How businesses can harness their HR department to support circular business ambitions.
Although I do not have the illusion that I will experience the Overview Effect to that extent, pivoting careers from the corporate field to a circular economy not-for-profit, Circle Economy, has given me a fresh perspective. After nine months of working in this new field, I can see that the Earth is one integrated whole: an ecosystem with natural cycles and a natural balance. And that balance—that harmony—is crucial in order to not destroy our planet, and with that ourselves. Positive insights you would say, but it’s a shame that a career switch was necessary for this revelation. But this is unsurprising: despite alarm bells ringing for decades, companies and governments are only now waking up to the threat of climate breakdown. This year marks 50 years after the publication of Limits to Growth by the Club of Rome, so we have been—or should have been—aware that our planet is not an infinite source of raw materials. The reality, alas, is that the Earth and nature are still too often seen as production factors.
As the latest IPCC reports confirmed, there is still enough to be saved if we—including government, businesses, social partners and citizens—act now. This is the decade of action. So let’s start doing it! This article will outline why it’s already directly beneficial for businesses to move towards action and how they harness an untapped resource to support a circular and sustainable transformation: their HR departments.
THE VERY REAL THREAT OF BUSINESS-AS-USUAL FOR BUSINESS: LINEAR RISKS
Although awareness for and policy related to the circular economy is rising, progress on the business side is not moving fast enough. The Netherlands Environmental Assessment Agency (Planbureau voor de Leefomgeving) recently published a report in which it calls for more ‘pressure and coercion’ from the government for a national circular economy. Aside from some front-running companies, most businesses seem to hide behind this call and wait for the government before taking action. To a certain extent, this is understandable and justified, as a level playing field through legislation and (true) pricing (on a national, European or even global level) is indispensable for a just and scalable transition. However, it’s already in companies’ best interest to adopt circular business models. As the old saying goes: snoozers are losers, and this would apply here too. With no less than half of all executives expecting circularity to become the new standard in the next ten years, businesses should feel the pressure and start moving. There are already major ‘linear risks’ associated with continuing with business as usual; businesses simply can’t afford to hit the snooze button and should start planning for the circular economy to mitigate climate change and maximise the talent at their fingertips.
These linear risks roughly cover four dimensions, which are closely related and often the result of each other:
Market. Shortage of raw materials, price volatility, boycotts, inflation…the newspapers are full of these stories on a daily basis. Although there has already been an increasing scarcity of raw materials, the horrid situation of the Russian invasion of Ukraine has spotlighted the dependence we all have on powers beyond our borders and the resources they can exploit. Dependence on natural resources such as gas should be kept to a minimum, both to reduce our vulnerability and the environmental impacts that come with the use of fossil fuels in general. By switching to circular business models, in which raw materials will be kept longer in the chain, businesses will remain more resistant to price volatility and supply chain disruptions.
Operational. Current labour market shortages are already a major problem for many businesses, for both white- and blue-collar jobs. More companies are experiencing a lack of labour, resulting in technological lags, supply chain issues and factories that simply have to close. Experts predict that these shortages will increase in the coming years due to an ageing population and the economy continuing to grow, so the problem will only get worse for businesses if they stick to old business processes and don’t invest in the development and retention of their workforces, and R&D for new production technologies. Investments that are already being made to make supply chains more circular and efficient, for example logistics to collect used materials, ensuring safety and good quality of work, will provide businesses with a huge competitive advantage.
Business. Much has changed since Corporate Social Responsibility was first coined at the start of the 21st century. Large, well-established corporations can no longer rest on small sustainability initiatives and schemes and are feeling the threat of young start- and scale-ups with circular strategies and business models that cater to environmentally-conscious demographics and are more agile to pivot according to new legislation or technologies. One-third of executives think their business will be disrupted by these new trailblazers in the upcoming years. Examples that already flourish in the Netherlands are Swap (bike leasing), Greenwheels (carsharing) and Vinted (second-hand clothing marketplace).
Legal. New legislation and regulations will increasingly force businesses to change from polluting, linear business models to circular ones. Companies tend to have a wait-and-see attitude when it comes to legislation and regulations and are often late in their preparations as a result. However, although not in full effect yet, the measures resulting from the Green Deal and the Dutch Klimaatakkoord, for example, will have huge consequences for the entire business line, from design to financial reporting. At the end of March already, the European Commission submitted new proposals that should lead to products having better quality, becoming easier to fix and lasting longer: the sustainable products initiative. There has always been scepticism about the EU meddling in product qualifications (think of the maximum allowable curvature of a banana!), but the latest developments on sustainability standards and reporting can only be praised. Moreover, this all paves the way to higher quality, longer-lasting products: what's not to like?
It speaks for itself that the flip side of these risks is that businesses that are already serious about the transition will take a leading position—well worth the costs it may take to take action now. Switching to a circular business model is therefore not so much a non-committal choice, but strategically and financially vital.
