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Conquering the circular economy after the SDGs! Introducing startups that support new business models

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This website has been translated into English using automatic translation. Please note that the translation may not be entirely accurate.

At the United Nations Summit for Sustainable Development in September 2015, 17 goals and 169 targets that constitute the SDGs (Sustainable Development Goals) were adopted by 193 member countries as targets to be achieved between 2016 and 2030. This has led to more opportunities to discuss sustainability and diversity in each country. For example, the main focus of sustainability is environmental action, such as conserving the limited resources of the earth, while diversity focuses on ensuring equal opportunities for all while considering differences in human characteristics such as nationality, age and gender. Those of you who often watch movies are aware that the effect is also spreading to the Academy Awards.

One of the trending words attracting attention in the context of environmental considerations is "Circular Economy". While the conventional linear flow of production, consumption, and disposal is called "Linear Economy," a circular economy involves reusing materials that have been discarded, with an awareness of recycling from the manufacturing stage to deal with environmental and social issues such as climate change, biodiversity, waste and pollution.

Transitioning to a circular economy also has the potential to become a new source of competitiveness in the post-COVID era as it enhances the sustainability of corporate business activities, and new business models are emerging in Japan and overseas.

The 3Rs are based on the premise of waste disposal, while a circular economy does not generate waste

A concept similar to a circular economy is the "3Rs Initiative", proposed and approved by then-Prime Minister Koizumi at the G8 Summit held in 2004.

  • Reduce
  • Reuse
  • Recycle

The 3Rs are based on the premise that waste will be generated, but to realize a more sustainable society, the circular economy goes one step further and aims to create a recycling economy that does not generate waste in the first place.

The Ellen MacArthur Foundation, a UK-based international organization that actively promotes the idea of a circular economy, advocates the following three principles for a circular economy:

  • Eliminate waste and pollution
  • Circulate products and materials (at their highest value)
  • Regenerate nature
Source: https://ellenmacarthurfoundation.org/topics/circular-economy-introduction/overview

The European Commission announced the Circular Economy Package in 2015, and a concrete action plan was established the following year.

Enactment of a new plastic law spearheaded by METI

What are the government activities revolving around the circular economy in Japan?

In May 2020, the Ministry of Economy, Trade and Industry (METI) announced the Circular Economy Vision as a guide for Japan's circular economy. As seen in the following excerpt, the Circular Economy Vision 2020 incorporates the spread of a circular economy using digital technology and includes expectations from startups.

Twenty years have passed since the introduction of the 1999 Circular Economy Vision. Although Japan has made progress on the 3Rs, extending the remaining life of final disposal sites and improving recycling rates, it is still only halfway to achieving a circular economy.
(Omitted)
A linear economic model based on mass production, mass consumption, and mass disposal will cease working sooner or later in Japan and the entire world. There is a need to depart from a growth model that pursues the quantitative expansion of wealth under shareholder capitalism, which prioritizes short-term interests.
(Omitted)
The development of digital technology and the increasing societal and market-driven demand for environmental action play key roles in shifting Japan to a circular economy.

Source: Circular Economy Vision 2020

In January of the following year, METI published "Disclosure and Engagement Guidance to Accelerate Sustainable Finance for a Circular Economy (Disclosure and Engagement Guidance)", the world's first guide on disclosure and engagement for companies and investors, etc., specific to the circular economy. In March 2021, METI, the Ministry of the Environment (MOE), and the Japan Business Federation established the Japan Partnership for Circular Economy (J4CE) as a related organization.

In addition, the "Plastic Resource Circulation Act", commonly known as the New Plastic Law, was enforced in April 2022. The law stipulates measures to promote efforts to reuse and recycle plastic as resources and attracted attention as a significant initiative that led to law enforcement.

The Netherlands is also drawing attention for its Circular City Plan

What are pioneering countries doing for the circular economy on a global scale? Let's look at the Netherlands, which is said to have an exceptionally high rate of initiatives in Europe.

The capital city of Amsterdam has set a goal of becoming a 100% "circular city" by 2050. It has announced the "Amsterdam Circular 2020-2025 Strategy", a five-year plan for transitioning to a circular economy.

Circularity in Europe is 12% and varies considerably from country to country. The Netherlands (31%) has the highest circularity, followed by Belgium (23%) and France (22%), while Romania has the lowest at 1%.

