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Digital technologies help circular businesses move faster and get further

  • September 1, 2020

The Circular Economy is already taking root in Europe.

In the Netherlands, Schiphol Airport next to Amsterdam has contracted Phillips and Cofely to provide light-as-a-service, while maintaining ownership of lamps and fittings (video link). The service life of the fittings has been extended by 75%, while 100% of the lamps used are collected and recycled in full.

RedAlimenta based in Spain is slashing food waste. The Toledo-based NGO collects surplus prepared food from restaurants, schools and hospitals and delivers it to people in need. It also runs an awareness campaign to educate children to lower food waste.

Donar, a Slovenian designer-furniture company, has adopted a cradle-to-cradle design approach to create comfortable and stylish furniture. Their products are designed to give way to a new use after their life service has ended, and are made from industrial residues where possible including using recycled PET.

The Metsä Group in Finland has inaugurated a novel circular-inspired paper mill. It has lowered its environmental footprint by 70% compared to the industry average. Also, it uses 100% of side streams for a range of bioproducts, and generates electricity which it sells to the national grid (2.5% of national total).

The European Circular Economy Stakeholder Platform has 390 more examples of circular business good practices from across the continent. Given the progress, what is the role for digital technologies, and why are they are important?

In simple words: Circular Economy is still small, and making it as big as it needs to be (to avoid the worst that climate change can bring) is not easy.

A business, to become circular, must look at what is coming in (inputs) and what is going out (outputs), making more use of renewable and recycled/reused materials while ensuring that their outputs are reusable and recyclable by others.

Inputs may not be located in one place (e.g. restaurants, schools and hospitals around Toledo for RedAlimenta), and their availability and quality may change throughout the week, and throughout the year. Byproduct-outputs should be processed and used to create new products, internally or by others (e.g. Metsä Group’s novel bioproducts). Finally, a business must also consider as well as actively manage the full lifecycle of a material item which they provide to their customers, which might require new business activities and new partnerships.

There is a clear need to forge new links across a wide network, and there is strong pressure to assume different business models. Scaled-up to the EU’s 27.5 million businesses, a significant logistical challenge arises.

This is where technology comes in. A logistical challenge can be seen as a big data problem, one which technology-assisted big data solutions can help address.

Various digital technologies (for example, track & tracing, artificial intelligence, the Internet of Things, edge computing, novel sensors, 5G, etc.) can be used to collect, process and convey a large amount of data: the location, quantity, availability and specifications of materials that can be used as circular inputs as well as the status of an item (e.g. if a Phillips lightbulb has to be replaced). If needed, this data can be transmitted rapidly and widely, creating awareness and facilitating collaborations. It can also be used to provide internal insights and inform business operations and business strategy.

Demonstrated applications of digital technology in support of the Circular Economy include:

  • Management of complex circular logistical chains, including by improving the efficiency of energy and resource use;
  • Traceability solutions, within and between companies and with consumers alike;
  • Sharing platforms and exchange platforms extending the utility and life of products through renting and leasing as well as by facilitating repairing, upgrading and reselling of items (e.g. RedAlimenta identifying surplus prepared food);
  • Product-as-a-service business models are typically dependent on a stream of data and its analysis (e.g. Phillips’/Cofely’s light-as-a-service).

Digitalisation provides the tools to make key linkages which are crucial to the contemporary notion of a circular economy, particularly one that is internationalised and globalised.

The DigiCirc project aims to seize upon this potential and boost the transition to circular economy. Through 3 accelerator programmes, DigiCirc will set out to support circular innovation and help entrepreneurs to make use of digital tools – and therefore boost the efficiency, scalability and overall impact of their products and services.