NEDERLANDSE VERENIGING VAN COMMISSARISSEN EN … · Airbnb is the world's largest accommodation...
Transcript of NEDERLANDSE VERENIGING VAN COMMISSARISSEN EN … · Airbnb is the world's largest accommodation...
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WORKSHOP
24 May 2016
NEDERLANDSE VERENIGING VAN
COMMISSARISSEN EN DIRECTEUREN
13.30-13.50 Plenary presentation by Circle Economy
Basic principles and business models of a circular economy
and Netherlands as a Circular Hotspot
13.50-14.30 Examples of circular innovations and business models
FrieslandCampina, Interface, Fairphone, Valley
14.30-15.15 Finance workshop by Circle Economy
15.15-16.00 Governance workshop by Allen & Overy
16.00-17.00 Bites and drinks
AGENDA
Netherlands as a Circular
Hotspot
PLENARY PRESENTATION
INITIATORS
AMBASSADORS & PARTNERS
NETHERLANDS CIRCULAR HOTSPOT
#NLcircularhotspot8
SHARING INNOVATION
CAMPAIGN
Vision Magzine NLCH
TRADEMISSION 140 PARTICIPANTS FROM 20 COUNTRIES
CIRCULAR HOTSPOT 2017
LUXEMBOURG
Basic Principles and Business
Models in a Circular Economy
PLENARY PRESENTATION
Sourc
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Linear risks have adverse long-term effects on the economy,
society and environment
1750 1800 1850 1900 1950 2000
Population
CO2 Concentration
Ozone depletion
Water use
Species extinction
Northern Hemisphere
average surface
temperature
Foreign investment
Loss of tropical rainforest &
woodland
Fisheries exploited
GDP
Paper Use
Motor vehicles
2050
CONTINUED LINEAR INVESTMENT IS UNSUSTAINABLE
The circular economy is an
economic system that is waste-
free and resilient by design,
mimicking natural ecosystems in
the way we organise our society
and businesses.
By following circular strategies
and principles, companies can
ensure the highest level of
economic and societal value is
attained while minimising
planetary impacts.
THE CIRCULAR ECONOMY OFFERS A SOLUTION
BASIC PRINCIPLES OF A CIRCULAR ECONOMY
Tesla opened all of its electric car
patents to outside use in the spirit
of collaboration and open source
development
BASIC PRINCIPLES OF A CIRCULAR ECONOMY
Airbnb is the world's largest
accommodation provider, yet it
owns no real estate, since it uses
innovative sharing models
BASIC PRINCIPLES OF A CIRCULAR ECONOMY
Levi’s Water<Less™ jeans reduce
the use of water in the finishing
process by up to 96% for some
styles, creating more with less.
BASIC PRINCIPLES OF A CIRCULAR ECONOMY
KWS produces PlasticRoad, a road
surface made from 100% recycled
plastic which can itself be recycled,
replacing asphalt.
BASIC PRINCIPLES OF A CIRCULAR ECONOMY
Philips actively informs, engages
with and enables employees to
implement circular economy
principles in the organization
BASIC PRINCIPLES OF A CIRCULAR ECONOMY
Since the 1950s, Desko uses a
buy-back scheme to sell and get
back its furniture three times, so its
furniture lifetime is expanded
BASIC PRINCIPLES OF A CIRCULAR ECONOMY
WITH THE CIRCULAR ECONOMY VALUE IS PRESERVED
TAKE THE EXAMPLE OF A CAR
“Circular Support” ModelsManagement, Support
Retail
Assembly
Manufacturing
Extraction
repair/maintain
reuse/redistribute
refurbish
remanufacture
recycle
“Optimal Use”
Models
Product as Service
Lifetime Extension
Sharing Platforms
Takeback
“Circular
Design” Models
Product Design
Process Design
Circular Materials
“Value Recovery”
Models
Recapture / Recovery
Refurbish / Maintenance
Recycling
CIRCULAR BUSINESS
MODELS
incinerate/landfill
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FRIESLANDCAMPINA
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INTERFACE
Towards a restorative
enterpriseThe circular economy in practice
NCD / 24th. Of May 2016
Geanne van Arkel
Head of Sustainable Development
Inventor of the Heuga
carpet tile
• Turnover $ 1 billion
• 3500 employees
• 110 countries
• 5 production locations
• Nasdac
Part 1:It starts with ambition
‘…There is only one
institution on earth
large enough, powerful
enough, pervasive
enough, influential
enough to really lead
humankind in a
different direction. And
that is the institution of
business and
industry…’
Paul Hawken
1 No Waste
2 Benign Emissions
3 Renewable Energy
4 Close the Loop
5 Resource-Efficient Transportation
6 Sensitize Stakeholders
7 Redesign Commerce
System Thinking in seven fronts
2014
1996
Our absolute GHG emissions reduced by 90% in
Scherpenzeel from 1996 to 2014.
