Expert blog – July 11, 2023
StartGreen aims to help build a sustainable economy. That is why our funds invest in three impact domains: the Energy Transition, Diversity, and Circularity. ‘There is a lot of social attention for the first two, but circularity remains underexposed,’ says Laura Rooseboom, co-founder and Managing Partner of StartGreen in this blog. ‘That needs to change quickly. Companies, governments, and consumers must work together to prevent the depletion of raw materials.’
Insufficient supply
There is still too little attention for a circular economy, even though it is at least as important as the energy transition. After all, what use will energy be if you no longer have raw materials to process? It is still too often assumed that the supply of primary (extracted from nature) and secondary (recovered, reusable) raw materials can meet the growing demand. For this reason, the Resource Wende Coalitie is advocating for a broadly supported Future Agreement, which takes a critical and scientific look at the consequences of the looming scarcity of raw materials.
Use of raw materials has not decreased
The Dutch government aims for a fully circular economy by 2050. By 2030, the consumption of primary raw materials must be halved. The second Integrale Circulaire Economie Rapportage (ICER 2023) – commissioned by the government and produced by the Netherlands Environmental Assessment Agency (PBL) – shows that this goal is still far from being achieved. In fact, the use of most raw materials has not decreased at all in recent years.
Reducing consumption
To reduce the consumption of raw materials, the government has formulated three sub-objectives. Raw materials must be used more efficiently in production processes so that fewer are needed. In addition, more sustainably produced raw materials must be used, such as biomass: raw material made from plants, trees, and food waste. New products and production methods must also be designed circularly.
Investing in circularity
StartGreen can primarily help achieve the third goal by financing innovative enterprises. A number of our funds invest in circular impact companies. For example, Fairphone produces smartphones using recycled and responsibly sourced materials. MUD Jeans is the world’s first circular denim brand. By recycling jeans and offering a leasing option, they prevent denim from ending up in landfills. Chaincraft converts organic waste into high-quality acids for the chemical industry.
Everyone contributing
These types of investments accelerate the transition to a circular economy. But it is not enough. I believe that a total system change is necessary to achieve a truly circular economy. We all have to play our part. As consumers, we should not immediately throw away unused or broken items and clothing, but recycle them or have them repaired. This is already happening for luxury clothing or furniture, for example via The Next Closet or Reliving. For technical devices, recycling is often still more expensive than buying new. To truly tackle the depletion of raw materials structurally, I believe the most important thing is for governments to start levying taxes in a different way.
Tax on extracted value
Large manufacturing companies will only start looking critically at their raw material consumption when they feel it in their wallets. As long as labor is still highly taxed and the consumption of natural resources and pollution are hardly taxed at all, little will change. I therefore wholeheartedly agree with the Ex’tax Project Foundation, which states that our tax system must offer different financial incentives, and quickly. The extraction of value—meaning pollution and the depletion of natural resources—should be highly taxed, while the burden on labor should be reduced. Or as António Guterres, Secretary-General of the United Nations, puts it so well: Tax pollution, not people.
Balancing ecological ceiling and social foundation
If we as companies look critically at our own business operations, we can together make a significant contribution to a circular economy. I find the book Doughnut Economics by Kate Raworth very inspiring. In it, she outlines an economic model in the shape of a doughnut. The outer circle represents the ecological ceiling, while the inner circle represents the social foundation. The space between those two circles forms the doughnut or the ‘sweet spot’: a circular economy that is good for both people and the environment.
Regenerative design
To realize that sweet spot, Raworth argues that companies must, among other things, pay attention to ‘regenerative design’: this shifts the focus from designing for consumption to designing for reuse. By participating in this as a company, we can together meet the needs of everyone within the means of the planet. Production and construction companies, in particular, can make a substantial contribution to a circular economy in this way. As a financial service provider, StartGreen can primarily make a difference through the investments we make. Naturally, we also strive to ensure that everything we do ourselves is as sustainable and inclusive as possible.
This blog previously appeared in our Impact Report 2022.
