CONTENTS WELCOME WEDNESDAY THURSDAY. 4 The Big Picture Panel Discussion
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1 CE100 USA Seattle Workshop Seattle March 8 & 9, 2017 EXECUTIVE SUMMARY
2 CONTENTS WELCOME WEDNESDAY 4 The Big Picture Panel Discussion 5 CEattle Site Visits Gear That Lasts: Creating New Business Models At REI Evrnu Creating The Future Of Apparel Starbucks Closed-Loop Journey THURSDAY 7 Toolbox/Knowledge Session The Biomimicry Toolkit A Toolkit For Policymakers The Circular Design Guide 11 The Power Of Creative (Self-) Destruction Panel Discussion 12 Roundtables Aligning On Circular Materials Setting The Course: Metrics For The Circular Economy Accelerating Circular Markets 15 New Frontiers
3 WELCOME March 8th and 9th, 2017 marked the 2nd US (and 11th overall) CE100 acceleration workshop. Over two days in Seattle, a diverse group of participants immersed themselves in a combination of plenary presentations and discussions, off-site visits, in-depth roundtables, knowledge sessions, and networking. Armed with a host of new connections and ideas, all of us including those of us at the Foundation itself are all the better positioned to drive our efforts forward. The Seattle workshop, along with upcoming events in the UK and Brazil, comes at an exciting time for the evolution of the circular economy. Through the steady efforts of the Foundation, its partners, and countless others, the concept has taken firm root among business leaders, policymakers, academics, and NGOs, and we see increased momentum across numerous dimensions as a result. However, the journey has only just begun. In the months and years ahead, amidst accelerating upheaval and change around the world, the CE100 community has the opportunity to pioneer new approaches to value creation and to drive the necessary systemic shifts to support an economy that is regenerative and restorative, and that works over the long term. With this in mind, the Seattle workshop was convened under the theme of Setting the Course. Across multiple sessions we worked to advance the vision of what the circular economy could look like and to strengthen our collective commitment to pursuing it, while in others we sought to deepen discussion and begin to craft more concrete plans for how to get there. The result was a refreshingly productive two days filled with new learning and insights, new connections, and an array of potential new partnerships. From here, we look forward to continuing collaboration and dialogue with and among CE100 members, further developing the CE100 platform in the US, and reconvening and building further on these efforts at the next US acceleration workshop, September in Chicago. Finally, thank you again to all the speakers and participants for a wonderful event. Chris Guenther CE100 USA Lead
4 CE100 USA SEATTLE ACCELERATION WORKSHOP SUMMARY
5 WEDNESDAY THE BIG PICTURE: OPPORTUNITIES AND CHALLENGES To provide an overview of opportunities in the circular economy, Andrew Morlet, CEO of the Ellen MacArthur Foundation, moderated a session combining big-picture perspectives of representatives from EMF Knowledge Partner Arup, Global Partner Intesa Sanpaolo, and Pioneer University Rochester Institute of Technology (RIT). Jim Quiter, Principal and Global Management Consulting Business Leader for Arup, spoke about growing awareness of the significant opportunities to eliminate waste and increase productivity in the built environment, particularly in the construction and deconstruction phases. He also highlighted Arup s work on a Circular House concept, utilizing all reusable and trackable materials, for the London Design Festival in While the approach is not yet cost effective, it demonstrated feasibility and sets the foundation for continued innovation by Arup and others. Nabil Nasr, Associate Provost and Director of the Golisano Institute for Sustainability at RIT, shared insights from his pioneering work in remanufacturing and updated participants on the creation of the U.S. Department of Energy s Reducing Embodied-Energy and Decreasing Emissions (REMADE) Institute, which RIT will lead. Nabil also spoke to his recently-completed reman/reuse/refurb study for UNEP, studying three sectors in four countries and looking at technologies that could help significantly reduce material consumption. Only 2-3% of the economy is covered in remanufacturing today, but there is potential for this to rise to 20% or above. Andrew highlighted that the remanufacturing division in Renault is its most profitable. William Denton, Senior Banker for Intesa Sanpaolo New York, highlighted the bank s large innovation hub in Turin, which is developing a circular economy strategy and narrative it believes will drive a whole new kind of engagement with its major corporate clients. Specifically, the innovation hub is developing risk benchmarks and criteria, with the goal of reshaping how ISP rates companies. The bank is also developing a venture capital fund targeting startups in, among other areas, the circular economy, and is evaluating midrange finance opportunities with several large international companies. In one particularly poignant moment, Jim noted that circular economy thinking requires a shift in mindset, not just a checklist. He contrasted this with LEED certification process that, while it has driven valuable awareness and innovation, doesn t always necessarily fit with what s best for the building owner. All the panelists agreed that the economics are crucial.
