• <a fr-original-style="" href="https://www.rttnews.com/3341228/german-exports-fall-sharply-on-weak-global-demand.aspx" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">German exports</a> fell by 6.3% month-on-month in December, figures from the Federal Statistics Office showed on Thursday, exceeding expectations for a 3.3% drop and suggesting a slowing down in Europe's largest economy despite fading supply chain problems. Imports dropped 6.1%, against forecasts for a drop of just 0.8%.<ul fr-original-style="padding-inline-start: 20px;" style="padding-inline-start: 20px; margin-top: 0px; margin-bottom: 1em; list-style-position: inside; box-sizing: border-box;"><li fr-original-style="" style="box-sizing: border-box;">Furthermore: In 2022 as a whole, exports were up by 14.3% from the previous year after calendar and seasonal adjustments. Imports rose much more strongly, by 24.3%, driven by increased energy prices due to the war in Ukraine.</li></ul>

Aposto World

The transition to circular economy continues to gain momentum under the leadership of different countries and regions. Thanks to the&nbsp;European Green Deal, all EU countries are willingly or unwillingly involved in this process, while countries such as the Netherlands, France and Finland stand out by leading this transition process. The United Kingdom, which left the European Union, continues to work rapidly in order to maintain its global leadership position in the transition to circular economy.So how does the process of transition to circular economy work outside EU countries? In our previous articles, we have discussed what the EU's Circular Economy Roadmap integrated into the European Green Deal will mean for non-EU countries. Of course, when we consider the impact of the EU's leadership of this transition process on other countries, it is necessary to discuss whether EU-oriented regulations cover the rest of the world. Considering the socio-economic situation, time will tell how accurate it is to include non-EU countries in this transformation process only through regulations.In this week's article, we discuss the impact of the EU's regulations on plastic packaging and plastic use in non-EU countries. While the question of how the regulations and strategic roadmaps determined by the EU should be handled for non-EU countries will be our main focus, the report <a fr-original-style="" href="https://link.apos.to/c/3l0PfzUckDpK?c=_yZkhdoLp5424APyXAgrW&sub=62b033905d379200061d8935&s=web" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">'THE EU'S CIRCULAR ECONOMY TRANSITION FOR PLASTICS AND TEXTILE'</a>&nbsp;prepared by the United Nations Industrial Development Organization and Chatham House will accompany us.<h2 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">What should non-EU countries do against the EU's regulations on plastic?</h2><h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">➡️&nbsp;Prioritise recycling</h3>Recycling is the last resort in circular economy. The main reason for this is not the management of waste, but the principle of preventing waste generation. In other words, instead of a system where we continue to generate waste, we need to design a circular system where we prevent waste generation at the very beginning, namely the design stage. The next steps are repair, maintenance, reuse, remanufacture and finally, recycling.Nevertheless, the EU's 'Ecodesign for Sustainable Products Regulation' and 'Packaging and Packaging Waste Directive' regulations are recycling-oriented. However, it is worth noting the difference between the use of the word 'recycling' in EU countries and other countries. Unfortunately, recycling materials 100% is not possible due to current technologies. This causes the material to lose its current value in the recycling process. However, the word 'recycling' does not only refer to a transformation centred on loss of value. Recycling literally means the reintroduction of materials into the economy. In other words, it means that the materials are recycled back into the economy with the right strategic steps before recycling, which we know causes loss of value.The first lesson here is that recycling, which is handled within the scope of EU regulations, actually means that in products such as plastic packaging in non-EU countries, materials with reduced environmental and social impacts and, if possible, recycled materials should be used. It is of critical importance for plastic packaging manufacturers, especially in countries like Turkey that have intensive trade relations with the EU, to use materials that are not only recycling-oriented, but also prevent waste generation thanks to their design, can be reused, can be included in re-production processes and can be recycled at the last stage.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">➡️&nbsp;Demand for recycled plastic</h3>As an outcome of the global struggle against the climate crisis, the demand for the use of recycled plastic materials is increasing day by day. The EU's transition to recycled plastic materials, known as rPET, is of critical importance for non-EU plastic manufacturers.The EU has not made a commitment to zero plastic use in the near future. However, the use of recycled plastic material has already become a material of interest throughout the entire EU supply chain. In particular, the fact that the plastic packaging of food products is made of recycled plastic material and that this is done in accordance with food safety laws and regulations makes it mandatory for countries producing plastic packaging outside the EU to change their supply chains.Another critical issue is related to the process of buying waste plastic from abroad and recycling them to produce various products, which is also on the agenda from time to time in countries such as Turkey. While the EU now supplies plastic packaging from non-member countries, it also examines how the raw materials of these products are supplied. For example, even if the plastic packaging produced in Turkey is recycled, it is necessary to transparently explain how the materials included in the recycling process are made. This makes the inclusion of local waste in recycling processes much more important.In addition, the practice of recycling the EU's waste by sending it to Turkey and similar countries is coming to an end. Thanks to the recycling facilities, the number of which is planned to increase rapidly in EU countries, the EU will now be able to recycle its waste within itself without sending it to other countries. In other words, while the EU-originated wastes coming to Turkey are decreasing, the environmental and social impacts of the wastes coming from other countries should also be taken into account.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">➡️&nbsp;Digitalisation and innovation</h3>While the demand for recycled materials in plastics and plastic packaging is growing, the potential for plastic manufacturers is not limited to recycling. For pioneering countries and companies of circular economy, innovative plastic products made from biodegradable, single-material plastics also have enormous potential. Therefore, innovation is critical for non-EU countries to maintain and increase their share in the EU market.In addition, with Industry 4.0 technologies, the demand for transparency from consumers regarding many products and services we use in daily life is increasing day by day for plastics and plastic packaging products. While the consumer demand for more detailed and transparent information about the environmental and social impacts of the products is increasing as opposed to cursory information, regulations are forcing manufacturers to transform in this area.The use of life cycle analysis (LCA) is on the rise, while consumers' demand for information on raw material procurement, production processes, logistics and even post-use processes of products continues to increase. At this point, it would not be wrong to predict that the level of awareness of consumers in EU member states on these issues will increase with the strategic steps of the EU. For this reason, it does not seem possible for plastic and plastic packaging manufacturers in non-EU countries to maintain their current business models unless innovation and digitalisation are included.🔎 Circular Economy 101's take: The sustainability efforts led by the EU and the transition to circular economy are very important, especially for countries with intensive trade relations with the EU. Nevertheless, it is not realistic to expect that a transformation process focused solely on EU strategies on issues such as climate crisis, hunger, gender equality, etc. will be accepted globally. It is important for each country and each region to design a transformation process in accordance with its own geographical, demographic, cultural and economic structure. In other words, a correct strategy determined according to the socio-economic structure of a country, not only according to the directives from the EU, is important for the transition to circular economy.Regulations play a key role for the transition to circular economy. Although keeping up with this change process led by countries is critical in terms of economic competition, it is also important for the localisation principle of the transition to circular economy that countries determine a transformation strategy according to their own characteristics, not only in line with demands from the leading countries. A business model that works in another country cannot directly be adapted in Turkey and needs to be updated according to the culture. Similarly, it will not be possible to manage the transition to circular economy correctly in the accordance with direct external demand.

