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Abstract

This contribution essentially aims to highlight the contribution of the circular economy in territorial development and the new industrial strategy for Europe. We highlight the main challenges of the circular economy and present the main obstacles to its deployment today. Finally, we propose the establishment of a European industrial and territorial ecology.
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Bourdin, S., Torre, A. (20xx). The circular economy as a means of territorialisation of our European
industry. Symphonya. Emerging Issues in Management (symphonya.unicusano.it), x, x-x.
http://dx.doi.org/10.4468/.............. 1
The circular economy as a means of
territorialisation of our European industry
Bourdin Sebastien*, Torre André**
*EM Normandie Business School, Metis Lab
**UMR Sad-Apt, University of Paris-Saclay, INRAE, AgroParistech
Abstract
This contribution essentially aims to highlight the contribution of the circular
economy in territorial development and the new industrial strategy for Europe. We
highlight the main challenges of the circular economy and present the main obstacles
to its deployment today. Finally, we propose the establishment of a European
industrial and territorial ecology.
Keywords: circular economy, Europe, industrial and territorial ecology.
1. Introduction
Some 3 billion consumers in emerging countries are expected to join the middle
classes by 2030. Due to the scale of this wave and its unprecedented impact,
companies find themselves caught between rising and increasingly unpredictable
commodity prices on the one hand, and competitive inflation and uncertain demand
on the other. The turn of the millennium marked the point where the rise in the real
price of natural resources began to erase a century of decline. The greatest economic
crisis since 1929 slowed consumption for a time, but by 2009 prices had rebounded
faster than global economic output. The time when we could ignore the cost of
resources is over.
In the face of price volatility and even fears of depletion of reserves, there are
increasing calls for a new economic model. And some companies are questioning the
assumptions underlying the way they manufacture and sell their products. To avoid
losing control of valuable natural resources, they are finding innovative ways to reuse
products and components. Their success raises new questions. Can economic growth
be decoupled from resource constraints? Can an industrial system be "regenerative"?
We can find an answer in the circular economy (Lieder & Rashid, 2016 ; Stahel,
2016 ; Geissdoerfer, 2017). The characteristic of a circular economy is to replace one
postulate, that of the disposable product, by another, that of a restoration.
Fundamentally, this aims to move away from "extract, make, consume, throw away"
by designing and optimizing products for multiple cycles of disassembly and reuse.
The effort begins with raw materials, which are considered valuable stocks to be
reused, not items that circulate once in the economy (Bruel et al., 2019). Circular
economy aims to eradicate waste, not only in manufacturing as in lean management,
but systematically throughout the multiple life cycles of products and their
components (often what is considered waste can provide the material for future use
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stages). It is these close cycles of return and reuse, and a product design that lends
itself to them, that define the concept of the circular economy and distinguish it from
recycling, which wastes large amounts of energy and labor (Zhu, 1998).
The objective of this paper is to highlight to what extent circular economy can be
an answer to design differently a new industrial strategy. In the very short term, the
priority is of course to minimise the catastrophic effects of the virus on our health
system and the circular economy does not necessarily provide an immediate response
(even if some are already thinking about recycling sanitary masks to reduce the
shortage). But it is in the perspective of building a more solid, more resilient and
above all more environmentally friendly economic system that the circular economy
finds all its interest.
Our hypothesis is that the development of the circular economy in Europe makes it
possible both to territorialize production and to promote the reindustrialization of our
economy.
2. The advantages and obstacles of implementing circular economy
2.1 The circular economy to reduce our dependence on the outside world
The onset of the epidemic in China first showed the fragility of the globalized
supply chains set up by companies. Many of the larger companies have found
themselves blocked or hindered by the fact that their supplies were relying on
suppliers located in quarantined areas. Following a recent study, the 1,000 largest
companies in the world have thus found themselves with more than 12,000
establishments (factories, warehouses, etc.) located in quarantined and confined
Chinese territories.