6 CEATTLE SITE VISITS Seattle is home to numerous companies, including both established multinationals and start-ups, that are already deeply engaged in pursuing and delivering circular economy solutions. We took advantage of our location to make a series of site visits exploring circular economic thinking and activities around the city GEAR THAT LASTS: CREATING NEW BUSINESS MODELS AT REI REI is working on a number of initiatives to repair broken products, get them into new hands, and support donation or recycling of retired products. To both support and engage collaboratively with participants in the CE100 workshop, they invited a group of us to their flagship store in South Lake Union for the opportunity to take a closer look at their work, and to have a roundtable discussion of new business models for product repair, re-use, and end-of-life. REI s Kirk Myers, Susan Long, and Greg Gausewitz began by walking the group through the history of the company and its unique co-operative business model, then highlighted its three main strategic directions related to the circular economy: Curation of products (e.g. better materials, expanding value, designing durability, healthy use, cleaner production, optimizing for end of life) Catalyzing outdoor experiences (e.g. gear swap events, REI garage sales, business models for repair) Core practices (e.g. zero waste, green buildings) We then divided into three groups for deeper discussion of those three strategic directions. The participants enjoyed very much the high level of discussion and ideas, as well as REI s openness to share their challenges, opportunities, and work, as well as to brainstorm with the group to push it further.
7 EVRNU CREATING THE FUTURE OF APPAREL The team behind Evernu opened up the doors to their facility in the industrial district of Seattle, inviting participants to better understand the company s unique technology and its efforts to disrupt a sector that is still heavily reliant on 20th-century infrastructure. Evrnu CEO Stacy Flynn briefly introduced their technology which transforms old clothing into raw material for the creation of new garments. She explained how they are able to create a regenerative supply of bio-based fiber while optimizing water use and reducing carbon dioxide emissions. After the presentation, participants engaged in in-depth discussion of the challenges and opportunities linked to scaling and branding. The following main challenges and opportunities were highlighted: Challenges Scaling Access to the right capital Secure feedstock Evolve technology to accept larger supply/diversity of feedstock Branding Potential constraints from collaborating with other brands/ retailers Ensure a single compelling message Opportunities Find new markets to expand feedstock Tailor story to the majority of the customers rather than an eco niche Ensure strong story Focus on performance of fibres Highlight impact
8 CE100 USA SEATTLE ACCELERATION WORKSHOP SUMMARY STARBUCKS CLOSED-LOOP JOURNEY The Starbucks team gave us a tour of their flagship roastery and coffee shop, home of the Starbucks Reserve Blend and a unique experience highlighting one-of-a-kind coffees with unique brewing methods. Starbucks journey to create sustainable, market-driven closed-loop systems has involved a largescale, collaborative effort to address the recyclability of its iconic cup and increasing efforts to realize opportunities in its retail stores and throughout its supply chain. Following a tour of the store s operations and a guided coffee tasting, the group discussed the history and challenges of the cup initiative and Starbucks other initiatives which included their built environment footprint and agricultural processes. Another opportunity discussed was the role of the partners (i.e. baristas) as the key touch point between Starbucks and the customer.