♻️ What do the EU's plastic regulations mean for other countries? What are the strategic steps that these countries should follow?

What do the EU's plastic regulations mean for other countries?

Studies in the field of circular economy have become an increasingly widespread point of focus for governments, legislative institutions, the private sector and academia, especially in recent years. Circular economy is being addressed from different perspectives as people try to integrate it into daily and professional life. In this way, reducing the use of resources, designing the most efficient processes, preventing waste generation and reducing greenhouse gas emissions are of course among the primary goals.The different perspectives of circular economy are of course considered as various perspectives aiming to transform social and economic structures. At the forefront of these are, due to their environmental, social and economic impacts, circular business models. Innovation-oriented circular business models are changing our daily lives, even if we are not aware of this. They are developed to accelerate the transition of the private sector, especially startups, to circular economy and to maximise financial returns.In this week's article, instead of the obstacles facing circular business models, we are discussing what kind of returns circular business models will bring regarding different dynamics.In this article, we are accompanied by the article<a fr-original-style="" href="https://link.aposto.com/click?uri=aHR0cHM6Ly9saW5rLmFwb3N0by5jb20vY2xpY2s/aXNzdWU9NjNiMmNlOTA3ZGY3ZTEwMDA2MjkwNTk3JnN1YnNjcmliZXI9NjJiMDMzOTA1ZDM3OTIwMDA2MWQ4OTM1Jm5ld3NsZXR0ZXI9NjAwMDQ5OTY1Njg2MGYwMDA4MDAzMzdkJnB1Ymxpc2hlcj02MDAwNDc4MzU2ODYwZjAwMDgwMDJmNmQmc291cmNlPWVtYWlsJnVybD1odHRwcyUyNTNBJTI1MkYlMjUyRm9ubGluZWxpYnJhcnkud2lsZXkuY29tJTI1MkZkb2klMjUyRjEwLjEwMDIlMjUyRmJzZS4zMzM5" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">&nbsp;'Drivers and barriers for circular business model innovation'</a>, which will shed light on our current discussion as it has just been published.<h2 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Positive impacts of circular business models</h2><h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">💰Financial effects</h3>In addition to the sustainability of existing processes, circular economy prioritises economic return through new business models. This is basically possible through the realisation of innovative business models with various principles such as R-strategies. In this context, circular economy can first bring financial growth by opening new markets and innovative business development processes.In addition, it will be possible to both reduce costs and create new income models, especially by reducing the use of resources and ensuring that waste remains in the cycle. In this way, it can enable the business world to increase resilience, which is critical for managing different crisis periods with less damage.Finally, especially for a future scenario in which various materials, which are being rapidly depleted due to the use of too many raw materials, become completely inaccessible, circular business models may help avoid the problem of access to resources thanks to closed loops.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">⚖️&nbsp;Legal impacts</h3>Due to the sustainability and circular economy studies that have occupied the global agenda, many countries are working on different regulations and legal arrangements. The Circular Economy Action Plan, integrated into the European Green Deal, makes transformation mandatory for European Union (EU) countries as well as non-EU countries.At this point, it is possible to foresee how important and at some point mandatory circular business models will be in the future. Many business models that do not seem possible at the moment may come back to the agenda thanks to new regulations that will emerge in the coming days and years. One of the biggest examples of this is the business models focused on preventing food waste, which are increasingly adopted in France after the regulation on <a fr-original-style="" href="https://zerowasteeurope.eu/library/france-law-for-fighting-food-waste/?utm_source=aposto" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">food waste</a>.New regulations expected to come into force in the future are critical for taking action and managing potential risks correctly. However, circular business models can be considered an important tool for today in order to comply with the regulations that have been intensively worked on in the last few years due to global studies such as the European Green Deal, United Nations Sustainable Development Goals, etc. In particular, circular business models are reappearing again at the point of compliance with innovative regulations that restrict the use of existing materials and support the use of recycled materials, or allow consumers to purchase or rent second-hand products.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">🏪 Effects on the market</h3>In the process of transition to circular economy, various obstacles create negative effects on the transformation processes of stakeholders that constitute social and economic structures. The most important of these is market dynamics, which are much more difficult to transform since they do not have a direct interlocutor. You can reach our previous discussion article on this topic <a fr-original-style="" href="https://aposto.com/i/barriers-to-transformation-market-dynamics" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">here</a>.Market dynamics are not very easy or fast-changing unless there are extraordinary crises like Covid-19. Although technological developments cause a new product or service to be developed every day and existing products and services to become 'obsolete', market dynamics often change slowly within certain patterns. With circular business models, however, market dynamics can change and it may be possible for the business world to increase its market share.Circular economy can be expected to increase the share of companies in the market, especially thanks to the aim of taking product ownership away from the consumer and giving it to the manufacturer or, the company that carries out sales. In existing business models, after the product is sold to the consumer, the relationship between the manufacturer and the consumer ends, whereas, with circular business models, a much longer-term relationship can be established between the manufacturer who retains ownership of the product and the consumer who uses the product only when needed. In addition, thanks to the increasing demand of consumers for sustainable and circular products and services, innovative products to be added to the product portfolio may also enable the increase of market share and the creation of new markets.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">💡Technological impacts</h3>Global problems such as combating the climate crisis, hunger, loss of biodiversity and greenhouse gas emissions are at the centre of technological studies. R&amp;D studies, innovation investments and incentives carried out within the scope of combating global problems are increasing day by day. Circular business models support the transformation of technological developments in this direction, with innovation at the centre.Circular business models aiming at the efficient use of resources expand the development areas of technologies such as data science and blockchain. On the other hand, innovative business models that will enable the recycling of waste into the economy, especially on the consumer side, also expand the scope of technological studies.Biomimicry studies, which have an important added value, especially in circular economy, prepare the environment to make technological developments more environmentally friendly with solutions inspired by nature.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">🧭 Impacts on corporate governance</h3>Sustainability and the transition to a circular economy, in which companies are obliged to participate, especially as it has found its place on the agenda of the investment world, also have positive effects on the corporate governance strategies of companies. The decisions made by investors with a more sustainable/responsible investment perspective and the criteria set by large investment funds in environmental, social and governance areas prevent companies from ignoring these areas.Circular business models are also becoming an extremely important tool, especially for companies that are trying to enter new markets by transforming their existing business models, trying to create new revenue models or simply trying to respond to the demands of consumers.Corporate sustainability and circular economy studies, in which top management of companies are directly involved, are becoming indispensable issues both in the eyes of investors, in terms of the company's current operations and employees, and perhaps most importantly for customers. Circular business models can have a much more positive impact than expected for companies that put innovation at the centre of their corporate culture.🔎 Review of Circular Economy 101: Contrary to popular belief, circular business models do not aim to 'reinvent the wheel', but to make existing processes much more efficient according to circular economy principles. By doing so, it may be possible to minimise negative environmental and social impacts, while maximising the potential for economic growth through innovative revenue models that we are not even aware of at the moment. It would not be wrong to predict that especially consumers and market dynamics will create various obstacles in the near future regarding circular business models. However, considering the changing purchasing decisions, especially for consumers, it is possible to think that circular business models will spread to all areas of our lives in the next 5 years.The process of transition to circular economy can be handled from different perspectives. However, all these different perspectives should act together for a total transformation without forgetting that the ultimate goal is systemic transformation. While state support programmes, investments and new regulations are required for the dissemination of circular business models, different studies that will raise consumer awareness should be carried out in parallel. For this, as we have mentioned in every article, all stakeholders that make up the social and economic structures should carry out this transformation process together, integrating everyone, and clearly learning their duties and responsibilities.

