Podcast transcript: Why a mindset shift matters for implementing circular economy

29 mins | 12 September 2023

Announcer

Welcome to the Decoding Innovation podcast series, brought to you by the EY-Nottingham Spirk Innovation Hub, where we explore the innovative technologies, business models and ideas that are shaping the future of industries. During each episode, Mitali Sharma, a principal in the EY-Parthenon Strategy practice, meets with stakeholders at the cutting edge to discuss innovations in their space, challenges they need to overcome and their outlook on the future.

Mitali Sharma

Hello and welcome. I'm your host Mitali Sharma and today's topic is circular economy. Our guest today is Helen Burdett from World Economic Forum (WEF). Until recently, Helen was heading circular economy at World Economic Forum, including the flagship initiative, Scale360°. Welcome to the show, Helen.

Helen Burdett

Thanks for having me.

Sharma

Helen, before we get into WEF and its role in circular economy, would you mind sharing with us your background and your journey so far?

Burdett

Sure. So, I am, you may notice from the accent, originally from the US, but I live in Geneva now. I started my career, out of university in consulting — working in strategy and operations consulting and then, in emerging markets with donor and development agencies as my clients, and then moved into technology. And actually joined the Forum from a mission-driven technology startup. The role they started me in at the Forum was really focused on building out Scale360°— the initiative that you mentioned that's focused on circular innovation ecosystems at a city and national level around the world. It's operational in 30 countries now. The focus there is concrete interventions to support and unblock innovators from thinking circular, and those that are thinking circular from scaling — and so from policy interventions to trainings for entrepreneurs, or even working with existing accelerator programs to teach them about what circular economy is. Then, at the Forum, I've moved into overseeing the topic of circular economy, and our initiatives and programs there. Then recently, as you said, it was until recently, I was in that role, have undertaken a role focusing on technology across our Centre for Nature and Climate, and looking at the role of innovation and technology more broadly across our topics.

Sharma

Helen, we generally start with the basics here. What does circular economy mean for you, the World Economic Forum, and how is it different than linear economy which has been the guiding principle for the world for the past two centuries?

Burdett

I think we can start by defining what the linear economy is. We all live in it and we know it well. But since the circular economy is reimagining it, we can get from a common standpoint. So, if we talk about the linear economy as taking resources from our planet, taking resources out of the Earth, making things from them, from the devices that we're talking on right now and all of the cables that this information is transmitting through to the food that we eat. And all of the things that we use in some form. And then eventually, we throw it away. It goes in this linear track. Yes, back to the Earth in many cases, but in ways that the Earth cannot reabsorb it and we cannot use it. The idea of the circular economy is to close that loop. That doesn't just mean recycling, and taking the things and everything as we're currently doing it, taking those materials and using them as inputs again. That is one lever, one approach to implementing the circular economy. But the vision for a circular economy can be using less, so that we need fewer resources. It's not using virgin materials, so not using things that need to come from the Earth. It can be reused schemes. It can be extending use, so that there isn't end of life of a product, but really only end of use of a specific product. Then, we find new uses for it and new ways to use those materials. So, it's keeping everything that's currently circulating in use and even pulling from resource sources that maybe we hadn't thought of before.

Sharma

So, when you, with your experience, when you think about circular economy and the initiatives so far, what's most important? And an added question, where are we not doing as well as a society?

Burdett

Big question. Where I jumped to actually is the answer to both of those is the system itself, in that you can't necessarily say just one thing is most important because we're talking about the economic system that we operate in. I mean in some ways, you could say that we're talking about capitalism, but we also look at the economic opportunity and the resiliency opportunity that circular economy as a concept and as a set of levers, as a set of principles embodies. I would say that the biggest opportunity, the biggest challenge is, how do we shift that system effectively to get to this new reality?

Sharma

What do you think is something that we're not doing so well?

Burdett

One thing that immediately jumps to mind is the hard-to-abate material sectors. So, circular approaches, anything from the reuse or recycling that you immediately maybe jump to changing how new materials are sourced or changing the design, what happens at the design of a product in terms of what goes into it and how it can be fixed or used, or life can be extended on it. And when we talk about hard-to-abate, I'm referring to greenhouse gas emissions. So, aluminum, steel, concrete and plastics are sectors that are harder to reduce emissions on or can be seen as behind in some ways, in terms of their emissions and circular levers could reduce emissions in those segments by 50% by 2040. You could say that seeing circular economy as a solution for nature and climate issues as it is a place where we're behind, as well as seeing it as a business opportunity. In terms of supply chains, I think through the last few years, we've had a lot of focus on the impacts of supply chains even at a consumer level as people are waiting to get their goods. Anybody who's moved in with the housing boom. This is where I come back to systems because it's all interlinked and all interrelated.

