 climate change is not separate from the way we produce and use materials. It's very much connected embodied energy and energy just used to transport goods and all of that. So there's the energy solution but there's also the material solution to climate change and so all of these are connected and that's why we want to make sure that companies do in the future report on their circular economic performance to show how they're acting to have these positive impacts. Yarko Harvas is my guest on this episode of Inside Ideas brought to you by 1.5 Media and Innovators Magazine. Yarko leads the Ellen MacArthur Foundation's insight and analysis work. INA consists of the data and metrics initiative with a focus on measuring company level circular economy performance, circulatics and teams working on upcoming focus topics for the foundation as well as the case study program. So really the stories, the wonderful stories that come from using these tools, the Circulatics 2.0 tool. Prior to joining the Ellen MacArthur Foundation, Yarko was an engagement manager at McKinsey & Company based first in Tokyo then in Brussels. His consulting work focused on agriculture and chemicals industry in both private and public sectors. Yarko's academic background is in environmental engineering and sustainability sciences. Yarko, welcome to the podcast. It's so great to have you here. Thank you Mark. Thanks for the introduction. You're most welcome. I'm glad you gave me the short version because you've been doing this a while and I'm sure I could go on and on. It's really about the environment. It's really about science and sustainability and how we can use the tools to get there. We've experienced the crazy time this last 12 plus months of what we're experiencing in the world, not only the pandemic and inauguration, Black Lives Matters and Asian Racism and I could go on and on. But your discussions, your topics, the things you're focusing on and especially with the Ellen MacArthur Foundation, this kind of thinking of bigger, higher level economic models, models for life, for business, for work on how we can actually not only live within the planetary boundaries of our planet, kind of this circular view of life, this closed system, very resilient models, but how have you seen you've weathered this time with that pre-work, that has proven to be a better business model, a better life operating model and what kind of stories or things can you tell us that you've seen during this crazy time? Yes, it's indeed crazy times and of course the whole COVID crisis, especially the latest one, I guess that impacts us all, has been devastating for the most of it, but it's also made I guess circular economy for one more relevance than it's ever been. And we've really seen that in value chains, supply chain disruptions, even just the ship that went sideways in Suez Canal just shows how fragile these very efficient supply chains are and in circular economy where things are more localized in many instances can be also a way to address that and I guess especially in Europe, also policymakers have seen that and the recovery plans from COVID have taken circular economy as a key sort of component and the whole green deal in Europe has already also accelerated a little of this crisis and now there's a chance to in a way reset and do things better and address climate change, address our very linear way of taking stuff out of the ground, making products out of it and then dumping it and doing that in a different way and that's really what circular economy is all about. Thank you for that introduction. I want to go even deeper because there are some people on my show or listeners that really have heard the buzzword sustainability, resilience, the new green deal, cradle to cradle, circular economy, they've heard about doughnut economics, they've heard about mission economics, they've heard about all these things emerging lately a lot around regenerative, restorative, regenerative economies, regenerative capitalism, can you maybe tingle and touch a little bit on more the description of how should we understand circular economy? Is it a new economic model? What's the basics of it? How can just any lay person kind of understand the thought process and philosophy, how it came about and then also now after this pandemic, how is that being applied? How do we see companies, organizations, cities starting to move in that direction once they understand what it's all about? Yeah, there is indeed a lot of the concepts and movements that you mentioned or have inspired circular economy. Circular economy has in turn inspired some others but in the end it's a very simple concept. We have one planet, that planet has finite amount of materials so it can't use things up and dump them. It needs to keep on using the same molecules that we have on this planet and that's in the simplest form and I think the most important form of circular economy that's what it is about. The economy needs to be built in a way where materials are used and then they're reused and they're reused again as many times as you can until you can't reuse something again and then you recycle the components or the atoms let's say at the end in a recycling process and nothing gets wasted because in the end if something gets wasted we will eventually run out of stuff to use in our economies and that's really the thinking behind it and Ellen who founded our foundation who was a professional yachtswoman in her earlier career came to this realization on her sailing boat. She has finite amount of food, finite amount of material to fix her boat while sailing around the world non-stop and towards the end of her record-breaking effort to sail around the world single-handed as fast as possible. She came to the realization that it's not different we are on a boat floating through space really and we have finite materials and that's where our foundation started and started to look at this really 10 years ago and today as I said it's more relevant than ever and I think you asked also where it has manifested itself today and I think in many places I mean more and more universities are teaching specifically, researching specifically on circular economy and how that can help us create a better future. Policymakers to the highest levels are looking into this and I think also now in North America with the new administration it's back on the table in EU it's very much front and center on the EU level policymaker agenda and then in countries specifically within EU and then elsewhere for example Chile has its own version of it so it is becoming mainstream let's say and large companies also so some of the biggest brands in the world recognize that they kind of need to get going with this if for nothing else than for public perception because they can't keep wasting stuff and finding their packaging material in the oceans and circular economy is really upstream solutions to tackle that not gather the bottle from the ocean but design bottles for the right types of systems upfront so that we eliminate waste before it happens and that's one of the kind of principles of how we want to keep materials in use. There are some great wisdoms out there around this thought process that you mentioned so kind of old the original term you know spaceship earth was Kenneth Boulding who kind of came up with it and then the one who made it famous and his name is failing me now he also did the geosphere type of architecture his name fails me right now but there's been this wisdom that we're all on this planet spaceship earth we're all moving in the same direction and it's usually those pioneers those leaders like Ellen MacArthur like Dr. Bertrand Picard who kind of take themselves and put them on this their own spaceship within the spaceship realize you know there's a similarity to how we're all living on this planet earth and then come up with great foundations and ways to deal with it so I really appreciate you you talking about those those stories the the the truth is is we've got you here today because we want to talk about circulatics 2.0 which hints that there was a version prior and what what that is for a wonderful tool and I want to kind of get into it a little bit in a few moments but that that's the journey we're