🧭 Potential impacts of circular business models

What do future business models offer?

Circular economy is a system of thought that requires us to redesign all our economic and social structures, and needs to be embraced globally. This makes the issue of strategic leadership for the transition to circular economy even more critical. Simply renewing waste management systems, replacing raw materials used in production processes with reusable alternatives, introducing circular economy into the education curriculum or introducing innovative business models are not enough to unlock the true potential of the circular economy.We have mentioned in our previous articles that all stakeholders that constitute social and economic structures have various duties and responsibilities in the process of transition to circular economy. Although these duties and responsibilities are shaped within the framework of each stakeholder's own sphere of influence, some stakeholders also assume the role of leadership in this transformation process and take the role of guiding other stakeholders. This leadership role is sometimes observed on the basis of countries (the Netherlands), companies, and sometimes NGOs (Ellen MacArthur Foundation). However, it is also possible to encounter situations where the real goal of everyone who takes on this role is not really to lead the transition to circular economy.In this week's article, we focus on how leadership qualities should be shaped in the transition to circular economy, especially in terms of mindset. The chapter 'Circular economy leadership' in the book <a fr-original-style="" href="https://link.aposto.com/click?uri=aHR0cHM6Ly9saW5rLmFwb3N0by5jb20vY2xpY2s/aXNzdWU9NjM4NjQyZDc3MTJhMmYwMDA4YWI5ZmMzJnN1YnNjcmliZXI9NjJiMDMzOTA1ZDM3OTIwMDA2MWQ4OTM1Jm5ld3NsZXR0ZXI9NjAwMDQ5OTY1Njg2MGYwMDA4MDAzMzdkJnB1Ymxpc2hlcj02MDAwNDc4MzU2ODYwZjAwMDgwMDJmNmQmc291cmNlPWVtYWlsJnVybD1odHRwcyUyNTNBJTI1MkYlMjUyRnd3dy50YXlsb3JmcmFuY2lzLmNvbSUyNTJGYm9va3MlMjUyRm9hLWVkaXQlMjUyRjEwLjQzMjQlMjUyRjk3ODEwMDMyNDQxOTYlMjUyRmltcG9zc2liaWxpdGllcy1jaXJjdWxhci1lY29ub215LWhhcnJ5LWxlaG1hbm4tY2hyaXN0b3BoLWhpbnNrZS12aWN0b2lyZS1kZS1tYXJnZXJpZS1hbmV0YS1zbGF2ZWlrb3ZhLW5pa29sb3Zh" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">'The Impossibilities of the Circular Economy: Separating Aspirations from Reality'&nbsp;</a>accompanies our discussion.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Professional humility</h3>Unlike other concepts that require sustainability or transformation, the transition to circular economy is a process that should not involve personal interests. Because it is not possible to transition to the circular economy only as an organisation or an individual. Collaboration, the adoption of circular economy principles by other stakeholders and the motivation to redesign all systems with the same mindset should not be associated with personal fame or brand reputation.Leaders who put innovation first by proceeding logically should consider the transition to circular economy as a long-term vision, first within the scope of their corporate strategies, then within the scope of the needs and realities of their region, and finally within the scope of their impact on global systems.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Commitment to right actions</h3>When it comes to the right action, we might question 'right according to whom?' This quality can be considered as a criticism of the steps taken in combating the climate crisis, which is also on the global agenda today. Within the scope of combating the climate crisis, decisions that were changed by taking into account economic interests, agreements that were not implemented or workshops that did not meet expectations come to mind.On the contrary, the people or organisations that will assume a leadership role in the transition to circular economy should take whatever is the right step for systemic transformation. Of course, this does not mean rejecting all other ideas or alternatives in line with a single decision. The steps to be taken today and in the future of transformation can change at any time. We can say that the most important feature of leaders here is to have a wide enough perspective to recognise the right steps on the way to the main purpose. This can be possible if we consider the definition of the right action as 'the right action required for transformation'.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">360° thinking</h3>The abovementioned wide perspective is actually another critical characteristic that leaders should have in the process of transition to circular economy. Approaching circular economy, which requires systemic transformation, in terms of a single organisation, a single structure or a single city may, of course, be the result of a limited perspective. This would not be a suitable feature for the transition to circular economy, whose potential is much more than estimated, as it does not have a clear framework.The specific frameworks we have been accustomed to in all areas of our lives so far, our limited fields of action and our ways of thinking with a certain structure are among the main reasons that hinder the transition process. The correct understanding of circular economy comes into play at this point. Since circular economy is a mindset that cannot fit into certain frameworks, it should be defined in terms of the current situation of each stakeholder and should be considered as a vision that is open to continuous development in the light of current developments. Leaders with a 360-degree perspective should follow a leadership method with a broad perspective that is open to innovation at any time within the scope of a road map suitable for whatever structure they lead.