THESE ARE THE VIEWS OF MVO NEDERLAND

CHALLENGE

Our economy is wasteful. As a result, we miss out each year on billions of euros of business opportunities, depend unnecessarily on imports of goods and raw materials from abroad, use up the earth’s resources and pollute our environment. Just think of all the plastic drinking straws that end up in the sea after two minutes of use and all the obsolete mobile phones left languishing in drawers. What if we were smarter? The result would be more entrepreneurship and employment, less dependence on other countries and less pollution.

WHAT IS REQUIRED?

In a circular economy, products, components and raw materials remain in the supply chain as long as possible while retaining the highest possible value. This is because companies increasingly focus on circular ways of doing business. The number of business models based, for example, on service and repair contracts and recycled raw materials needs to increase rapidly in order to deliver the New Economy. That means organisations need to join forces and work together in the supply chain.

WHAT DO WE WANT TO ACHIEVE?

Companies in the New Economy should minimise the use of primary raw materials and do business without generating waste. They can do this by designing products that return in another environment or form after use, but also by dealing more efficiently with raw and recycled materials instead of using primary raw materials. Companies should also switch to biobased and renewable raw materials and adopt new business models enabling them to keep control of their products and raw materials.

WHAT ARE WE LOBBYING FOR?

Central government has a key role in accelerating the journey towards the new, circular economy. MVO Nederland believes there are four key issues:

• Governance: the government must steer the transition to a circular economy, preferably through the Ministry of Economic Affairs and Climate Policy. This includes explicit links with the Top Sectors policy and Dutch business policy to foster the Dutch knowledge economy.
• Financial resources: the government must provide sufficient funding, on the one hand to support circular innovations and on the other to facilitate the process role required in supply chain innovation and sector integration.
• Appropriate laws and regulations: businesses are still too often impeded by laws and regulations, for example in the case of waste. The government must remove these obstacles.
• In a European context too, manufacturers’ responsibilities should be more aligned with the goals of the circular economy.
• Procurement policy: governments must give circularity a clear role in the implementation of their purchasing policy. This is therefore a question of commissioning, not just purchasing.

CHALLENGE

Our tax system is strongly geared towards the linear economy. The government does little to tax pollution and taxes labour far more than raw materials. Policymakers increasingly recognise the need for a different approach. But the current system is so complex that the necessary changes, for example for sustainable energy or new business models, are barely practicable.

WHAT IS REQUIRED?

Excise duties must serve the New Economy. Businesses must charge ‘real’ prices for goods and services, because if polluting becomes more expensive, it will pay to produce cleanly. And if carbon emissions cost money, businesses will be more inclined to operate on a climate-neutral basis. The principle of the New Economy is that the polluter pays. And if that helps bring about lower labour costs, there will be more scope for nurses at the bedside, police on the street and teachers in the classroom.

WHAT DO WE WANT TO ACHIEVE?

A futureproof tax system that imposes less tax on labour and more on raw materials. Tax incentives must make the sustainable choice the logical choice. We will have biggest impact with a tax system that makes pollution, biodiversity loss and climate change considerably more expensive, while, for example, making it cheaper to produce healthy food or recruit people who have difficulty entering the job market.

WHAT ARE WE LOBBYING FOR?

In the years ahead the government must develop a futureproof tax system and deploy the financial instruments needed to achieve the New Economy. This may require a root-and-branch overhaul of the tax system.

CHALLENGE

It is still too often the case that sustainable businesses with an innovative business model fail to get their business case off the ground because finance proves a sticking point.

WHAT IS REQUIRED?

The financial sector needs to take a different view of cash flows and risks. It needs to futureproof its financing, which means allowing for potentially longer payback periods for new business models, and for the risks associated with investments in the ‘old’ economy. This may also require changes to the existing accounting and financing guidelines.

WHAT DO WE WANT TO ACHIEVE?

Financing of business models must no longer be an obstacle for sustainable businesses. Banks, funds and insurance companies must be able to anticipate new business models when providing finance and gauging risks.

WHAT ARE WE LOBBYING FOR?

The government should play a facilitating role and ensure that banks, insurance companies and funds are increasingly ambitious in providing finance for sustainable businesses. The government could also develop guarantee funds to facilitate market entry for financial institutions.