[00:00:04] ES: Hello and welcome back to Happy Porch Radio. This is season 5. This season, we are talking all things digital in the circular economy.
Today, Barry and I have the pleasure of being joined by Roy Vercoulen. He is a circular economy pioneer. He co-founded Circular IQ in 2016 to leverage digitization in the context of the circular economy and facilitate sustainability data management. Circular IQ developed CTI Tool for the World Business Council for Sustainable Development. CTI Tool allowing businesses to measure their circuit performance using a framework that is globally recognized. Barry, I know that this conversation was a really good one for you and that you felt inspired by the time we got to the end of talking to Roy.
[00:00:55] BO: Yeah, very much so. I saw, I guess, a little bit of inspiration for where my own journey. Circular IQ started out with their intention of building software to help make businesses more circular, particularly with procurement. Then they as the story that Roy tells, they very quickly realised that the tools, the software needed a much more high-touch, a much deeper understanding and a much more guiding businesses through understanding and overcoming objections and challenges to the whole concept.
I think a theme we've seen in several other episodes, it's unlike – it's the purpose of going out to change the world, I guess, is more – makes the whole process of selling services and software harder, because you have to explain the whole concept. Then never mind, get to the actual difficult problem of gathering data and all the multi-faceted problem of understanding and giving businesses and decision makers enough data to be able to measure circularity and to digitize their information in order to become more circular.
[00:02:03] ES: We've seen that before in other episodes of pioneers, like Roy, going out with this idea of introducing some data-driven solution to it for the circular economy, and then realizing that maybe that one step ahead of the game and having to step back and say, “Okay. Hold on. First of all, we have to get people onboard.” I think that that just says a lot about the adaptability and innovation behind these projects.
What I really liked as well as Roy mentioned, the kind of conversations that he has with clients, talking about what is the end goal and being really clear about what circularity means in terms of their specific processes and their specific company. I think that's just a really – I think those are the important questions to ask. Asking the right questions and I think that says a lot about how he's got where he is.
[00:02:56] BO: Yeah, agreed. There's so many different other aspects of this conversation that I hope people find really interesting and inspiring. Without any further ado, let's meet Roy.
[00:03:11] RV: Hi, everyone. My name is Roy Vercoulen. I’m the founder of Circular IQ. We help businesses and governments to measure their circularity, so they can take the right actions to improve their circular performance.
[00:03:27] BO: Hi, Roy. It’s really great to have you with us on the show this week. I think, I’m really excited with this conversation. I often say that, but this time I think it's really significant, because measuring, particularly measuring circularity has got to be one of the core ways to actually work out how to progress, or transition towards a circular economy, how to actually measure and understand that we're doing the right things with the right impacts. Maybe just to start, we could talk a little bit very generally about what is measurable in a circular economy context? What are the types of things that we are looking to measure?
[00:04:01] RV: Yeah. Thanks for asking that question, Barry. Because people tend to think when we talk about measurement that it's about zeros and ones. Let's say, numeric values, which in my experience is not the case. In terms of your question, if you're looking into the circular economy, the way I like to approach it is that we don't want to use up resources that are finite, but we want to put them to use at the best way possible without diminishing, or compromising their quality and their pureness.
In order to be able to achieve that goal, you need to have reliable information about material, component and product characteristics. If we talk about measuring, we're talking about defining the characteristics of inflow and outflow on a product level. Defining what goes into the product, what are the characteristics of the materials that are being used? What are their weights? Where do they come from? Are they primary materials, or are they secondary materials? Also, how can they be treated after use of the product? Are they biodegradable? Can we reuse them? Can we recycle them? Are the connection points accessible, or not?
These are the types of data points that you would be defining, or measuring, if you will, apart from volumes, of course; so mass balance information related to the weight and the properties, or the dimensions of the materials and the components. Then if you look at it on a larger level, then we also like to think about a product in terms of a product tree. This represents the way these materials and components are connected inside the product itself, because that information has a lot of impact as to the practical ability to achieve any theoretical potential for reuse, or recycling.
[00:06:15] BO: That's really interesting. As you say, measuring must be quite broad and very specifically between different types of products and different industries and so on. I’m especially interested in that concept you just described there of a product tree, so that's not measuring. It's not measuring just this much of X material and this much of Y material in the product. Maybe we can try and make that concrete. Have you got a way of describing that and you bring it with an example or something to bring that to life?