9 THURSDAY TOOLBOX The second day of the workshop kicked off with a learning session and highlighted new knowledge and tools needed to aid implementation of the circular economy. Selected partners and emf team members led a series of three practical and highly engaged sessions designed to equip individual participants with tools to accelerate the transition within and across organizations. HARNESSING NATURE S TECHNOLOGY: THE BIOMIMICRY TOOLKIT Innovation is key to the circular economy and continuing advances in material, information, and other technologies offer compelling opportunities to accelerate progress. However, there may be no greater promise than in harnessing nature s technology to create products and systems that effectively balance resource flows and eliminate the concept of waste. To help participants explore that promise and learn practical ways to apply it, Nicole Miller and Erin Rovalo from Biomimicry 3.8 facilitated a toolbox session introducing the new biomimicry toolkit. Following a short presentation on biomimicry the study and emulation of nature s forms, processes, and ecosystems participants were led through an exercise using the recently developed biomimicry 3.8 Resource cards. Each card showed an organism and its functions, helping to stimulate awareness and inspiration. Participants were then invited to generate and share new business ideas inspired by biomimicry and the concepts highlighted by the playing cards. DELIVERING THE CIRCULAR ECONOMY: A TOOLKIT FOR POLICYMAKERS Ashima Sukhdev, Government and Cities Programme Lead at the Ellen MacArthur Foundation, provided an overview of the Toolkit for Policymakers report (link and download here), published in June Addressing an engaged group of both public and private-sector participants, Ashima highlighted the necessary multi-stakeholder approach and the step-by-step methodology summarized in four main steps: 1. Align on starting point, ambition focus,
10 2. Asses sector opportunities (ReSOLVE framework*) 3. Analyze economy-wide implications 4. Engage businesses and other stakeholders Based on the report, the Ellen MacArthur Foundation has created three Plug and Play tools for governments interested in using the Toolkit in an easy way by selecting focus sectors, quantifying sector impact, mapping sector specific policy options, and identifying barriers. Following the presentation, participants divided into four small groups on textiles, transportation, construction, and electronics in order to (a) discuss how to apply circular initiatives in those sectors using the leavers of the ReSOLVE framework, and then (b) identify the barriers to capturing these opportunities (categorized as economic factors, market failures, regulatory failures, and social factors). The group then reconvened to share their notes and thoughts. Based on those comments and from the Toolkit for Policymakers, Ashima listed some of the system conditions policymakers can offer and create to overcome those barriers: Information and awareness Collaboration platforms Business support systems Public procurement & infrastructure Regulatory frameworks Fiscal frameworks Slides from the session are available here. *The ReSOLVE framework, developed by McKinsey, SUN and the Ellen MacArthur Foundation, takes the core principles of circularity and applies them to six actions: Regenerate, Share, Optimise, Loop, Virtualise, and Exchange. See next page for a summary graphic.
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12 THE CIRCULAR DESIGN GUIDE In January, the Ellen MacArthur Foundation and IDEO released the Circular Design Guide. Recognizing the huge opportunities in the circular economy transition and design a crucial lever for realizing them, the guide aims to help innovators create more elegant, effective, creative solutions for the circular economy. Solutions that are invaluable for people, give businesses a competitive advantage, and are regenerative for our world. At the workshop, Lauren Yarmuth, a Portfolio Director for IDEO, led participants in an interactive presentation of the Design Guide, exploring how it can be used as a tool to help design products and services, or for making the case for circular thinking to colleagues or clients. She offered a starting question: What if you could redesign everything? She then walked through the Circular Design Guide and began an exercise by inviting participants to identify challenges they often faced in building support for circular economy projects. Suggestions included: A fear that other companies will capture the financial gain Logistical challenges Politicization of the term Why does it matter, our company is already doing it Desire for change has to come from companies they need to see the value but you can still make inroads by offering new mindsets. Lauren Yarmth, IDEO Among the recommended responses was to shift the mindset used to look at a given problem or opportunity, and indeed, one of the key sections of the Design Guide focuses on this. One example offered in the session was around the idea of universal benefit, such as Starbucks building an opensource database of coffee strains. Lauren also highlighted the need to find a human touchpoint. For example, designing a building because you love your family. From here, Lauren introduced the Design Guide s 24 methods, or concrete tools to help guide designers. The participants broke into small groups and experimented with applying these methods to challenges in their own organizations. Slides from the session are available here.
