On 24 January 2017 a range of organizations, including TNO, signed a Raw Materials Agreement (Grondstoffenakkoord). This expresses their intention to transform the Dutch economy into a circular one, in which products and raw materials are re-used as far as possible and with no loss of value. But how can this be achieved in practice, when it is often difficult for companies to identify the composition or origins of the goods they buy? Ton Bastein of TNO is currently working on a Raw Materials Scanner (Grondstoffenscanner) which offers a solution to this problem.
1. Why is the ‘circular economy’ so prominent on today’s political and business agendas?
“The realization is growing that the supply reliability of certain raw materials is under pressure, and that makes companies and economies vulnerable. For instance, in recent years there has been a lot of discussion about the rare earth metals – platinum, indium and gallium – used in electronics and in solar cells. Some raw materials are mined in only a few countries, so their supply is vulnerable to unstable government; or they are mined under inhumane conditions, or they come out of war zones. In a circular economy you can optimize recycling, lengthen product lifespans, or organize new ways of using products, like sharing them, or providing associated services. This reduces the need for raw materials, and makes the economy less vulnerable.”
“The realization is growing that the supply reliability of certain raw materials is under pressure, and that makes companies and economies vulnerable”
2. What role does TNO play in fostering this transition?
“In a 2013 report to the Dutch Ministry of Infrastructure and Environment we calculated that the circular economy could be worth €7 billion and create 54,000 jobs; that report has been frequently consulted and cited. It also stimulated a large number of regional and national initiatives, and led to a national programme for a circular economy, the Rijksbreed programma Circulaire Economie, which sets out reduction targets for five groups of materials: biomass, building materials, plastics, raw materials for the manufacturing sector, and domestic waste. The goal is to halve raw material requirements by 2030 and to have an entirely circular economy by 2050. On 24 January 2017 a broad group of social stakeholders signed the Grondstoffenakkoord. Now is the time to decide how these aims will be achieved. TNO has been asked to test the feasibility of the targets, and to provide solid quantitative foundations for this discussion we are now also working on a Raw Materials Scanner that will make information on the materials concerned – in this case metals and minerals – easily accessible.”
3. How does the Raw Materials Scanner work?
“It will be part of a Netherlands Enterprise Agency (Rijksdienst voor Ondernemend Nederland) website that collates information on raw materials, to be launched in mid-2017. It will have fact sheets on various raw materials, and will identify the raw materials found in certain products. The fact sheets will explain where raw materials come from and how critical they are. The site will also link to other websites with more information, for instance market studies of specific raw materials. We are aiming principally at companies that depend strongly on the purchase of raw materials, like the manufacturing sector, but have no strategic buying department of their own. We want to give them the information they need, but we also want to offer operational advice: what actions can they take? We can suggest alternative materials, for instance, or provide a checklist to assess the reliability of a supplier.”
“Many of the raw materials that are under pressure are the vitamins of the economy. Only small amounts are needed, but they fulfil an essential task”
4. Why should companies use the Raw Materials Scanner?
“We want to give companies a tool they can use to assess the risks they run. And we want to promote awareness of the problems they might soon be facing. Tomorrow’s problems are best tackled today, obviously, but when it comes to problems in the more distant future you just want to find out, quickly and easily, what kind of impact these problems might have on your company. Raw materials can suddenly become unavailable, or prohibitively expensive; for example, TNO research that was carried out together with the metals sector and TU Delft showed that 24 of 30 interviewed companies had already experienced acute supply problems in 2011. For some of these companies this had been the result of the tsunami in Japan, where the only factory making a certain component was located. Another issue is when a company’s entire production run is bought by a single customer. The awareness of these kinds of risks is generally rather inadequate. It may only concern small volumes, but many of the raw materials that are under pressure are economic vitamins: only small amounts are needed, but they fulfil an essential task.”
5. How badly can a company’s buying policy damage its reputation?
“The Raw Materials Scanner also gives information on countries of origin, environmental impact, and human rights. Could you be buying your raw material from a country where human rights are being flouted? Are conflicts being financed from the profits? Are their mining methods destroying the environment? If half of your raw material supply comes from the Congo, in the knowledge that the Congo is at the bottom of all kinds of global human development rankings, then you need to wake up. It might lead you to work together with others in your sector to identify the specific origins of the raw materials you use, and to assess the risks involved.”
- Circular Economy & Environment
- Strategic Analysis & Policy