[00:06:45] RV: Well, that's a good question. Well, I can try. With Circular IQ we offer three programs to the market. One program is aimed at procurement, so allowing our customers to leverage their purchasing power, to achieve their sustainability goals. With this program, we help them to revisit the way they structure their requests for proposals, so their procurement policies, to make sure that whenever they purchase something, they collect information that's necessary to be able to maintain the value on the component and product and material level throughout the use phase and also, at the end of life .
To go back to your question, in order to be able to really achieve, or utilize potential for recovery in a good way, you need more information than is currently available in the market. I mean, the front runners, internationally they work with EPDs, or LCA information, or sustainability certificates. None of these certificates actually contain product tree-related information. They don't have information on how to disassemble a product. Most of the products available on the market are not designed to disassemble at the end of life.
A good example of a product that is designed for disassembly and where I think we see a lot of let's say, circular economy potential is Herman Miller. They have a series of desk chairs called the Mirra chair, for example. These chairs have been optimized for their safety. A huge level of scrutiny has been applied to determine which materials should be used to produce and create that chair. At the same time, they really went all in to make sure that these chairs could be disassembled in a very easy way, without compromising the quality of the individual materials used to create the chair.
This is where you try to have a design that is as less complicated as possible, and where you work with let's say, mono materials that are disassembled in a way, or assembled in a way where they can be disassembled very easily. You have reversible connection points, accessible connection points and connections that you can reverse with normal hand tools.
[00:09:27] ES: Am I right in thinking, Roy, that at Circular IQ, you work with companies in terms of developing products in a more sustainable way, but also working with companies in terms of procuring more circular products. Is that right?
[00:09:45] RV: Yeah, I guess so. If we look at the programs we offer to the market, then we see that these programs have traction in let's say, different areas of the market. If you look at the EU policies related to sustainability and the circular economy, then what we see is that there's a huge pressure from national governments to source more circular. This is also where we have a lot of let's say, governments as our customers.
This is not something that a lot of let's say, traditional companies are already accustomed to as their sourcing is primarily focused still on price and availability. Sustainability is not a very dominant aspect in their sourcing policy.
[00:10:42] ES: It's interesting that you mention the pressure coming in from policy and governance. I’m interested to hear what you think about how the responsibility for this transition is distributed and if you think it's distributed in an effective way, or how we can maybe shift the responsibility and the mindset around that as well, as we're shifting logistics and procurement in the more practical side of things. How do you see that?
[00:11:12] RV: Well, I think my first response is that I don't believe that this is a zero-sum thing. I think that all actors should take their responsibilities, be it governments, or businesses, or even consumers. Also, at all the stages of the value chain and the life cycle. This is about achieving our objectives by working together, so alongside each other.
If you talk about impact, then I think what I like about working with governments is that they have huge budgets. In Europe, an average of 13% to 16% of the gross domestic product on a national level is being procured by governments. If they start caring about the circular economy, start integrating it into their procurement practices and this has a huge impact on the market.
I also like working with businesses, because I really see them as a very important lever in achieving the circular economy, because in the end, companies have a very important say in the design and even the delivery, so the business model behind the products that they put out there in the market. I think what we've seen in the past years is a huge, let's say, ignorance on a business level related to the impacts of the product that they are pushing into the market.
If you look at the problems we face with resource depletion, waste pollution, plastics in our ocean, a lot of these problems are directly related to the way we produce and also, consume products. I believe that production companies have a very important role to play, also in the consumption aspect.
[00:13:19] ES: Yeah. I picked up on a phrase from your website that I think you also mentioned here. It was giving the opportunity to activate your entire supply chain, which you just touched on in terms of specifically coming from that position of government organisation, where it's starting the ball rolling in terms of procuring and supporting these more circular products and businesses.
You also mentioned in terms of who you're working with that you like to work with governments, because they have a lot of money to spend on this sort of thing. Do you think that this is still – that these solutions are still very much only within the grasp of people who – or organisations that do have the income to spend on this? Obviously, circularity is still in the minority in terms of our economic system. Do you think that finances is an issue there?
[00:14:16] RV: Good question. I think finance can definitely be an issue, but it's definitely not always an issue. The businesses we work with, they save money. They save money by better understanding where value is lost within the products that they use to make their business thrive, by better understanding where value is lost inside these products and which aspects of these products impact human and environmental health.
They put themselves in a position, where they can take control over the environmental impact and also resource depletion and waste-related aspects to their production. If we look at legislation, we see that within the European union, incentives are now being put in place to tax carbon emission to ban single-use plastics. A very powerful trigger for businesses to approach this in a more proactive way.
