Posted in GreenBiz
June 13, 2022

In Europe’s budding circular economy, regulation = innovation


Reprinted from GreenBuzz, a free weekly newsletter. Subscribe here.

In Europe, the road to sustainability is circular. And while the journey is still in its early days, it seems to be picking up speed, thanks to regulation.

That’s a conclusion from my time last week in Amsterdam to discuss how the circular economy is shaping up on that side of the pond. I was there in part to attend a board meeting of the Cradle to Cradle Products Innovation Institute and to speak at the institute’s annual CircularShift conference, a gathering of professionals from companies and allied organizations across the continent, the U.K. and U.S.

Europe has long led in pursuing circularity, with an ecosystem that begins in large part with national and regional regulations. The circular economy has become a development priority of the European Union and is part of its industrial strategy. “The transition to a more circular economy is an essential contribution to the EU’s efforts to develop a sustainable, low-carbon, resource-efficient and competitive economy,” according to a paper published last fall in the journal “Environmental Sciences Europe.” The U.K., post-Brexit, is deciding which aspects of the EU laws to keep in place.

Europe is at the center of the re-evaluation of ingredients — and circularity in general.

In other parts of the world — including, notably, the United States — the circular economy is largely a voluntary initiative, encouraged to varying degrees by national and local governments but with few substantive laws that would make circularity mandatory.

I was struck by how European regulations have spurred innovations at both large and smaller companies. Consider: One panelist on the session I moderated at CircularShift was Heather Barker from Reckitt, the global consumer products company whose hygiene, health and nutrition brands include Air Wick, Calgon, Clearasil, Durex, Lysol and Woolite.

Her title: Global Vice President Regulatory Hygiene and New Growth Platforms.

Regulation and new growth platforms? At first glance, those two seem at odds. But after learning how regulation is spurring new products and business models, it makes perfect sense.

In Europe, regulatory changes are guided by a Circular Economy Action Plan, adopted by the European Commission in 2020, one of the main building blocks of the European Green Deal, “Europe’s new agenda for sustainable growth,” said the commission.

The plan aims to “make sustainable products the norm in the EU” through laws that ensure goods sold there are designed to last longer; are easier to reuse, repair and recycle; and incorporate as much recycled material as possible. “Single-use will be restricted, premature obsolescence tackled and the destruction of unsold durable goods banned,” the plan states. The commission identified seven priority areas: electronics and information technology; batteries and vehicles; packaging; plastics; textiles; construction and buildings; and food.

The action plan has spawned new regulations. In March, for example, the commission proposed that smartphones, clothes and furniture must meet new circularity requirements to gain access to the EU market, meaning they must be durable; can be reused, repaired or recycled; and contain recycled materials. Just last week, the EU proposed requiring all new smartphones and tablets sold within its borders to have a common charging port by fall 2024 (laptops by 2026), pushing tech firms to adopt a universal format. Among other outcomes, Apple’s lightning connector, the default plug on its iPhones and other gadgets, will be verboten.

“Leveraging the power of the Single Market, these new and long-awaited rules will bring resource and CO2 savings while allowing technological innovation,” the EU proclaimed, neatly framing the linkage between those two outcomes.

In the United States, such a proposal, should it even make it through the regulatory quagmire of, say, the Environmental Protection Agency or the Department of Energy, would be subject to endless political skirmishes and manufactured pundit outrage about Americans losing their “freedom” to choose whichever darn plug they want (or that manufacturers require them to use). The proposal would likely be delayed, watered down and subject to scads of lawsuits seeking to undermine the proposed law or nip it in the bud.

But not in Europe. There, the regulatory environment, while not universally loved, isn’t the adversarial affair it is stateside. And companies — including many U.S.-based firms that operate or sell products in European markets — often find innovative solutions that allow them to meet the new rules in a sustained, orderly fashion.

Chemical reaction

Consider the Chemicals Strategy for Sustainability, or CSS, adopted by the European Commission in 2020, another key component of the European Green Deal. It aims to promote a general shift towards less polluting “safe and sustainable by design” chemistries and make it easier for EU authorities to evaluate and restrict groups of chemicals that don’t meet its standards for acceptable risk. Under the CSS, endocrine-disrupting, persistent and bioaccumulative substances will all likely be phased out.