Sharma

For sure. What, in your experience, has been the biggest misconception that you come across when you're working in this field?

Burdett

One misconception that may be directly answers that is that circular economy is one thing. That there's one metric that defines it and it is an approach or a methodology. When really, a circular economy is a vision for the future. It's redesigning of the way that our economy works, and can affect and be affected by all of the industries we work in, across ministries. So I think “Circular economy is a single solution,” is maybe the biggest misconception that I hear, because it is a way of thinking of the whole and can be so pervasively applied.

Sharma

What you're saying is, we started our conversation with the fact that you want materials to be perpetually in circulation, right? You don't want to use them and discard them. But what you're now talking about is a nuance about how we create that. So, it's more of an ecosystem approach where finance and transportation, and physical goods all need to come together, and maybe more.

Burdett

Well, anyone designing a product, anyone designing a business model, anyone thinking about collection and reuse, that's how it really isn't just one function. Although sometimes, one of the things that we learn is that to build up circular economy within say a multinational corporation, you do need a dedicated team that can then reach across and educate others, or is responsible for driving the agenda — because it is so hard to mainstream it. We hear about, from leaders particularly, we did a poll around the Sustainable Development Impact Summit, where we heard from leaders about what's been hardest in implementing circular in their businesses. One of the key themes that came out of that is that it's really a mindset shift. That because it's so pervasive, you have to have a shift in the mindset of leaders and of implementers. It's not one group and then, you can get into how do you get there.

Sharma

Could you also talk a little bit about the Industry 4.0 and its connection to circular economy?

Burdett

With Industry 4.0, we talk a lot at the Forum around the Fourth Industrial Revolution, and the impact of technologies and the acceleration of technology adoption over the past 10, 20, 30 years. From the artificial intelligence (AI) applications for how we're managing data about materials and managing data for companies, to a lot of it comes down to reverse logistics and blockchain has big opportunities for traceability, I think that's one that people often will come up with as an example, as it’s being able to track where materials are or how much materials are in use in a specific product, does lend itself to the leaders that say what gets measured gets managed.

Sharma

You talked about traceability, which is a separate initiative under circular economy work, right?

Burdett

The advanced manufacturing and value chains group at the Forum has a large, dedicated program, engaging companies on traceability and the opportunities for traceability, and building resilient and streamlined supply chain.

Sharma

Are all these initiatives connected?

Burdett

Absolutely. The Forum itself, I would use the term as more of a platform for public and private collaboration. And that we are not the partnership of ourselves, but we create spaces and programs in which, not only private sector and public sector, but also civil society leaders, and we bring in universities and different voices can convene around key issues. A lot of what we're doing is listening to those and then, helping to shape conversations around what might come next in particular topic areas. We have our industry teams and industry groups that are really focused on working with companies within those industries, and bringing in the relevant government stakeholders and understanding what the key trends are there. Then, we have additional platforms around topic areas and agendas that are important to those businesses and are important to our world. So, the mission of the Forum is improving the state of the world, which is a lofty and grand ambition. We tackle it through these different platforms of collaboration. Within the Centre for Nature and Climate, which is one of these platforms, we actually also talk about being a platform of platforms, because we interact with so many of the global actors within the climate space. So, when you ask if they're connected, I'll bring all of this back to that is that we have a pillar for resource circularity within the Centre for Nature and Climate, and part of the role of that pillar is to connect the circular economy work across all of the industry teams and across the Forum, and to be that home for knowledge, as well as to drive particular programs.

One thing that helped me understand it when I first came in is that 52 years ago, the World Economic Forum started when Professor Klaus Schwab brought together leaders in Davos. So, it started with the annual meeting. This meeting became a forum and a platform for conversations that were not otherwise happening. So sometimes, they were. But sometimes, it allowed leaders to meet that wouldn't have the opportunity to otherwise, in a space where the conversations are all curated around improving the state of the world. So, they're curated around conflict resolution, and around nature, and around climate and new economy, and society. And around what is the future of these businesses and for people in planning.

Sharma

The World Economic Forum engages with thought leaders, large institutions and public leaders. How does an innovative company or an independent innovator engage with WEF?

Burdett

Uplink is the open innovation platform for the Forum. So, anyone can join Uplink. Anyone can create an account on Uplink and add their innovative idea to a challenge. We host innovation challenges that lead to different outcomes. So, some have grant funding behind them. We partner with accelerators. Uplink is not an accelerator in itself. But it's a platform where we engage with innovators at every stage of development. From early stage, I'm having this idea and I want to connect with others and get support and thinking through this idea from a community of top innovators there, to those that have received multiple rounds of funding and are looking to scale. We brought a cohort of Uplink innovators to Davos and that's a select few. But there are these programs for them to be able to engage with companies and have Forum stakeholders as innovators. There's also programming. We have a technology pioneer’s program, which is a program that you get awarded into where we engage with a cohort of companies that are vetted and selected as technology pioneers. That's always established, that has to be an established company. That's not an individual, but they become members of the Forum for the period of that, and engage in the communities and bring innovative voices into those conversations, and network and connect in that way.

