The circular economy - lessons from the Netherlands

The circular economy demands a fundamental systems change so supporting it demands different skills and new attitudes by policymakers. That’s why this article proposes a new role for government.

We live in exponential times. It has never been tougher to predict even the short-term future. Extrapolating history is no longer an option because disruptions seem to have become a daily pattern. Everything – industry, finance, people and nations – is inter-connected much more than ever before. A minor change on one side of the world can lead to turmoil on the other.

What does this mean for policymakers, especially in terms of the circular economy? There’s no way to predict when or how the transition towards a circular economy will happen, and there are no rules yet for how to accelerate that transition. The most common trend is to become no more than a facilitator of whatever change is occuring, but we believe that the approach being taken in the Netherlands to combine strong vision with a facilitating attitude is the more effective.

Last year, we at Circle Economy signed a ‘Green Deal’ with the Dutch government that jointly committed us, along with the Dutch Social Economic Council, De Groene Zaak, MVO Nederland and the Amsterdam Economic Board, to the creation of a national program aimed at positioning the Netherlands as a circular hotspot. This not only challenges us to accelerate the transition towards a circular economy at home, but is also designed to encourage other countries to follow suit. If we’re going to make this dream come true, we need all stakeholders – from business to science, and from the financial world to our government – to become actively involved.

In helping to decide the Dutch government’s role in the shift to a circular economy, we have been inspired by the UK-based economist Mariana Mazzucato and London Business School’s management specialist Lynda Gratton. At first glance, their theories may appear totally different, but we believe that both apply to the challenges a circular economy faces. In her work ‘The Entrepreneurial State’, Mazzucato describes how governments have often been the source of the most radical, trail-blazing types of innovation through their funding of highly risky research. She cites the rise of Silicon Valley, saying the U.S. federal government rather than venture capitalists laid the foundations for the booming internet hub through pre-competitive seed-funding.

Gratton, though, advocates a hotspot creation approach. “You always know when you are in a Hot Spot”, she says. “You feel energized and vibrantly alive when the ideas and insights from others miraculously combine with your own in a process of synthesis from which springs novelty, new ideas, and innovation.” Gratton believes that you must create the right conditions with a vision that excites, which could be a perfect recipe for a circular hotspot. This requires our government to be visionary and inspiring as well as merely facilitating bottom-up developments. These endeavours must fit real needs, rather than perceived ones, and the conditions must be created in collaboration with hotspot stakeholders.

One of the many important lessons we have learned from working with the members of our non-profit cooperative Circle Economy fits perfectly with these ideas. Each of our members committed themselves to starting up a circular project by creating inspiring examples and paving the way for others. We soon discovered that it’s not just about doing lots of projects, but more about effective projects. Helping a dairy factory to make better use of manure is a good idea, but it might have more impact to discuss whether intensive livestock is the best way to use scarce land. We therefore developed ‘Circle Scan’, as a method for locating the real leverage points in a system. This allows us to identify projects that are genuine system changers, for instance the circular investment strategy we are currently developing with the largest of the Dutch pension funds.

We are taking much the same approach to turning the whole of the Netherlands into a circular hotspot; we’re collaborating with the most visionary leaders we can find in science, business, and government to build a shared vision of what the Netherlands as a circular hotspot would look like, and what’s needed to get there. To support this, we are developing a ‘Circularity Framework’, intended to guide decision-making on a national and organisational level. At the same time, we are mapping and then reaching out to bottom-up initiatives that are already operational in the Netherlands, so that the government can support them by creating the right conditions.

What we are now doing in the Netherlands can be translated to Europe as a whole. Many people still see Europe as an abstract and somewhat distant concept, but an inspiring man-on-the-moon vision backed up by a solid circular economy framework can help create cohesion and synergy on a Europe-wide level. Europe, too, could boast the close contact of policymaking and day-to-day circular practice that we are striving for in the Netherlands, and could advocate this vision by facilitating a multi-stakeholder approach at a European level. But it will, of course, take some getting used to.

In an economy, as in nature, we can only create growth by providing the right conditions. We therefore need to carefully select the right incentives for boosting circular bottom-up initiatives, and this may mean replacing our policy instruments with new unfamiliar ones that have been co-designed with those intended for the initiatives. That will take some getting used to, but if we believe in the circular economy, now is the time to be brave.