13 THE POWER OF CREATIVE (SELF-) DESTRUCTION Noting that the circular economy often invites industries and companies to rethink fundamental aspects of their businesses, this plenary session considered both the power and perplexity of bringing disruptive innovation to scale, especially inside established companies where the proposed innovation may compete with or eventually undermine the existing business model. The panelists included: Vik Sahney of REI, who spoke about the slow work of shifting mindsets when both company culture and systems are built around one way of doing things; Randi Braunwalder of HP, who shared insights from the nearly 20-year evolution of the company s Managed Print Services from a small-scale experiment to a vital segment of its business; Andy Ruben from Yerdle, who talked about his company s new strategic direction and helping larger brands overcome barriers to facilitating secondary sales of their own products; and, Lauren Yarmuth of IDEO, who offered observations and experiences from helping clients navigate the long and frequently painstaking process of designing around complex business problems. At the core of the discussion were questions of how to effectively embrace the process of creative destruction, and how to traverse the many challenges it entails. Key insights from the panelists included the following. 1. The process frequently begins with a key question, such as what is our purpose, or what is the biggest problem facing our customers/users today, or how can we gain credibility through embracing emerging models? 2. Remember that creative destruction is the process not the end. Its power derives from the potentially positive outcomes it can produce, and/or the risk that may come from avoiding it. 3. Change comes from the customer/user. You can see the opportunity for change from watching behaviors. 4. Some innovations cannot be realized within current constraints. But don t lose these. Instead, find a way of storing and revisiting further down the path. 5. Be honest about the challenges ahead and engage with them authentically. 6. When we talk of the circular economy, it is the shift in thinking that is fundamental. 7. Conflicting business models can co-exist within an organization, but only for a time. 8. Try setting a worldview for 12 months out and using this to challenge current thinking. In a process of creative destruction, it s important to cultivate and protect the new idea to flourish internally, before you have it compete with the main business Andy Ruben, Yerdle We are looking to provide experiences instead of the usual product sale. We want to bring customers and keep them for a lifetime. Vik Sahney, REI
14 ROUNDTABLES The roundtable sessions provided space for in-depth discussions of critical topics and for incubating ideas and potential collaborative project to drive accelerated progress. ALIGNING ON CIRCULAR MATERIALS Materials are key determinants for the circularity of products. For many sectors, a circular materials palette does not yet exist, while in others a great deal of work remains to be done. To support the development of new materials with value chain partners, and to assess the circularity of existing ones, there is a need to develop a common vocabulary and metrics for circularity and materials. With this in mind, this session sought to gather experts from relevant brands, material suppliers, and other stakeholders to align perspectives and identify potential paths forward. Following initial context-setting for the session, Erica Ocampo, Sustainability Manager for the Dow Chemical Company spoke briefly about Dow s evolution from pursuing industrial ecology within and around its own operations, to increasingly partnering with its customers and others to develop circular economy solutions at scale, and some of the challenges that arise when trying to define and develop circular materials in particular. Ed Thomas, General Manager Material Science Innovation for Nike, then described related challenges from the perspective of a brand making thousands of material choices in the context of product design, and the urgency added by Nike s recently-announced goal to double its business while halving its impact. From here, participants divided into groups to discuss five key questions: What do we mean by circular materials? What vocabulary and metrics should we use when considering circularity and materials? What are the tradeoffs inherent in this discussion (e.g. durability, recyclability)? What existing assets (e.g. standards) can inform this discussion? What are the gaps? How can we develop consistent messages for our upstream partners? While this resulted in a rich discussion from which numerous ideas emerged, among the key takeaways was a consensus that this space is indeed not well defined enough and that further work is needed to