Sharma

Helen, tell us more about Scale360° and was it your baby?

Burdett

Yeah. That was. That was kind of my baby. I joined and had a grant to build Scale360°. It was a two-year grant that I actually managed to extend and build out this platform for the way that we can support circular innovators and then, have moved in. And then, within our circular economy program, we manage relationships with the Africa Circular Economy Alliance, the Latin America Circular Economy Coalition and the Platform for Accelerating the Circular Economy, and have many different programs, including circular economy for the net-zero industry transition that has a built environment working group. So, there's programming across the Forum. And then now, thinking more back almost to this Scale360° and innovator piece to think about how will technology, and as you said, Industry 4.0 play a role in supporting the nature and climate transition or needs that we have now. One of the beautiful things about building an initiative at the Forum is that it is not that one or even a handful of individuals necessarily say, “Let's build this.” But there are consultations across key actors that know a lot more than I do about what might be needed in this space and how we can build it, along with core partners and supporters that are delivering the work on the ground, and supporting the work to operate globally. So, while it may have been my baby, it's definitely a lot of people's to make it happen, have been really invested into and supportive of it, and continue to be.

Sharma

For sure. Can you talk a little bit about some of the success stories for Scale360°?

Burdett

One success story I will say makes up a large percentage of those global operations that I've mentioned and that's our partnership with the Global Shapers. So, Global Shapers is another mechanism for engagement with the Forum for those who are under 30. There are over 450 Global Shapers hubs in cities around the world, each of which has a curator and delivers volunteer-based programming through their hub, and oftentimes, in collaboration with other Forum initiatives. Scale360° partnered starting in early 2021. We did a pilot with four cities. We held an application where hubs from all over the world applied and we selected down to just four cities to help them go through what we call the Scale360° Circular Innovation Playbook. So, it starts from what are the challenges, who are the key actors and what is it that we can tackle to say that circular economy is very broad. Innovation is very broad. What is it that we can really do to support innovators in our city. So, doing a whole ecosystem scan, and coming to how make statements and understanding the barriers and then, have a decision tree actually to saying what activity will they implement. All four of these cities did this and have implemented programs, which are still in action now. And others that really delivered their impact and we're supportive of that. That's okay. These are volunteer-based programs that are putting a lot into engaging their communities from hosting whole accelerator programs to one developed Spanish-based training. So, identified a gap that there's not enough information about circular economy in other languages and developed a Spanish language training, and delivered it to university professors and to regional governments in Mexico. There's this really beautiful partnership that we have with the Shapers. And it's been really awesome to work with them and see what they do with these tools that were in some ways developed with national governments in mind. That we have a national-level partnership with the UAE that led to the establishment of the Circular Economy Council of the UAE that oversees implementation of the circular economy policy. Some of the same tools were used by youth actors in these cities as at the national level in Chile, the UAE and in Singapore. It's neat to see how they're used in different ways. I think I've given you a bunch of different success stories. But the thing that I would jump to is this partnership that we have with the young change makers.

Sharma

Helen, talk to us a little bit about how funds are being allocated by governments, by public sector, by private sector in circularity. And whether it's the right way to do it or there could be better ways.

Burdett

As we talked about a little bit earlier, there are a lot of ways to approach the circular problem. I think a few examples that I would speak to there that the EU is launching a new regulation on circular economy that includes a lot of these different angles and is unique in some ways. There's also been even, I think in the last two years, there's been a huge proliferation of circular roadmaps at a national level for countries around the world. But then, how does that translate into a specific sector, specific industry and then, that gets into where these are investing in circular. We see some in design. We see a lot around resilience and supply chains, in terms of tracking material flows. Then, one that is tricky, just it's a gnarly problem is that there is a huge business opportunity in green growth and accelerating the circular transition, and delivering circular products. But to have that impact on circular economy, it can't only be growth to do what we're doing in the linear economy, continue to grow all of the linear business and then, also grow our circular economy business, doesn't necessarily have the social or environmental impact that it could. I think that is one that is trickier to talk about because businesses do have important shareholder return metrics that their CEOs are hard-lining on. Their board is saying that they need and so how do you advance the circular transition in a way that gets to stakeholder capitalism — not only shareholder return.   