The most painfully glaring example is of course that of surgical masks. As Western
countries sought to replenish their stockpile, they realized that they were almost
entirely dependent on China for this material, which is strategic for the protection of
the population.
This is where the circular economy comes in. It can help to limit this type of risk
by reducing the dependence of economies and territories on external supplies of both
raw materials and finished products. By using secondary raw materials (recycled
plastic, etc.), a company can diversify its sources of supply and reduce its risk
compared to its usual suppliers (Dubey et al., 2019). Similarly, by developing repair
and reuse, it can reduce its dependence on imports and suppliers whose decision-
making centres are often far away from Europe.
However, the challenge of the circular economy goes far beyond securing
companies' supply chains.
2.2 Circular economy to reduce the extraction of raw materials
It is now scientifically established that there is a link between the impact of human
activities on nature and the development of viral pandemics of the kind we are
experiencing today. In a very detailed report, the WWF explains that the development
of human activities (urbanization, industrialization, deforestation for the benefit of
agricultural land, etc.) has led to an increase in contacts between humans and virus-
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carrying species. Similarly, the reduction in biodiversity has led to the disappearance
of species that could act as "buffers" between us and viruses. As the WWF states, "it
is no coincidence that many recent outbreaks originate in markets selling a mixture
of wild and domestic animals, mammals, birds and reptiles".
The protection of biodiversity and natural areas calls for vigorous solutions to
prevent the ongoing disaster and, in particular, to try to prevent these "leaps" of
viruses from wild species to humans (Buchmann-Duck & Beazley, 2020).
Here again, the circular economy can play an important role. For example, by
developing the reuse of electronic devices, we reduce the production of new
equipment, thereby preserving the drain on natural resources. Similarly, by
supporting the recycling of these devices, we can recover metals and components
whose extraction poses many environmental problems. For example, it is estimated
that nearly 7% of the world's gold stock is now contained in the waste electrical and
electronic equipment that piles up in landfills around the world. By reducing the need
for "primary" raw materials, i.e. those directly extracted from nature, the circular
economy contributes directly to reducing the pressure of human activities on natural
areas and thus on biodiversity.
2.3 The circular economy to fight global warming
We are all obsessed today by the Covid-19 crisis, which is perfectly normal as its
consequences are likely to be profound for our societies. However, the major
challenge of our century remains that of global warming, the impact of which could
well be much more negative and much more lasting (Muray et al., 2017). It is also
striking to note that, although containment policies are significantly reducing CO2
and other greenhouse gas emissions around the world, this reduction is limited and
will not be enough to avoid the worst-case scenarios predicted by scientists.
If the confinement of almost half of the planet is not enough to reduce CO2
emissions sufficiently, it is proof that a deeper paradigm shift is needed to meet the
objective of zero emissions in 2050 and thus keep the warming target limited to
1.5°C.
Switching to decarbonised energy will only reduce" 55% of current emissions. To
take care of the rest, the deployment of a much more circular economy is certainly
the most promising avenue. The Ellen MacArthur Foundation's report
1
on the subject
shows that by applying a circular model in just 5 sectors (cement, aluminium, steel,
plastics and food), we could eliminate almost 25% of global CO2 emissions. The
extraction of raw materials, which is necessary to produce new materials, and the
production of new goods are among the most CO2-intensive activities. Let’s note
that this foundation is an independent organization that works with business,
academia and government to accelerate the transition to a circular economy (box 1).
Box 1. The role of the Ellen MacArthur Foundation to develop circular economy
Ellen MacArthur made history in 2005 when she broke the single-handed round-
the-world sailing record. She now leads the Ellen MacArthur Foundation,
1
https://www.ellenmacarthurfoundation.org/assets/downloads/Completing_The_Picture_How_Th
e_Circular_Economy-_Tackles_Climate_Change_V3_26_September.pdf
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"When you embark on a round-the-world sailing trip, you know you have so much
food, so much fuel. And you become incredibly connected to those resources. As
you see their levels drop, and you're 2,500 miles from the nearest port, you really
understand what the word "limited" means. I've realized that our global economy
is no different - that it operates on limited resources at the end of the day - and that
this is a much greater challenge than sailing around the world. Our global
economic system is based on extracting something from the ground and
transforming it into something else, and then the raw material, or the product it
goes into, is finally thrown away. In the long run, this cannot work. Once you have
finished a round-the-world boat trip, you can refuel and leave again. But this is not
possible on the scale of the global economy.
