Save on raw materials through circular business

If it were up to the Dutch government, the country will be fully circular by 2050: manufacturers are required to reuse natural resources as long and as often as possible, and waste will be a thing of the past. This means business owners have their work cut out for them, as they will need to adapt their products, services, production processes, and sometimes even their business models accordingly in the coming years. Get involved in circular business, use the tools available, and take advantage of grants and tax credits.

Circular economy: definition

In a circular economy, raw materials are used more consciously, for longer periods of time, and are reused over and over again. For example, products must have a longer lifespan, be repairable, and serve as raw materials for new products. Old train seat upholstery is recycled into shoes, bananas that are ‘too straight’ are made into banana bread, and clothing is rented out(versnellingshuis, in Dutch) rather than sold.

Cradle-to-cradle

A related term to circular economy is cradle-to-cradle. Cradle-to-cradle products are deliberately designed in such a way that they can be reused after use for the manufacture of new products, or are fully biodegradable. If you use a circular business model, check if you can organise your production process based on the cradle-to-cradle principle, so as to make the circular production process as simple as possible.

Natural resources will become even more scarce and expensive in the future.

Benefits of circular business

The prices of many natural resources have skyrocketed in recent months as a result of shortages. In addition, there have been supply-chain issues with deliveries from remote areas. Reasons for these shortages include the high demand following the economic recovery after the COVID-19 pandemic (Volkskrant, in Dutch) and the war in Ukraine. These price increases and uncertainty are not likely to end in the foreseeable future. If you work on a circular basis, you will save on natural resources and will be less dependent on price increases and uncertain delivery times. This is good news for you, as your production chain is stable, plus convenient for your customers, because you deliver what you promised, at the time you agreed.

“Natural resources will become even more scarce and expensive in the future,” says Suzanne van Haren, programme manager at the Versnellingshuis Nederland circulair!, an initiative launched by the Ministry of Infrastructure and Water Management and MVO Nederland. The Versnellingshuis supports businesses in doing circular business free of charge. “All this shows that the dependency on new natural resources is not without risk. If you would like your business to remain profitable in the future, it is sensible to learn more about opportunities for circular businesses and about the risks involved if you do not do this.”

Rules and regulations

As a business owner, you must comply with certain laws and regulations regarding circular business. For example, the EU introduced a ban on disposable plastics on 3 July 2021, including cutlery and plates. From July 2023, you will no longer be able to give plastic cups and meal packaging to your customers free of charge. In addition, you must provide a reusable alternative. From 2024, you will also not be permitted to use disposable packaging for any food and beverages you consume onsite.

Van Haren says additional rules will be introduced to promote the reuse of natural resources. In a growing number of sectors and industries, for example, manufacturers will be required to pay for waste collection and disposal. “This will apply, for example, to the textile sector from 2023. Textile manufacturers will then be responsible for collecting, reusing, recycling, and waste processing of their products, and they also cover the costs of waste management. We have already been using this system for items such as batteries.”

Grants and tax benefits

The government promotes circular business through financial support (RVO, in Dutch) in the form of grants and subsidies, tax benefits, and affordable loans. Many regional governments also invest in the circular economy. Use this tool (versnellingshuis, in Dutch) to check if your provincial authority or city council provides relevant grants and subsidies.

Funding for circular chain projects

If you and other SME owners are turning a product supply chain or material supply chain into circular chains, you can apply for funding for circular chain projects (subsidie circulaire ketenprojecten, RVO, in Dutch). This grant covers 50% of the expenses you incur and the costs to cover a processs coordinator. You will receive a maximum of €20,000 per business owner and €120,000 per project, in which a minimum of three and a maximum of six business owners with different roles work together in the supply chain.

Tax benefit through MIA\Vamil

If you invest in circular business assets and technologies, apply for the environmental investment credit (MIA, RVO, in Dutch) and the random write-off of environmental investments (Vamil). The MIA is an investment allowance equivalent to a maximum of 45% of your investment amount. You can use the Vamil to write off 75% of your investment costs. You can also combine the MIA and the Vamil and benefit from a net tax credit of up to 14%.

Getting into circular business

If you intend to get involved in circular business, there is no need to radically change your entire business operations or business model. You can follow the R-ladder of circularity strategies (RVO, in Dutch) a model to make your business more circular in 6 steps.

The R-ladder of circularity strategies

  • R1. Rethink

Take a critical look at the products, materials, and fabrics you are using. Abandon anything you do not really need or set out to find sustainable alternatives.

  • R2. Reduce

Manage natural resources more economically and more efficiently in order to prevent waste.

  • R3. Reuse

Reuse of obsolete products. Items such as smartphones and tablets are increasingly finding their way back to consumers. Refurbished, recovered, or upgraded, they are like new, but lower in price.

  • R4. Repair

Extend the economic life of products by repairing or refurbishing them. Turn old products into new ones or use parts of an old product for the manufacture of a new one.

  • R5. Recycle

Process and reuse natural resources and waste streams or waste, including grass, waste wood, and coffee grounds. They should preferably be processed into resources of the same quality as the original resource.

  • R6. Recover

Incinerate waste materials whereby the incinerator converts the material into heat and electricity. In a circular economy, as few materials end up in this stage as possible.

Tools and partners

  • The  Natural Resource Scanner (grondstoffenscanner, RVO, in Dutch) developed by the Netherlands Enterprise Agency tells you what natural resources you are using and how to reduce your risk of scarcity.
  • If you would like to design or redesign products, services, and business models based on a circular model and then do circular business, CIRCO(in Dutch) will help you with the support of the government.
  • You will find answers to the most frequently asked questions on doing circular business here.
  • Ask all your questions about network partners, funding, and laws and regulations related to circular business to the Versnellingshuis.