We are only beginning to realise that there aren’t enough natural resources for our growing population and changing climate. In a circular economy, things that die can give birth to new life.
A circular economy presents businesses with a new kind of growth opportunity to solve some of our generation’s biggest challenges. Innovation is happening across every sector of the economy because of the need to redesign materials, products, and services for circular use.
Finland is a global forerunner in the circular economy and has ambitious goals to transform its economy into a circular one by 2035.
In 2016, Finland created the first circular economy roadmap in the world. Following suit, the City of Helsinki created its own circular economy roadmap, which was approved in May 2020. These roadmaps are paving the way for new sustainable businesses.
With these lofty goals, comes a great amount of business opportunities for companies all around the world.
Europe’s vision for a circular economy
Let’s zoom out of Finland for a second, and take a look at Europe as a whole first. Adopting circular economy principles has the potential to unlock €1.8 trillion in economic growth by 2030. In Finland, a circular economy is expected to add about 3 billion euros to the national economy by 2030.
A study by McKinsey & Company proves that a circular economy, empowered by the technology revolution, would enable Europe to grow resource productivity by up to 3% annually.
As Europe continues to shift the paradigm of consumer behaviour, businesses are jumping at the chance to innovate new business models. Critical enabling technologies are advancing and scaling fast. Sharing, regenerating, looping, optimising, virtualising, and exchanging for new and better technologies is becoming especially powerful.
Circular economy business models
While a circular economy can touch every industry, it can be divided into five core business models:
1. Product as a service
Products are delivered in a service model where the product is owned by the producer and leased to a consumer. In this model, businesses can build long-term relationships with their customers and build higher-quality products which are managed across the entire lifecycle.
Case: Naava offers “nature and healthy indoor air as a service.” Their intelligent green walls purify and humidify the air, while the company takes care of the maintenance through their automated system.
Renewability or “circular supplies” refers to replacing scarce commodities with fully renewable, biodegradable, or recyclable resource materials.
Case: Montinutra converts forest industry by-products into ingredients for the cosmetics, food and beverage, and pharmaceutical industries.
3. Sharing platforms
A sharing platform is a peer-to-peer based model where products or assets with low ownership or use rates are shared. Companies that leverage this model can maximise the use of the products they sell and enhance value creation and productivity. Think Uber, Airbnb, and TaskRabbit.
Case: BloxCar enables people to rent out their cars when they’re not in use, for extra cash. The service even includes peer-to-peer rental car insurance.
4. Product life extension
This model aims to extend the lifecycle of a product so that it can remain economically useful. Products or materials that are typically disposed of will instead be maintained or improved through repairing, remanufacturing, upgrading, or remarketing.
Case: Bamomas optimisation service extends the life cycle of industrial batteries by utilising battery data.
5. Resource recovery
This business model takes waste as input material and leverages technology innovations to create valuable products as new outputs.
Case: Honkajokioy uses animal-based waste and refines them into raw materials for products such as pet food and biofuels.
Strongholds of the Finnish circular economy ecosystem
As of 2021, 83% of Finns believe that Finland should take actions to promote the circular economy, even if other countries aren’t.
With the citizens and government on its side, Finland has been taking the world by storm when it comes to sustainability: from sustainable steel to recyclable fabrics to micro-plastic-free solutions.
Finland, along with the help of the Finnish Innovation Fund Sitra, even started The World Circular Economy Forum (WCEF). The annual event brings together over 4,000 global business leaders, policymakers, and experts. The goal of the WCEF is to share business opportunities and work towards achieving the UN’s Sustainable Development Goals.
In a study by Deloitte, they found that a large chunk of the circular economy work done in Finland has been focused on construction and urban planning. This is understandable since Finland focused on raising the recycling rate of construction waste to 70% in 2020 (currently 50% has been achieved) to comply with the EU Waste Framework Directive.
