Save on raw materials through circular business
- Edited 9 October 2024
- 4 min
- Managing and growing
- Sustainability
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 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
Is your business circular? Then you save on raw materials. You are also less dependent on price increases and uncertain delivery times. The prices of many raw materials shot up recently due to shortages. Also, deliveries from far away are more often uncertain. The end of these price rises and the uncertainty surrounding delivery times does not seem to be in sight for the time being. If you work in a circular way, you will be less affected. And that is not only nice for your business, but also for your customer. After all, you can deliver what and when you promise.
“Natural resources will become even more scarce and expensive in the future,” says Suzanne van Haren, programme manager at the Versnellingshuis , 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. And since July 2023, you can no longer give plastic cups and meal packaging to your customers free of charge. In addition, you must provide a reusable alternative. Since 2024, you also cannot use disposable packaging for any food and beverages that are consumed onsite.
Van Haren says additional rules have been introduced to promote the reuse of natural resources. In a growing number of sectors and industries, for example, manufacturers are required to pay for waste collection and disposal. “This applies, for example, to the textile since 2023. Textile manufacturers are now 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 (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 (in Dutch) to check if your local 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 (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 3 and a maximum of 6 business owners with different roles work together in the supply chain.
Tax benefit through MIA and Vamil
If you invest in circular business assets and technologies, apply for the environmental investment (MIA) and the random depreciation of environmental (Vamil). The MIA allows you to deduct a percentage of the investment costs from your taxable profit. With Vamil, you write off any percentage of the investment costs in any year. Combine the MIA and Vamil and benefit from a net tax advantage 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 (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 (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, (in Dutch) will help you with the support of the government.
- Ask all your questions about network partners, funding, and laws and regulations related to circular business to the .
