‘The circular economy is not the same as recycling’

Professor Tobias Stucki is co-head of the Institute for Sustainable Business at BFH Business School. In collaboration with the KOF Swiss Economic Institute, he conducted the first representative study of the implementation of circular economies at the company level, titled ‘Status report on the Swiss circular economy’ (in German).

What is the circular economy in layperson’s terms?

The goal of the circular economy is to use existing resources as efficiently as possible and to produce as little waste as possible. To achieve this, companies and organisations must engage in three fields of action: the first is to increase efficiency in production processes and the products themselves, like refrigerators and other electrical appliances that require less energy. The second is to extend product life by improving quality and creating products that can be repaired and/or upgraded with new parts. Third, companies must close loops by passing on products that are no longer in use, reprocessing or – if all other options have been exhausted – recycling them.

Is this a new concept?

Much of it has been around for a long time. An exchange student from Cuba once said that a circular economy was exactly what people did back at home. However, as general prosperity has increased, humans have moved away from using resources efficiently. What certainly is new are the opportunities afforded by digitalisation, like simplifying the ability to share products or perform maintenance.

How can the circular economy be implemented in practice?

In the last 10 years, for example, companies have made production processes more efficient, thereby saving energy.

Patagonia, the US-based outdoor clothing company, is a good example of a manufacturer that has improved product durability. From the outset of developing a new product, Patagonia will test the item for durability, with a focus on its being able to be repaired. If the product fails to pass muster, it doesn’t make it to store shelves. Customers can send in damaged gear for a free repair, and Patagonia even brings along a mobile repair shop to trade fairs.

The company also provides a good example of closing loops. For example, they welcome customers to return their old down jackets and sleeping bags, so they can reuse the materials.

Does it make economic sense for a company to produce (and repair) more durable products?

That all depends. Efficiency is about making processes more efficient, which should lead to cost savings and thus generate economic benefits.

The situation is different when it comes to a product’s lifespan. When products last longer, they aren’t bought as often. To a certain extent, a decline in demand can be compensated with price hikes. If there’s too much competition, however, this becomes untenable and new circular business models are required: companies no longer just sell their products, but also rent them out. In a sense, they become service providers. HP, for instance, now offers printer rentals. With this new branch, the company has created the incentive to produce high-quality printers that don’t cost much to maintain.

Where do things stand in Switzerland in the transition to a circular economy?

In our study (see inset), we found that currently about 10% of Swiss companies are substantially active in the circular economy and have taken measures in the various fields of action. About 50% of companies have done little and 40% have done nothing in the last three years with regard to environmental sustainability.

How do you see the situation developing?

For Switzerland in particular, a circular economy is also critical from an economic point of view, because we don’t have many natural resources. We have human capital, stone, gravel and water, but that’s about it. By using resources more efficiently and minimising waste, companies can cut costs while reducing their dependence on suppliers. This is important because companies will only implement the circular economy on a broad scale if it’s profitable for them. If market incentives are insufficient, sooner or later new policy measures will become necessary. Because one thing is clear: without substantial progress in the circular economy, our environmental goals don’t stand a chance.

How can politics support the transformation?

It’s usually best to start with prices. If raw material prices increase, company costs rise and efficient production pays off more quickly. The example of the carbon tax, however, shows that this is often politically infeasible. It’s why subsidies and regulations may be more promising, like the right to repairability currently being discussed in the EU and many other countries.

How can BFH support the transformation?

With research, for one. Our research can help companies determine where they stand and where potential for improvement remains. It can also alert politicians to areas where action is still needed. Furthermore, there’s a lot of research at BFH directly concerned with developing new technologies to boost the circular economy, such as solar energy or timber construction.

BFH also powers this change through education. As a university, we have a responsibility to teach future workers – and by extension, companies – how to implement this economic model. It’s a responsibility we’re aware of, and it’s why we created the new interdepartmental Master of Science in Circular Innovation and Sustainability programme.

What are the biggest hurdles on the way to a circular economy?

First and foremost, a higher level of awareness is needed, given that a majority of companies seem to think everything’s fine and should continue on as it has done. Ecological sustainability is irrelevant to them. I have no other explanation for the fact that 40% of Swiss companies haven’t taken any measures in this regard in the last three years.

For those companies that are aware of the need for change, profitability is certainly a hurdle because implementing a circular economy is relatively costly and complex. To make products more durable, for example, companies need to start at the design level and review the whole production process. What’s more, they face technological challenges because technological solutions are often necessary to optimise circularity.

What are the most common misconceptions about the circular economy?

The greatest error people make is thinking a circular economy is just recycling. Recycling is the final stage in a circular economy. Take bicycles, for example: it is much more efficient to repair your bike, maybe installing higher-quality parts for an upgrade, and then reuse it, than to melt down all the material and make a new bike out of it.

Are there also downsides to the circular economy?

There is quite a lot of greenwashing done in the name of the circular economy. People say something is circular without looking closely at whether it also has an ecological effect. For example, I recently saw an article about a company in California that makes surfboards out of recycled polystyrene. This entrepreneur was saying that some people are so thrilled by his idea that they travel for hours by car to deliver the polystyrene to him. This is circular in a way, but makes no ecological sense. It’s critical that we always ask ourselves, does a measure only increase circularity per se, or does it also make sense ecologically?

What’s up next for you, now that your study of the Swiss circular economy has been completed?

We want to take a closer look at the connection between the circular economy and digitisation: which forms of digitisation support which types of circular economy? There are many exciting possibilities, but as yet there is little broad-based research. We also want to set up a monitoring system in Switzerland to see how the spread of the circular economy develops over time.

First study on the state of the Swiss circular economy

There is great potential for a circular economy in Switzerland, according to the first representative BFH/KOF study of Swiss companies. As an innovation hub, with its well-trained specialists and high quality standards, Switzerland is ideally positioned to make better use of the opportunities offered by circular economies in the future.

The circular economy in Swiss companies

Why is a capacity for transformation central to the competitiveness of the Swiss economy? Professor Tobias Stucki, Head of the Institute for Sustainable Business at BFH Business School, answers this question and explains what companies can do to make this crucial change.