Source: https://www.ibm.com/blogs/solutions/jp-ja/iot-harch/

The ING Group, a major banking and financial services corporation headquartered in the Netherlands, has collaborated with other megabanks to create the Circular Economy Finance Guidelines for understanding the circular economy in the financial industry.

The Netherlands has a lot of excellent facilities. De Ceuvel in North Amsterdam is particularly famous. Houseboats have been upcycled in this former polluted shipyard. These houseboats can be used as an office, coworking space, lab, event space, hotel, or cafe. Initially kicked off as a 10-year land use project in Amsterdam, solar panels and composting toilets have been installed over time. A circular economy is practiced by generating fertilizer, growing vegetables, and serving them at the cafe. Many sustainability-related events are hosted at the "Metabolic Lab", operated by Metabolic, which is at the heart of the project.

Also located in North Amsterdam is NDSM. Artists, engineers, and others work on projects related to the circular economy at this facility located on the site of a shipyard that was closed in 1984. The GDLT Festival, a techno festival held here every April, is also designed with a circular economy in mind, with PET bottles, food offered, etc., being recycled at the festival site.

Rotterdam, the second most populous city in the Netherlands after Amsterdam, has a facility referred Blue City that uses an old swimming pool. It is an incubation and co-working facility for circular economy businesses, home to more than 30 startups, SMEs, artists, and researchers.
The German media outlet "EU Startups" distributes European startup news by country. If you're interested in developments in the Netherlands, please check it out.

circular economy startup

Our next interest is startups that run businesses related to the circular economy in Japan. Just published in January 2023 is Chaos Map (1st edition) from Circular Economy Hub, a media platform specializing in the circular economy, and Archetype Ventures, which supports BtoB Tech. We have picked up 11 companies here, divided into the following categories. (Classification by editorial department)

  • Development of circulating materials:fabula Inc., Fermenstation Co., Ltd.
  • Design for circular manufacturing: Synflux Co., Ltd.
  • Consumer engagement: Sanu Inc., CLAS Inc., Social Interior Inc., DATAFLUCT, Inc.
  • Product circulation traceability: RECOTECH Co., Ltd., digglue inc.
  • Sharing economy: KAMAN, Inc.
  • Upcycling (not just recycling, but upgrading to another product): Your mystar Inc.

Chaos Map lists famous service providers, such as "NOT A HOTEL", second house subscription service Sanu, furniture and home appliance subscription service CLAS, and Social Interior. Perhaps the most easily recognized concept is the sharing economy. If many of us can start using sharing services such as iKASA and Anyca without much thought and try to get out of the cycle of buying, possessing, and disposing of things, and if we can establish a lifestyle in which we pass on the things we possess to the next user through services such as Mercari or Jimoty, we may be able to ingrain in our own lives the concept that all products are not disposable but can become a motto for the next user or product after upcycling.

Startups providing decarbonization services

Startups in the line of environmental action are steadily increasing in Japan. Here are a few companies that JP Startups has had the opportunity to interview. Tools are emerging that support the visualization of the amount of CO2 emitted in their processes, from manufacturing to sales of their products, to enable companies to respond to decarbonization and other environmental considerations in the future.

[Related article] Interview with the founder of CO2 emissions calculation SaaS "zeroboard"

CO2 emission visualization business that has been reached by taking advantage of social needs and the characteristics of the founder

“If you can see CO2, you can see a clean future”… The words “SDGs” and “ESG” appear frequently in the media…

Action regarding CO2 emissions is not limited to the corporate world. Especially in Europe, where sustainable culture has taken root quickly, various environmentally conscious services have emerged. For example, Doconomy, a Swedish fintech company, offers DO, a service that allows ordinary consumers to easily visualize and manage how much CO2 emissions their purchases lead to. Switching to a premium card allows the cardholder to limit payments when a certain amount of CO2 emissions is reached.

DATAFLUCT provides a service that can be called the Japanese version of DO in collaboration with Doconomy and Saison Card. While the company's business domain is data utilization, it focuses on carbon neutrality in its "becoz" service line. A system that allows individuals to be made aware of and manage their CO2 emissions has been established in Japan.

[Related article] Interview with the founder of DATAFLUCT, the developer of "becoz"

Our Goal is to Democratize Data Utilization. DATAFLUCT's Challenge to Solve Social Issues with Data Science

"Developing our own products that solve global standard issues" Decarbonization, smart cities, dynamic pricing, etc., in a wide range of areas…

In recent news, Faeger, which provides services for generating and selling agriculture-derived carbon credits and procuring voluntary credits, announced seed round funding in January 2023.