15 align the understanding and efforts of the relevant parties. Agreed follow-up plans included developing a longer summary of the ideas discussed and for interested organizations to explore ways to continue the discussion, possibly in the form of a CE100 Collaborative Project. SETTING THE COURSE: METRICS FOR THE CIRCULAR ECONOMY City and regional governments in the US have begun to set their ambitions for a circular economy. But what are the opportunities the public sector is hoping to unlock and how should it measure progress? In this session, we gathered public (Washington State, Oregon State, Vancouver, Seattle, Alameda County) and private-sector (DSM, HP, Dell) participants alike to dive deep and explore the role of measurement, metrics, and indicators for policymakers. Participants objectives ranged from gathering broad feedback on their current measurement mechanisms to specific requests on measuring the potential impact of a circular economy. Ashima Sukhdev, the Ellen MacArthur Foundation s Government and Cities Programme Lead, began by setting context for the session and the group shared some existing metrics and approaches they re using. In particular, a representative of the State of Oregon s Department of Environmental Quality spoke about the use of an innovative consumption-based inventory that allows them to tailor policies and budgets on the basis of more specific economic and environmental impacts. Alameda County also shared their perspectives on their measurement journey, highlighting the role measurement plays for public-sector bodies in identifying opportunities and challenges they must address in the first place. The group then undertook discussion to answer three key questions: Why do we measure? In a nutshell, to help set priorities, to track the impact of policies and investments, and to hold various players accountable. How and what do we measure right now? At the moment, there are mainly downstream measurements such as landfill diversion, recycling rate, GHG emissions, and waste reduction, so it is all very focused at the end of the pipe. Why should we measure? A lot of ideas were raised, with considerable focus on having more influence upstream. For example, suggestions around volume of activity measurements for upstream initiatives included measuring the repair industry s market size, what percentage of purchases are shared/reuse, etc. Or perhaps measuring economic impacts (e.g. employment, cost savings) as the result of circular economy innovation.
16 A broad conclusion was also reached that our current economy runs on linear metrics and we therefore need to explore a whole new way of measuring material flows as well as broader economic outcomes. ACCELERATING CIRCULAR MARKETS Circular Markets that support recommerce are an essential element of the circular economy. However, there are currently a host of barriers to having these markets achieve scale, from data issues, to logistical challenges, to brand resistance. In this session, stakeholders approaching these challenges from diverse perspectives combined their experience and ideas to explore ways to collectively address them. A starting point was recognizing that challenges exist on both the supply and demand sides of the equation, but that starting with supply addresses a number of barriers on both sides. Guided by John Atcheson of Stuffstr, who facilitated the session, the group investigated the supply challenge through the lens of two customer preference archetypes, saving money and saving space. After participants were split into two groups, key themes that emerged from discussion were a distinction between B2B and B2C customers, tapping into life-change moments such as moving, the effect of locality on availability and logistics, and the role of brands. Notably, three ideas for potential CE100 Collaborative Projects emerged: Ownership Visibility & Value (CoreCentric) Premium Secondary Markets for Apparel (Nike) Cities as Concentrators of Nutrient Streams (The Plant).