I don't think in the majority of cases, sourcing, more sustainable leads to increased prices. In fact, I rarely see examples of that. I don't think that that's really an issue. I do think that within governmental organisations, but also within businesses, there's this anxiety for the unknown. People don't like to embrace something new, because they understand their current operating process. This is the same with starting to embrace the circular economy. It's something new. You don't exactly know what you're getting yourself into.
This also is paired with pushback within the organisation and people just saying, or telling you that this will lead to increased prices and decreased quality, etc. This is very often not the case. In fact, we are putting ourselves also in a better position to be able to underpin and demonstrate increases in quality and also, decreases in price levels associated with products that have been optimized from a circular economy and environmental impact perspective.
[00:16:41] BO: That's really interesting, in that it's that cultural challenge that's bigger than a raw cost. Is that the biggest challenge? When an organisation, or government department, or something starts to work with you, is that the biggest challenge that's overcoming that pushback and that misunderstanding? Or is there other equivalent challenges as well?
[00:17:02] RV: I think, I’d have to say that that's the biggest challenge, because it's also a blocker to start experimenting in the first place, the anxiety you might feel that it might not work, or it will be difficult, or you might fail if you try this, because you don't see the complete picture yet. I definitely see that as the biggest obstacle.
It has also been a very important part of our learning journey as a business, because we started Circular IQ as a software company delivering software to help you use your purchasing power to achieve your sustainability goals. We found out that before people are prepared to start working with software, all these cultural obstacles need to be overcome.
Right now, before we introduce the software, we have conversations with our customers that are really about their goals related to the circular economy. We really push them to get clarity on okay, what do you want to achieve with this circular procurement process? When is it a success? What should this lead to? How will you measure your success? Is this about reusing existing products, decreasing virgin content, increasing recycled content? What is it?
Then we have developed this game where we work with teams where the members of the procurement team can decide what their goals are related to the circular economy. Then we present them with strategies; strategies they can use to achieve these goals. Then these strategies are linked to data points we integrate into their RFPs. Then we have a discussion with them about how we can score and weigh these different aspects as part of the procurement process.
You're absolutely right that a lot of our processes are still high-touch, because there's this obstacle we have to overcome to get our customers to start trying, to start doing this, because it's of course more easy to just do what they were doing yesterday and try to find an excuse, not to try something new right now.
[00:19:25] BO: That's an amazing story. I think for me, that story you've just told of transitioning from we're going to build software and build the tools to do this, to the much more deeper, bigger problem and identifying that and challenging that is I think one of the core stories of this season of the podcast. Because we as an industry software developers, digital folks, designers, we often think that here's the tool that will solve this problem. Here's the app, or whatever.
What you're describing there is that that is might be true in some other specific circumstances, but especially when your goal is this much deeper transition change that it's even more complicated and the software and the tooling is just one of the things at the end of the chain almost. I love the fact that there's a game involved there that you said these real conversations and really using terms like, pushing them to identify their goals. I think that's amazingly powerful. I’d love to hear a little bit more. When you say game and the point system for procurement and RFPs, can you talk a little bit more about that?
[00:20:34] RV: Yeah, sure. Let me try. For instance, one of our customers has a very strong circular economy related vision, aiming to become fully circular in the coming years. When we came onboard, we noticed that there was a lot of unclarity within the teams inside of the organisation, how they could achieve this goal. What is 100% circularity by 2030? How can you measure that and how can you work towards that as an organisation?
I think, a very important step is to make these goals less abstract and bring them towards, let's say, the normal operating procedures. We found out discussing about these goals, that stepping away from using virgin materials was very important on the one hand, because the types of materials they use have a huge carbon emissions. They're finite materials. They have to travel long distances to reach them. This was an important aspect.
By just creating more clarity and saying, okay, so for your company, if you want to have an impact related to the circular economy, then stepping away from using virgin materials is really an important lever for you within, let's say, the position you have in your value chain and the type of activities you have as an organisation, this is something you can do to move the needle and this is not rocket science. I mean, you can start challenging your existing suppliers and rewarding existing suppliers and selecting new suppliers based on their ability to step away from virgin materials and increase recycled content without of course, decreasing any quality related issues.
This is just one, let's say very tangible example of making these goals that are often very abstract, just more tangible. Because in the end, professionals, they just need a framework that they can apply, that they can work with, that they can also interpret. The measurement has to be very straightforward and easy to follow. Preferably, also recognized beyond the company level, because as I mentioned before and as Emily brought up, this is a value chain effort. In the end, we see this as a domino effect.