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Being multi-faceted</h3>The main reason why the transition to circular economy is progressing relatively slowly - or even regressing - is that stakeholders are completely unfamiliar with this innovative system. Leaders who are accustomed to linear economy, which has been embedded in all our systems, ways of living and doing business for more than 300 years, sometimes willingly and sometimes unwillingly slow down the transition. For this very reason, circular economy leaders need to be leaders who have versatile skills, who have a diverse range of interests, who are constantly curious and who can think not only within the structure they are in, but also beyond it.In order to accept innovation, it is necessary to understand innovation first. For this reason, leaders in organisations that only focus on transformation within the scope of their activities or individual leaders who only try to change their own lives have difficulty adapting to the transition to circular economy. As a result of the realities of the current modern world, having expertise, knowledge and decision-making ability in many different fields instead of expertise in a single subject is among the most critical characteristics of circular economy leaders.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Supporting development</h3>The most common answer to the question 'What is the most important characteristic of a leader?' is usually 'guiding the team they work with correctly and supporting their development at all times'. This generic answer is much more critical for individuals or organisations that assume the leadership role in the transition to circular economy. The main reason for this is that the transition to circular economy offers a completely unknown future through innovation. In fact, this means the realisation of many innovations that we cannot think of, cannot even be imagined yer, or are not possible with existing technologies. In order to eliminate this uncertainty and shape our future with innovation, people working in the field of circular economy should be supported by their leaders and innovative ideas should be evaluated even if they are not suitable for existing processes.In order to support the development of teams, the main criterion should no longer be the suitability of an idea in existing processes, but its potential to shape the future. This, of course, can only be possible with leaders who are open to development and change in every way.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Inspiring</h3>The transition to a circular economy is much more challenging than any other idea due to the uncertainty it involves. Due to the linear thinking system we live in, which is present in every aspect of our lives, many people today either consider the circular economy in a limited scope or see it as an unattainable 'dream'.It is important for circular economy leaders to inspire the large audiences they influence to understand the circular economy in the right way, to realise that it is achievable if we act together, and to realise the true potential of the circular economy. The transition to a circular economy is a long, challenging and patient process that requires a shared vision where all stakeholders know why they have embarked on this journey. Although this vision may lead to the loss of some stakeholders in long-term processes, the task of leaders should be to bring all stakeholders together at the necessary points and inspire them to gain the same motivation.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Being natural collaborators</h3>Circular economy requires the establishment of a new system that is completely different from our existing structures. This requires a complete change in everything we have, and this change requires cooperation with as many different experts as possible (not only individuals who are experts in one subject, but also different institutions or organisations should be considered among these experts).Identifying areas along the value chain where resources are used inefficiently or piloting an innovative business model requires the views or expertise of different stakeholders. For this reason, as we have stated in every article, it is worth noting again that it is not possible to carry out a single transformation in the process of transition to circular economy. The wider the information flow, the more comprehensive a transformation is possible.In conclusion, the characteristics we have mentioned above are the characteristics that are included in different definitions of leadership today. These characteristics, of course, do not cover all the characteristics that individuals or organisations expected to lead the transition to circular economy should possess. As we can see, all the characteristics we have included in our discussion are shaped by the mindsets that leaders should have. These leadership qualities, which once again show that circular economy is not a waste management strategy, but an innovative way of thinking that proposes to redesign systems, should not be limited to an institution, a person or a government official.Every individual, every organisation, every brand is leading a separate transformation process. This leads us to assume the leadership role from time to time within our sphere of influence at different points in our lives. For this reason, it is becoming more and more important to understand circular economy correctly, to be more open-minded about the future with each passing day in order to be included in the transformation, and to direct the flow instead of getting lost in it.

🧠 360° thinking and other qualities of a leader in the transformation to circular economy

How to lead in circular economy?

