Wanting to reinvent the way we do laundry Bundles developed a business model that focused on selling washing cycles instead of washing machines. By attaching a device to their washing machines the company is able to maintain ownership of the machines while monitoring their usage. Statistics gathered from the machine are displayed on the Wash-App, which provides the customer with insights into the overall cost of doing their laundry, including energy, water and detergent consumption. This pay-per-use model not only reduces the costs for the customer, but also extends the life of the machine. However, by introducing this new way of doing laundry a different way of structuring long-term financing was required.
Multiple challenges arose in the case of Bundles, the first being that the washing machines needed to be financed with a longer payback period, which put pressure on the company’s cash flows. Secondly, Bundles’ balance sheet continues to grow due to the fact that they maintain ownership of the washing machines throughout their entire life-cycle creating a capital demand. Lastly, there is currently no company which can remanufacture or refurbish the used washing machines making it very difficult to incorporate residual value into the machine’s lease contracts.
“We save our planet and simultaneously households save money”
- Marcel Peters, CEO
Owning a large fleet of assets is considered a capital tie-up for Bundles. To relieve them of this financial burden a collaboration with (institutional) residential real estate investors, who have financial means and a long-term investment strategy, was established. A washing machine can be seen as a key service that home owners may want to provide to their renters. Through this collaboration, Bundles was able to access an existing real-estate rental market with pre-established customer relationships.
In order to strengthen the business case for the pay-per-use model the guarantee of residual value from the company’s suppliers would be very beneficial. The trade off between strong contracts with clients and the flexibility of such contracts needs to be balanced in order to optimize the possibility of financing new business models such as this. Additionally, increasing equity capital and factoring or securitisation of receivables would increase financing possibilities for Bundles. The report “Money makes the world go round”, published by the FinanCE working group of the Ellen MacArthur Foundation features further information on this case study. For more information about the report please contact elisa@circle-economy.com
Continued investment in a linear economy results in long-term, system-wide impacts and risks that have adverse effects on the economy, society and the environment. Moving towards a circular economy can generate value and reduce vulnerability against these risks.
Circle Economy understands that a global standard is needed to help investors assess the resilience of their portfolios against circular economy objectives; while engaging with their investees to improve their circularity performance and create long-term value. The Circle Portfolio enables investors to review the circularity of companies in their portfolio allowing them to collaborate with investees to reduce risks, capitalise on new opportunities, and enable long-term growth in a circular manner.
By completing our online survey, Circle Assessment, companies are evaluated based on the extent to which they are pursuing and implementing various circular business strategies. The results of the assessment are used as an input into the Circle Portfolio to assess the overall circularity of an investment portfolio. This enables investment managers to identify areas in which they can improve the overall performance of their investment portfolio.
“The circular economy is unlikely to be delivered by individual firms alone. In order for it to develop meaningfully a significant number of like-minded players, in key sectors such energy, manufacturing, and technology, must stimulate sector-wide learning and sharing of best practices.”
- ACTIAM
A large part of the development of the tool involved focusing first on the business model and the relationship between the partners. However, it was soon decided that a more lean-startup approach was required to first develop a version of the tool and let it organically direct the approach along with the business model. Following this approach and engaging with companies and investors has yielded a significant amount of insights including new directions for the tool.
The creation of the Circle Portfolio involved presenting mockups of the tool to financial institutions to gain feedback and further insight regarding their needs. Input was received from portfolio managers at PGGM. Additionally, from initial reactions and conversations with ABN, AMRO, GRESB, as well as learning from the RACE Finance program, the tool was redesigned to better evaluate the extent to which circular economy strategies can enable investors to make smarter decisions. It also provides incentives for their portfolio companies to pursue circular strategies.
The Circle Portfolio is a useful tool to gather information about the circular possibilities and actions of potential investments. As a partner in the development of this tool, PGGM will use our network to create a community of financial institutions to further develop the circular analysis framework.”
- PGGM
In our current linear "take - make - waste" pattern, the everyday products that we use are contributing to the quick depletion of the world's natural resources, resulting in price volatility and unsustainable, future growth. Entrepreneurs must find ways to preserve value throughout their supply chains, design products with longer lifespans and take advantage of the possibilities of circular design. Products need to be redesigned so that they can be reused, remanufactured, and recycled with a goal of reducing the amount of waste that ends up in landfills or incinerators.