If the entity purchasing something values recycled content in the finished product, then this trickles down into the entire value chain that's associated with this product. All the different actors in this value chain will have an incentive to prefer secondary materials and non-virgin inputs. In that way, a simple purchasing decision can have a huge impact, also beyond the spend of the single actor.
[00:23:45] ES: I’m really glad that you've said this, Roy, because I think that quite often when we talk about this transition to circular economy and sustainable changes and all these broad ideas of things, it can be difficult for individuals and organisations to actually understand what that means in real, tangible day-to-day terms.
To hear you saying that a big part of how you're talking with your clients is about okay, what does this actually look like in terms of your day-to-day work and your value chain and your product. That seems like a really – well, a very sensible approach, but also, potentially very empowering. This is can be a very overwhelming challenge to face as you've already mentioned it, sometimes can take some persuasion to even get companies onboard with this transition. That level of clarity I think is really important part of the process.
[00:24:49] RV: Yeah. I agree with you there, but I really think that looking into this inflow aspect, so the recycled content that is present in the materials, I’m sourcing is one thing. I think in the end, the biggest impact we can have apart from what I just mentioned is really pushing value chain partners to come up with take back schemes, because with most of the products we're currently using, the problem isn't related to the theoretical potential to recycle on the material level. We have the tendency to use a lot of materials with recycled content in them.
Our problem is that in our current manufacturing processes, we connect these materials to all types of other materials without thinking about the ability to disconnect them without harming their properties after use. That's a real problem, because putting to use even recycled materials in a way where you cannot get them out of the product at the end of life, it's just destroying potential.
That's where we are seeing now, while we're conducting research also together with our customers. That's where the biggest potential is right now, to get these take back systems in place and make sure that we actually utilize our theoretical potential for recovering materials at the end of life, because this is not how processes are set up currently. We're using tremendous amounts of materials every day. This combined with us mining more and more resources every year is a huge, totally unsustainable situation that we find ourselves in.
[00:26:42] ES: Yeah. In terms of new products that are being developed, ensuring that in the design, it is implemented that these products can be taken apart easily and therefore, recycled effectively to feed back into this reuse mindset as you mentioned.
You said, as you began talking about your clients, you said you ask them at the beginning what does it look like when you've succeeded in getting to complete circularity, to define that end-point, to make the goal really clear.
If I were to take on your role and ask you that question, what does that look like for Circular IQ? I assume that maybe, there's a point in the future where the advice and support that the services you offer become in a way, obsolete if circular economy becomes the norm and completely integrated into everyday life. Is that the dream?
[00:27:44] RV: Good question. My dream is first of all, making this into the new normal. Making sure that businesses everywhere just know the properties of the materials they're using and selling. Because that's really where everything starts. If you don't track the material properties and register them on an individual unit level, then you'll start losing potential already when you're starting to work with assumptions, when you're talking about material properties.
Because we are a software company, I think it will take some time before our role will be obsolete, because I think in this new normal, data management related to the circular economy is very important. That is the core of our service. The reason that right now we are offering consulting service is because our clients are not able to work with the software right now. I think the first step towards achieving our goal is to create more awareness, that to be able to achieve a circular economy, you need to keep track of individual material properties throughout the life cycle of products, because otherwise, you just cannot arrive at a circular economy, at least not the way I see it.
Then, I think once we start tracking all these materials, then I really see the value of marketplaces becoming available where we can see which materials are out there in the market and which materials will become available at what point in time and what's needed to use these materials for production purposes.
I think, depending on the maturity level in the market, the needs for data management and reporting will start to differ. Right now, it's very high-touch, creating awareness, allowing teams to take the first steps to experiment with embedding circularity into their RFPs. Once they become more aware and they've gained some experience, then their needs start to change and they're interested in tracking performance real-time and in dashboards, in different types of reports, in impact overviews, stuff like that.
[00:30:23] BO: To dig into that and just a little bit more detail then, so the software tools and the things like the dashboards and the reporting and the data management and analysis, is that something in terms of the software tooling, is that something that you have a platform for, or a series of tools for, or is that something that is custom, more custom implemented depending on the exact scenario in the client and the sector?
[00:30:49] RV: Yeah, good question. First of all, I think there's a huge need for a globally recognized framework to measure circular performance. I think with the circular transition indicators that were developed by the world business council for sustainable development, we have a very good uniform language that we can use everywhere across the world to measure circular performance in a uniform way. I think that's important, because if we all start using our own definitions and our own, let's say, measurement schematics, then this can never work on a global scale.