going to be on because it's a tool that companies who now have realized that we're on this spaceship earth and we need to start living in closed loop systems and we need to create products and materials that stay in the organic cycle and in the technical cycles and really don't come back to harm the planet this is almost a movement that has been kind of been around and been in the makings for a long time and we're just seeing really the doubling down now after this pandemic are still kind of on the tail ends of the pandemic where companies are really saying we've heard the talk we've we've been discussing this for ages we never did anything or we kind of half-heartedly did something now my phone i'm sure your phone the emails are off the hooks uh saying how can we get into this new form of thinking and what tools are there available and I would say that that's your circulatics tool but is there any other kind of things for businesses before they jump into a circulatics tool that they need to be thinking of or to even transition in their business models or in their organizational structures before they start using tools like this how does that process kind of work yeah I guess um I'll get back to the tool or in circulatics question but there is no kind of you know you don't need to do anything as an organization before you use it uh it can also be a way to guide your thinking and inform you on what circular economy actually means for you as an organization when you start measuring things um but I I thought what you said was interesting that you know it's it's coming now and it's getting sort of big now the circular economy but as you said you know it's been around for a while it's actually it's been around forever that's how nature works there is no waste in nature everything is food to something else and and our economies or societies have worked very much like that in sync with nature until we discovered things like oil and coal and oil that allowed us to decouple from those natural systems and loops and and in that way it's it's nothing new it's just we forgot how to how to create economies and societies that are in sync with the planet and I think um it's it's sort of getting very timely now that it's it's almost you know the 11th hour to just to kind of go back to it and and figure out how do we turn our linear oil based economies back to to being something that that don't waste and and the sort of thing about circular economy that drew me into it and that this very sort of um appealing for for companies is that it doesn't need to be a trade-off between your bottom line and doing something good circular economy is as a concept and and as houses foundation are always trying to think and and see how it can be a positive financial way to to you know it can have a positive financial impact for you as well and that's why I think uh and many companies are so serious about it and and finding the benefits of using secondary materials rather than digging up new ones and and that can have economic benefits as well and and circulate it is really to there to to help for one guide companies on what what is it that you should be looking at when you look at circular economy and it all starts by looking at your strategy and is if circular economy is at all as an organization you know on the table for you and and that's really where it all starts and then we get into you know material flows and energy and water flows and so on through your company but but that's where it starts and and that's why it can be also even if you've never heard of circular economy using circle ethics will kind of give you a nice overview of of what it could be for your company in terms of your strategy your employees your external engagement setting up your operations and IT systems right way to deal with this new way of doing business and then looking at really what matters for most which is material flows and how you're able to source circular materials and produce products that that can be used and reused as many times as possible yeah so some of the writings that I was mentioning before this uh spaceship earth thinking so not only Kenneth Boulding but then the gentleman I forgot was but minister Fuller or Bucky who kind of did this spaceship earth this geodomes and things like that for the built environment and moving us to think about materials and things in a different way but as you so eloquently said it's the beginnings of life it's a we've always been in a closed system and uh we we crawled out of the primordial soup and and um we sometimes hear the this the sci fi examples where you know as is the resilience of living in a closed system in outer space or on mars where you have to every input and output has to remain in that system for thousands of years and could come back very quickly in a smaller system to to harm you as a human being so I like how you explain that in that that thinking and transition this is another way of really seeing the world and how it functions but there's also an aspect in there not just as business but as human beings where we've got to kind of reconnect ourselves with our earth and the ecosystems that we live in to kind of also have that shift on how we see life and how we see the way things work most of as we go into circulatics most of those economies that we've been working with around the world are very extractive economies this cradle to grave model so we extract resources out of the earth and they get used once or a couple times and then they're discarded and then that can pollution or waste for us that come back to to haunt us and and there are many models out there are a few models out there that are really thinking in in this circular economy way um yohan rocstrom's planetary boundaries the safe operating spaces of planetary boundaries donut economics uh going even back further uh herman daily uh in his ecological economics this kind of connecting us back to the earth the way the earth works and how we're on this planet of finite resources but they have the opportunity to almost endlessly regenerate and restore themselves but there's a balance of of how much can be used and how that how long that time takes to go back in there uh into the system so that we can use it again and it remains in that that constant flow um in the circulatics the tool that you offer for companies and organizations that can help them with their stories and these transitions is that also a model a tool that really can help organizations to sustain themselves for future generations to apply the tools that they do get into that system that they can regenerate their business and and kind of have that net positive impact back on the planet almost doing planetary services tell us a little bit more how that works and how that structure set up I think it's you know implicitly there um in the in the form of circular economy itself so circular economy is is what the foundation thinks and and what I think is is is the way to actually you know have a functioning economy and society that that you know provides for future generations in a way and what Circulatics does is is to measure companies performance in that today um and and and that's that's what it does so as a company you can create yourself a baseline and and measure yourself once this year and and then see next year how you've improved on on what you what you've acted on to to become a more circular company I guess and so that's that's the link and indeed you said you know net positive and and these things and I how I see and how we see circular economies is means to get to these positive ends so what we're working on a lot right now actually as a foundation is is to connect the dots so to speak between circular economy and these positive outcomes in terms of climate change how circular economy can help mitigate emissions or biodiversity where you know we're making connections between circular economy and circular sort of strategies business models and how those can have positive impacts in in halting and and reversing biodiversity laws by tackling the uh five uh main drivers of opi diversity laws that that out of which I guess four are directly relevant to us and invasive species as the fifth driver is not necessarily that's relevant