, and resources allocated to resource use and circular economy;
• Targets related to resource use;
• Resource in- and outflows;
• Potential financial effects from resource use and circular economy-related impacts, risks and opportunities.

 

This reporting scheme focuses on improvements concerning decarbonization, biodiversity, social responsibility and promoting the strength, security, and stability of the EU economy.

 

Benefits are easy to find, but there is still a financing gap.

 

Financing is a common gap to be overcome to any transition. The new EU taxonomy (Delegated Acts/Annex II) can support closing that, allowing actors from the financial sector and investment-receiving organizations to work more efficiently together based on common definitions. With large government funds, green bonds and else, and with ESG indicators in the stock market, new forms of loans, resource efficiency targets and penalties, the moment for the managed and controlled circular economy has come.

 

Those courageous to move may just now get ahead.

 

In essence, the circular economy offers promising possibilities with the ongoing progress in regulatory frameworks. Actors daring to create, deliver and capture value in new ways can allow for long-term, exciting and sound business operations and lock bottom line profits.

 

 

Read the full article (original) in Portuguese here.

 

Source: Jornal Económico