The transition to circular economy requires social transformation. Social transformation, and naturally cultural transformation as well, need to be carried out in line with a common goal and road map adopted by all stakeholders that make up social structures. Social transformation is a process that has no clear boundaries and is difficult to control according to the diversity in the reactions of individuals, but today it can be carried out more easily than in the past, especially with new media tools.It is possible to see that circular economy is inevitably at the centre of social transformation thanks to its innovative and borderless structure. However, the road maps, duties and responsibilities of the stakeholders that make up the society are not as uncertain as in cultural transformation. In particular, the transformation processes of the business world and governments involve clear targets, regulations and specific roadmaps, which have been very much on the agenda recently.This week, we discuss the steps that will create value in the transition process of the business world to circular economy, the points to be considered and the action areas that will accelerate the transition process. '<a fr-original-style="" href="https://www.unep.org/resources/publication/role-business-moving-linear-circular-economies?utm_source=aposto" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">The Role of Business in Moving from Linear to Circular Economies'&nbsp;</a>report prepared by the United Nations Environment Programme (UNEP) will accompany us in our discussion.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Is value-creating transformation possible?</h3>The transformation of the business world, which started within the fight against the climate crisis and then took a broader framework by including social issues, unfortunately does not carry out the transition to circular economy as it should.Circular economy, which is misunderstood as merely innovative waste management strategies, is of course far from realising the potential that exists within the concept. However, there are still steps that need to be taken to ensure a transformation that creates value for private sector representatives who are trying to carry out the transition to circular economy in accordance with its principles.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Search for new markets</h3>With concepts such as R-strategies, biomimicry and cradle-to-cradle, circular economy is a concept that aims to completely change the existing ways of doing business and existing systems. This actually allows the private sector to create new business areas while changing existing business models.The first step that companies should pay attention to while carrying out the transition to circular economy can be seen as entering innovative economies and markets by updating their existing business models with circular economy principles. In the current linear economy, manufacturers give ownership of their products to their customers after producing them, while the circular economy suggests the opposite.Take a car manufacturer as an example. After the car is produced, it goes to the consumer, and after the consumer's use expires, the car is reintroduced to the market through second-hand sales. Although second-hand, in other words reuse, is critical in circular economy, it is only the first step in the process. Although it may seem like the right strategy to change owners many times, the value of the car decreases day by day until it finally becomes unusable, and when it does, it takes its place in the junkyard.Circular economy aims to change this situation for manufacturers and keep the ownership of cars in the manufacturer. This allows the car to be renewed after each use, maintenance &amp; repair practices to be carried out and the value of all the resources that make up the car to be preserved for a long time. Instead of making money by selling the product, manufacturers can enter new markets by renting the product permanently and continue economic growth with different revenue models.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Cost reduction</h3>R-strategies in circular economy include steps such as less consumption, reuse, maintenance &amp; repair, remanufacture and recycling. This is actually a strategic cycle that ensures that resources remain in the cycle continuously. Thanks to this cycle, producers can reduce the use of raw materials by incorporating the product they produce once into their production processes after use, while reducing their purchasing costs by purchasing a used resource at a more favourable price.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Risks of access to resources</h3>The linear economy, which has been included in all our lives with the acceleration of industrialisation, supports production and consumption as if the resources on earth will never end. This is the main reason for the global shortages in access to many different materials and resources today. In addition, many studies show that in the coming years, there will be difficulties in accessing many different resources that we use in every aspect of our lives.Circular economy is basically a strategy that ensures the correct use of resources instead of a waste management strategy. In other words, a system that will utilise resources in the right way must first be designed so that we can then manage waste in the right way. Thanks to this perspective, the faster and more accurately the private sector adopts circular economy principles, the easier it can avoid the risks of access to resources in the coming years.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Putting innovation at the centre</h3>The sustainability of the business world involves the design of current processes in a way that will ensure the use of sufficient resources for future generations. Unfortunately, this reduces the concept of 'sustainability', which is widely used by the private sector, to continuing linear economy.Circular economy is a concept that centres on changing existing systems from top to bottom. In order to change all systems, innovation should of course be at the centre of our ways of thinking. In other words, it is not necessary to 'improve' existing ways of doing business, but to design them in an innovative way from top to bottom. Innovation has an extremely important place in the circular economy, not only in finding new environmentally friendly business models, but also in innovative ideas that will increase the welfare of society, change daily life, and at the same time provide economic growth.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Acquisition of new skills</h3>As circular economy is a concept that aims to change all mindsets, ways of doing business and even the education system, it has a lot of potential for new talent and employment.For this reason, the private sector needs to develop or incorporate talents in many different areas, from innovative business models to circular economy principles. Employees with a linear economy mindset are unlikely to be able to truly implement the principles of circular economy.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Customer value</h3>By taking product ownership away from consumers, circular economy actually enables new areas of value to be created for them. While the consumer who owns a product has the responsibility to maximise the value of that product for the longest time, they may not have the technical competences required for this.In order to maximise the value of resources by extending the life cycles of products, manufacturers offering services such as maintenance &amp; repair, and remanufacturing to their customers can offer innovative value propositions for them. This is likely to increase customer loyalty and satisfaction.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Societal expectations</h3>One of the most critical areas for the private sector is customer expectations. The reshaping of customers' purchasing decisions based on issues such as climate crisis, loss of biodiversity, and gender equality makes it imperative for producers to move in this direction.Thanks to business models designed with circular economy principles, it is possible to create environmental and economic benefits while meeting the demands of the consumers. In this way, the private sector, which contributes to the transformation of society, can guarantee economic growth while diverting to less consumption from more consumption.<hr fr-original-style="" style="height: 0px; overflow: visible; border-bottom: none; clear: both; user-select: none; break-after: page; box-sizing: border-box;">🔎 Circular Economy 101's take:&nbsp;Of course, these shared value areas do not actually cover all the steps that need to be addressed for the transformation of the private sector. However, all these topics we have opened up for discussion are critical for a holistic transformation and the correct realisation of circular economy.If the private sector adopts an understanding that centres these value areas in the transition to circular economy, it can be the biggest supporter of social transformation. The critical point to be considered here is to transform the 'profit-oriented' perspective of the private sector in the right way and to explain the financial return of circular economy in addition to its environmental and social impact. Although the design of a global circular economy system is a long and challenging journey, each stakeholder needs to understand circular economy correctly and fulfil their part.

Value-creating transformation

What are the areas of value in the business world?

