For a transition to circular economy

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L’economia circolare offre l’opportunità di indirizzare il cammino dell’economia mondiale verso una maggiore sostenibilità. Sebbene si tratti di un concetto già contenuto nelle teorie dello sviluppo sostenibile di 20 anni fa, la sfida dell’economia circolare consiste in un cambiamento strategico reso necessario dalla consapevolezza della scarsità (attuale o prossima) di risorse naturali ed energia, e delle conseguenze in termini di impatto ambientale che il loro sfruttamento ha da tempo mostrato [Bertram , 1986; Van DenBergh, 1993; Hofkes, 1996]. Ciò è di particolare importanza per l’Unione Europea che soffre di dipendenza da altri paesi per l’importazione delle materie prime e costituisce un intrinseco fattore di rischio, in periodi di instabilità, per l’economia e la produzione industriale.
L’Economia Circolare ha l’obiettivo di ridurre l’impatto ambientale dei sistemi produttivi spostando la logica produttiva da un approccio lineare risorsa–prodotto–rifiuto [Zengwei et al. 2006; Pauliuk et al., 2012] ad un approccio circolare [Mathews& Tan, 2011; Geng, 2012; Naustdalslid, 2014], dove le risorse sono utilizzate più volte in una ciclicità di processi, prefigurando una globale supplychain circolare. Secondo questo approccio le materie prime, i semilavorati e i prodotti vengono recuperati a fine vita, rilavorati, e riutilizzati in successivi cicli di produzione come materie prime seconde, evitando la dispersone del loro potenziale valore e riducendo l’impatto ambientale derivante dal loro stoccaggio in discarica.
Oggi esistono tanto le condizioni che rendono opportuno un passaggio ad una economia circolare, quanto le tecnologie che consentono di ricombinare i cicli di produzione e la progettazione di prodotti e processi in modo da ridurne l’impatto ambientale.
E’ necessario eliminare dai processi produttivi i materiali molto inquinanti, ripensare prodotti e processi per ridurne l’impatto ambientale e aumentare la possibilità di riutilizzo di parti o materiali, come materie prime seconde, riducendo al tempo stesso la quota di rifiuto residuo.
Allo stato attuale manca un quadro di riferimento per l’applicazione di un modello di cooperazione transnazionale, capace di valorizzare i modelli di produzione locali (come i distretti industriali o parchi industriali) e supportare un cambiamento di produzione-consumo che accolga e veicoli i principi della circular economy. Attraverso lo sviluppo di un meta modello, il paper si propone di raffigurare le direttrici di sviluppo della circular economy partendo dall’analisi di un caso di studio multiplo comparato.

Introduction

Circular Economy (CE) offers the opportunity to re-target the development of the economy worldwide on a path of enhanced sustainability. Although this concept dates back to the sustainable development theories proposed twenty years ago, the challenge of CE is that of producing a strategic change made necessary by the awareness of the (imminent or future) paucity of natural and energetic resources, and of the negative consequences in terms of environmental impacts deriving from their intensive exploitation [Bertram , 1986; Van Den Bergh, 1993; Hofkes, 1996]. A transition to a CE is particularly relevant in the EU. Being it currently dependent on foreign countries for the import of raw materials, this transition represents a strategic opportunity to reduce risk factors created by such dependence in periods of international instability and economic turmoil.
The main objective of the CE is to reduce the environmental impact of the productive systems and to increase their sustainability over time shifting the production capacity from the linear axiom resource-product-waste [Zengwei et al. 2006; Pauliuk et al., 2012] to a circular approach where natural resources are reused within new production cycles in a global, circular, supply chain [Mathews & Tan, 2011; Geng, 2012; Naustdalslid, 2014]. Raw materials, semi-manufactured and final products are recovered at the end of their life cycles, re-manufactured, and re-used in future production cycles as raw and secondary materials, avoiding the dispersion of their potential value, and also reducing the environmental impact deriving from their storage in landfills.