Sharma

If we break these three things down even further, could you talk to us more about what you mean by design and circular economy? Are there some industries that are embracing the circular design more than others?

Burdett: One neat example in terms of embracing circular more generally is actually jewelry, has it down because the materials are so expensive to mine and just the pressures that the jewelry industry is under. And so, some jewelry companies, some of the largest jewelry companies in the world have some of the most ambitious targets for using only circular materials. That's an interesting example of where incentives have aligned to lead to circular systems and circular design earlier. The Circular Electronics Partnership, of which the Forum is one of the founding members, launched a paper in September of this year that really gets into some of the principles for design for circular electronics, and the roadmap for circular electronics partnership had included design as a core element. There are many electronics companies that are really engaged in how to make that happen.

Sharma

And the second part of your earlier answer was around circular supply chains. Talk to us about that.

Burdett

Thinking about supply chains, you could start from just where the material is coming from, but it can also be what is lost along the way, how much waste is there, and what's happening to all of the by-products. If you're only tracking what it is that that you need and not thinking about all of the externalities, you won't be able to get all the way there. So, that's where we think about circular supply chains is not only, “Let me think about this one material that I need and where it's coming from.” But also where is it going through? What's happening to it? Are there by-products of that? How are those entering into their next use or next life, or as inputs into another product? It's taking responsibility for the supply chain and not only the end product that your business or organization may need.

Sharma

You had mentioned the business case on circular economy being sometimes hard. How do you justify doing all these things to bring the material back into the market which sometimes is harder?

Burdett

It can sometimes be hard. Circular economy, in 2018, a study was published that said that by 2030, the circular economy represented a US$4.5t business opportunity. In specific use cases, sometimes making the business case is hard because of maybe the timelines on delivery or because it's disrupting the way that you're currently doing something. Systems lock-in and technological lock-in is real. People don't like change. Circular approaches generally require change and so are hard to implement. The economics make sense. Whereas that also can come down to true pricing, in that what we pay for steel or aluminum is not accounting for the carbon costs necessarily of their production. Right now, they are less expensive, in many cases as virgin materials than they are as reused. In a lot of industries, this comes up often in the built environment. There's also a supply issue for reused materials that the production of them is behind the demand, and if you're a huge business, so say you're a huge electronics company and you can guarantee your supply from a mine, obviously many steps removed. But at a base level from mine, you can have guaranteed supply. You own the mine. You're in control of the operator. Whereas you may not understand the landscape for materials that are in a second life, and how to procure those and there may be competition for getting those as demand increases, can be a challenge. The reverse can also be true, in that you may not be able to control anything from that mine. If you take, you as an organization, and some of the biggest tech companies have done this, if you as an organization take responsibility for saying, “We're going to collect all of our phones or computers back, so that we are controlling our own supply chains and have access to those secondary materials,” then, we're building more resiliency into our system.

Sharma

Helen, how is circular economy differentiated across the globe in different regions?

Burdett

I think that like anything, there is a high degree of regionalization, not only of the challenges, but also of the progress and opportunities. And that circular economy has been talked about particularly in Western Europe for longer. It's more part of the consciousness in Western Europe than anywhere else in the world. But that doesn't mean that there's an automatic buy or that the countries in Europe will remain ahead. As the need for circular is more and more well recognized around the world, I think there are huge opportunities for some specific economies. And we could get into examples to accelerate much faster than say, the US, which just codified circular economy and then, Save Our Seas 2.0. It's a one-line recognition of it. It's not part of the consciousness there in the same way that it is in the Netherlands. But there are some excellent regional organizations that are advancing and driving circular economy at a regional level in Africa and in Latin America. So, the Africa Circular Economy Alliance works primarily with public sector leaders. The Africa Circular Economy Network works more with the private sector. They work closely together. In Latin America and Caribbean, there's the Latin American and the Caribbean Circular Economy Coalition, that hosted a festival in Peru around circular economy and brought together leaders of the region on the topic there. There are some great innovators that we see through the Uplink challenges on the circulars accelerator, as well as working with the Circular Valley in Wuppertal, Germany, that sources circular innovators from around the world and brings them to Germany for an accelerator program. We definitely don't see that all the best applications are from one region. There are some excellent solutions coming from all over.

Sharma

Interesting. What has surprised you most?

Burdett

I think that the thing that I come to with that is something that should not be surprising at all. But I will own that it may be what surprises me most and that's around the power of storytelling. That regardless of who the audience is, stories hold power. And I think that, well, I maybe should have known that, operating in an environment of this platform for public, private and civil society collaboration, I see the power of stories to convey information across different stakeholder groups.

Sharma

Thank you for your time today, Helen. It's been a most interesting conversation and good luck with your new job.

Burdett

Thank you.

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