Since circular economy is a system of thinking and doing business, it is also critical for us to change our social structures top to bottom. However, especially due to its place on the agenda, we see circular economy more in the transformation of various sectors in the fight against the climate crisis.The most critical of the sectors in this struggle is the textile indusrty, which, like the food industry, involves the consumer a lot, but whose transformation is much more complex due to its current structure. The textile industry is in a very important position both because of its potential and because it is a sector with direct consumer impact. For this reason, it needs to be handled much more carefully than other sectors and carry out its circular transformation.In this week's article, we will discuss the transformation of the textile industry and the duties and responsibilities of stakeholders, especially in the European Union countries, with reference to the report <a fr-original-style="" href="https://reports.fashionforgood.com/report/sorting-for-circularity-europe/#chapter3?utm_source=aposto" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">"Sorting for Circularity Europe: an Evaluation and Commercial Assessment of Textile Waste Across Europe"</a> prepared by Fashion For Good and Circle Economy.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">👕 The current state of the textile industry</h3>92 million tonnes of textiles are buried in landfills worldwide every year. If this doesn't mean anything to you, let's use an analogy. One garbage truck full of textile products is buried in the ground every second.Unfortunately, the waste generation of the textile industry is not limited to the products. Today, the textile industry alone causes&nbsp;20% of the water pollution&nbsp;due to the use of chemicals in its current practices.The potential of this industry is as high as its negative effects. According to the research shared in the report, close to 500 thousand tonnes of clothing and textile products in only six European Union countries have the structure that would allow closing the cycles. Although 92 million tonnes of textile waste may seem small compared to this amount, we can better understand the potential of the industry when we consider that textile waste in only six countries has this potential. When this is considered from another aspect, a potential emerges for the textile industry to create an average annual value of 74 million Euros.So what are the duties and responsibilities of the stakeholders in order to unlock this potential and for the textile industry to transform in accordance with circular economy? Let's investigate together.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">🚚 Waste collectors, sorters and recyclers</h3>Re-collecting of products in circular economy is much more complex than other processes as it requires many different stakeholders to fulfil their duties and responsibilities at the same time. To date, recycling processes have mostly focussed on the collection process, while the waste management processes in which the products will be included after collection have been ignored or not prioritised. This means that even if the products are somehow collected back, they are not properly included in waste management and thus continue to cause pollution through waste generation.In order to carry out a circular waste management process, it is necessary to carry out R&amp;D processes that are independent of all existing processes, handled with innovative approaches and actively using new technologies. The textile sector has products that are difficult to recycle and separate, especially due to the chemicals used in production processes. This is a major obstacle to the correct implementation of R-strategies within the circular economy of existing technologies. For this reason, the duties of stakeholders who are responsible for waste management processes and making waste reusable in the cycle, which can be handled as collectors, recyclers and sorters, are to find innovative solutions that will force the legal regulations related to these processes to change and to redesign waste management processes.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">🏭 Manufacturers and textile brands</h3>Manufacturers are seen as the stakeholders with the most responsibility in circular economy. However, as we mentioned in our previous articles, the steps they take alone are not enough to establish a complete circular system. However, manufacturers also have critically important duties and responsibilities as their sphere of influence is very wide.It is the responsibility of manufacturers to design products in accordance with the principles of circular economy at the very beginning, at the design stage, from raw material procurement to production processes, from logistics to consumption and even post-consumption waste management processes. This proves the impact of manufacturers. For this reason, it is imperative for manufacturers to adopt innovative business models that will guide the stakeholders we defined above as collectors, recyclers and sorters to implement strategies that will enable textile brands to re-cycle products after use.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">⚖️ Lawmakers</h3>While lawmakers often have the task of accelerating the transformation process, this is unfortunately not the case anywhere in the world. However, there are two main topics that legislators should carefully address in order to carry out the transition to circular economy in the right way. The first of these is the realisation of regulations&nbsp;that will facilitate the transition of the private sector to circular economy. In addition to financial incentives,&nbsp;it is the duty of lawmakers to establish and lead platforms to increase the momentum of transformation by bringing together stakeholders such as the private sector, waste management, academia and NGOs.The second issue is to ensure that the price of recycled textile raw materials in the free market is lower than that of unprocessed raw materials and to increase the demand for these raw materials. Legislators are obliged to support consumers and producers by providing product-based price control&nbsp;when necessary. For the transition to a circular economy, price controls and financial incentives of the legislators are critical in order to include stakeholders in the process, especially in terms of 'financial return'. It may be possible to ensure the traceability of resources by harmonising regulations with new technologies. A comprehensive resource monitoring regulation that will include data science will help prevent waste generation for many different sectors, especially textile waste.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">🛍️ Consumers</h3>Although consumers are not taken into account much in the transition to circular economy, they have a greater responsibility than any other stakeholder in the textile industry, as in many other sectors. The fact that not only the material dimension but also the environmental and social dimensions are effective in purchasing decisions clearly shows the potential impact of consumers on the entire transformation process.Based on this, consumers should contribute to increasing recycling rates by preferring textile products produced using a single raw material, products that are easier to separate, and actively and correctly use the recycling opportunities offered by various stakeholders, especially municipalities.<hr fr-original-style="" style="height: 0px; overflow: visible; border-bottom: none; clear: both; user-select: none; break-after: page; box-sizing: border-box;">In conclusion, the potential of textile products that we frequently use in daily life, which we can consider as low-value textile products, in circular economy cannot be ignored. However, as we mentioned in the introduction, this process has a very complex structure. For this reason, it is critical that all stakeholders know their duties and responsibilities in the transformation process, and that decision-making processes are carried out by going deeper into environmental, social and economic dimensions.It may be possible to achieve a complete transformation at the point where we consider circular economy not only as a waste management process, but also as a way of thinking and building systems, and integrate its principles into all decision-making mechanisms.

Towards circular textiles

What to do to unlock the potential of the textile industry?

• <a fr-original-style="" href="https://apnews.com/article/russia-ukraine-inflation-germany-economy-moscow-0ab530c2364eecfdde3c1d1e56197e1a" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">Germany’s government</a> slashed its growth forecast for this year and predicted that Europe’s biggest economy would shrink in 2023 as it deals with the fallout from an energy crisis set off by Russia’s invasion of Ukraine. The Economy Ministry said it expects German GDP to grow by 1.4% this year and then decline by 0.4% next year; down from an April forecast of 2.2% growth in 2022 that would accelerate to 2.5% next year.

