More and more companies want to engage with the circular economy but finding a new use for excess industrial material is difficult. New digital platforms are hoping to make it easier.
An increasing number of companies are realising the necessity of moving from a linear to a circular economy. And various digital platforms are working on facilitating this.
“We match companies. One of them has materials that would normally be thrown away and the other one is interested in buying those materials. Think of us as the Tinder of the circular economy,” says Christian van Maaren, co-founder
of the Excess Materials Exchange.
The company, a digital marketplace that enables companies across industries to exchange excess materials and products, was founded in 2017, with the idea that there is wealth in waste and that a world without waste is possible. The aim of the exchange
is to make companies more resource resilient, decrease their environmental footprint, and turn their trash into cash.
Paavo Ritala, a Professor of Strategy and Innovation at LUT University (Lappeenranta-Lahti University of Technology) in Finland, says this is a growing field.
“In the past few years, we’ve seen platforms like these emerging from everywhere,” says Ritala, who conducts research on circular economy business models, including those using digital platforms.
Excess Materials Exchange has worked with various sectors, including building and construction, packaging, textiles, and organics, but most clients are either governments or firms that supply to governments.
In one of its projects, Excess Materials Exchange matches the railroad tracks from their client ProRail, which maintains the Dutch railway network infrastructure, as support beams in a construction project.
“Governments are using their procurement power to take the lead in this transition,” Van Maaren says.
There are a number of reasons private companies have been slow to adopt circular practices.
Ritala notes that in many sectors, it is cheaper to dispose of materials than find a way to reuse them. “The problem is that companies are used to using new, so-called ‘virgin’ materials, and it’s not expensive enough to throw
materials away,” Ritala says.
Van Maaren notes that trust is also an issue. “Companies find it difficult to take over excess materials and waste from other companies because they don’t know the origin and exact make-up,” he says. The Excess Materials Exchange creates
Resource Passports for materials that can provide insight into the composition, origin, toxicity and de-constructability of the materials that we are matching.
He suggests that for companies just beginning in the circular economy, one way to start is by exchanging materials between their own departments and then continue doing it externally. In addition to matchmaking services, Excess Materials Exchange also
creates Internal Circular Marketplaces for companies and organisations to help facilitate this process.
Ritala believes established industry practices can also be a barrier.
“Companies have been successful in the linear economy. Changing to a circular approach requires adapting to new practices and uncertainties. Employees are busy, and it takes time to experiment and doing things differently including getting to know
the platform,” he notes.
These factors also make it difficult to keep a circular economy platform running.
Ritala has noticed that the circular economy platforms often have to offer users incentives to sign up, which cuts into their profits. “You only want to join if there are enough other companies from your industry. So when starting up, you often have to give at least some users free access, and you need enough subsidy or investments to do that,” Ritala says.
Van Maaren recognises the challenges.
“Platforms like ours have quite often been tried in the past, but just as often failed,” says Van Maaren. However, he thinks this is the right time to make them a success: companies will have to make the transition because of new circular
economy and waste reduction regulations recently imposed by the European Union and national governments, as well as emerging technologies like blockchain and artificial intelligence tools.
Ritala agrees. “Today, it’s not only governments that expect companies to contribute to the circular economy, but also industrial customers and end consumers. And it’s an advantage if you can tell your stakeholders and investors about
your sustainable achievements and, for example, say you’re a zero-waste company.”
Van Maaren thinks that Covid-19 is creating a shift, too. Some companies that showed interest in the past recently contacted Excess Materials Exchange again to discuss cooperation.
“At the beginning of the pandemic, companies wanted to avoid risks, but then it became a wake-up call. Now it’s Covid-19, but the next shock may well be climate change. Everyone knows that if you don’t adapt to the circular economy,
you will fall behind,” he says.
“It’s a learning journey for all of us,” says Van Maaren. “Recently, someone said: the circular economy is a bit stuck in the future. Everyone would very much like it to happen, but company processes and investments make the switch
hard.” What makes it more complicated, he says, is the fact that everyone needs to join: all departments in a company, the rest of their supply chain, and governments, too.
Associations such as the World Business Council for Sustainable Development and the Capital Equipment Coalition are working to bring more businesses and even entire industries into circular economy practices by building coalitions to share knowledge and create new standards.
Van Maaren emphasises that new technologies are critical to making these initiatives a success. “Artificial intelligence and blockchain make it possible to create easy-to-use platforms. The matchmaking becomes cheaper, and we can safely exchange
sensitive data,” he says.
Blockchain technology is seen as an important way to encourage participation in the circular economy because of its security features. Another Dutch firm, Circularise, emphasises its use of blockchain technology
to trace the provenance of materials across supply chains, making them easier to recycle while also preserving data privacy.
Van Maaren expects the continued developments in technology will only make it easier to make matches in the coming two years.
“We believe that five to 10 years from now, platforms like this will be the most normal thing in the world, that everyone will be working with them,” says Van Maaren.