to circular economy and business models but pollution climate change land use change resources extraction all of these are really at the heart of what circular economy can deliver and so there is circular things that measure performance in circular economy and then there is sort of this uh knowledge base that that connects connects that circular economy to these positive outcomes as a sort of a separate step I guess one thing we are doing in circular ethics this year though is is is to link your circular ethics results as a company or another organization could be a public sector organization as well to the sustainable development goals so showing how what the linkages are between circular ethics indicators and sustainable development goal indicators that sit under the goals and and how you have either positive neutral or negative kind of impact on on those uh sustainable development goals um through what we can see in circular ethics as your circular economy activity so that's some a very concrete thing that we hope to to roll out in the next version towards the end of this year that's beautiful so do you see that something is that also could help organizations with their reporting or yeah how they can see where they're fitting in not not only in the circular economy but also how they maybe can report on their sustainability efforts and things like that for the goal yeah absolutely and and we see that so circular ethics for now is is there is no mandatory disclosure so it's just for you as an organization to know where you're at and how fast you're going to your end state that you want to be at in terms of doing things more circular in a more circular way but companies can and do choose to disclose their scores and and I think that's what we also encourage you know to show what you're doing in circular economy where you are today even if it's not great today uh talking about it is is a great way to get attention to to um your sort of proactive actions to do better and and I think just more broadly there is quite a quite a lot of energy to to consolidate a lot of these non-financial accounting methods and standards into as much as possible one like we have on financial side financial accounting is very similar across the planet and to do that for the non-financial sort of parameters of company performance and that has a lot to do with environmental performance and and something we're doing also this year a lot is to um try and get circular economy into those sort of emerging attempts to create that standard because we see that as really critical in achieving those positive environmental ends that we we we want in terms of mitigating climate change or tackling biodiversity loss or or having a sort of net positive impact on the planet etc you can't really do that until uh you've fixed the economy and you've fixed the material flows because that really it it's not separate issues climate change is not separate from the way we produce and use materials it's very much connected embodied energy and energy just used to you know transport goods and and all of that so there's the energy solution but there's also the material solution to climate change and so all of these are connected and that's why we want to make sure that companies do in the future report on their circular economic performance to to show how they're acting to to um have these positive impacts there there's two things you brought up and two almost two separate questions but i want to bring them out now so that we can make sure that we address both the first one is what i'm strongly hearing from you from what i understand and know about the circular economy which is you know the step before we get into the circulatics is that it's just not an add-on to business as usual it's an entire new operating system economy economic model that we can use but going back to how we started our conversation of what all there's out there you know there's extractive economies there's capitalism there's the donut economics and on and on are are those models that work as a circular economy that have some kind of a integration of the circular economy are those circular economy specific types of models are they separate are they in alignment together do you work with planetary boundaries do you work with the donut economics with kate real worth and things like that so i i kind of want to understand that and and what i also hear it's it's not like we've got to add circular economy on to our current extractive economic models and our current economic models that we've we're seeing out there we've got to actually recreate a new way of doing business a new way of our economic systems so i want to touch on that but just let me tease real first the next one the other thing that you said about circulatics and as we i want you to go back before we go any further and really explain what it is how does it work because from what you're saying what i hear is it's a it's a system that's it's not really just about measuring and reporting but it's one of actions in the beginning of what you can do how you can change that model and what you can do and so yes you get the measurements and you get the the reporting possibilities with the sdgs that would come but that you get a report on actions that have actually transitioned and that's where the stories come from and i kind of want to go deeper in that but first i want to jump back to to the first question okay the first question first so yeah um there are a lot of similarities and and cradle to cradle for example was a big kind of influencer to to how the foundation how the ellen mccarty foundation has defined circular economy i guess cradle to cradle is more looking at uh a product or materials journey through through the system where circular economy is more saying what the system itself should look like what the economic system should look like and kate kate rovers um uh done it economics economics is also you know it's it's very close to um what we say and then kate was just in our uh we have a weekly circular economy show and she was just uh there um towards the end of last year and uh i think there are many synergies um between those two sort of similar schools of thought i guess um the circular economy how the foundation lays it out is is talking a lot about the economic economic benefit of having a better system for the planet and that's really at the core of it whereas and and this is my view you know but in in donut economics it's showing what are the kind of what's the operating space between creating um uh sort of i might probably call it the wrong way kate will not like me but the quality of life uh to a level where it's it's you know eco and acceptable and good for everybody but not sort of jumping over the planetary boundaries that that then is another important factor in this whole package so in a way they are looking at the same thing from different angles like yes you know yeah i i i just want to know and that sounds like you're you're describing that that you're working together there's a lot of synergies there's a lot of alignment but what tends to happen is we have you know five different economic models or five different systems and they're all wonderful but they're also kind of all going in their own direction no it's my thing it's it's this thing and and and they're all great but and so that's what i want to know is does the circular economy plug into a lot of these different things or is it um it's described differently it's more of a framework that can be used with all these models and yes overarching it is the circular economy even though she calls it donut economics it's pretty much the same thing we just need to make that shift to the overarching thing and it's confusing and but it's also confusing to those who hear five different models out there that you know donut economics planetary boundaries circular economy and that i want to see how can are they all the same are they all working together are there finite differences or do we need to look at it in a different way of of transitioning and i i'm i don't want to put you on the spot i just want to see if you maybe help us understand how that works and what that you're maybe we're not that far away and that's why we're