Circular economy trends in the DACH region

The concept of a circular economy is increasingly influencing industries across the DACH region, where waste elimination and sustainable design practices are pivotal in shaping the future of recycling. 

More than just improving environmental sustainability, a circular economic model on a commercial scale can give businesses a competitive edge and help them become more resilient. In order to thrive in a world where we consume an average of 1.7 times more natural resources than the earth can regenerate in a 12-month period, we need to adopt different processes and habits. 

Innovative enterprises known as “circular startups” are poised to catalyse the shift towards a regenerative economic model. It’s only a matter of time before they revolutionise waste management and recycling industries across Germany, Austria, and Switzerland. 

While fledgling companies may initially struggle to compete due to limited resources and scale compared to industry veterans, their disruptive potential shouldn’t be underestimated. Equipped with cutting-edge digital technologies and a passion for circular principles, DACH start-ups are set to capture the attention of local governments and diverse clientele, ultimately driving the circular economy forward through their groundbreaking approaches.

Recycling and reducing waste

As much as 80% of a product’s environmental impact is decided in the design stage, so if we want to foster a circular economy, businesses need to adapt to not only generate less waste but also identify ways to improve recycling methods. In the medical industry where plastics play a critical role, certain plastics have been identified as a valuable feedstock for innovative recycling practices. Similarly, resale platforms like MPB have increased in popularity, helping to prevent tech products from heading to landfill and preserving resources.

For the DACH region, there’s a huge opportunity for increased growth and job creation. It’s expected that the circular economy will create an astonishing 18 million jobs globally, and has already been credited with creating over four million people working in this sector in the EU. If the DACH region can adapt its waste and recycling sectors, it could exceed the governments’ and the EU’s targets for job creation.

Moving from a “take, make, and dispose” approach

The linear model of ‘take, make, and dispose’ has been the foundation of industrial development for decades. But it has its limitations, especially when it comes to the environment. This linear approach relies on extracting raw materials from the earth, transforming them, and then eventually disposing—in many cases, after a single use. But as the population grows and our consumption habits increase, there’s an unprecedented pressure placed on our resources.

In the DACH region, environmental awareness has been key drivers in the transition towards a circular economy. Consumers are seeking out more sustainable products and services than ever before, and businesses are recognising the economic opportunities in resource efficiency and waste reduction and making the necessary changes.

The impact of the European Green Deal

Established in 2019, the European Green Deal has been a cornerstone of the EU’s move towards a more sustainable economy. This forward-thinking framework aims to make Europe climate-neutral by 2050 while separating economic growth from resource consumption.

In the DACH region, the Green Deal has sped up the transition toward circularity by establishing goals for reducing waste, boosting recycling rates, and advancing eco-design principles. Programmes like the Circular Economy Action Plan offer a strategic guide for businesses and policymakers, fostering innovation in sustainable product design, waste management, and the development of business models centred around reuse and recycling.

Digitising the circular economy

For a circular economy to work, digitisation is essential. Waste and recycling businesses, in DACH regions and on a global scale, need to find ways to operate digitally. The benefits are multifaceted.

First, digital ecosystems provide greater visibility into processes and enable companies to spot impactful events in real time. The data gathered from these areas of the business can provide key insights into ways the company can make smarter, more sustainable decisions. Digitisation helps companies apply circular business models to their own strategies and operations in order to capitalise on the circular economy.

Digitisation isn’t just about boosting profits, although this is a benefit, but it helps to develop efficiencies within the business by lowering operating costs and expanding profit margins. Already, waste and recycling companies in the DACH region are seeing the benefits of going digital.

Logistics is one of the main areas of a business that can benefit from digitisation, from weight and sorting to sales and customer management. However, while DACH businesses are ahead of many other regions when it comes to digitisation, few are solely digital, providing an opportunity for growth where this trend is concerned.

How can DACH businesses incorporate sustainability into their strategy?

There are several ways DACH businesses can become leaders in the circular economy and embed sustainability into the core of their operations.

Boost investment into sustainability measures

Companies in the DACH region are being strongly encouraged to enhance their investments in sustainability initiatives. This shift is largely driven by a combination of regulatory pressures and a growing awareness of the importance of environmental stewardship. As governments and regulatory bodies implement stricter environmental policies and sustainability guidelines, organisations are recognising the need to adapt to these changes, not only to comply with legal requirements but also improve their reputations and align with the values of consumers and stakeholders.

As a result, businesses are increasingly prioritising sustainability in their strategic planning. This trend is expected to continue, with projections indicating that by 2030, the annual increase in sustainability budgets across these countries is set to rise significantly, reaching nearly 13%. This increase reflects a broader commitment to sustainable practices, which encompass a range of initiatives, from reducing carbon footprints and improving energy efficiency to investing in renewable energy sources and sustainable supply chains.

Improve internal initiatives

DACH businesses are ahead of the curve in recognising that digital tools are fundamental to success when it comes to sustainability, with many businesses today using them to make their internal operations more energy efficient. In a bid to focus on the circular economy, these initiatives include recycling waste from office operations, and reusing and repairing products or assets.

But looking forward, many companies in this region have plans to use data analytics more to identify areas for improvement where green processes are concerned, indicating that there’s a significant power in digital tools where eco efforts are concerned.

Explore innovative ways to use new technology

DACH businesses differ from businesses in other areas of Europe as they’re more inclined to realise the effectiveness of innovations and technologies to fuel their sustainability efforts.

Whether it’s artificial intelligence, cloud computing or Internet of Things, DACH companies are keen to find ways to transition to tech-led solutions for the sustainable benefits. For example, Germany has invested significantly in environmental technologies over the past ten years, and has seen Rapid Technological Advancements in the business sector where climate-change mitigation is concerned.

Appoint CSOs

Across Germany, Austria, and Switzerland, a transformative shift in corporate governance is taking root. Historically, CEOs in these countries wielded exclusive power over sustainability strategies and budget decisions. However, a new trend is emerging, recognising the need for specialised oversight and distributed responsibility in driving sustainable practices.

This evolution manifests in two ways: the rise of Chief Sustainability Officer (CSO) roles and the delegation of sustainability-related decision-making authority to upper management. By integrating sustainability principles throughout organisational hierarchies, companies in the DACH region are fostering environments where eco-conscious initiatives can flourish.

A decentralised approach offers several advantages. It enables quicker identification and resolution of sustainability challenges, as empowered teams can act with greater autonomy, and it fuels innovation by allowing diverse perspectives to shape green strategies. This model paves the way for long-term business resilience by making sustainability a core consideration at multiple levels of operations. A structural shift also means it’s easier for sustainability systems and incentives to be tailored to the unique needs of the business or individual departments for more meaningful results.

What’s the outlook for a circular economy in the DACH region?

While the transition to a circular economy certainly offers many benefits, it also comes with its own unique set of challenges. Businesses in the DACH region of Europe will likely face initial costs and complexities in redesigning products and processes in order to align with circular principles, and regulatory frameworks will need to evolve to support these business models.

Consumer behaviour and preferences also need to move towards more sustainable consumption patterns, a trend that we’re already seeing as customers become more environmentally conscious and seek out products and services that align with their values.

Despite these challenges, the outlook for the circular economy in the DACH region is promising. With strong policy support, technological innovation, and growing consumer awareness, these countries have the potential to remain global leaders in circular economy implementation and a more sustainable future.

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