Tabella 1 – Multiple conceptual analysis

Tabella 1 – Multiple conceptual analysis

Today, there are both the conditions that make such transition appropriate, and the technologies for redesign production systems, products and processes for a reduced environmental impact that make it possible.The elimination of most of the pollutants from the production processes is now more than necessary, as it is also crucial to rethink the design and processing of the products so to reduce their environmental impact and increase the possibility to reuse some parts or raw and secondary materials and the production of waste.
At the current state of knowledge, a framework for the application of ainter-organizational cooperation model to support this shift to CE has not been provided yet. We posit that such framework would be useful to enhance the local production models (such as industrial districts and industrial parks) and support a change in the production-consumption model embracing and transfer the principles of CE. This paper contributes consequently proposing a meta-model for analysing CE compliant inter-organizational business models defined on top of literature and from the results of a compared multiple case study analysis.

Background

A typical limitation of several initiatives aiming to achieve an increased environmental sustainable production system is the difficulty to include the so called rebound effect. To stimulate the growth of an area, like that of the EU, it is necessary to adopt a systemic perspective focusing on three main ingredients:
(i) the design of the product/process,
(ii) the business model, and
(iii) consumers’ behaviour.
On the side, the factors of policy, education, and technological and financial tools are in the position to stimulate and support such transition.
A concrete contribution to the circularity of the products/services can be offered by a different approach to their design. Recycling and reusing possibilities shall be considered since the design phase [Beuren, Gomes Ferreira, and Cauchick Miguel 2013; Mont and Tukker 2006], making use of innovative assembling/disassembling practices and providing services along with the product to increase its reuse/recycle potential [Leimeister and Glauner 2008]. Under this point of view there is much to be done. For example, the principles of the partition of technical and biological nutrients and the toxicants in products and production processes are still under-used [Ma et al., 2014; Jiliang & Chen, 2013; Li et al., 2013].
New business models based on inter-organizational cooperation, both within a local and an international context and thanks to the integration of products and services systems, can make production and consumption more sustainable and circular [Schulte 2013].
Among the enabling and facilitating contextual factors a key role is played by the consumers’ behaviour. It is in fact central to determine a change in the consumption styles so to shift from possession to use [Ellen Macartur Foundation 2015].
Many advantages are expected from this approach for many different stakeholders: first, the reduction of costs and resources; second, the maximization of profitability; third, the generation of knowledge and the possibility to use this knowledge for advisory services; and finally, the reuse of products in several services [Mittermeyer, Njuguna, and Alcock 2010].
From an environmental point of view, the benefits accruing from the reduced exploitation of natural resources results in a reduction of waste, the reuse of those products with longer life-cycles and materials and components recycling [Baines et al. 2007; Li et al. 2010].

Main focus of the paper

The transition to CE requires a systemic perspective that goes beyond the limits of a single organization [Frey, 2013], and stimulates a cooperation among different actors within a logic of deconstruction of the value chain and the reconstruction of new ones over networks [Normann and Ramirez 1993; Stabel and Fjeldstad 1998]. In turn, this offers new opportunities for the implementation of economic initiatives, also at local level, for example exploiting the peculiarities of industrial districts, or promoting the cooperation between companies supporting the production fabric and increasing market opportunities, in the tertiary sector in particular.
fig02This approach does not only contribute to increase the resilience of the production systems, presently affected by geopolitical and/or environmental shocks, but can also reduce the exploitation of the resources, such as critical raw materials [EU Action Plan for the Circular Economy, 2015].
There are already experiences, yet limited the action of individual companies (see for instance the Xerox case), which make use of product-service systems [Tukker, 2013] that can act as a reference to design a model of CE based not on a single product/waste to be recycled, but rather on smart design and disposal characterized by a mixture of products and services managed trough an inter-organizational cooperation model [Tukker and Tischner, 2006].
This double configuration is used to facilitate the planning of systems with a low environmental impact, on the basis of equal economic growth [Lieder and Rashid, 2015], which would finally contribute to the application of the CE and to add innovative services to the characteristics of a product, in order to support the sustainability of production, recycling and consumption.
Considering such practice, the paper describes and discusses the development of a meta-model of inter-organizational cooperation to assess and evaluate CE enabled business models.

