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Impulse: Four Good Reasons Why the Circular Economy Must Become the DNA of Our Value Creation

Bild gechaeftsstelle badge © Dr. Claas Oehlmann, Geschäftsführer BDI-Initiative Circular Economy mit Projektreferentinnen Inken Sittler und Annika Stuckenhoff
Written
15 December 2022
Topic
Sustainability
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Impulse by Dr. Claas Oehlmann, Inken Sittler und Annika Stuckenhoff, BDI-Initiative Circular Economy

Reason 1: Only with the circular economy will we achieve our climate goals.

No doubt about it - One of the great challenges of this century, ours, and future generations is to combat the climate crisis. Experts from the International Resource Panel have found that raw materials extraction and processing account for more than 50% of global greenhouse gas emissions. This figure shows the enormous potential that the circular economy holds. But for this to happen, we also need a coherent understanding of how emissions reductions can be accounted for and how circular economy targets can be meaningfully linked to climate targets. After all, CO² emission reductions must be taken into account throughout the entire life cycle.

Reason 2: With the circular economy, we secure our supply of raw materials and create resilient supply chains

In addition to high energy prices due to significant distortions in the gas market, currently strongly caused by the Russia-Ukraine war, the pandemic, for example, has also significantly affected supply chains and also led to higher production prices. This was and is a reminder for all of us to re-evaluate the stability of our current trading system and bring new, better ideas to the "old" structures. It is important that we do not put the issue on the agenda now and forget about it later, once better times come again. It is a matter of setting up our industry to be crisis-resistant in the long term: Raw material extraction in our own economic system through material recycling! This is also important because global raw material extraction will continue to increase in the long term and will double by 2060 - if it maintains its current growth pattern.

Reason 3: The circular economy opens up innovative business models.

The mantra of the circular economy is product design as the anchor of the circular economy. We need to design products so that they are, for example, durable, repairable, and recyclable. And aren't many features of the circular economy - for example, the durability of products - actually also integral components of our "Made in Germany" brand? The main question for start-ups and industries in the circular economy is: What is the business case? We need to understand the circular economy as an economic strategy and competitive advantage. Here, many start-ups with innovative business models are also leading the way - and cooperation with established industries is a good way to achieve this.

Reason 4: Those who focus on the circular economy are also the digital pioneers of tomorrow.

Circular economy and digitalization go hand in hand because digital technologies and the intelligent use of data can achieve important leverage effects in all phases of value creation and support CE strategies. According to findings from scientific research, manufacturing companies in Germany that already have a well-developed digital infrastructure are also more successful in implementing resource-saving processes. Digital technologies (including digital product passports, decentralized identifiers, robotics & AI systems) can, for example, support sorting and recycling processes, improve transparency and information exchange across different supply chain stages, assist in the measurability and control of production processes, and generate new insights in product design.

To sum it up:

Germany has a strong industrial base and at the same time, thanks in part to UnternehmerTUM, one of the largest and most dynamic start-up ecosystems in the world is unfolding here. Nearly two-thirds of the start-ups surveyed in the German Startup Monitor 2022 report categorize themselves as belonging to a digital business model (65.2%). These are many good prerequisites for assuming a pioneering role in the circular economy, because, for the circular transformation, in particular, we need disruptive innovations and digital data collection in addition to networking and exchange in the value cycle. The task now is to help shape the transformation to the Circular Economy.

About the BDI Circular Economy Initiative:

The BDI (Federation of German Industries) Circular Economy Initiative connects companies from the industry as well as start-ups in the field of the circular economy and promotes the exchange of its members with politics, science, and society. With currently almost 60 members, technological potentials and framework conditions for the circular economy are identified together on an ongoing basis. This includes, for example, practice-oriented workshop formats, 'policy updates' on political strategies, regulations, and guidelines at EU and national level, public discussion panels, and cooperation events with science. Interested in joining us in advancing the circular economy? More info at: Circular Economy (bdi.eu)

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