Expert Blog – July 11, 2023
StartGreen wants to help build a sustainable economy. That is why our funds invest in three impact areas: the Energy Transition, Diversity and Circularity. ''In broader society, the focus goes mainly to the first two, while circularity is under-reported,' says Laura Rooseboom, co-founder and Managing Partner of StartGreen in this blog. 'This needs to change, and the sooner the better. Businesses, governments and consumers must work together to prevent resource depletion.'
Too little supply
There is too little focus on achieving a circular economy, even though this is at least as important as the energy transition. Because what good will energy be, when we don't have any raw materials left to process? All too often, people still think that the supply of primary raw materials (extracted from the natural environment) and secondary raw materials (reclaimed or re-used) will be able to meet the growing demand. For that reason, the Resource Wende Coalition advocates for a widely supported Future Agreement, in which the consequences of the impending scarcity of raw materials are examined in a critical and scientific manner.
Use resources has not fallen
The Dutch government is aiming for a fully circular economy by 2050. By 2030, the consumption of primary raw materials must have fallen by half. The second Integral Circular Economy Reporting (ICER 2023) – commissioned by the government and produced by the Netherlands Environmental Assessment Agency (PBL) – shows that we are nowhere near achieving this goal. In fact, the use of most raw materials has not decreased at all in recent years.
The government has formulated three subsidiary goals to help reduce the consumption of raw materials. Raw materials must be used more efficiently in production processes so that fewer are needed. We also need to ensure we use more sustainably produced raw materials, such as biomass, a raw material made from plants, trees and food waste. New products and production methods should also be designed from the outset to be circular.
Investing in circularity
StartGreen can help achieve the third goal in particular by financing innovative companies. A number of our funds invest in circular impact companies. Take Fairphone for instance. They produce smartphones using recycled and responsibly sourced materials. MUD Jeans is the world's first circular denim brand. Recycling jeans and offering an option to lease their goods prevents denim from ending up in landfill. Chaincraft converts organic food waste into high-quality acids for the chemical industry.
We all need to contribute
These kinds of investments accelerate the transition to a circular economy. But it's not enough. I believe that a total system change is necessary to achieve a truly circular economy. We all have to contribute to that. As consumers, we should not thoughtlessly discard our unused or broken items but recycle them or have them repaired. This already happens with higher-end clothing or furniture. For example The Next Closet or Reliving. For electrical or electronic devices, recycling is currently often more expensive than buying new. To really tackle resource depletion across the board, I think the most important thing is for governments to start levying taxes in new ways. .
Tax on extracted value
Large manufacturing businesses will only start looking critically at their resource consumption if they feel it in their pockets. Little will change as long as labour is highly taxed while the consumption of natural resources and pollution are hardly taxed at all. I therefore strongly agree with the Ex'tax Project Foundation which argues that our tax system needs to start offering alternative financial incentives. And fast! The extraction of value - in other words, pollution and the depletion of our natural resources - must be taxed hard, while levies on labour are lowered.' Or as António Guterres, Secretary-General of the United Nations succinctly put it: Tax pollution, not people.
Balance between the ecological ceiling and the social foundation
If we take a critical look at our own business operations, together we can make an important contribution to a circular economy. Kate Raworth's book Donut economy is truly inspirational. 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 stands for the sweet spot: a circular economy that is good for people and the environment.
To make that sweet spot happen, Raworth says businesses must pay attention to 'regenerative design': shifting the focus from designing for consumption, to designing for reuse. By participating in this as a business, we can meet the needs of everyone within the limits of our planet's capabilities. Manufacturing and construction businesses in particular can make a significant contribution to achieving a circular economy. As a financial services company, the scope for StartGreen to make a difference lies primarily in how we invest. Beyond this, it goes without saying that we try to act as sustainably and inclusively as possible in all other aspects of our operations.
This blog appeared in our Impact Report 2022.