Methor or approach

The representation through a meta-model allows to configure and describe the most relevant aspects of a considered factor [Höfferer, 2007]. It is an inductive analysis [Johnson, 1998] in which conceptual systems, categories and variables come from implicit and explicit models, and from a theoretical model not directly based on empirical data, and are eventually integrated into a new holistic model.
The necessary pieces of knowledge to derive the meta-model were obtained from three case studies:
(i) manufacturing of sanitary ceramic,
(ii) production of extra virgin olive oil, and
(iii) wood transformation.
The comparison allowed a multiple analysis aimed to identify the enabling key factors of the CE. The results were compared with the literature and lead to the creation of a reference meta-model that allows the configuration of synergies aimed to the application of the paradigm of the CE.

Case studies

The analysis of the case studies is summarized bythe conceptual matrix presented in Tab. n. 1. The first case belongs to the sanitary ceramic sector, which has accumulated a delay in innovation, confirmed by the low technological level of the product, and by the massive resort to traditional and artisan manual processes. The manufacturing processes are characterized by a low production efficiency, are ascribable to the high quantity of wastes, and products show a defect rate higher than the average of other sectors, with significant high margins of variability over the whole year. Furthermore, the analysed firm falls within the category of energy-intensive users with a total energy cost equal to 3% of the turnover.
The second caseis in the edible oil crop sector, and is closely connected with the local territory and renewable natural resources (soil, water, agro-forestry, fishery and biological resources). The contextstudied involves several actors in the different stages of production and processing of the products. The farm (where the crop production takes place), the first-stage processing industry (oil mills and processing places where the olives are crushed), the second-stage processing industry (pomace processing, refinery, and packaging). Adding to this all the manufacturing companies producing the technical equipment and the inputs (for example, the nursery, mechanical and agro-chemical industries) produce an impact. The production chain represented by these activities generates waste at all stages of production: cultivation (waste biomass and pruning residual), oil extraction (virgin and exhausted pomaces, vegetation waters), and distribution (disposable packaging).
The third caseanalysed is in the wood processing industry, with a company operating from the semi-finished to the finished furniture product with a high degree of specialization. The loss of the know-how that has taken place in this highly specialized sector, has been determined by the increased competition of substitute products, such as panels, laminated timber. The perspectives, as regards exploitation of the results, are ascribable to the increased sensitivity of the consumers towards natural and renewable materials, the possibility to realize shorter production chains, the introduction of innovative and eco-sustainable products with high physical and mechanical performances.
The most difficult aspect in the three cases is represented by the absence of a structured and sound network, not only in the design-production stages, but also in the most innovative activities related to architecture and design, so to support situations of green public procurement. The waste of production is literally reused but through low-added value processes such as the production of pellet wood.
The companies described above have a high potential of innovativeness, and are characterized by the improving efficiency in production processes and the possibility to reduce the environmental impact, thanks to the use of waste, to reduce the resort to non-renewable energy sources and to support the residue treatment/valorisation. In order to ensure the sustainability of the products, it is possible to intervene during the operating time of the cycle time of the products, so reducing the consumption of resources such as water, chemical detergents for the sanitization, or for the most correct disposal of the products. Tab. 1 shows the key factors identified for the composition of a meta-modelling model for each of the companies considered in this study.