developing these tools so that eventually you know that's the end goal that we all unify in a unique model well i you know i my understanding of these different concepts is probably not deep enough to really properly answer answer your question but one one thing that came to mind when you talked about that is that all of these models and schools of thought aim at becoming obsolete right like we don't need if the if the economy wasn't wasteful we wouldn't need to talk about it right so so in a way i think they all have the same end goal which is that we shouldn't talk about these concepts at all anymore but i agree you know like who's winning who's losing what's the most prevalent concept it really in a way doesn't matter as long as we make sure that we operate within planetary boundaries we have positive impact on the nature we create you know inclusive economic growth that's decoupled from resource use all of these concepts that are shared and and then i think there's merit and reason why they're you know this kind of shared concepts are packaged differently because they you know are for different i guess audiences and for different purposes somewhat so there's a reason why they all exist and and then i wouldn't see them as competing more than you know having been created for for different purposes cradle to cradle talks about the material journey you know donor economics talks about the sort of boundaries i guess for the economy to operate in and and all that i think what's what's important is really that um high level policymakers i bring back again the EU example having taken circular economy as an important sort of component to um recover from covid and and and have this green deal and and all that and the circular economy taxonomy is coming up soon in the EU where there will be a hundreds of pages of long list of the economic activities that fits the model and and it doesn't matter if you call it really circular economy or not it's helpful if we all talk about the same thing in the same way so that's that's good but in the end it just shows what are the economic activities that are compatible with the planet in a way um and that's important and then large companies either you know voluntarily or or because of regulation um doing the same thing that's important so making sure that for example your plastic packaging uh does not end up in oceans and it's not harmful to the environment if it happens to leak but it is designed to stain the economy forever first as a plastic bottle many times for example then you know chemically recycled for example um to to something else or to another generation of plastic bottles it doesn't really matter but that the important thing is that we we do the right things no matter what we call them i guess in short that yeah that it doesn't leave the system and become a hormone environment and human health i i you said this in the beginning and i think that's the the unique summation is there's a lot of synergies but i think that it's about we need these different organizations they're telling us or these different systems of economic thoughts that are all kind of moved in moving in the right direction in the same direction of circular economy closed system thinking one planet living planetary boundaries those those type of thought process and that they're all aligned and collaborating they're cooperating together you said it yourself that kate was just uh talking together and you guys have not only wonderful synergies but a lot of wonderful cooperation and together with that same moving in the same direction i i think we have a lot of strength to change those bigger very multicultural economic models on a global system to really have a planet that works for everyone and so i think you very very nicely answered that and and i hope i didn't put you in the spot i think now it's a lot clearer for those who listened to understand that we're definitely in this alignment not fighting against each other or disagreeing with each other on which economic model it's just we need as many and options and tools as we can to make that shift from that cradle to grave or that that extractive economy and and that that i mean go ahead and you can ask some of this leads into the next yeah i'll just add a little bit on that i think having said all that it's still important that we do share commonly accept the definition of things uh as an example what does circular economy mean uh there is a misconception and that's a big risk that circular economy means more recycling that we just recycle our way out of this problem and and that's not going to work and that's not what circular economy is about and that's why it's important that the shared understanding and definition actually happens despite all of the schools of thought being out there and that's something that we're also trying really hard to do and and just what is that definition then and one key aspect is that it is upstream solutions it's not recycling our way out of the problem but it's circular economy is about the designing products designing materials designing systems that those products and materials live in um that eliminate waste before it happens that keeps materials and products in use and eventually then uh and for some types of materials regenerates natural systems so those are the three principles that we we go on and on about and we think are the core of the definition of circular economy and regenerating natural systems is really really important oftentimes we talk about the technical materials but when we talk about circular economy and we're recycling those and but it's increasingly about regenerating natural systems as we substitute finite materials with renewable materials uh to make sure that these natural systems that those materials come from are taken care of um and improve through soil health you know um uh the agricultural methods that that can be considered positive you know it can be things like no-tillage cover crops all these things as a package um are called you know regenerative agriculture that leads to better ecosystem health and that's really important and that's also a part of circular economy because if we use those natural materials in a circular way and we disregard the system they come from nature or agricultural systems uh it's not going to work either so it's in that sense it is it's much more and it's much more upstream than recycling and it's important that we all agree on that in a way so we talk about it the same we talk about the same thing in the end I love it and yeah I'm glad you brought that up because there is a lot of myths or misunderstandings about about that in general and it's definitely not what it's about um now I think we're we're nicely prepared to to first of all understand what exactly is circulatics and how does it work and is it like what I what I what I heard you describe already that it's kind of a way in the beginning to start some actions some really transitional transformational movements that then let's say at the end of the year not only do you have the measurements but then you can report positively about your successes about what's been done to transition to that new that new way of operating in a circular system closed system yeah well I'll get back to the sort of impact or value for companies but what what does it actually do so circulatics is a way to measure circular economy performance on a company or non-company organization level it consists of 38 indicators if I remember right now not all indicators are are asked to all companies if your service company you don't need to worry about your manufacturing material flows as an example and there were four we don't ask that but the maximum number of indicators is 38 it's an it's a three-step process for a company where you sign up for an account then you log into your account and submit your data to an online system securely and we would only disclose that information to anybody and then you get an assessment done with the Circulatics tool and so that's a code that lives in a cloud server that generates this circular economy performance score Circulatics score that breaks down into different elements that we call themes there are 11 themes in Circulatics going from strategy and planning