“How Circular Economy came, saw and is beginning to conquer Luxembourg”

in Advisory, 10.02.2015

It’s been a few months since I first gave an introduction to the circular economy – and what busy months they have been. The concept has gone from just a small seed of an idea to a project with a growing number of stakeholders and ever more ambitious goals. These six points – a mixture of status update, FAQs and case study – will bring you up-to-date on the speedy progress of this rising trend …

Luxembourg would be a suitable testing ground for a Circular Economy

At yesterday’s event organized by the EcoInnovation Cluster, Francine Closener declared Luxembourg and its government to be ready to invest in making our economy circular. The feasibility study commissioned by the Luxembourg government revealed that the marketplace Luxembourg displays several strengths which make this change possible. Besides the strong governmental willingness to support this idea, there are numerous examples of already functioning circularity projects present across Luxembourg. Why have we not yet heard about them? Because usually, firms investing in circularity do not explicitly call it “circularity”. After careful investigation, the feasibility study revealed that there are already between 7 000 and 15 000 jobs in Luxembourg today related to a Circular Economy which drive more than €1 billion primarily in manufacturing, but also in retail and other sectors. What is still needed to move forward in the process are measurement frameworks and KPIs. Here, Luxembourg’s outstanding research centers and universities will certainly play a role going forward.

How is KPMG going to contribute in Luxembourg?

KPMG Luxembourg is going to host an introductory event on Circular Economy for the financial sector on 12 February 2015 in cooperation with the EcoInnovation Cluster.

We will introduce this alternative economic model to the Luxembourg financial sector, as their involvement is sorely needed. Luxembourg’s excellent position as a financial marketplace is a strong advantage for establishing a Circular Economy.

During our conference, we will present the challenges and opportunities for action and outline a variety of already existing initiatives from the business world. Representatives of both business and the Luxembourg government will share their views and future plans/hopes for this concept to give our guests a tangible first insight into the topic.

A list of speakers can be accessed on our dedicated event website.

We look forward to welcoming all participants and to the fruitful exchange of information.

Who else is interested in the topic?

Luxembourg is not alone in this endeavor. Several European Circular Economy initiatives joined forces when they all met in November last year to explore the potential for cooperation. Circle Economy, the leading Dutch initiative invited participants from all over Europe, meaning that representatives from Germany, France, Belgium, Scotland, the Netherlands, Hungary and Luxembourg mingled and presented their country’s activities to accelerate the transition to a Circular Economy.

At this meeting, the work done in Luxembourg was represented by the EcoInnovation Cluster, the Ministry of the Economy, the CRP Henri Tudor, the newly created Luxembourg Center for Circular Economy and KPMG.

Participants found significant differences in approaches and stages of development in the various countries. Sometimes, the political will to back up the transition is stronger in one country than in another, technical capabilities and relevant experience with concrete projects change from nation to nation. Amazing was the range of business cases of what is already working.

The participants agreed to keep sharing information in the future, for instance on life cycle assessment, to jointly develop tools to measure circularity and to boost activities to adequately incorporate the financial sector.

What does the political support look like at European Union level?

An event on Circular Economy as an alternative business model was hosted by MEP Gerbrandy on Thursday, 4 December at the European Parliament.

More than 50 participants from a wide range of industries gathered in Brussels, amongst them huge industry players like IKEA, Philips and Unilever, the European Commission, the European Parliament, the European Investment Bank, business associations (FEAD, BusinessEurope), as well as the civil society (European Environmental Bureau) and UNEP.

The discussion was moderated by Mercedes Sanchez Varela from the KPMG EU Office. In addition to Karen Wordsworth, Director at KPMG UK, the panel was composed of EC official Werner Bosmans from DG ENV, Vice President of Suez Environnement Henry Saint Bris, CEO of REDISA Hermann Erdmann (a not-for-profit organization from South Africa) and Rémy le Moigne, consultant and author of a book on the implementation of Circular Economy.

The panel and the participants discussed a Circular Economy package which was proposed to the European Commission, plans and hopes for the future as well as best practices and challenges ahead. A clear result of this discussion was the consensus about the inevitable need for a change in mindsets, as the fact that we live in times of increasing resource constraints is axiomatic.

What is the status of this Circular Economy policy package today?

The European Commission (EC) put the proposed policy package on hold in December 2014. The debate about Circular Economy was postponed, until a more substantial proposal can be submitted by the end of 2015. Although the idea of a more substantial policy is welcomed, the decision to delay the already existing ideas contradicts the support of a great amount of important actors from industry, civil society, trade unions as well as many Member States (including Germany, France, Spain and Luxembourg from whom the EC received multiple letters urging them not to withdraw the package).

According to EC leaders, the proposal did not reach far enough and focused on environmental aspects only whilst ignoring economic goals. Frans Timmermans (First Vice-President, European Commission): “We want to look beyond the narrow focus on waste and to ‘close the loop’ of the Circular Economy, for example by addressing recycling in product design and creating a market for secondary raw material.” He said further: “We will present this new, more ambitious proposal to promote the Circular Economy by the end of 2015. In parallel we will promote investment in this sector through the new European Fund for Strategic Investment as well as the European Structural and Investment Funds.”

Although the EC postponed the Circular Economy proposal, corporates all over the world (e.g. Apple, IKEA, Unilever, Caterpillar, Cisco, Michelin, Carlsberg, Coca-Cola, Puma, Philips, Vodafone, Timberland, Toyota, etc…) are not hesitating to invest into Circular Economy and are increasing the pressure on politicians to act. So even if politicians are falling behind, corporations are making sure that Circular Economy is becoming mainstream and they are proving the importance, value and opportunities it represents.

Interested in Circular Economy in the EU? Click here for more information.

Circular Economy made in Luxembourg: Tarkett

Tarkett, one of the world leaders of innovative and sustainable flooring and sport surface solutions, is one of the best practices worldwide for circularity. Their acquisition of Desso, another carpet and surface manufacturer also promoting Circular Economy, once owned by Bencis Capital Partners, a Private Equity firm and minority investors, will allow Tarkett to expand its customer base worldwide and extend cradle-to-cradle design expertise.

Tarkett shares are mainly held by KKR international – a Private Equity firm. The company has its Research Center in Luxembourg and is a participant of the Circle Economy 100 (CE100) program of the Ellen MacArthur Foundation. The combination of both businesses will create a powerful player in the Circular Economy world with a significant contribution from Luxembourg.

Leave a Reply

This blog is pre-moderated which means that all comments are reviewed by a moderator before they appear. KPMG reserves the right not to publish any comments made.