Contrary to current sustainability efforts, circular economy does not aim to improve existing systems or correct faulty points, but to change the system as a whole. This transformation, which should be kept separate from sustainability, requires a complete change in social and economic structures starting from the smallest scale. Although the transition to circular economy requires an innovative perspective that has no boundaries and is not restricted by certain frameworks, it must of course be measured and monitored correctly. A holistic approach is still too innovative for our current mindsets, so it is critical that a holistic process of transformation of systems is properly tracked, and the stakeholders are properly guided.A complete systematic transformation will bring many challenges that are currently unforeseen. Governments and legislative bodies have the greatest responsibility to ensure that the transformation process is carried out in the right way.Starting from this point, in this week's article, we discuss the critical action steps for governments to manage and follow the process correctly in the transition to circular economy. We will use the <a fr-original-style="" href="https://pacecircular.org/circular-economy-indicators-coalition" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">Circular Indicators for Governments report</a> published in 2021 for our discussion.<h2 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Action plan</h2><h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">1- General measurable metrics</h3>We have already mentioned that the circular economy is an umbrella concept with no clear roadmap. However, this creates an uncertain situation where most stakeholders, especially the private sector, do not know what to do. Therefore, the first step is to prepare circular economy tracking metrics that all systems and sectors can benefit from, starting from the smallest scale systems (sectors, institutions, education system, etc.). In this way,&nbsp;each sector can have a framework&nbsp;that they can refer to while carrying out the change within themselves.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">2- Information exchange</h3>All stakeholders that make up the social and economic structures of circular economy need to carry out their own processes in cooperation with other stakeholders. This cooperation should not be limited to committing to projects together. The learning process should be accelerated by&nbsp;sharing the information that is learned from different processes with all stakeholders, and a holistic approach should be taken thanks to this exchange of information while transforming small systems. It is also important that governments coordinate the necessary sharing platforms in this context.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">3- Expanding the scope</h3>In almost all of our articles to date, we have criticized that the circular economy is misunderstood and treated only as a waste management process. In order to correct this misconception, it is a critical step for governments to introduce the circular economy as a broader system of doing business and thinking rather than just waste management. This broadening of scope, which will prevent stakeholders from having a limited perspective due to existing linear processes, will allow circular economy to be understood correctly and reach its true potential.🔎 Circular Economy 101's take:&nbsp;A more inclusive general definition of circular economy is also critical for scope expansion. While it is unlikely that there will be a single definition of circular economy in the near future - which is open to debate as a single definition would limit the circular economy in every way - at least the outputs of the studies can be considered from a broader perspective. In this way, it may be possible to address not only waste management but also many different aspects from production to supply, logistics to product and service use processes and to analyze the circular economy holistically within the value chain.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">4- Identifying economic impacts</h3>Because the circular economy is not just a waste management strategy, it changes systems and addresses environmental and social issues. In this way, it also focuses on economic growth, which is often overlooked but is much more inclusive than sustainability. From this point of view, the economic benefits and drawbacks of the circular economy should also be addressed within a certain framework and it should be ensured that all stakeholders involved in the process adopt circular economy with its economic factors. A system transformation that is measured by economic metrics similar to, but not limited to, the current Environmental, Social and Governance (ESG) standards will increase the potential of circular economy.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">5- Setting the right targets</h3>Governments and companies have sustainability goals that are very much on the global agenda. These goals are especially shaped within the framework of the Paris Agreement and the United Nations Sustainable Development Goals. The sustainability journey, which is tried to be carried out with the main goals of 2030, 2040 and 2050, has unfortunately not adopted the circular economy sufficiently today. Therefore, in order to accelerate the transition to circular economy and to prevent only the improvement of faulty areas, circular economy strategies and targets need to be set in a way that is truly meaningful, measurable and unleashes the potential of circular economy.<hr fr-original-style="" style="height: 0px; overflow: visible; border-bottom: none; clear: both; user-select: none; break-after: page; box-sizing: border-box;">Although the above-mentioned action plans are considered as action plans that governments should implement, they are actually critical processes that all stakeholders should be involved in. Of course, it is very important for states to manage this process as a governance structure and to assign duties and responsibilities to all stakeholders in order for the process to be carried out in the right way.Still, there is no need for a single stakeholder to start the transition to a circular economy. As we always mention, consumers, producers, NGOs, academia and all other stakeholders that make up the society should know their duties and responsibilities in the process of transition to circular economy, understand circular economy correctly and adopt it in every moment of their lives and mindsets.To this end, we need to do more research, be skeptical of any information that does not have a scientific basis, and question the authenticity of every piece of information we receive. Only in this way can we change the fate of the concept of sustainability, which has lost its meaning, and achieve a circular economy.

🧭 Action plans for states in the transition process to circular economy

Where are the governments?

• <a fr-original-style="" href="https://www.theverge.com/2022/9/7/23339954/google-maps-eco-friendly-routing-expanding-europe-fuel-types" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">Google Maps eco-friendly directions</a>, which the app introduced to the US last October, are coming to 40 undisclosed European countries. The feature takes into account things like congestion and inclines to find you the directions that are best for your fuel economy. A later update will let users tell the app what type of vehicle they drive, which will affect the specific directions.