Sustainability is financing itself
Part 2:It works throughout the value chain
Embedding sustainability in your product
Look at the
context!Glue free installation system,
Based on gekko-feet
Performance based economy
Providing an inspiring interior
design, a pleasant working
environnement and a better
indoor climate.
Since 1995
Carpet take-back program ReEntry
Since 1996
Evergreen Lease concept
Product-service systems
Part 3:It is about creating sustainable valuethrough cross-sectoral cooperation
Connect! Co-innovation thanks to cross-
sectoral cooperation
Open LoopsRe-designing the supply
chain with Net-Works™
• A circular inclusive
business model
• Net-Works enables
fishing communities in
developing countries to
sell waste nets back
into a global supply
chain
• www.net-works.com
The best are every where!
A way of working that connects ideas, people +
resources,
removing barriers to progress, and enabling to
achieving goals
together
Why do you start?Radical transparancy
Sustainable business is the only way to thrive
Economy is on the verge of a transformation
Circular and inclusive business models,
adressing Sustainable Development Goals
Open innovation and cross-sectoral cooperation
Speed of change is continuously increasing
The winners of the future have the ability to adapt to change!
Create internal and external engagement
Geanne van ArkelHead of Sustainable Developmentgeanne.van.arkel@interface.comwww.interface.comwww.net-works.com/nl@InterfaceInc
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FAIRPHONE
The workshop will provide a better
understanding of the financing needs for
organisations moving towards a circular
economy. An interactive case study will
highlight ways for companies and
financial institutions to work together to
develop new financial solutions.
FINANCE WORKSHOP
“Circular Support” ModelsManagement, Support
Retail
Assembly
Manufacturing
Extraction
repair/maintain
reuse/redistribute
refurbish
remanufacture
recycle
“Optimal Use”
Models
Product as Service
Lifetime Extension
Sharing Platforms
Takeback
“Circular
Design” Models
Product Design
Process Design
Circular Materials
“Value Recovery”
Models
Recapture / Recovery
Refurbish / Maintenance
Recycling
CIRCULAR BUSINESS
MODELS
incinerate/landfill
BUNDLES “OPTIMAL USE” MODEL: PRODUCT AS A SERVICE
Washing Machine as a Service
Bundles leases circularly designed Miele
washing machines with an attached device
that monitors how it is used
Customers are charged based on how
much they wash and are rewarded if they
use the machines optimally
The time that the machine is out of order or
not working properly is deducted,
incentivising Bundles to deliver the best
service possible
However financing is a challenge!
TRADITIONAL LINEAR MODEL
What are the benefits and challenges
of a linear model?
Miele produces and
sells each machine
for €1000
Households buy and
own machines to use
TRADITIONAL LINEAR MODEL
CHALLENGES● Machines expensive to own, so
cheaper machines are bought
● Assets are not optimised
● End-of-life is not considered
BENEFITS● Short payback period
● Ownership is with the end consumer
● No complicated financing needed
Miele produces and
sells each machine
for €1000
Households buy and
own machines to use
PRODUCT AS A SERVICE LEASE MODEL
Households lease
and pay per use of
machines
Bundles buys and
leases machines and
also repairs, maintains
Miele produces and
sells each machine
for €1000
What are the benefits and challenges
of an operating lease model?
PRODUCT AS A SERVICE LEASE MODEL
CHALLENGES● Ownership not with end consumer
● No end-of-life to retain residual value
● Hard to scale without working capital
● Longer payback period due to lease
BENEFITS● More expensive but more durable
machines become more accessible
● Assets are optimised over lifetime
● Transparency of cost of ownership
Households lease
and pay per use of
machines
Bundles buys and
leases machines and
also repairs, maintains
Miele produces and
sells each machine
for €1000
PRODUCT AS A SERVICE LEASE MODEL WITH AN INVESTOR
Households rent
from Bouwinvest and
pay per wash
Bouwinvest, a real
estate investor, owns
the washing machines
Miele produces and
sells each machine
for €1000
What are the benefits and challenges
of a financial lease model?
Bundles is a service
company to provide
washing as a service
BENEFITS● Same as in operating lease
● Financing from real-estate investor
enables scaling of model
● Access to existing customers
PRODUCT AS A SERVICE LEASE MODEL WITH AN INVESTOR
CHALLENGES● Ownership with real-estate investor
doesn’t ensure optimisation of assets
● No end-of-life to retain residual value
● Hard to scale without working capital
● Longer payback period due to lease
Households rent
from Bouwinvest and
pay per wash
Bouwinvest, a real
estate investor, owns
the washing machines
Miele produces and
sells each machine
for €1000
Bundles is a service
company to provide
washing as a service
OTHER FINANCIAL SOLUTIONS
What are some ideas for financial structures that:
● encourage greater ownership across the chain
● enable transparent communication and collaboration
between parties
● link multiple incentives between parties
● guarantee stability of all parties involved and guarantee
consistent long-term cash flow
● ensure end-of-life recovery of residual value
● provide insurance to isolate financial and credit risks
GOVERNANCE WORKSHOP
© Allen & Overy 2016
Governance in the Circular EconomyChristiaan de Brauw
24 May 2016
5858
Content
‒ Introduction: some legal aspects of new business models
‒ Introduction: governance parameters relevant for Circular Economy business
models
‒ Dutch stakeholder model
‒ Strategy of the company domain board
‒ ‘Short-termism’
Dutch Corporate Governance Code
5959
Introduction: some legal aspects of new business models
‒ Exclusive use or access to service Ownership of products
‒ Services Products, e.g.