The current strongholds of the Finnish circular economy ecosystem include:
- Food systems: Resource-efficient processing, nutrient recycling, and value-added products
- Textiles: Pro-active design, transparent value chains, recycling technologies for sustainable closed-loop textiles. The first factory to circulate wool and cotton-based textiles is already under construction in Finland.
- Construction: Holistic designs and technologies for longer lifetime and circular material use
- Metals and minerals: Smart material use and holistic design for sustainable mineral value chain
- Electronics: Circular designs based on safe and abundant materials and waste minimisation. According to Eurostat, Finland recycles 49.2% of its electronic waste, compared to an EU average of 34.8%.
- Batteries: Ethically and sustainably produced battery solutions
- Packaging: Tailored and sustainable closed-loop packaging solutions based on “just-right-for-the-purpose materials.” As an example, Pramia Plastic Oy reuses recycled PET plastics (typically found in beverage bottles) and turns them into a virgin-like material. What is truly unique about this material is that what was once waste can now be utilized as food contact material.
Moreover, thanks in part to a deposit system, Finland recycles 95% of cans, 90% of plastic beverage bottles, and 87% of glass bottles. These are some of the best rates in the world; the worldwide recycling rate for cans is only 49.8%.
- Piloting opportunities: The VTT Technical Research Centre of Finland, the City of Espoo, and Helsinki Business Hub have developed a world-class piloting and business ecosystem for a bio-based and circular economy.
- Bio-based expertise: When it comes to bio-based circular solutions, Finland is the global leader. One innovation is utilising wood to create products traditionally derived from oil. Such innovations are already gaining traction in the market.
Another example is StepOnetech developed eFlexFuel, a technology that enables gasoline and hybrid vehicles to run on renewable biofuel. They recently announced the first sustainable biofuel solution for the global motorbike market and its expansion into the U.S.
Circular economy growth opportunities in Finland
While Finland has many strengths, there are also many things still lacking in the existing ecosystem, which presents numerous opportunities. Some of those include:
- Increasing the understanding of the primary and secondary raw materials stock and flows in the various regions of the globe would help to create new solutions for a circular economy (EU-wide problem)
- Increased knowledge in the identification of sustainable production and consumption practices at scale, so that current circular economy activities reach their potential. (EU-wide problem)
- Opportunities for specific financing instruments and circular economy investors
- Because circular economy business is rather new – there is always room for creating innovative circular economy solutionsg. optimised waste collection, automated waste sorting stations, and price competitive cleaning solutions for textile waste.
- Challenges in utilising recycled materials & creating demand.
- The ICT technology needed for a circular economy already exists in Finland — but the data is limited to closed chains. Thus, more openness in utilising the technologies is needed (i.e. open-source data).
Many companies in Finland are starting to take advantage of these opportunities, especially in the plastics and textile industries. Here are a few projects already underway and paving the way for other innovations and companies:
- New Cotton Project: New Cotton Project utilises a textile fibre regeneration technology, which takes textile waste and turns it into a new, man-made cellulosic fibre that looks and feels like cotton. The fibres will be used to create different types of fabrics for Adidas and companies in the H&M Group.
- ExpandFibre – ExpandFibre upgrades pulp fibres, hemicellulose and lignin from renewable and sustainable sources of straw and northern wood into new bioproducts. Its ambition is to meet the growing demands for sustainable textile fibres and other added value biomaterials.
- Package-Heroes: Package-Heroes studies and develops packaging solutions, that addresses food protection and the global and constantly increasing concern of plastic packaging waste. Package-Heroes is a research project funded by the Strategic Research Council functioning under the Academy of Finland.
- Closed Plastic Circle: The goal of the Closed Plastic Circle project is to get all recyclable plastic in the Helsinki and Lahti areas to circulate more efficiently.
Finland and Helsinki are well on their way to transforming into a circular city. Now is the time for innovative companies to seize the circular economy opportunities that Finland has to offer.