Although we tend to focus on environmental problems on land, marine organisms also absorb CO2. This is called Blue Carbon, instead of Green Carbon, based on terrestrial plants. There are still very few players in Japan, for example, UMITRON, which initially engaged in marine-related DX and was approached by ENEOS to enter the Blue Carbon business.This is an excellent example of open innovation, in which a traditional company with a significant social responsibility tries to tackle social issues by involving fast-moving startups.

[Related article] Interview with the founder of Umitron, which is working to realize sustainable aquaculture

"From catching fisheries to raising fisheries". What is the world that UMITRON is aiming for through the insight and technology gained from visiting aquaculture sites?

"From catching fishery to raising fishery" Mr. Ken Fujiwara, who is trying to solve the problems of the aquaculture industry in the fisheries industry, says this. The Fisheries Agency departs…

The rising challenge of Greenwashing

While the idea of a circular economy is being promoted everywhere, various issues are also emerging. Intentionally causing misperceptions that deviate from actuality is called "whitewashing". The phenomenon of pretending to be environmentally conscious without any scientific basis is called "greenwashing" and is regarded as a problem.

Although it can't be helped, manufacturers of consumer goods for end-users, which have traditionally operated their business through mass production and mass consumption, seem to be having a tough time. Canadian marketing agency terrachoice, which US certification company UL acquired, has published a report titled "The Seven Sins of Greenwashing."

Green-label colas with less sugar than usual, paper straws that are not recycled, sustainable fashion that does not indicate the content of recycled materials, and EV cars that claim zero emissions without indicating CO2-related values. Many people have experienced using paper straws that crumple as they absorb moisture as their favorite cafe began working to eliminate plastic straws after seeing a video of a sea turtle with a straw stuck in its nose. People will be more accepting of such measures if it means saving the environment; however, if the actual situation does not accompany these measures, they will only cause inconvenience to the user.

If you get a "somewhat environmentally friendly feeling" without being provided with a rational explanation such as scientific evidence or conventional comparison, then you should question whether such measures are really meaningful actions. Nonetheless, from the perspective of companies that have no choice but to engage in CSR activities, there is a fear that if the data they present is inadequate, it may be pointed out as greenwashing, even if that is not the intention. The demand for fact-based information disclosure will further accelerate the acquisition and disclosure of non-financial data such as CO2 emissions.

A look at programs with "circular economy" as the keyword

Even among startups, some accelerator programs have begun using "circular economy" as a keyword.

For example, Loftwork and FabCafe Global, a creative community based worldwide, hosted the 2nd "crQlr Awards (Circular Awards) 2022", a global award for designing a circular economy. The event was launched in 2021 as Japan's first award for circular design. Projects and ideas for designing a circular economy are welcome, based on the following three indicators: "Circular rather than linear evaluation," "Award for action, not fame," and "Ability to acquire a global perspective."

In addition, UNERI, which is developing an ecosystem of social entrepreneurs in the Nagoya area, hosts DONUTS, a series of incubation seminars for students and student entrepreneurs who want to create a sustainable future by solving social issues. During the period from September 2022 to January 2023, social entrepreneurs were invited to conduct a total of nine seminars and mentoring sessions.

social design yourself

In fact, one of Shibuya QWS's projects has challenged the circular economy, although it has not yet been incorporated. That is "Shibuya Fertilizer".

A project of the Shibuya QWS Program is a circular economy challenge called "Shibuya Fertilizer". The first step in the QWS Program is to produce organic fertilizer using food waste from restaurants in Shibuya Scramble Square to sell it at the Aoyama Flower Market and Tokyu Hands in Shibuya Scramble Square by the end of 2020. By reusing and utilizing food waste within the building, we will promote waste separation efforts in Shibuya Scramble Square, down to sorting even chicken bones, thereby creating a circulation system from within the building.

Source: https://shibuya-qws.com/project/shibuya-hiryou

Shibuya is attracting attention internationally as a center of culture. At the same time, the large amount of garbage generated during events and celebrations such as Halloween is also seen as a problem. This project takes on the challenge of circulation in such a city.

Instead of thinking that you have never been aware of the circular economy or that it is irrelevant to you, why not take the viewpoint that you could develop a better idea for such social designs? The day may come when your idea might unexpectedly save the earth 30 years from now.

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