If I look at Circular IQ, I think – we're the software partner for the circular transition indicators from the World Business Council, so we developed the tool to measure circular performance in-line with that globally recognized framework. I think that's one thing. Apart from that, you have identities and let's say, businesses that have their own brand and their own personal preferences. I think that based on their identities and their own personal goals, like if you look at Patagonia, they have a very specific, very almost personal way of pursuing sustainability.
Of course, if they measure performance, it has to be in-line with their identity, with their values, if you will. I think the trick is in balancing your own values and your own goals against globally recognized ways to measure performance related to your own goal, so it’s balance of maintaining your own identity and being able to stand for your definition of the circular economy and what you are measuring and understanding that. That's also why I don't believe in black boxes. I want our customers to understand not just their performance, but also what is driving their performance. It makes it easier for them to act upon that. I think that's really where we – what will be the challenge in the coming years.
[00:33:07] BO: To try and to tie that back to something that you said earlier about the product trees and about the procurement process, so is there – what does that look like, if I’m a decision-maker and you're saying it's not a black box. I want that information to be available. I’m trying to tie in the performance indicators and make decisions, whether that's in a procurement space, or in a product development or whatever, what does that look like? Is it a series of dashboards with numbers on it? Is it a more complicated reporting structure with different views on it and so on? What are some examples of that being real?
[00:33:43] RV: Yeah. Good question. Yes, definitely. It's about creating reports that get the job done. Within any organisation, or any business, you have quite a number of jobs that have to be done. Depending on the job you need to do, like for instance, a procurement official has to select the best supplier and material, so that's the job they have to do. We provide them with product passports and tender reports that provide detailed insights as to which supplier and which material scores the best related to their own sourcing goals for this specific product category.
If you then look at the contract manager, they have different types of reporting needs. The same goes for the C-suite people and the product managers and the plant managers and the business unit managers. That's why our goal with Circular IQ is really to be able to report on anything based on the data we gather, because depending on your role within the organisation, you'll be looking for different, let's say, cross sections of data that you will be using to improve your decision-making. We just want to facilitate that.
It's about a large volume of different types of reports that are based on one data set, that's generated in collaboration with suppliers, because that's how you have the highest data reliability.
[00:35:22] BO: I think that the detail you provided there provides, I think, a really fascinating insight into the size and the complexity of the problem. We've talked a lot about that just getting the clarity and overcoming the cultural and the mindset, the high-touch consulting as you described. Then when you're actually in the process of gathering that data, that's a huge challenge and creating those materials and product passports, and then creating all the views and the depth and breadth of that challenge is just amazing. Is the challenge something that is daunting for you, or is it sounded like, this is the right thing to be doing and enjoying the challenge?
[00:36:04] RV: Yeah, it depends when you ask. I think, most of the time our role is to help our customers to feel that they can take control over this topic. To try to make this complex topic, tangible and actionable for them, that's our first job. To help them understand what they can do to get their job done in a good way.
Once we've succeeded for one person within a company, or a group of persons within a company to get their job done in a better way related to the circular economy, then that's where we try to expand and really try to get them to activate other teams within the organisation and work more closely with suppliers, but also with customers, to really start grasping potential related to improving their impact.
[00:37:05] BO: I’m really totally inspired by that story there. I feel very connected to where you're describing that coming from software. Then what I wish we had more time to dig into is some of the motivations, because it's obviously very clear that all the way through this, you're talking about the end result, the goal being of trickling down, or changing the conversation in the value chain and activating the value chain, and which means that you're not shying away from this. Very fascinating, big multi-faceted problem.
It would be wonderful to explore that in more detail, but as we're running out of time. For our listeners who do want to find out more about that, more about yourself and the work that you're doing, where should they go?
[00:37:46] RV: They should go to ctitool.com, or circulariq.com. If they're interested in measuring their circularity and they are looking for an easy way to explore what that means, then I’d suggest going to ctitool.com and register for a free account there, so they can make themselves acquainted with this topic.
[00:38:09] BO: Wonderful. We'll make sure we link to those and to the other things that we've mentioned on the show notes at happyporchradio.com as well. Thank you, Roy. That was really fascinating and wish we could go for twice as long and get into even more depth.
[00:38:23] RV: Yeah. Thank you, Barry and Emily, for having the opportunity to participating in this podcast series. Thanks.
[00:38:29] ES: Thank you.
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