to material flows water flows money flows if you're a bank or a financial institution and so it depends a little bit what exactly gets shown so you get a scorecard with those scores in them in it and and for companies that are in our networks or members of the foundation or or large companies of over one billion USD annual revenue we set the bar there will also generate or make an analyst in our team will make a commentary on what we see that's going well where do we see as the next things to do on your journey to becoming more circular company and overall sort of what we see in your company as in terms of your circular economy performance we've set that threshold purely because we have a small team and we can't we just can't do it for for everybody we have now over a thousand companies would sign up but but that's what it is it's an assessment quite a straightforward thing you sign up you submit data and get an assessment done and then the value comes at the end for many it comes through the process also where you may kind of have these moments where you realize that you have overlooked something large company in our network called B.S. Smith um paper packaging uh a cardboard packaging company mostly um they do other things as well one thing they said is that we didn't really look into how we communicate about circular economy internally and we kind of missed something on the people aspect and circular ethics helped us find that so things like this can come through the journey as well of getting assessed but at the end the scorecard can be used in many ways getting internal buying having informal conversations with decision makers or it can be used to communicate what you've already done and what you plan to do next you know and a sort of independent assessment of of your performance by somebody else in this case EMF at the MacArthur Foundation can be very powerful and many other kind of stories that we have on on the type of value that companies have found from from this assessment do you so I guess I misunderstood it just a little bit you have stories where companies have taken that assessment and that says boy we were really didn't know how we were performing in this area and we were able through that knowledge through that assessment to really fix those holes or those areas to improve how we do that and to create another action or a model to to improve that and and I guess that that's one thing whether you have a story or companies are using like that and then the the follow up to that is is that one that you would want to do an assessment every year to see if that's improving over time if it's getting better if it's a or are you saying okay no this is our point how does that work what are you seeing on the housing company plus companies that are using it so yeah the stories so one one story is indeed just finding a blind spot in your circular economy strategy another story is where and this is also publicly available but Solway a chemicals manufacturer in based in Belgium they they use circulates to inform their internal circular economy related targets and and indicators so they have their own environmental sustainability related strategy where there is a circular economy component and circulates was just used to inform what that looks like that's another example of how it's been used another example is where companies have had informed conversations with their material suppliers using circletics and and being able to talk about what type of options they have for procuring one type of material and and you know the rate of secondary material within that and and things like that then and actually asked their suppliers to do circletics themselves to to to make sure that they know where they are at and in that sense sort of starting to create a picture of your entire supply chain and circletics can help with that as well to make sure that your first tier and second tier suppliers have done it you know how circular they are you know how circular you are and perhaps your customers as well as or if they are businesses and and that can be very informative because in the end we talk a lot about systemic transition and that's you know two big words put together but in the end it means that everybody needs to move at the same time when you talk about circular material flows you need all the players to to move at the same time and that's a systemic transition right in in a simple form and that's why it's important that you know you do that as an organization and circular ladies can help with that as well so that's that's another story and now I forgot the second part of your question you're totally fine I I think you've pretty much addressed that that part of you know how the circulatics work and and I asked you the follow-up questions how are companies using that as positive results that they're seeing you touched on this systemic shift and that's something that I really like to to touch on so in 2018 pretty much all international organizations went to the went from this linear or siloed approach to solving our global grand challenges to really the systemic approach to systems dynamic shift in the way we think and do and act to solve our problems um circulatics obviously is helping in this systemic shift towards a circular economy can you go into more specifics of how you do that how you work with organizations that maybe are very hierarchical very linear in the past now to say what systemic where we're not even doing that maybe a little bit more touching on that shift and and the roles that you've played in it and how circulatics plays that role I guess it's better answered sort of more broadly with with what the foundation does um the circulatics helps it's also quite early stages so we've been we launched it in January of 2020 of time the perception of time has just completely gone weird with working from home but it's really just one year and four months in the past and when we launched the first version and the second 2.0 was launched in October of last year so there is not much kind of history with circulatives but the foundation has operated for 10 years and there one example is our plastics work so new plastics economy is that he's a team and the initiative where they bring together companies from all along the supply chain for plastics packaging from brands that we all know and use to to companies who use you know oil feedstock hopefully soon you know secondary feedstock or renewably grown regeneratively grown plant-based feedstock but anyway every and everybody in between because the realization when we talk about circular economy with these companies very early on is like hey wait a minute I need to get my supplier on board hey wait a minute I need to get their supplier on and and this is sort of systemic thinking happens very quickly when you start to talk about these things because materials you know they flow through a system and you need to change that entire system and the plastics work we've done has has brought all these players together to figure things out in a pre-competitive environment and that's our network of companies that's the whole idea in a pre-competitive environment you can talk with your competitors your suppliers your customers about what does it mean for our industry to do this shift and we're now in a in a I think year six of our plastics initiative where we launched two years ago this global commitment where we're finding at the stage where those brands and other organizations are putting commitments behind changing the way that they use plastics packaging and set targets for 2025 and four years left to that date and we hope to see big systemic shifts in plastics packaging by that date I do too I really hope that that's achieved because there are some some big issues going on in our world specifically towards that although it's just one facet of the big picture of our systemic problems that we're facing around the world so we initially talked about you know the spaceship earth concept and that we're all on the the same spaceship that there's there's this new question buys to globalization ties to the spaceship that do you believe that there's passengers on this spaceship earth and also um how do you feel about this this thought that we're