One of the most striking things I've learned from talking to analysts and investors
is that it took just ten years to erase a century of falling commodity prices. This
rise in prices and their greater volatility means that discussions with companies
very quickly turn to questions of efficiency and the need to use less energy in
manufacturing. Companies are receptive because they are aware that the pressure
on commodity prices will be even greater with the arrival of 3 billion new middle-
class consumers in emerging markets. A few adjustments to the system will not be
enough: it's a matter of rethinking how the economy can function in the long term.
When we set up the foundation in 2010, our aim was, first and foremost, to
demonstrate through analysis the economic validity of the circular economy. Then,
in order to work with companies, we created the platform "The Circular Economy
100", which brings together major groups such as Coca-Cola, H&M and Unilever,
emerging innovators, SMEs and regions. Finally, we are cooperating with a
number of universities in Europe, the United States and India, and next year in
China and Brazil. We see ourselves as a catalyst of a great system. In the first two
years, we have seen the "circular economy" move from a stage where it was just
being practised to one where it is becoming a mainstream, and we are happy to
have helped it gain credibility. We are now in a phase where companies need to
get started and get more value out of it. And the sooner this happens, the sooner
everyone will follow. Nor is it something that will take fifty years. It can go - much
- faster. »
This text is adapted from an interview with Tim Dickson of McKinsey Publishing.
The full video of the interview, "Navigating the Circular Economy: A Conversation
with Dame Ellen MacArthur," is available at www.mckinsey.com
2.4 Circular economy: what are the obstacles?
There are many obstacles to this transition. The first is of course the question of
price. Throw away, not worrying about the second life of a product is often cheaper
for a company. Similarly, "primary" plastic, directly from the para-oil industry is
often cheaper than recycled plastic, depending on the evolution of oil prices.
However, the price dimension should not be overestimated: often the circular
economy is an opportunity to make savings (by buying cheaper or reducing landfill
costs), or even to generate new resources by recovering what was previously
considered as simple waste.
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The sticking points are mainly due to the reluctance of the existing players to
change, the scale of the changes to be made and the cost of the related investments.
It is indeed a question of completely rethinking the way in which a product is
designed to anticipate its second, second and third life... It is therefore sometimes
necessary to review the materials used, find other companies that can reuse them, set
up a second-hand channel, etc... This represents a considerable change that can put
off many companies that have a lot of other things to manage elsewhere.
Nevertheless, we are convinced that the current crisis will force each of us and each
company to rethink its relationship with the world and the planet and that mentalities
are now ready to change. A recent study that uses focus groups with consumers
(Sijtsema et al., 2020) shows that even if some of the respondents did not have a clear
vision of what the circular economy was, people felt that they could play a new and
more active role in consumption. They asked for more awareness of the sustainable
use of resources based on the circular economy.
Moreover, let's not forget that the circular economy can be a tremendous source of
growth and jobs in what are likely to be complicated economic times (Horbach et al.,
2015 ; Schroeder et al., 2019). Continuing in the only logic "extract / produce /
consume / throw away" leads us directly to the wall. The coronavirus crisis is an
opportunity to launch a new, more robust and resilient business model.
3. Towards the establishment of a European industrial and territorial ecology
The concept of industrial ecology first emerged within a scientific community of
engineers, as can be seen from the origin of N. Frosh and R. Gallopoulos (1989), the
two authors of the first article referring to it. Based on a systemic approach, industrial
and territorial ecology (ITE) is an operational approach that draws on natural
ecosystems to strive for optimal management of materials and energy: the industrial
system can be considered as a particular form of ecosystem.