Key factors emerging from the literature

The literature shows that the application of the CE model is related to two different logics of development [Lieder and Rashid 2015]: the top down model – supported by the effort of the Nations to promote the EC model – and the bottom up model – promoted by business individual actions and efforts to activate low environmental impact processes.
The application of this model depends on all the stakeholders expressing converging views, so to produce benefits in terms of recycling of waste, scarcity of resources and resulting business economic benefits. Lieder & Rashid [2015] identify in this approach the triggering factors towards a convergence of interests, legislations and policies: support infrastructure and social awareness in the first case, and profitability, competitiveness e manufacturing industries, in the second.
The regulatory framework plays a crucial role in the dissemination not only of the principles of the EC, but to produce a radical change within the production systems. Such aspect is emphasized especially in the case of China with the imposition of industrial management policies [J.-H. Zhang and Chen 2015; C. Yu, de Jong, and Dijkema 2014; Wübbeke and Heroth 2014; Xue et al. 2010; Geng et al. 2012; Dong et al. 2013; Foundation 2014; F. Yu, Han, and Cui 2015; T. Zhang et al. 2011]. The application of the CE principles is pursued by the creation of eco-industrial parks in producing important improvements in terms of exchange of waste, of economic and environmental benefits [Mathews, 2011; Shi, Chertow, & Song, 2010; F. Yu et al., 2015], though such regulations require serious periodical revision to improve industrial policies.
Yu et al. [2014] study of the economic-technological development area is based on 5 keys activities for driving the changes of system eco-industrial parks (institutional activity, technical facilitation, economic and financial enablers, informational activity and company activity). On one hand, they find that the support of public institutions became an important and relevant tool able to trigger the change towards sustainability, on the other they attribute the company activity a marginal role.
In the literature, the policies of targeted incentives are also connected to the possibility of tax relief, trade facilitation measures, removal of market entry barriers or the reduction of imbalances related to the company size or to benefit from grants for the prize of clean electrical power [Chang et al. 2011]. These policies are often contradictory [Wübbeke and Heroth 2014] and don’t necessarily reveal a concrete commitment/intention on the part of the institutions to facilitate this kind of support to EC composition of models [Y. Liu and Bai 2014].
Another key factor deriving from the application of the CE is represented by the promotion of industrial symbiosis [Jiliang and Junting 2011; Shi, Chertow, and Song 2010; C. Yu, de Jong, and Dijkema 2014; Jiao and Boons 2014; Dong et al. 2013; F. Yu, Han, and Cui 2015; Yang and Feng 2008]. The symbiosis illustrates the systemic relationships between several types of business, based on a collaborative approach, and is run by competitive advantage [Bain et al., 2010] deriving from the physical exchange of materials, power, water and by-products [F. Yu, Han, and Cui 2015; Chertow, 2007]. In particular, it provides an analytical method useful to understand how cooperation between companies helps achieving competitive advantage. [Bain et al., 2010].
Industrial symbiosis represents the collector that helps define stringent environmental standard in the implementation of the model of the CE, on the part of the governments [F. Yu, Han, and Cui 2015] called to take action applying restrictive regulations, taxes and incentives and provide instruments fostering the development of eco-industrial parks (especially in China)
Public funding is one of the enabling factors of the CE, despite the increased difficulty in accessing the credit on the part of the companies. The resort to these funds is central in the pre-cycling stage to support community initiatives which incentivize participation through the definition of the cycles of local material, the sharing of competences and the supply of unwanted goods object of recycling [Greyson 2007] and, in the next stage, in order to help the companies upgrading their eco-industrial technologies, support research and development, as well as the construction of new recycling facilities.
Gabriela-Cornelia, Iudith, & Alexandru [2015] consider the strategic role of implementation of environmental projects in the transition from a linear economy to a CE. They maintain, in fact, that these actions enhance the interdependence and interaction among different components of the funding (sources, tools, products, institutions) so to ensure future perspectives and the simplification and the multiplication of cash flows.
In this context the financing networks represent interactive models that will in turn direct investments and measure and their impact on environmental policies. At the same time the scarcity of investments in research activities and innovation can turn into a barrier for the application of a sustainable approach [see for e.g. Matus, Xiao, & Zimmerman [2012]for the green chemistry] and in more general terms for the promotion of CE models.
Liu et al. [2009] in their study on the promotion of the CE model in Tianjin (China) highlight a limited awareness and a poor understanding of the EC program and the outcome of such interventions on the part of the beneficiary populations. However, they also underline a pattern of economy consumption behaviours rather than a conservation-conscious behaviour, because of people’s concern about safety and health rather than environmental issues.
Liu and Bai [2014] underline that, also with the increase of awareness of the positive effects of the CE, the consumer would not willingly pay higher prices for cleaner products. On the other hand, Xinan and Yanfu [2011] propose three distinct interventions to direct government behaviours pattern to support the economic development based on a CE model, that is to define the coordination mechanisms on the part of the local government and enhance the regulatory frame on CE; build an industrial chain at regional level and, more important, create a public instruction system able to transfer knowledge about CE.