HOW TO GET THERE? UTILISE YOUR HR DEPARTMENT
By delivering practical support and insights, the Circular Jobs Initiative at Circle Economy helps businesses in their shift to a circular economy. Above all, we know that the workforce is an essential lever for the transition: people must be put first in a circular business model and strategy design for their to be real business, not to mean environmental and social payoffs. As a linking pin between management and operations, we believe HR has a key role to play. Through the following actions, outlined earlier in our briefing for HR professionals, HR can create the right organisational culture and build the human capital needed for a business to thrive in the circular economy.
- Provide support through a long-term strategy
Good leadership is key, and especially in the current war on talent, it is essential that HR attracts the right talent and, above all, keeps it in-house. The Dutch labour shortage is currently at its highest level ever, which means that many technical and managerial talent can make high demands on their employer. Many young talents expect that sufficient attention is paid to the development and growth paths within the organisation, which is of course also to the benefit of the company itself. Employees must continue to be well supported so that they keep abreast of all the latest developments. The circular transition as a continuous process and a long-term strategy is crucial for building a strong pipeline, setting an inspirational organisational vision and staying ahead of the curve.
- Bridge the skills gaps
Circular activities are particularly cross-sectoral and interdisciplinary. This requires different—especially transversal—skills and even new types of jobs. HR needs to have a clear overview of these new qualifications and ways of working, so they can adjust their hiring and training policies accordingly, and ensure that the current workforce has the right skills at the right time through re- and upskilling. Involving everyone, including employees who themselves have critical knowledge and skills, is essential for the transition.
- Manage projects and mentor workers
With the transition to circular business models generally taking place across several departments and with multi-disciplinary teams, organisations and governments experience difficulties getting started with the transition because they are often not equipped to deal with such a transversal strategy. Work processes and systems are set up per silo. HR, therefore, has a major role in ensuring that overarching ambitions and processes are put in place and that the staff can continue to thrive in the new way of working. HR can also initially take on the role of a circular project manager for both internal and external stakeholders. This way there is a central point of knowledge in the organisation and someone who keeps an eye on the course.
- Promote circular values
Younger generations, in particular, are making increasingly higher social demands on their employer. A big bag of money is no longer enough for the purpose-driven millennials and Gen Z, and there is also a shift going on among the older generations. Companies that do good for people and the environment are therefore popular. It is up to HR to ensure that the circular values like focussing on using regenerative materials and minimising waste, are integrated into the core values of the organisation and that these are also communicated and operationalized.
- Build and contribute to a circular HRM network
Throughout the transition, we see that collaboration is essential, and that also applies to the HR community. The circular economy is a relatively new and diffuse concept about which much still needs to be worked out through learning by doing. HR professionals will therefore need to find each other to share experiences, exchange information about circular jobs, best practices, etc. Even employees can be ‘shared’, for example by being part of a circular pool. This might lead to new contract forms that may have to be drawn up together with other companies.
- Promote industry 5.0
Last but not least: promote industry 5.0, which basically strives for harmony between people, nature and the planet. People-oriented and focused on the balance between environmental and social needs to boost resilience and innovation. This should be the basis of everything, the starting point of all strategies and business activities. HR must offer the workforce opportunities to develop themselves, in areas that go beyond their own tasks and responsibilities. It's about empowering the employee, giving them self-confidence and thus preparing them for meaningful work in the long term. Shouldn’t this be all that HR is about!?
TO BE FUTURE-PROOF, WE NEED TO START TODAY.
Although it's clear that the tide will not turn in time without stricter government regulation and legislation, we’ve seen that a call to companies to work on the circular economy goes further than 'just' a moral appeal. Sooner rather than later the circular economy will be in full swing, and it is up to us, to you, to decide how soon it will become reality. As a business, you should be prepared for the future. With all recent global developments, it has become even clearer that success is largely dependent on agility. Organisations that stick to current, linear, processes and business models will eventually miss the boat. To be future-proof, we need to start today and start with your people.
While I close my eyes I try to imagine that I view Spaceship Earth just like Wubbo Ockels did. When I see all living things as passengers on this ship, I also realise we as human beings can and must be crewmembers at the same time. We are the last generation to stop the climate crisis so let’s take responsibility! Let’s change the narrative and the way we do business for good. It’s not so much a sacrifice as it is an imperative and an opportunity... An opportunity to restore the balance between Human, Nature and Earth.
This blog was originally published on the Circle Economy blog page.
About the Circular Jobs Initiative
The Circular Jobs Initiative (CJI) defines and identifies circular jobs, analyses the environment needed to create them. We produce research, training and advocacy to champion circular strategies that governments and businesses can use to have a positive social impact.
We work with employers, workers, governments, multilateral organisations, education institutions and research organisations to realise this ambition. Get in touch with us here.