Product design is the engine with which we can accelerate the transition towards a circular economy. Creating innovative products and exploring new ways to deliver services is a means for which circular design can come to life. Designers are the change agents for circular business within their organisations and play a key role in making the circular economy, a priority in future strategies.
Throughout a series of 3 day-long workshops, businesses, designers, and students join forces to create a roadmap to develop business through circular design. The workshop participants are taken on a journey through three stages, initiate, ideate, and implement. For designers there is a separate day long class in which they take the first steps towards redesigning a product of their choosing in a circular manner. At the end of the business track participants leave with a clear circular business proposition, a finalized feasibility check and a roadmap to implementation.
Through shared knowledge and inspiration, key partnerships are formed to develop new products, services, and business models based on concrete challenges. By providing a safe and creative environment in which businesses and designers can apply circular business strategies to current, real life cases, they can take the first steps in implementing their circular business ideas.
Are you interested in learning more about the CIRCO framework or signing up for an upcoming workshop?
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The textiles industry has a significant impact on the environment due to its land, water and energy intensive operations. With an ever increasing need to decrease our reliance on natural resources; the transition from virgin to recovered and upcycled cotton is becoming a necessity. For example, one kilogram of virgin cotton requires over 13,000 litres of water. In comparison, one kilogram of recovered, upcycled cotton requires no additional water, farming, processing, or dyeing than when it was first produced and generates no additional greenhouse gasses.
“Closed loops in textile industries are closer to reality than many would think. The improving techniques of mechanical recycling and the endorsement of global brands and retailers, that realise the important potential for profit making, push the practices of high value recycling to become the new standard for the textile and fashion sectors.”
- Isaac Nichelson, Chief Sustainability & Marketing Officer, Recover Textiles
Recover has been recycling post-industrial clipping waste for over 70 years, however this recovery stream accounts for only a fraction of overall textile waste. Four generations of research and development in textile recycling has led to some impressive technical advances that make the quality of Recover’s upcycled yarn comparable to virgin, at a competitive price and with a fraction of the environmental impact. Different textile streams (post-industrial, pre-consumer, and post-consumer) require different considerations such as logistics, security and recycling processes. Together with Circle Economy, Recover aims to explore the high-value recycling possibilities within these waste streams, and develop new, scalable, closed loop solutions, through a series of practical implementation projects.
https://vimeo.com/114698289
These ongoing pilot projects, with pre and post consumer textiles, aim to develop a model that is both replicable and scalable in the long term, while maintaining the high standards that Recover has set. Circle Economy and Recover are developing this model through the following collaborative projects with industry: Reblend High-Value Recycling Project, Reshare High-Value Recycling Project, and G-Star High-Value Recycling Project.
With this project, Recover aims to extend it’s expertise of recycling to pre and post consumer textiles, to develop new closed loop solutions for the industry. Such changes can create a system whereby products, fabrics and fibres are infinitely and effectively cycled through connected loops allowing for continued fibre consumption without the depletion or destruction of resources and ecosystems, on which we are dependent.
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Roughly one billion tires are removed from vehicles annually, creating around 13.5 million tons of solid waste. Waste tires, also known as ‘End-of-Life Tires’ (ELTs) contain a significant amount of valuable high quality carbon black, typically between 20 and 25% of the total mass. The standard way of producing black carbon is very polluting, but it has a high surface-area-to-volume ratio, which makes black carbon widely applied as a reinforcing filler in tyres and other products. Around 60% of the produced carbon black is used for tyre production, the remainder in technical rubbers, but also as pigments in paint, plastic and ink.
“Tens of millions of tires are burned annually, wasting massive amounts of valuable carbon black. Petroleum is used for the production of new carbon black. Black Bear thought of something smart.”
- Martijn Lopez Cardoso, CEO, Black Bear Carbon
Black Bear has developed a highly innovative process enabling the recovery of high quality carbon black from waste tires, thereby providing a sustainable solution for a problematic waste stream and preventing pollution related to the production of furnace carbon black. Black Bear offers a commercially attractive proposition given its high quality and lower production costs compared to furnace carbon black.
As a young, innovative organisation in a conservative industry, Black Bear experiences several challenges in implementing a circular business model. In the first place, although many potential customers are keen on adopting a green alternative, it takes dedication and perseverance to move through the lengthy approval procedures in large and established organisations. We have found that building a trusted brand and sharing (independent) test results have been key drivers for success.
Secondly, many circular business models require significant funding. In our case, moving to commercial scale required a €10m investment in plant construction. We have found the process of attracting investors rewarding, yet very time intensive. A key takeaway is to present an excellent business case, with circularity as a bonus.