The meta-model: discussion and implication

The meta-model was developed starting from the key factors identified through the comparative analysis of case studies and the literature.
The first enabling factor, regulations supporting CE, includes all the regulatory aspects and the law governing the reuse of products. Regulatory barriers are not only relevant at trans-regional level, but often represent an obstacle within the same national systems, where the many territorial competences (for example regional laws) can turn into a limitation for the waste transfer and by consequence for the industrial symbiosis. To overcome these obstacles would allow the adoption of common policies across Europe. This implies that each member nation should work towards a common regulatory framework so to promote good practices and propose common guidelines to facilitate integration.
The second enabling factor, incentive system is represented by all the actions taken by each member state to support the transition to new business models of CE. According to F. Yu, Han, and Cui [2015] economic benefits result from the application of a strict regulatory frame where tax incentives and financial grants can contribute to a production change finally bringing environmental benefits.
The huge repertoire of knowledge accumulated over the past years by the EC, thanks to the opportunities offered by funding and research framework programs, represent the added value and the first step towards a valorisation of what has been most recently done [Chen & Du, 2009]. Such progress must accompany the efforts made by the US towards the promotion of several incentives and tax deductions to support the implementation of good practices, the activation of EC business models and encourage commercial transactions, so making the EC market more convenient for the firms.
Consumer behaviour represents a further enabling factor for the EC. If consumers are more aware of the environmental impacts and production processes [Manzini, Vezzoli, and Clark 2001; Sakao, Panshef, and Dörsam 2009], such awareness must be general and triggered by a cultural change on the part of both producers and consumers. These latter are accustomed to buy and own products, but are less used to buy their functions and this influences (or has been influenced by) in turn production processes. This behavioural aspect represents a potential obstacle for the realization of a CE [Rexfelt and Ornäs 2009], considering the elasticity of the demand of products, and for such reason cannot be left to individual entrepreneurial initiatives but is to be directly supported by education and cultural policies. Industrial symbiosis processes allow to start new forms of collaboration between networks, not necessarily operating within the same business sector but capable to identify, thanks to the use of the best available techniques new ways of valorise waste. New EC business models based on the planning of the recycling and deconstruction processes, as well as the combination of products and services, could be triggered from this enabling factor, according to the logic of products service systems.
The production process ought to be characterized by environmental sustainability and the ability to realize an interchange with recycled products at home level or coming from other production systems (as a consequence of the application of new industrial symbiosis). Consumers behaviour, both at the purchasing and the replacement stage, ought to be accompanied by a cultural change induced by EC enabling factors in order to support the reuse and re-cycling of the products.

Future research directions

The current proposal of the meta-model is still at the research in progress stage. The model was developed over recent literature discussing circular economy, and it is informed by key factors identified in three empirical cases over a regional territory. Further research should be conducted in the future to validate and eventually extend the meta-model in different territorial contexts and industries.

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ALESSANDRO RUGGIERI

Rettore Università degli Studi della Tuscia, Viterbo

ENRICO MARIA MOSCONI, ALESSIO MARIA BRACCINI, STEFANO POPONI

Dipartimento di Economia e Impresa - Università degli Studi della Tuscia, Viterbo
www.deims.unitus.it
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