In one of our recent issues,<a fr-original-style="" href="https://apos.to/i/what-does-the-private-sector-make-of-circular-economy" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">&nbsp;("What does the private sector understand from the circular economy?")&nbsp;</a>we examined what the private sector understands from the concepts of circular economy and sustainability, and talked about how each company adapts circular economy to its own needs and does not utilize the true potential of the concept sufficiently.In order to understand the circular economy correctly, the duties and responsibilities of all stakeholders that make up the system, which we share in our articles as Circular Economy 101 every week, need to be determined. So, do stakeholders with clear roles and responsibilities carry out the transition to circular economy easily and smoothly?We will take the research conducted in the article <a fr-original-style="" href="https://onlinelibrary.wiley.com/doi/10.1002/bse.3228" rel="noopener noreferrer" style="color: rgb(9, 9, 9); text-decoration: none; background-color: transparent; outline: none; cursor: pointer; transition: color 0.3s ease 0s; touch-action: manipulation; user-select: auto; box-sizing: border-box;" target="_blank">"The impact of internal company dynamics on sustainable circular business development: Insights from circular startups"</a> as a reference in our article where we will discuss the internal obstacles faced by startups that play an important role in the circular economy transition process thanks to their agile structures.<h2 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">Challenges facing startups</h2><h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">1- Not taking risks</h3>The transition to a circular economy requires a complete overhaul of entire systems. While this is a situation that can be adapted relatively faster for startups, especially corporate customers of startups remain undecided in the process of transitioning to products and services created with circular economy principles.While the linear processes that make up the existing structures cause inefficient resource use and waste generation, especially corporate customers' unwillingness to use second-hand or recycled/upcycled products or services makes it difficult for startups to transition to circular business processes.We can say that risk aversion is not only valid for the circular economy in general, but in fact for all change and innovation. For this reason, sending only a small amount of waste for recycling instead of making systemic changes to prevent waste generation is considered sufficient to be a "circular" company today. This is of course due to the fact that circular economy is not considered as a way of thinking and doing business, but as an innovative waste management system.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">2- Motivation</h3>Motivation is a must-have for startups, especially for founders during the challenging business development process. Relatively small startups that run the entire value chain - from raw material procurement to logistics, from production to distribution, from consumer relations to finance and accounting - are strongly motivated by a specific purpose. But of course, every startup needs to attract the attention of investors in order to thrive financially. But circular economy or sustainability-related business models are still not on the radar of investors today.You may think of "green finance", "sustainable investment" funds or investors. Unfortunately, the first thing these investors look at is not sustainability or circular economy principles. This, of course, negatively affects the motivation for startups to spend time and effort on circular/sustainable business models that "won't bring in cash".<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">3- Financial barriers</h3>We have discussed the main reason for the motivational barrier we mentioned above in terms of getting investment. However, when we talk about financial barriers, the subject covers financial barriers related to business processes. As consumers also encounter in the markets, while a normal product is X dollars, the organic version of the same product is sold for 2X dollars. This unfortunately causes the budget to be allocated to circular business models to create problems.Another financial barrier, also related to investment, is that circular or sustainable business models are just being implemented and their profitability has not yet been proven in the market. Innovative business models require a change in habits not only for producers but also for consumers. Therefore, while circular business models may seem innovative, ethical and appealing to consumers in theory, in societies where the "circular mindset" has not been established, this remains only theoretical.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">4- Establishment phase</h3>Contrary to popular belief, the founding process of a startup is much more challenging and more important than any other process. It can be a very challenging process for the founding partners to establish a team with the same enthusiasm and motivation for an idea and to determine the vision of the venture. It is inevitable that a venture that is not properly structured will face problems in the transition to circular economy, especially in the vision and decision-making processes in line with this vision.Differences of opinion between co-founders, insufficient interest of customers in circular business models may cause startups to change their internal operations and unfortunately move away from circular business models.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">5- Capabilities</h3>The transition to a circular economy requires a total change not only in environmental but also in social issues. The most important proof of this is the insufficiency of circular talents, people with expertise in circular economy principles. The lack of employees who can apply circular economy principles not only in theory but also in the entire value chain such as design, production, procurement and purchasing is an obstacle to the transformation process of all stakeholders, especially enterprises.In order to accelerate the transition to the circular economy, not only waste management needs to be improved, but also the education system needs to be changed from top to bottom, vocational trainings with technical competence need to be widespread and the culture of innovation needs to be adopted by all individuals.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">6- Organizational barriers</h3>The main reason why startups have an important role to play in the transition to a circular economy is that they are agile and adaptable, as mentioned in the introduction. However, this agility and rapid adaptation decreases in proportion to growth due to the "limits" imposed by linear processes. Once an early-stage startup starts to grow, it has to adapt to the conditions imposed by the existing linear system. This leads to a slow decline in change and innovation, and innovative business models and sustainability gradually fall off the main agenda.Growing operationally can also be seen as a critical obstacle for startups, especially in the transition to a circular economy. Growing business volume, increasing customer demands for existing products and services, financial resource constraints, and problems such as raw material supply, which increase with the expansion of the value chain, can disrupt or completely stop the startups' transition to the circular economy.<img src="https://images.aposto.com/2022/7/3/1661943567372.jpeg" style="display: block; vertical-align: top; margin: 5px auto; text-align: center; width: 100%; max-width: 550px; border-style: none; position: relative; cursor: pointer; padding: 0px 1px; box-sizing: border-box;" width="550" ratio="0.80" fr-original-style="display: block; vertical-align: top; margin: 5px auto; text-align: center; width: 100%; max-width: 550px;" fr-original-class="fr-draggable">unsplash.com<hr fr-original-style="" style="height: 0px; overflow: visible; border-bottom: none; clear: both; user-select: none; break-after: page; box-sizing: border-box;"><h2 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">How can obstacles be overcome?</h2>The barriers mentioned above can of course be encountered not only in the transition to a circular economy, but in all innovative systemic transformation processes. In order to overcome these obstacles, it will be important to take some strategic steps not only for the initiatives but also for all stakeholders facing obstacles.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">➡️&nbsp;People-oriented vision</h3>Almost all of the aforementioned obstacles are due to the mindset of the linear economy. In order to prevent this, it is especially important that startups are led and staffed by people who can take risks, who can demonstrate their skills outside linear structures, and who are open to change and innovation. Although teams formed with people who are aware of the circular economy and open to using their skills for change will be in a constant battle with the linear economy on the outside, vision and goal-oriented work can always be managed correctly in internal processes.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">➡️&nbsp;Circularity at the management level</h3>This strategic approach, which is directly related to motivation, requires the management teams of startups, especially the founders, to work entirely with a circular economy focus. Since startups operate with a smaller team and less hierarchical structure than corporate firms, the influence of managers on employees at all levels is much greater. This influence will allow the entire team to remain motivated, especially in the face of any negativity due to the limitations of the linear economy, as managers will not give up their vision and focus.<h3 fr-original-style="" style="margin: 0px; color: rgba(0, 0, 0, 0.85); font-weight: 500; padding: 0px; box-sizing: border-box;">➡️&nbsp;Circular capabilities</h3>One of the most critical features of the circular economy that is often overlooked is the "circular" capabilities mentioned above. When enterprises and all other companies that are in the process of transition to circular economy, or other stakeholders that make up the society, lack experts with technical or theoretical knowledge in the field of circular economy, the transformation process is disrupted. For this reason, it can be seen as another strategic step for all stakeholders, especially enterprises, to first train their internal talents according to the requirements of the circular economy, develop their skills, and then work on talent acquisition from outside.In conclusion, the transition to the circular economy is a process that needs to be managed differently for each stakeholder. This process has to vary depending on location, level of awareness, sector of activity or sphere of influence. This necessity stems from the fact that the circular economy, unlike the linear economy, is a way of thinking and doing business that has no boundaries, is not set in a specific framework, and is based on innovation. Therefore, while there is no clear roadmap for the transition to the circular economy, the obstacles posed by the linear economy in this transformation process are similar for most stakeholders.🔎 Circular Economy 101's take:&nbsp;Although there is no clear roadmap for the transition to circular economy, the duties and responsibilities of stakeholders are clear. But in general, the most important task is of course the holistic approach to the circular economy and the correct understanding of it. Not only startups, but also corporations, government agencies and even consumers can overcome these obstacles with a circular economy mindset and make the necessary contribution to the transformation process.

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