humanity at least is divided by borders and limitations and one species from another's by borders divisions laws and things in regards to globalization global citizenry and this spaceship earth do you think we all need these local because the circular economy is very can be very local yeah it's also this kind of a global model and what what are your thoughts and how does that work how do we understand that better that's a very deep question I guess we're all passengers but we also all managers of this ship right we all should have the responsibility to make sure that we keep the ship tidy and functioning and in that sense I guess we all should consider ourselves as global citizens being responsible for the entire ship collectively and and so there are demerits for having artificial borders in that sense and and thinking you know not in my backyard but rather in yours is not helpful there are also merits and and you know I it's such a multifaceted question but um there is theory on on you know having sizable administrative areas and that being helpful in in making sure that those administrative areas have services for for us passengers or spaceship managers and and the ability to create equal opportunities and and and have healthcare and school services and all kinds of societal aspects like that are not optimally taking care of if those units are too large and I think in that sense it makes sense that we do have that and I think there's massive value also in sort of cultural identity and I realize that national borders don't always match with that but in that sense there is there's a lot going for having sort of human centric lines to divide our societies in some ways but in other ways it's not helpful and that's really about this environmental stewardship I guess of of our collective planet because it's everything is connected right and I think climate change it has been um help shouldn't say helpful but eye-opening in a way where we can see that it you know it's connected the air is connected and you can't sort of hide from it and and that's why we we really need to all work cross borders on on those topics so in short helpful for some not for all and I think we all need to be a bit global citizens and a bit a bit our local citizens as well yeah I like the term local so kind of a nice mixture of both global and local you mentioned in the beginning as well that a lot of circular economy thinking especially circulatics and that can be very specific and very local on can kind of drill down as how we fix that especially in an agriculture business is is kind of very very broad as well as well as agriculture is that where we're shipping supply chains shipping things all over the world businesses always been the global citizen I mean that that really you know doing business all over the world and shipping products and goods all over the world um obviously the pandemic has been a global citizen this whole time it wasn't restricted by nations and borders and and species air and water as you so nicely mix what what did you specifically mean on this local how we can have this yeah local type of a thinking how does that work I think so when you have sort of more reuse of products you'll have more repair of products and refurbishing and and so on and and that most likely in a future where we do more of that it's going to be more distributed if you have a mobile phone and if you need to change a component you're not going to probably send it to even if it was manufactured in far east you wouldn't send it there from let's say northern europe but it would fix it locally and so um a circular economy without sort of consciously even designing for more local economies it would probably be more distributed because it just makes more sense that way and and I think there is also the push to to consciously make that choice and we've seen how very efficient global supply chains are also very fragile and so so there is the resilience point to external shocks to the system where having a degree of being you know one or two or more steps more distributed is also more resilient to shocks and so there is a lot going for it and and reducing maybe the efficiency because it's not always positive in in the longer term when you experience multiple shocks so that's that's the sort of some of the thoughts on on how circular economy is more distributed and can help with with some of the supply chain issues right um yeah I I used to uh it was probably eight eight or more years ago really when I'd kind of and I don't know if I did a service or did a disservice when I would describe kind of just a quick simple way of circular economics and cradle to cradle because I always saw this kind of really this leasing model that uh that that's not cradle to grave it's a product that when the newer version comes that it gives give back and it's not recycled it's put back and I get the latest greatest most efficient model but those products aren't being thrown away they're not creating harm or or that on the planet um but it's also a model that in some respects it's it's um and I'm from the food industry so a lot of food industries will go in and extract resources and things in a certain area and then like five 10 15 years later they're like oh we've used everything we can here we need to leave and go somewhere else and start that model but when they leave that area there's a lot of sludge or waste or sometimes even a super fun site left of pollution and and things left there and then just so that they can go start over we've seen that in many different industries um but if that that leasing I want to continue to own and I want to continue to stay there and make sure that it's regenerative I see it as this regenerative type of a model as as leasing maybe that's wrong I don't know has there been a I think I heard a few people at Ella MacArthur and Circular Economy also kind of mentioned that in some respects am I wrong am I right is there ties to that has that shifted thinking shifted no I think you're right I just to sort of caveat that there is no silver bullet in terms of business model for these things but one example that's probably overused already is light bulb and how Philips has has started to sell in some places you know lux or light not light bulbs or or fixtures and so what that does what that leasing model does when you lease these fixtures is that you have an incentive now to make as durable products as possible because it's yours as a manufacturer you don't sell the product you just sell the service that it creates in this instance it's light and so that's very helpful and that's kind of nice anecdote to the benefits of a leasing model and having the responsibility for for what you make in a way it's extended producer responsibility that has a built in incentive you know so I guess in the agriculture sense it's it's it's probably more more complex I guess there's no more land in many places just you know move on to the next plot because it just doesn't happen and so you know the how carbon content has been depleted from agricultural land I guess is becoming an issue because it just you know soon you won't be able to farm on it and what do you do then and and that realization hopefully doesn't come too late and moving to more regenerative practices and I think in agriculture also it's the it's the question of efficiency versus sort of long-term well resilience or or benefits to both humanity and the planet and there we've probably gone too far or we have gone too far right and and one I guess aspects to this globalization and and how much we should regulate things is that there's a time and place for regulation because things tend to to go towards this highly efficient extractive systems if they're not regulated at least if they do today and so there's role for that tool that's a very it's a very complicated transition will be less profitable probably when you transition from one way of doing things to another you will have a time when it's less profitable and something needs to gap that bridge that gap right and and I think agriculture especially where in many instances it is you know the margins that you get from farming are so low that you don't want to take the risk and something needs to to bridge that