Why platforms drive the circular economy

The use of digital technologies (DT) to promote circular practices in all industrial sectors plays a key role in addressing the issues of sustainability, resource use and climate change and building resilient systems. In this context, digital platforms are an effective tool to unite technologies and improve the flow of information between actors in value chains. In a first article, we highlighted which functions and services platforms offer and how they support circular strategies. In this article, we would like to show which laws have promoted the data sharing of actors along the value chain in recent years and which economic potentials arise from the establishment of central circular economy platforms as an industry solution.

Global industries in particular are characterised by a “take, make, dispose” mentality, previously better known as the principle of the “linear economy” (Lacy & Rutqvist, 2015). In Switzerland alone, up to 90 million tonnes of waste are generated annually – one of the highest amounts of municipal waste in the world (Federal Office for the Environment, 2022). In this context, the Circular Economy (CE) is a proven means of optimising resource use by reducing material flows, extending product lifetimes and returning resources to cycles. However, the implementation of these principles often fails because they are not or not yet economically viable, be it because of lower prices for primary raw materials relative to the prices (and qualities) of recycled materials or because the reprocessing of products for the secondary market represents a high logistical and technical effort. However, all economic incentives in a complex ecosystem are preceded by legislation that not only seeks to intensify the use of circular practices in various industrial sectors, nationwide or in Europe, but also makes them mandatory.

Change towards a circular economy through new legislation

Already in 2015, the European Union adopted a comprehensive action plan to address challenges on the way to a climate-neutral, competitive CE and to minimise the pressure on natural resources, freshwater resources and ecosystems(European Commission – Circular Economy Action Plan, 2015). The Action Plan is in line with the EU 2050 climate neutrality target as part of the European Green Deal. A first package of measures to accelerate this change was adopted in 2020, which supports the promotion of sustainable products through EU-wide regulations, for example by improving packaging design or mandatory reductions in the use of materials by 2030(European Parliament, 2021). In this context, the Ecodesign Directive also plays a central role, which aims to create digital product passports to share all relevant information along the product life cycle(European Union, 2022). The digital product passport is an example of how DT can fundamentally contribute to change in a CE. Important enablers in this context are digital platforms that bring together different technologies and stakeholders.

The potential of digital platforms

10 of the 24 platforms we studied were launched on the basis of new regulations within different industry sectors. The oldest of these platforms(International Information Dismantling System and International Material Information System) were created in early 2000 in response to the revision of the End-of-Life Vehicle Directive. The amendment required car manufacturers to release information to facilitate the remanufacturing of vehicles after their first use(IDIS | Discover IDIS, 2022). in 2007, the centralised web database for material declarations “BOMCheck” followed, which was founded on the basis of the new REACH regulation by a consortium of original equipment manufacturers in the electronics industry(Sphera BOMcheck, 2020). Also based on the REACH regulation, the “Scan4Chem” app was developed in 2019 to help article suppliers provide information on substances of concern free of charge upon request from a consumer(Scan4Chem, 2022). Another web application for the electronics industry is the Information-4-Recycler platform, which requires producers to organise and finance the take-back and recycling of their products under the Waste Electrical and Electronic Equipment (WEEE) Directive. The platform gives waste operators access to information about processed materials in products that require separate treatment(About – I4R Platform, 2022).

What do all these platforms have in common?

As described above, platforms offer the possibility to unite different actors on an independent medium, which creates economic potential: On the one hand, CE platforms enable central, neutral and confidential data management within an industry sector. Companies in this sector do not have to develop their own cost-intensive solutions in order to comply with the applicable laws. The development, hosting and maintenance are usually carried out by an independent entity and financed by a monthly or annual membership fee from participating stakeholders. This results in lower costs for companies, which would otherwise have to produce costly reporting to demonstrate compliance. Secondly, the use and thus financial support of as many stakeholders as possible on a platform ensures the economic viability of the platform. We argue that platforms developed on the basis of new legislation represent a viable business model for service providers and software developers and, in the long term, facilitate the implementation of circular principles through appropriate data management.

Outlook

Our research sets the starting point for an in-depth study to validate previous findings on the impact of emerging legislation on the development of CE platforms in real systems through expert interviews. Groesser (2012) had analysed a similar dynamic between real system, voluntary and legal standards early on in the energy efficiency of buildings. Another focus of the detailed study will be the identification and implementation of methods and technologies for data collection and management. In summary, the integration of digital platforms for sustainable development is essential for all companies, not only to increase resource efficiency and reduce costs, but also to meet the increasing requirements of new legislation.


References

  1. About – I4R Platform. (2022). https://i4r-platform.eu/about/
  2. Federal Office for the Environment. (2022). Waste and raw materials: the key facts in brief. https://www.bafu.admin.ch/bafu/de/home/themen/thema-abfall/abfall–das-wichtigste-in-kuerze.html
  3. European Commission-Circular Economy Action plan, (2015). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52015DC0614
  4. European Parliament. (2021). https://www.europarl.europa.eu/news/de/headlines/society/20210128STO96607/wie-will-die-eu-bis-2050-eine-kreislaufwirtschaft-erreichen
  5. European Union. (2022). https://eur-lex.europa.eu/legal-content/EN/TXT/?uri=CELEX:52022PC0142
  6. Groesser. (2012). Co-Evolution of Standards in Innovation Systems. https://link.springer.com/book/10.1007/978-3-7908-2858-0
  7. IDIS | Discover IDIS. (2022). https://www.idis2.com/discover.php
  8. Lacy & Rutqvist. (2015). Waste to wealth: The circular economy advantage (First published). Palgrave Macmillan.
  9. Scan4Chem. (2022). Scan4Chem. https://scan4chem.at/
  10. Sphera BOMcheck. (2020). Sphera BOMcheck. https://sphera.bomcheck.com

AUTOR/AUTORIN: Ässia Boukhatmi

Ässia Boukhatmi is a Doctoral researcher in Digtal Technology Management and Circular Economy at BFH University of Applied Science and the TU Berlin. She ist holding a master degree in industrial engineering with a focus on environmental resources and renewable energies.

AUTOR/AUTORIN: Stefan Grösser

Stefan Grösser is Professor of Strategic Management and Business Analytics. and heads the Industrial Engineering Department at BFH Technik & Informatik. He lectures in the Master of Engineering (MSE) and works on several research projects in the areas of simulation methodology (System Dynamics, Agent-based Modelling), decision making and strategy tools (Decision Making and Strategy Tools), circular economy and business models (Business Models).

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