All businesses stand to benefit from the Circular Economy, which will create efficiencies and revenue opportunities while also making companies more sustainable. That latter benefit is no less important than the others. Being part of a global move towards sustainability will be essential for Luxembourg companies to flourish in the years ahead, as the issues of corporate responsibility and the environment move rapidly up the agenda of authorities, clients and consumers.
In the Grand Duchy, the six sectors listed below will be among the first to develop Circular Economy roadmaps and pilot projects, based on public-private partnerships. Importantly, while government can create the right framework, real progress will only be made if individuals and businesses embrace these opportunities.
In other words, creative, enthusiastic entrepreneurship will be needed if we are to implement a Circular Economy here in Luxembourg. Both companies from Luxembourg as well as international businesses and investors can contribute to the success story.
Many aspects of the construction sector make it ideal for being an early adopter of the Circular Economy approach. Large quantities of materials are produced, transported and stored - all of which requires energy - and it also consumes other precious resources such as soil and water. The United Nations estimates that the buildings and construction sector accounts for 50% of resource consumption and 60% of waste generation in Europe [source]. Worldwide, the built environment produces nearly 40% of all energy-related CO2 emissions (direct and indirect emissions, such as the production of construction materials) [source].
Action plans can include making greater use of natural materials, such as wood, and low-energy versions of essentials like concrete or steel; introducing ‘material passports’ which provide data on all the products used in a building, thereby making them easier to recycle later; and reusing components, from steel beams to concrete pillars.
For everyone to play their part, citizens need the opportunity to understand and learn about the Circular Economy. In some cases, this will mean raising public awareness through government campaigns. However, education will be important at many other levels, including vocational training (e.g. the construction trades) and university courses, where its concepts should feature in subjects ranging from the sciences and engineering to social sciences, economics and law.
Training for the repair and maintenance of goods will also be needed, while ICT teaching in schools will be ever more important.
Already a global centre for ‘green finance’ and sustainable investing, Luxembourg’s financial sector is well-positioned to help the Circular Economy flourish. Once the concept is understood, the Grand Duchy’s financial firms and service providers will be able to seize opportunities to offer new products and services to firms wishing to move to a circular business model.
This offering could include providing venture capital for start-ups or making private equity investments in innovative SMEs, securitisation, and developing dedicated insurance and banking products that reflect the specifics of a Circular Economy.
Food and bio-sourced materials
High-quality food is key to promoting health and welfare across society. Protecting the environment through better agricultural practices is equally important. A Circular Economy brings both these needs together, for example, by seeking to avoid chemical fertilisers and regenerating soils through mixed farming techniques.
More use can be made of bio-sourced materials, such as insulation materials or wood, along with biogas from organic waste, which can be used to heat homes. Capacity can be increased in some cases by creating new growing areas, such as rooftop greenhouses and urban farms, while locally-grown alternatives to imported crops such as soy can be developed.
Like construction, manufacturing consumes large amounts of raw materials, energy and natural resources. Studies show that a circular approach to design and circular business models can help industry reduce not only raw material and production costs, but also minimise risk of material supply and environmental impacts.
Initiatives in Luxembourg include the creation of the Product Circular Data Sheet, a document that provides transparent, standardised information on circular materials, which can be shared among companies. In some cases, infrastructure can also be shared, while switching to a Product-as-a-Service business model is a less resource-intensive option.
Avoiding waste in the use of everyday products such as electronics, textiles and furniture is a major target of the Circular Economy. Action by retailers can take many different forms, including supporting the use of labels to inform consumers about the circular aspects of a product (such as how easily it can be repaired or recycled) and helping to create a market for recycled consumer goods, notably through online platforms.
The retail sector can also support the ‘right to repair’, by providing access to spare parts and developing additional services. Lastly, it can encourage the growth of Products-as-a-Service businesses.