Thus, like the functioning of food chains in the natural environment, the waste and
co-products of one activity can become a resource for another activity. Companies
can reuse their production residues (vapours, co-products, exhaust gases, effluents,
waste, etc.) among themselves or with local authorities and thus limit pollution,
resource extraction, waste production and energy consumption.
In addition, the ITE makes it possible to establish partnership relations and
encourage exchanges between economic and industrial players while promoting local
economic development and the consideration of environmental issues.
The name "industrial and territorial ecology" comes from several contrasting
notions that mean:
1) Ecology: scientific ecology, study of ecosystems
2) Industrial: industrial society as a whole (production, consumption,
agriculture, transport, etc.)
3) Territorial: an approach that is delimited and anchored in a territorialized
space
Whatever the vision adopted, many agree that industrial ecology is a territorial
approach. Indeed, the strategies by which it becomes operational only make sense
and have economic and environmental rationality if they are deployed locally. The
analogy with the functioning of natural ecosystems also calls for a localised
consideration of the different actors of the industrial ecosystem, if we refer to the
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principle of locality according to Korhonen (2004). Locality is one of the four
principles considered in the analogy with natural ecosystems, the other three being
flow looping, diversity and the notion of progressive evolution. The term "locality"
refers to the use of local resource consumption, taking into account local
environmental constraints and limiting the impact of activities, as well as cooperation
between actors.
The objective is to encourage collaborative dynamics and the implementation of
concrete and shared actions. These actions are seen as synergies between economic
actors. They are of different types:
1) Sharing and pooling - These strategies consist of pooling goods, resources or
services, thus enabling economies of scale and reducing some of the environmental
impacts of economic activity.
For example: waste management, reuse of rainwater, security guards, collective
catering, crèches, inter-company travel plans, vehicle sharing, etc.
2) Flow trading - These strategies consist of valuing the externalities issued by
certain companies from other neighbouring entities.
For example: industrial waste water, heat, waste, co-products...
Exchanges of flows may require the presence of interface activities to allow the
valorisation of by-products, the development of products or services, the
management of a common resource...
ITE is a perfect response to the challenge of ecological transition in territories
through its innovative, systemic and transversal approach to the optimization of
material flows (water, energy, waste). Industrial ecology provides a global and
integrated response by proposing to draw inspiration from natural ecosystems,
characterised by optimal recycling of matter and energy, to reorganise the industrial
system in a viable way.
ITE is a mode of organization set up collectively by several actors. This approach
is characterized by an optimized management of resources (water, energy, materials),
a strong recycling of material and energy on the scale of an area, a territory or simply
between two companies. This may involve, for example, the sharing of infrastructure,
equipment (heating networks, production tools or spaces, etc.), services (collective
waste management, inter-company travel plans, etc.) or materials (production waste
from one company may be used as a secondary material by another).
4. Conclusion
Our paper highlight the double interest of circular economy: (i) to territorialize
production and (ii) to promote the reindustrialization of our economy. We advocate
the need to move from the linear to the circular model. If this is done, the benefits for
the European economy and its industry could be of different orders:
1) savings in raw materials. On a global scale, net savings on raw materials could
reach $1 trillion per year. For the European Union, the annual savings for products
with a moderate lifespan could reach 630 billion dollars. They would be most
significant in the automotive industry ($200 billion per year), followed by the
machinery and equipment sector;
2) less risk on supply. Applied to steel consumption in the automotive, mechanical
engineering and transport sectors, a circular transformation would result in a net
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global saving of 110 to 170 million tonnes of iron ore per year in 2025. This could
reduce the volatility of demand in these sectors;
3) increased potential for innovation. Redesigning materials, systems and products
is a fundamental requirement of a circular economy. It is also a huge opportunity for
companies to innovate, even in product categories where it is not normally expected,
such as carpets;
4) job creation. According to some estimates, repackaging and recycling already
accounts for about one million jobs in Europe and the United States. 