Finally, Black Bear sees constraints in current regulations. The assumptions of the current regulation are still based on the old linear thinking and tries to protect society from the “evils of waste”. We have to rely on governments to change these regulations, creating a more favourable regulatory climate, but this will take time and pioneers to lead the way.
Carbon black, when successfully retrieved from waste tires, may be re-used as an equally acceptable replacement for virgin furnace carbon blacks. Applying this circular business model has great advantages for companies active in tire processing and rubber manufacturing by reducing waste processing costs, use of and expenditure on resources and by drastically reducing negative environmental impacts.
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Nearly everyone owns or uses a phone. Most phones contain on average over 30 different minerals. These minerals are mined in various locations around the world, most of the time under poor conditions and have become known as conflict materials that fund rebel groups. Additionally, many smartphones are not designed to be long lasting and their technology changes frequently, enticing consumers to upgrade to new models regularly. Fairphone aims to tackle the planned obsolescence of electronics while supporting conflict-free and fairer minerals by working towards social improvements throughout the value chain.
Established in 2010 as a campaign against conflict minerals and registered in 2013 as an independent social enterprise. Fairphone designs and produces modular smartphones that are easy to repair and long lasting. An inspiring example to the existing industry, the company is using modular design to extend the lifespan of their smartphones while opening up the supply chain and mapping the source of their materials. They are also enhancing the circularity of the supply chain by making spare parts more readily available and promoting do-it-yourself repairs.
"Pioneers in circular economy will reap the benefits as they are the game changers." - Bas van Abel, CEO
One of the principal challenges is shifting the consumer's mentality to slow down the replacement pace of smartphones. By allowing its users to purchase spare parts for do-it-yourself repairs, Fairphone’s reparability feature makes it easier for those users who do not consider themselves tech savvy. From the insights gained through repairs made to the first version of the Fairphone the company was able to identify the parts of the phone that most commonly break, and turn these into replaceable parts in version two. They found that reparability pays off because sustainability conscious consumers are willing to put the extra effort into replacing parts and caring for their device.
Fairphone’s business model allows for the potential reduction of CO2 emissions by 25% and reduction of human toxicity by 42%. To date, the social enterprise has sold over 90,000 phones and continues to bring fairer phones to the market while inspiring positive change throughout the entire industry.
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95% of all “wireless” communication data goes through deep sea cables. This 150-year-old technology has accumulated approximately 3.6 million kilometres of telecommunication cables, whereby close to 60.000 kilometres of cables are still being produced and installed each year. Although no longer in use, old cables remain on the seabed as there is has been no value for telecom companies in retrieve them until now.
An estimated 30.000 km of cable have been recovered from sea beds to date but 94.4% of unused cables are still lying on the ocean floor. With the addition of new cables each year, the cable routes are becoming more and more congested. This material wastefulness represents a potential value of several billion U.S. dollars in metals and plastics.
The 3 main uses for decommissioned cables are:
The case for recovery of deep sea cables is an interesting solution for the current congestion issues cable-routes face, both from a financial, legal, environmental and practical point of view.
During recovery CRS Holland encounters congestion on many the cable routes. Intersecting and parallel cables, within safety margins, is something they see more and more of. This tangled web of cables can cause operation challenges not only during recovery but also when ‘live’ cables need repairs or maintenance. With the movements at the Paris Climate Convention and discussions surrounding future regulations, there is hope the industry will not employ more cables unless they have first recovered its decommissioned systems.
“Hundreds of thousand kilometres of decommissioned cable are on the sea bed floor. CRS Holland is proud to be able to create a circular business case for these materials by partners with cable owners to clean up the ocean floor.”
Due to the increasing scarcity for recycled materials there is a growing demand for metals and plastics, making the business case for the recovery and recycling of deep sea, communication cables even more relevant. However, the benefits of selling back recovered cable components are currently higher than the costs of recovery and recycle process. The industry must continue to be educated regarding the benefits of recovering decommissioned cable systems.
CRS Holland’s' cable recovery service have prevented the emission of 54.000 tons of CO2, the equivalent of taking 13.500 cars off the road annually. They are responsible for recovering 60% of the total 30.000 kilometres of cable that has been brought up from sea beds in the Atlantic and Pacific to date. What the industry needs now is for telecom companies to take a greater role in cable recovery and use their influence in the industry to champion proper cable recovery practices.
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