in order to make the transition well what I mean it's so complex and there are so many systems involved but there are some examples I mean specifically when if we were to go to into agriculture way way farming and and agriculture you know used to work really is that a lot of that food waste or after humans had ate it in the peelings and the rest of that even the the human waste would somehow be turned back into fertilizer and reused on that land to certain extent and then that cycle will be created now we're shipping food you know thousands millions of miles across the world and and that food waste is going into landfills and garbages and it's not being composted it's not returning to the soils to help without soil health so then on that extractive with agriculture you know I guess that's maybe a big part why chemicals and fertilizers and things well how can we get that back into the soil it's really created a bad system yeah we also see the other trends of carbon farmers and a lot of movements in that direction as well but it's very very very complicated on on on how that works this whole thing about land use and and and how we see this leasing option and how circular economy works do you think we're educating the consumer the end user wrongly when we set up a system like that or do you think that's an actual better system to help us function better in the circular economy we yeah we have thought quite a lot about sort of how do we talk about circular economy to to the user or shouldn't say consumer because we should only be consuming food really everything else is used and so are users of everything anyway and I think it would be there is merit to put some of that responsibility to all of us of course we need to sort of both with our wallets I guess but the problem is that there are not too many good solutions out there and and so that's why we we work as a foundation with large companies is to say that that's where the needle needs to shift like we need to have those better options for the consumer or user if you put in a way like blame the user for being in a system that doesn't work there's limited capacity for us as as individuals to to fix that with our purchasing power but the purchasing power of large companies is a completely different game right and and that's where we think is is you can the fastest try to fix this system is with the organizations policy makers companies that have the power the purchasing power and the decision-making power through to shift things faster I don't know if that answers a question at all yeah no it definitely does because there's always that thought okay um somehow the consumer has to have a buy-in to that bigger economic system or to the new circular economy and I think that the companies the producers the manufacturers it will be fabulous if they didn't put that onus or the responsibility of how how to recycle or get that product back to them or keep it in the circular economy leave it to the consumer that they would kind of take care of that before the consumer gets gets it in a lease model or some kind of other model to keep it in there or to transition the consumer over to this new way of thinking there there's one other aspect that comes into there and then I'll go into my final questions for you and that is where does natural capital true cost total environmental cost as percentage of EBITDA in this system come in where does it come in in circular economy how do we account for those finite resources in our planetary boundaries that we're actually doing as as I mentioned or discussed in the beginning being that positive create leave the planet better than we found it but keep it in this this nice nice ecosystem where the value of products are ones that that take that whole system into account so it's really about where does true cost or total environmental cost this percentage of EBITDA natural capital come into that system does it play play a role are we um I mean yeah example I eat mangoes or cashews from Vietnam or Thailand all the time but I buy them from a grocery store here in humberg and you know even though it's organic and fair trade or whatever it's still only one euro something it's you know there's no way that costs to transport the labor all that's included and so is that involved in the circular economy is that in the system as well as far as business goes yeah so implicitly I would say yes so I guess internalizing external costs is is a whole different debate doesn't need to be different but I guess it is but just talking about food for example so the journey of a of a food from in a circular economy would probably be more local would probably be more seasonal would come from a place that's regeneratively farmed um where you know the food waste or production sort of non-edible parts of that production go back into the land uh relatively locally um and and and then it's transported with a means of transport that uses renewable energy um and so designing a system like that will have less externalities so I guess it's a bit of an implicit thing in circular economy where if you design a system that is circular um and you kind of play with the principles of circular economy and power that with renewable energy um you you kind of solve at least partially that externalities problem before that becomes a thing in a way where the idea is to eliminate waste before it becomes a reality by designing smarter products so so there's there's that implicit link I guess um and then the debate becomes very different I I think on externalities no I think you you answered that perfectly and I where I was leading you to as something that um uh is probably the last second to last big question I have for you and and you tickled upon it just shortly um that there is a way to be profitable or earn a profit off of circular economics and in your business model I think that if you let's take food for example since we've been talking about it what if we produce food with non-finite resources renewable energies clean tech processes have the sustainable supply chain and the and the sustainable logistics behind that not only are we driving our cost of goods down because we're using more efficient and better ways of energy we're also paying that true cost that natural capital and then we can sell products at a competitive rate in the market plus we're regenerating and healing our planet I see it as a better operating system a lot more sustainable long-term model that's also a closed system and really I hate to say you know um self-sufficient or off-the-grid type of a model but it's a closed system within a closed system that really functions better yeah and and it's one that's not on this model of eventually cradle to grave you've got a limit to growth where you've exhausted not only your employees but all your resources and then your your products either dead or you just can't afford it anymore and so that's the kind of thing that I wanted to hear is there stories or models coming out of circulatics 2.0 that you're saying yeah they're definitely better for business yeah no I think yeah so definitely so but it's as you say it is it is I think it's more difficult when we have an incentive system that looks at only a part of what it means to be an organization company that produces stuff and that's on just the financials of that company that's how we measure the success of the company and so it's a it's a misplaced target in a way in the bigger picture and so it's harder with that to when you do this transition to a more circular way of doing business for specific instances to make money out of it in some cases overall our research and many others research show that on continental level so Europe US is a multi trillion dollar opportunity to change the entire economy to be more circular but for an individual company it can be a hard transition to do and because and that's partially because the incentives are skewed to making quarterly financial results and for example having incentives to to have extractive practices and and use nuclear or not sorry not nuclear but oil for example in some places and so that's where we come back to metrics and measurement and it's and that that's why it's important to have measurement that does not only look at your