Concentrating public effort on these four levers would have a decisive systemic
effect. The EU could address the issue of raw material flows, which are the most
universal industrial asset. The ultimate goal would be to close the loops and reach
tipping points where raw material flows would return to the system, with high
volumes and high quality levels, via well-established markets. The creation of pure
material stocks would help companies to start this process while giving them strong
incentives to innovate. Industrial and territorial ecology is another important point
that the EU must keep in mind when designing its strategies for a greener and more
virtuous Europe.
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... These results have important implications in terms of public policies and local public action in a period when the introduction of circular economy approaches seems to have become one of the new mantras of territorial development policies (Bourdin & Torre, 2020). This is true at the European level and particularly in the French case, where ADEME is supporting them with a series of methodological tools that aim to facilitate interactions between voluntary enterprises. ...
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There have long been calls from industry for guidance in implementing strategies for sustainable development. The Circular Economy represents the most recent attempt to conceptualize the integration of economic activity and environmental wellbeing in a sustainable way. This set of ideas has been adopted by China as the basis of their economic development (included in both the 11th and the 12th ‘Five Year Plan’), escalating the concept in minds of western policymakers and NGOs. This paper traces the conceptualisations and origins of the Circular Economy, tracing its meanings, and exploring its antecedents in economics and ecology, and discusses how the Circular Economy has been operationalized in business and policy. The paper finds that while the Circular Economy places emphasis on the redesign of processes and cycling of materials, which may contribute to more sustainable business models, it also encapsulates tensions and limitations. These include an absence of the social dimension inherent in sustainable development that limits its ethical dimensions, and some unintended consequences. This leads us to propose a revised definition of the Circular Economy as “an economic model wherein planning, resourcing, procurement, production and reprocessing are designed and managed, as both process and output, to maximize ecosystem functioning and human well-being”.
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The concept of circular economy (CE) is to an increasing extent treated as a solution to series of challenges such as waste generation, resource scarcity and sustaining economic benefits. However the concept of circularity is not of novel as such. Specific circumstances and motivations have stimulated ideas relevant to circularity in the past through activities such as reuse, remanufacturing or recycling. Main objectives of this work are: to provide a comprehensive review of research efforts encompassing aspects of resources scarcity, waste generation and economic advantages; to explore the CE landscape in the context of these three aspects especially when they are considered simultaneously; based on an idea of a comprehensive CE framework, propose an implementation strategy using top-down and bottom-up approach in a concurrent manner. To fulfill this objective a comprehensive review of state-of-the-art research is carried out to understand different ideas relevant to CE, motivation for the research and context of their recurrence. Main contributions of this paper are a comprehensive CE framework and a practical implementation strategy for a regenerative economy and natural environment. The framework emphasizes on a combined view of three main aspects i.e. environment, resources and economic benefits. It also underlines that joint support of all stakeholders is necessary in order to successfully implement the CE concept at large scale. The proposed framework and implementation strategy also identify new avenues for future research and practice in the field of CE.
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As forms of private self-regulation, multi-stakeholder initiatives (MSIs) have emerged as an important empirical phenomenon in global governance processes. At the same time, MSIs are also theoretically intriguing because of their inherent double nature. On the one hand, MSIs spell out CSR standards that define norms for corporate behavior. On the other hand, MSIs are also the result of corporate and stakeholder behavior. We combine the perspectives of institutional theory and club theory to conceptualize this double nature of MSIs. Based on a stage model that looks at the interplay of actor and institutional dynamics, we generate insights into why actors join a voluntary MSI, how the various motivations and intentions of the actors influence the standard development, and how these as well as the MSI design are subsequently influenced by both external (institutional) and internal (club) dynamics.
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Horbach, J., Rennings, K., & Sommerfeld, K. (2015). Circular economy and employment. In 3rd IZA Workshop: Labor Market Effects of Environmental Policies. http://dx.doi.org/10.1007/s10551-014-2468-1