Reckitt’s Barker explained that the proposed regulation is already spurring innovative changes for her company’s products — a response to what she calls the “war on chemistry.”

“Europe is at the center of the re-evaluation of ingredients,” she told me. “The CSS is going to be a sweeping piece of legislation that will have impacts globally. So, we at Reckitt and the regulatory team are trying to get on the front foot to make sure we aren’t making regrettable decisions. But more so, we’re formulating our products now knowing this is coming.”

At Danish consumer electronics company Bang & Olufsen, the focus is on product longevity and repairability, appropriate for a company whose high-end products can last for two decades or more.

“We are part of a consumer electronic industry that in no way can be perceived as being long-term sustainable,” said Mads Kogsgaard Hansen, senior global product manager, product circularity at Bang & Olufsen and another of my panelists. “We are using a hell of a lot of materials and energy, and creating increasing amounts of waste, if we look at the industry in general.”

The EU hopes to change that through its Circular Electronics Initiative, which aims to strengthen energy efficiency, durability, reparability, upgradability, maintenance, reuse and recycling.

Hansen’s company adopted the Cradle to Cradle certification as a roadmap to help it meet anticipated regulatory changes.

“If we start to look closer at our product system, not just the object that we are creating, and break it down into the 100 components that we have in a fairly high-tech product, it can be overwhelming with all of the complexity,” he explained. “So, we have used the Cradle to Cradle framework to get things into structure. It has been key for us to understand that the principles are based on science. It’s not dictating how to solve it. It’s setting direction that gives us a clear challenge to solve.”

The company is building in modularity to its designs, he explained. “If we want to create a wireless speaker that should be relevant for 10 years or more, where are the barriers? We did a lot of research to understand what makes people buy new stuff. And some of the things that come into play are very practical. Through a period of 10 years, your life situation changes: You move to a different apartment or to a bigger house. So, your need for sound changes over time. How can we make something that is flexible? How can we make hardware components replaceable so that we can adapt to a future that we don’t know anything about yet?”

Clothes encounters

My third panelist, Alice Beyer Schuch, hails from Bay City Textilhandels, a German company that produces textiles both for other apparel makers as well as for its own line of clothing, Detto Fatto, which exclusively features circular materials, again based on the Cradle to Cradle standard.

With textiles being yet another focus of the European Green Deal, labels such as Detto Fatto will need to embrace circularity frameworks to meet a goal that “all textile products placed on the EU market are durable, repairable and recyclable, to a great extent made of recycled fibers, free of hazardous substances, produced in respect of social rights and the environment.”

My takeaway from all this is the need to build circularity frameworks into product designs and formulations now rather than waiting until regulations require it.

Schuch, Bay City’s circular fashion product manager, explained how the EU’s Strategy for Sustainable and Circular Textiles is leading her company to rethink the chemicals it uses, along with other strategies for keeping its garments in use.

“It changed everything,” she said. “Like when you design it, what is the next phase that you have for that product? Repairability? Which kind of textile item do you want to repair? Should I repair a toothbrush, for example? Should I repair my socks? Or should they be composable?” Like the other two panelists, Bay City is using the Cradle to Cradle standard to guide it along its innovation journey.

My takeaway from all this is the need to build circularity frameworks into product designs and formulations now rather than waiting until regulations require it, although that can be challenging given the evolving nature of both the regulatory environment and consumer expectations. As all three of my panelists made clear, designing products for a continually evolving future is part of the new normal.

Reckitt, for example, is setting itself up to be ready for whatever circularity looks like down the road. “What we really do day in and day out is try and predict the future,” Barker said. “We’re looking to set the company up for resiliency so that we aren’t continually reformulating or changing our products. We’re thinking five to 10 years down the road right from the start and building that into what we do.”

Thanks for reading. You can find my past articles here. Also, I invite you to follow me on Twitter and LinkedIn, subscribe to my Monday morning newsletter, GreenBuzz, from which this was reprinted, and listen to GreenBiz 350, my weekly podcast, co-hosted with Heather Clancy.

June 13, 2022 at 03:25PM

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