One of the issues we have today is that we're using far too many virgin resources in our supply chains. These virgin resources then mostly end up in landfill, or worse are incinerated and the end of a products useful life.
The fix for this is to use circular economy principles, but these are still very early in their development and so can be challenging to implement.
Circular IQ is a pioneer in this space, and their software platform is helping around 1,200 organisations in 84 countries today to measure and improve their circular performance, so I invited Roy Vercoulen, the founder and CEO of Circular IQ to come on the podcast to talk about the importance of the Circular Economy, and steps organisations can take to become more circular.
This was a truly fascinating episode of the podcast and as always, I learned loads, I hope you do too.
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Music credit - Intro and Outro music for this podcast was composed, played, and produced by my daughter Luna Juniper
Every product that we use ends up as waste at this point, basically, when a lot of these products they cause global warming, resource depletion, waste and pollution across our globe, and I believe that for, for humanity to thrive, we need to find a solution for that. I mean, we're talking about putting people on Mars, we should be able to get our act together over here as well, right.Tom Raftery:
Good morning, good afternoon, or good evening wherever you are in the world. This is the climate 21 podcast, the number one podcast showcasing best practices and climate emissions reductions. And I'm your host, global Vice President for SAP. Tom Raftery. Climate 21 is the name of an initiative by SAP to what our customers calculate, report and reduce their greenhouse gas emissions. In this climate 21 podcast, I will showcase best practices and thought leadership by SAP, by our customers, by our partners, and by our competitors if they're game in climate emissions reductions. Don't forget to subscribe to this podcast in your podcast app of choice to be sure you don't miss any episodes. Hi, everyone. Welcome to the climate 21 podcast. My name is Tom Raftery with SAP. And with me on the show today I have my special guest, Roy. Roy, would you like to introduce yourself?Roy Vercoulen:
Yeah, sure. So my name is Roy Vercoulen. And founder and CEO of Circular IQ. We are a software company that helps businesses across the globe deliver on their sustainability promises.Tom Raftery:
Nice. And tell me why you think that is important.Roy Vercoulen:
I think that is important for multiple, multiple reasons. So first of all, I think it's a very good thing that businesses across the globe are slowly taking responsibility over the products that they produce or sell. But if we look at these products, every product that we use ends up as waste at this point, basically, and a lot of these products they cause global warming, resource depletion, waste and pollution across our globe. And I believe that for, for humanity to thrive, we need to find a solution for that. I mean, we're talking about putting people on Mars, we should be able to get our act together over here as well. Right.Tom Raftery:
Sure. And how how does something like circular economy help with that? And even at a more basic level, how are you defining circular economy?Roy Vercoulen:
Yeah, these are very important questions. These are questions that our customers and users are struggling with on a on a day to day basis. So first of all, to the bad news is at this point, there is no alignment globally, on how to measure the circular economy. There are several initiatives that are moving towards that direction, one of these initiatives as the circular transition indicator framework that was developed by the world Business Council for sustainable development, and around 30 of their, of their members, these members are fortune 500 companies that really want to play a key role in solving key issues we face as a society related to pollution, waste, global warming, and resource depletion. So for me, the circular economy is a framework, systems thinking approach. You can apply to tackle these, let's say three or four. Yeah, key challenges we were facing as a as a society globally.Tom Raftery:
Okay. And can you give me like practical examples of how circular economy initiatives can help organizations or can help the planet even better?Roy Vercoulen:
Yeah, so, circular economy initiatives can can start in in multiple ways, what we see as a as a as a dominant route for for business is that on a, on a corporate level, so so top down from the from the leadership into the organization, it starts with commitment, commitment and the form of bold statements, something like that. In 2025, or in 2030, our company will, XYZ. That's a starting point. What we see on the more, let's say, tangible operational level, is that these commitments often relate to stepping away from using virgin materials. Because using virgin materials leads to resource depletion. And in the process of mining, and creating these materials, we have a lot of negative environmental impacts as well, like, for instance, global warming, or pollution and waste aspects. So this is a very let's see tangible example that businesses are already doing today, which can be measured, pretty soon, pretty straightforward manner, and lead to dramatic positive results, stepping away from virgin materials, preferring recycled content. And the added benefit there is by preferring recycled inputs, you're stimulating a market for materials that are now being discarded, wasted, burned, destroyed forever, basically. So yeah, I think that's a very, that's a very low level thing that you could start doing tomorrow.Tom Raftery:
Okay, great. And if I am an organization that is thinking about embarking on something like this, what's the benefit to me apart from a livable planet?Roy Vercoulen:
Yeah. So one important benefit is related to resilience, future resilience, so what we're seeing in Europe, but also in other parts of the of the globe, that regulation is in place already, to tax emissions to tax or ban even single use materials, like certain types of plastics. So that's an important benefit, just resilience, that's the the ability of your organization of your business to try over the next decade. I think that's, that's something that that that is slowly sinking. On top of that, if you are a first mover in this whole transition, there's a huge opportunity to now secure recycled inputs for your products, these recycled inputs directly translates into lower carbon emissions, and are favored by a growing amount of buyers across the globe. So you're, it's really an opportunity to grow your market share. These are very robust, let's say financial objectives. On the other end, on the other side of the scale, you might you might say, there is things like fear, fear pressure, there is things like stakeholder groups. And there are consumers, whether it be business to business or, or business to consumer that are simply expecting that the brands they buy products from, do not harm ecosystems do not contribute to global warming, do not contribute to waste creation and resource depletion. It's already what they expect. So when they find out that your company is not doing a good job in these areas, that's likely to have consequences. And this trend is also growing. I mean, we're seeing the EU taxonomy with regulations being announced to really create transparency also on what will be considered circular over the next year. So there is also a push again, from from that perspective towards companies having to become more transparent on how their operations and their products are impacting, let's say these these these three key issues dump that I've been pointing out several times waste resource depletion and global warming. And for me, these are really core to the circular economy. Okay.Tom Raftery:
And if I do start to embark on something like this as an organization, how do I measure progress? And how do I measure myself against other organizations who are doing similar projects?Roy Vercoulen:
Yeah. Yeah, good. Good question. So at this point is that the market is still pretty immature. And what I mean by that is that a lot of businesses have not yet established their baseline. So even though they might have clear goals for 2020, or 2030, defined saying, In 2025, we want to be 100%. Circular. In reality, right now, they don't know what is circular for our organization. So how will we measure this goal? And because they don't know how they will measure the goal, they don't know where they are yet. So they don't know. Basically, where they want to go and where they are. So this, this is a huge problem that causes a lot of pain and frustration. Fortunately, since 2020, larger multinationals feel comfortable using the circular transition indicators as a measurement framework to establish clarity on how to measure circular performance in a robust, transparent manner. And this is important because as a, as a leader in your industry, as a large corporate, you cannot just accept certain measure certain circularity in in your own, let's say a way and expect that everyone will buy into it, you need, you need standards, standardization is absolutely key, because we're all working in complex value chains with with that span, across across the whole world, basically. So we need one language in the end. So I think that's the first thought, establish clarity on how to measure and accept that maybe next year, you will refine your measurement method, but at least you know where you are, and you will have something to start with. And then I think what's the second point is not just think about, why do you want to measure? And this is, I think, where where your question was really the right question to ask because you were asking, How do I measure progress? And that's really key, because this is what we need. We need progress. We don't need measurement, to say, Hey, we're 50 or 60. And let's celebrate. No, it's about how can we transition from being better tomorrow than we are today. Because that's, that's really our responsibility. As, as a society, we know we have these huge problems across the globe. So we cannot just celebrate that. Even if we're let's say, it's possible that you're 100% circular, then then even think about how you can how you can be beneficial how you can give back how you can help your whole value chain to be to become positive to have positive impact on the on the planet as well, because that's what what's needed for us to try with the 10 billion people that we will have on this globe in in a couple of years. So I think two things are key one is accepting that you just can get this ride straight off the bat. But it's important to start and to learn by doing. So start doing, start measuring, and then use measure in a way where you understand what drives your performance. Because only if you understand what drives your performance, are you in a good position to identify and prioritize improvement efforts? And these are key in establishing the progress that you pointed out in your in your question. But that's not that's not easy.Tom Raftery:
No. And you also want to be able to report on your progress report on where you are and report on your progress so that you can tell stakeholders, be they customers or suppliers or employees. This is where we are and this is why we're doing well or not.Roy Vercoulen:
Yeah, yeah, fair, fair point. And, and I mean, just to be honest, the problem with measuring circular performance once you've tackled the challenges that I that I brought forward a minute ago. is okay, where do I get the data? So that's another key element. And that's why I'm, I'm happy to be in this podcast also with you. So very, so where do I get the data? Yeah, exactly, I had a. So, you did. First of all, at this point, the type of information that you need to measure your circular performance is is not yet captured very often. And as part of procurement processes. So you register, what you what you purchase, for which amount you purchase it, you have an invoice number, and maybe some characteristics and the supplier name, but the material composition is very often lacking. And you need this material composition information, to be able to, to know to what extent you already have recycled inputs or rapidly renewable inputs as your as your inflow going into your organization term. So this is a huge problem getting that that data available, because right now, it's not available. In most instances. It's not comparable, it's not reliable. So there are, let's say, some basic issues to overcome. And that's also why I'm, I'm happy that that circle IQ is at this point, collaborating with SAP. And I saw last Friday with one of the proof of concept partners that we were exploring collaboration with, that they actually have this data sitting in their SAP system. So I had, I had a very happy weekend. Great, and forth, and validation. on our end, yes.Tom Raftery:
Okay, so tell me more about that. How does circular IQ help organizations with this?Roy Vercoulen:
Yeah, so we, we help organizations to our software platform. So this software platform facilitates the measurement process, and doesn't stop at just giving you the outcome? Our our dashboards and our reports are really designed in a way where they help facilitate human interaction and decision making processes. So our reports don't just show the percentage of your circular performance, but they also highlight with with color codes. So which materials are the most circular materials in your info, which ones are the most linear? So you can you can see which materials might become problematic in the in the long term, you might have some critical materials in there. But also it showcases what we call loss potential, which is the difference between let's say the opportunity, you have to reuse a material at the end of life, and the actual recovery. Because in the end, only what you what you're able to actually recover, can be reused or recycled or refurbished, or. And this is really key in seeing that potential that is being lost, because you don't have a collection system. Because maybe you're gluing materials together, we don't have access to connection points, or they are not reversible, or these simple design, design things that you might be able to tackle inside your your organization or in collaboration with one of your value chain partners. Our reports, our dashboards, point you towards this type of information with the intent to really drive decision making processes towards identifying improvement opportunities, prioritizing them, and then also translating them into well, smart action plans detailing who should be responsible for achieving a certain improvement by when it would be ready if a budget should be allocated, if there are risks associated, that need to be mitigated. This is all let's say, aspects that our software facilitates, but I should say that we do that in line with the CDI methodology. So with the sirpur transition indicator methodology, and it's seven, seven steps that are outlined as part of that process.Tom Raftery:
Okay, very good. Have you any customer examples you can speak to?Roy Vercoulen:
Yeah, we work with quite a number of of companies. So at this point, we have around 1200 organizations in 84 countries that are using our software, so CTI tool to as their go to solution for measuring and improving their circular performance. And we have a lot of examples in the chemical sector. Like, for instance, companies like DSM and and are, are using our software, but also consumer products manufacturers like whirpool. Isn't, isn't isn't is an example, that we often speak to our companies in the betting industry like helping? Yes, so these are some, some some examples. And what they have in common is the C suite leadership has the conviction that if you want to change something, you need to measure it. Because if it's, if it's not measured it, you can't expect it to improve because you don't know how to measure the improvement. So that that's really what's lacking that key performance indicator on a C suite level, that that you can really focus on on the board level and align, let's say the roles and responsibilities in your organization to start that improvement journey.Tom Raftery:
Okay, one thesis that I've put forward a number of times on this podcast is that sustainability and sustainable goods should be, by definition, cheaper than their non sustainable counterparts. I mean, if you're using goods that you have collected as what otherwise would have been waste, and you're using that as an input, then you've not had to buy virgin material, as an example, in a circular context. You know, in general, I think sustainable goods, by definition should be cheaper. It turns out that today, probably more due to economies of scale and the immaturity of the technologies that that's not the case. But I think long term, it should be the case. And that in terms of sustainability, and circular economy, you should not just be saving the planet, you should also be saving your pocketbook. Is that is do you think, is that a fair assessment? Or am I just smoking crack?Roy Vercoulen:
Well, on a on a on a conceptual level, I couldn't agree with you more. But if you look at the powers that be or the DMV incentives that we have amongst us, like, for example, taxation schemes, like at this point, businesses are not taxed for using up materials. So there is no tax for destroying material forever. So therefore, there's no incentive for using it without using about. So I think that's like a very important, that's a design flaw that we have in on a system level across the globe, currently, related to not daxing. So not charging companies for destroying finite resources forever. I mean, over the past months, the price of the carbon credits is finally at a level that it that it should have been like 10 years ago, or more than 10 years ago. And, and, and even at this point, it's not really driving, driving change. Also, if you look at, let's say, taxes, we have our own labor, that are also, let's say, problematic to, let's say, work towards the situation that you're mentioning where circular products are cheaper than than linear products. And I think another, let's say, point that that you hinted at is the vested in interest that that also is not really helping us at this point. So large corporates like we should we saw on the Netherlands with the very important, let's say legal, the shell case, they need to speed up their their efforts to to decrease their impact on global warming. I mean, it's it's it's unfortunate that that companies, let's say need to be pointed Towards the responsibility they they they have,Tom Raftery:
it's even more unfortunate that their first response was to say that we're going to appeal the decision.Roy Vercoulen:
Yeah. And it's, it's, it's, I think it's it's the there are, let's say a lot of deeper, deeper problems, but we need to start doing and then learn how to resolve them, instead of, let's say, giving the response from Okay, well, this is not fair, because my competition is not facing the same legal, legal ramifications as I am, or it's it's not, it's not fair because I just invested x in this or that process. So, yeah, that's also problematic. I mean, there's still a lot of lobbying going on for for linear, helping to the problems that we're facing related to whether it be waste or our global warming to just stay the same doing to maintain the status quo. That's, yeah, that's just not now. You can feel very frustrated. Once you spend too much time, let's say diving. Diving into that.Tom Raftery:
Yeah. Yeah. Right. We're coming towards the end of the podcast to know, is there any question I have not asked that you wish I had, or any topic we've not brought up that you think it's important for people to be aware of?Roy Vercoulen:
Um, yeah, I mean, we touched upon upon barriers, let's say for, for starting, becoming more, more circular. And I think this is not a something that that really speaks to my, to my heart, because I see a lot of people working within larger corporates that are, well, somewhat hesitant to maybe try something that is not legally enforced, or, as a related to compliance, I would really say with this issue, it's, it's key to just start, start doing something and accept that you will not get it right, the first the first time around, but at least you're educating yourself. And you're making a statement inside your organization. And that's really where, where it starts. And another point, I think, is accept that this is not coming for free. This is like, this is not the path of least resistance. I mean, the path of least resistance is the linear economy, let's say all our systems are in place for the take make waste society. So accept that this is also about creating a new path. And that comes with sacrifices. And you cannot expect, let's say, plug and play solutions in that in that area. Yeah. Okay.Tom Raftery:
Super, super. Really, if people want to know more about yourself, or about circular IQ, or any of the topics we discussed in the podcast today, where would you have me direct them?Roy Vercoulen:
please direct them to CTI tool.com where they can request their their own free account to start measuring tomorrow. So there's even no financial barrier for for testing this out and seeing how it how it helps your organization. to to to have clarity on what is driving your circular performance right now. Okay,Tom Raftery:
super, super. Really. That's been great. Thanks a million for coming on the podcast today.Roy Vercoulen:
Thank you very much for inviting me, Tom. It was my pleasure.Tom Raftery:
Okay, we've come to the end of the show. Thanks, everyone for listening. If you'd like to know more about climate 21 Feel free to drop me an email to Tom email@example.com or connect with me on LinkedIn or Twitter. If you'd like to show please don't forget to subscribe to it in your podcast application of choice to get new episodes as soon as they're published. Also, please don't forget to rate and review the podcast. It really does help new people to find the show. Thanks. Catch you all next time.