17 NEW FRONTIERS For the last session of the workshop, participants were immersed in an array of case studies, experiments, and new lines of thinking that are pushing the boundaries and creating the new normal in multiple sectors. To kick things off, Ken Webster, Head of Innovation for the Ellen MacArthur Foundation, offering three seemingly unconnected frontier stories around the circular economy. In the first and conventional story, circular economy as applied particularly to access over ownership or sharing economy approaches (which can have an effect on resource use) are part of the way in which, in a low-growth, developed nation context, businesses can grow; i.e. by lowering consumer, regulatory, and labor costs and capturing more of the consumer surplus revealed. It is consistent with an economy which is ever more dominated by capital gain (return to asset ownership), is experiencing asset price inflation while the market for conventional goods and services is ever more competitive, and where deflation is a risk. Would control of circulating perhaps specialist materials or products or components be attractive as a future asset class? Another story takes the opposite pole: that the very technologies which offer additional returns through platforms increasing utilization and lowering transaction costs can be accessed ever more cheaply, so that the opportunities for aspects of social production, of peer to peer exchange, working at different scales (cities, towns, etc.) could also be part of a circular economy by lowering transaction costs and upping the availability and number of transactions. The aim might be a regenerative, accessible and abundant economy, but one of no real interest to commercial operations at scale, since price formation requires scarcity of one sort or another. The third story was around the recognition that, for as much as we celebrate and focus on the impact of and on business in the circular economy, there are other ingredients just as vital to a productive system. Using the metaphors of a sandwich, a butterfly, and a cake, Ken highlighted the role of other elements such as a scientific and systemic worldview and enabling conditions. The cake was a reference to Hazel Henderson s famous layered cake model of an industrial economy (see figure below), in which the private sector is merely the icing sitting atop a complex system encompassing the public sector, the informal or love economies, and underlying factors like natural capital, ecosystem services, etc.
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19 We then had five short presentations from innovative organizations from across the landscape of the circular economy and sharing what constitutes the newest frontier in their work. Nicole Hagerman Miller, Managing Director of Biomimicry 3.8 highlighted growing understanding of the potential of biomimicry, including new research predicting that by 2025 biomimicry s annual market impact will be $300 billion in the US and $1 trillion globally. She then presented one their most innovative current projects, which is developing a factory to function like a forest, complete with systems that both harness and contribute to beneficial ecosystem services. Access slides here. Evernu CEO Stacy Flynn reintroduced her startup following the site-visit on Wednesday and stressed the importance of creating technology in the context of strong ethical principles. In this light, she emphasized that the company believes in the principles of regeneration and that they use scarcity as their greatest design tool. She also shared that they are driven to responsibly use resources at their highest and best use and waste nothing: time, money, resources. Access slides here. David Rachelson, Head of Sustainability at Rubicon introduced their idea to utilize technology and data to disrupt the waste and recycling industry and create less expensive solutions, in turn shifting the economics of implementing the circular economy at scale. He emphasized the significant market opportunity for his company, namely the $11 billion of easily recyclable materials that are buried in US landfills every year, and the potential of unlocking this value through technology. Frances Yang, Structure and Sustainability Specialist at Arup, shared a collection of case studies demonstrating both the value and remaining innovation challenges of applying circular economy principles in the built environment. The cases included design and pilot applications of bio-based composites, layered building systems, standardized components, removable fasteners, and compostable materials, with each helping to drive progress toward more effective disassembly and reuse of crucial building components. Access slides here. Jonathan Pereira, Executive Director at Plant Chicago, introduced their food production space designed to be a net-zero, closed loop system in Chicago s Back of the Yards. The Plant s mission To develop circular economies of food production, energy conservation and material reuse, while empowering people of all backgrounds to make their cities healthier and more efficient emphasizes the opportunities that exist at another crucial frontier of the circular economy: local. Access slides here.
20 The Ellen MacArthur Foundation was established in 2010 with the objective of accelerating the transition to the circular economy. Since its inception, the non-profit organisation has become an important lead in global thinking by inserting the circular economy firmly on the agenda of decision makers in business, government and academia. The organisation s work focuses on four interconnected areas: Education: inspire learners to rethink the future through the circular economy framework Businesses and governments: to catalyse circular activities across the global economy and create the enabling conditions Insight and analysis: to provide robust evidence of the benefits of the transition Communication: spread the circular economy to a global audience For more information, visit the website here: ellenmacarthurfoundation.org
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