financial performance but looks at your planetary performance let's call it that environmental performance societal performance of course as well and incentivize companies for getting that right for now it's really public perception so if you don't do anything about those things you have more and more consumers us who don't want to buy your products but having a more forced mechanism behind it is something that is actually going to happen eventually it will hopefully sooner than later and having measurements you know indicators that are broadly accepted in measuring that performance is important and that's where circle ethics comes in and that's where a lot of sort of more broadly the environmental and social indicators of company performance come in and having a broader way of looking at company impact beyond your financial impact and incentivizing you as a company based on that broader view is is actually it kind of feels like a dry topic but that's I believe very important in going to shift the needle and that's we are doing our best to to have a part in that through circle ethics as well. Yeah I see circle ethics and circular economy much more than corporate social responsibility I see it enveloping environmental social governance I see it as a better economic model and system that's more ecological economics and well thought through of how we function on this spaceship burst as team members crew members on the on the ship not just as passengers along for the ride. I have four more questions left for you before I get into those I just want to say is there anything that you would like us to know about circle ethics 2.0 any stories that we didn't know that we haven't touched upon or covered so far that are absolutely vital for us to know and why should organizations go and to your website that I'll list in the show notes to take a further look at that. I guess in short it's why not it's free it's easy to use and you'll get a sense of where you are at with your circular economy performance even if you haven't never you know thought about that this can be a nice introduction to to that and finding sort of the business benefits from from doing things in a more circular way if you're a company that has thought about it and and you're more advanced it's a way to have a reliable external assessment of your performance and and track your performance year on year if you wish to do so and communicate your results and achievements and and in that sense there's benefits for companies at different stages of their journey and it's free and so why not. Yeah I'm definitely going to use it and refer everyone to to take a look and and I advise a lot of clients on ESG and and how to transition and use different tools and I'm very excited about it I'm glad you're spoken to me about it we we've had some hard questions already and I don't see smoke coming from your ears you've done very well you've answered them all correctly the hardest question I have for you today though it is the burning question WTF it's not the swear words so don't worry even though maybe we have been saying that in the last 12 months but it's what's the futures where are we going what from you or Ellen MacArthur Foundation tell us what the what's the plan what's the roadmap what do we have to look forward to. Yeah I think the burning question is I think it's nice to summarize that there was some months ago a nice graphic that was going in in different media on on these waves that are coming on humanity COVID being the first relatively big one then climate change bigger one by diversity loss than like a monster wave on top of that and that I think is those are the burning questions are those crisis that are happening that affect us all and how we survive from those and have a healthy thriving planet after these crises have been solved as well and the only way that I see and I think the foundation sees that happen is is to have for one a more circular economy right so so we we don't extract materials until we run all of them and waste materials until we pollute the planet but have economy that that is in sync with the nature and in a way it's either that or or it's the end there is because it's a finite number of resources on this planet we just have to play ball with that there is no other option the sooner we get there the less damage will do so that will be the future it has to be the future but it can happen much faster before it's too late right and it's easy to say and that's been said for decades now but in a way it is true and I think that kind of pressure is is all the time more and more on on climate on biodiversity and and and if anything positive comes out of COVID it hopefully has shown how humanity is connected and how we all through our actions in wearing a mask can have actually quite a big impact locally and globally and and it's the same sort of analog for for for these other questions as well in in preserving what we have on the planet and making things better. Thank you so much boy that was a great that was probably the best answer I've had for a long time so I really appreciate that if there was one message you could depart to my listeners as a sustainable takeaway that has the power to change their life what would it be your message Ellen MacArthur's message yeah circulatex 2.0 message tough one I think and and this is maybe from a personal point of view but we all of course have the power to change things in our immediate you know surroundings in our lives by making better choices but many of us are also part of bigger organizations that collectively can shift the needle fast and so in our professional lives driving change in our organizations can be a very meaningful thing to do and a faster way to change the system and the more of us do that within our organizations the better right so I think sort of connecting our us as our individual sort of personal life to to what we do for many of us nine to five right so and and having those same ways of thinking and values in our professional lives as well can can have tremendous impact and and that's how I see it and I think how our foundation also sees it that we need to work with larger organizations and we're all parts of those organizations they they are just concepts that people run them us and it's important that we use our power there to make things happen what have you experienced or learned in your professional journey so far that you would have loved to know from the start oh wow maybe it's a bit similar to what I said the one message it's it's I guess you know being you know proactive in trying to solve problems and create solutions think of the solutions that you can have to to make things better can have a surprisingly large impact and I hope that for example circle ethics with me and in the small team around the tool can actually happen you know in unexpected ways we can have larger impact that we can we can we even know about and and not being discouraged with with being just an individual I guess is something I could have told myself earlier on what should businesses be thinking about if they uh just right now from listening to our podcast they go to the description they click on is anything that they need to know they can just jump in self-explanatory to use circulatics 2.0 any any caveats or advice or things that you would suggest to them besides that it's free and it's it's still fairly new yeah there is tremendous amount of resources on our website and actually when you sign up we'll link to those so if you've never heard of circular economy signing up to circulatics and using the resources that we link there to learn about it more uh in online to our online resources is is makes it less daunting I guess so I'm go and explore Yarko thank you very much for your time it's been a sure pleasure I really enjoyed every moment we could talk for hours but we're out of time and I really thank you for telling us about circulatics 2.0 thank you Mark it's it's really been a very very nice discussion and a great way to start start today yeah it's been nice that you let us inside of your ideas and I hope we can have a follow-up discussion very soon again about Ellen MacArthur Foundation's circular economy and circulate it thanks so much take care