‒ operational lease
‒ Phillips lighting: selling 20 years of light selling lightbulbs
‒ Ongoing relationship one-off
e.g. access to (leased) infrastructure, information sharing
‒ Contractually securing expected cash-flows becomes key
‒ But: some old school legal “title” issues remain, e.g.
‒ bankrupcy
‒ accession (‘natrekking’)
6060
Introduction: relevant governance parameters for new Circular Economy
business models
‒ New business models
sustainable, circular, cost efficiency elements
‒ To be reflected in the company’s strategy
and governance/organisation
‒ Long-term view
long term value creation (also in society)
e.g. from one-off sale to service relationship
time to earn back initial investments
‒ Cooperation of all stakeholders
not only shareholders and employees, but also suppliers, customers and finance providers
no predominant (short-term) shareholder results (resisting circular investments)
6161
Dutch stakeholder model offers right framework
‒ Board to act in interest of company
and its business:
‒ promote sustainable success of the
business
‒ i.e. long-term value creation for all
stakeholders
‒ Take into account the interests of all stakeholders, not only shareholders, e.g.:
‒ employees, suppliers, customers, finance providers and creditors, and relevant other interested parties, possibly society
at large
‒ Stakeholder dialogue (‘polderen’)
6262
Dutch company’s strategy domain board
‒ Management Board determines the strategy, under supervision of the Supervisory Board
‒ Shareholders have no right to prior consultation
‒ accountability to shareholders afterwards
‒ Possibility of protective measures to secure the Board’s long-term mission
‒ against hostile takeover and shareholder activism
‒ Mylan/Teva 2015
6363
Problem of ‘Short-termism’ in a listed environment
‒ Shareholder focus more and more on short term results
‒ Rapid change of shareholder base
‒ Increased hedge fund activity
wolf packs
‒ Reduced governance protection in many jurisdictions
‒ in shareholder model jurisdictions
‒ e.g. Delaware: annual elections of the full board ‘Permanent election season’
‒ often no effective protective measures
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Dutch Corporate Governance Code
‒ Focus on continuity company/business and long term value creation and careful weighing of all stakeholder’s interests
‒ including non-financial aspects, environment, social and personnel matters, respecting human rights and combattingcorruption and bribery
‒ Importance sustainability
‒ sustainability integral part of company strategy
‒ includes the chosen circular economy approach
‒ Culture/tone at the top
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Corporate Social Responsibility (CSR)
‒ Dutch Corporate Governance Code
‒ Revised Version DCGC
‒ CSR is an integral part of the daily operations of a company
‒ (Mandatory) reporting of CSR
‒ ‘sustainability report’
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Governance of large companies and Circular Economy
‒ Key structure governance remains
‒ One tier board:
‒ executive & non-executive directors
‒ Two tier board:
‒ Managing Board & Supervisory Board
‒ Employee consultation, e.g.:
‒ works council advice?
‒ co-determination: 1/3 of Supervisory Board members in large (structure) company regime
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Governance of circular start-ups/SME’s in their lifecycle
‒ Circular companies already have circular model in DNA
‒ Private company by founder and informal investors
‒ (Conditions for) subsidies by the government (EU plan)
‒ Next (venture) financing rounds
‒ Sale to a large company: Buying innovation?
‒ Initial public offering (IPO)?
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Some practical considerations to implement Circular Economy business
models
‒ Adjust company’s strategy to incorporate changed business model allow weighing all stakeholders interestsand effective cooperation
long-term approach also in shareholder jurisdictions (± convergence long term shareholder value with interest otherstakeholders)
‒ Reflect in programs, compliance and (reporting on) CSR / stakeholder dialogue
‒ Tone at the Top / Culture
‒ top to choose and support changed strategy
focus on sustainable/circular goals, cooperation all stakeholders
Internal organisation
– Chief Sustainability Officer: executive term (‘CSO’)
– Sustainability Governance (council/department/ committee)
– Adjust appraisal/compensation structure
– Bonus, performance criteria
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Questions?
“The wise man doesn’t give the right answers, he poses the right questions.”
- Claude Levi-Strauss
THANK YOU