Sustainability Symposium 2022 David McGinty

00:00:00:03 - 00:00:22:25
Mike Collignon: We're going to stick with the economic theme and delve deeper into the circular economy. It has an essential role to play on the road to decarbonization and the creation of inclusive, sustainable economies. Now the circular economy can accomplish quite a lot. It designs out waste and pollution. It keeps products and materials in use for as long as possible.

00:00:23:00 - 00:00:58:07
Mike Collignon: It regenerates natural systems and is necessary to tackle the root causes of the climate change, biodiversity loss and pollution crises. All of them. So here to tell us more about the circular economy is David McGinty. He is the global director of the fast growing platform for Accelerating the Circular Economy, located in The Hague. Previously, he has led public private partnerships for an international NGO, served as the head of a private sector development and impact investing advisory firm, and has taught graduate level courses in management and law.

00:00:58:10 - 00:01:02:24
Mike Collignon: David, welcome to the Sustainability Symposium.

00:01:02:26 - 00:01:28:20
David McGinty: Hey, thanks. Excellent, thanks. Well, thanks for having me, everybody. I think what I'll do is I'll go through a little bit and help level set about what, what we mean by the circular economy and then talk about where, where we're going and where we can go. Some bright spots that are out there, share a few specific ideas around the built environment and then a few kind of ways forward.

00:01:28:20 - 00:01:59:03
David McGinty: And I'm happy to have a more robust Q&A session. So some of my remarks are going to be high level, some will be esoteric and some will be very specific and tangible. So hopefully there'll be something in there for for everyone. So like Mike said, I'm David McGinty. I'm the global director of Pace, the platform for Accelerating the Circular Economy, which is a coalition of around 100 CEOs and ministers, mostly ministers of environment, who are championing work on the circular economy.

00:01:59:07 - 00:02:28:25
David McGinty: And, you know, so what what is that? I like simple explanations. I'm originally from Alabama, as you might be able to here. And so for me, straight forward, I think things are good. So, you know, one one definition I like is that a circular economy decouples or links economic activity from the consumption of finite materials. So we separate the idea that we have to consume more stuff in order to drive economic activity.

00:02:28:27 - 00:02:49:18
David McGinty: If you go a little deeper, I would say a circular economy is about business models that do three things business models that design out waste, that can keep materials in use at their highest value for as long as possible, and that return value back into the system. So return materials back into the system so that it can regenerate.

00:02:49:20 - 00:03:17:22
David McGinty: And so, you know, a circular economy is much more than recycling. And sometimes it gets kind of buckets into that area. Recycling can be a component. But to be honest it's actually the last thing that you want to think about. So we're usually talking about things about how do we have an economy that is regenerative by design, that explores alternative materials, design innovations, durability, longevity, optimal reuse, refurbishment, remanufacturing and the like.

00:03:17:24 - 00:03:45:14
David McGinty: Then we talk about recycling of products and materials. So why does it matter? Why is it urgent? There are a lot of reasons, but I'll share a few. More than 100 billion tons of resources into the economy every year. Everything from metals, minerals and fossil fuels to organic materials like plants and animals. And of those resources, those that resource use as tripled since 1970 and is set to double again by 2050.

00:03:45:16 - 00:04:10:11
David McGinty: So again, 100 billion tons of resources into the economy every year. It's tripled since 1970. And it's going to double again by 2050. And currently we're using the equivalent of what would be about one and a half Earths if we scaled up that that consumption pattern. And we're using Earth after Earth with only 8.6% of that material that we use being cycled back into new products.

00:04:10:14 - 00:04:33:13
David McGinty: So 100 billion coming in and 8.6 coming back in. And along the way, what that's doing is the consumption and production of our products is contributing about 45% of greenhouse gas emissions. That's just one example of the potential of the current impacts. But what's the upside of shifting that production and consumption when we talk about the circular economy?

00:04:33:16 - 00:05:00:18
David McGinty: Accenture's put the target at a $4.5 trillion economic opportunity by avoiding waste and making business models more businesses, more resource efficient. So the new models that focus on reuse, repair, remanufacturing and sharing models offer a lot of that value. And if you just take, for example, using less plastic waste in the ocean would benefit industries like fishing and tourism.

00:05:00:22 - 00:05:29:14
David McGinty: Whereas plastic pollution currently is an economic cost of $13 billion, so we want to shift cost into increased potential benefits. The circular economy also offers economic or employment opportunities. So transitioning to this green economy, these types of approaches that we we promote, look to create about 24 million global jobs by 2032 and offset. That includes offsetting potential job losses.

00:05:29:16 - 00:05:54:03
David McGinty: And then finally by doubling global circularity from that 8.6 to 17.4% in the next ten years, we'll be able to ensure that the world is on track to meet the Paris Agreement. Without addressing materials, we won't be able to do that. So how did we get here? So maybe let's just take a step back. This is the part it's a little bit simple esoteric, but like kind of basic economics here.

00:05:54:04 - 00:06:17:22
David McGinty: And I think Covid 19 really emphasized this, this issue for us that for the first time in history or say, for a unique time in history, we're facing what I would call a single, tightly coupled human socio ecological system where we're at a global scale, we're interconnected and interdependent. And I think maybe we just haven't realized that so much.

00:06:17:23 - 00:06:48:02
David McGinty: We're connected individually. Our movements connected, our food, our goods, our services, our information are all deeply connected and interdependent and our individual and collective. And then it becomes our individual and collective responsibility to address issues due to that interconnectivity. The Club of Rome nicely summarized this problem by arguing that we're moving from what used to be so think, thousands of years ago, an empty world dominated by nature to a full world dominated by humans.

00:06:48:03 - 00:07:15:02
David McGinty: So in the empty world, labor and infrastructure were the limiting factors of human well-being. In the full world where we're at now, the limiting factors of human well-being are the natural resources in environmental sinks that we tap into. So how do we start to address where we're at on the climate, on inequity, on just kind of the broad set of socioeconomic and environmental imbalances that we're facing.

00:07:15:04 - 00:07:44:07
David McGinty: One is the human capital. For example, healthy citizens is in many cases undervalued. And natural capital, such as health ecosystems, is often not valued at all. And given that we have a market system, it makes sense that with the market guiding our production and consumption and price signals being what they are, that we shouldn't be surprised in the existing, intertwined kind of mess that we're in because it's the logical consequence of the market.

00:07:44:08 - 00:08:09:00
David McGinty: Sidney signals to all the players in a way that proves that the markets work. So an economic theory, you would just talk about externalities that costs that do exist, those human costs, those natural costs that do exist. And we perhaps deny and we don't account for when we produce and consume something that they're very real cost. And somewhere, somehow they have to be paid for.

00:08:09:02 - 00:08:35:01
David McGinty: And a lot of times we're saying that those are going to be paid for by the next generation. So the core of any partnership addressing these issues, sustainable consumption of production or the circular economy has to embrace a new perspective, a new way to look at that tangle of interdependency. And so I would say there are two principles that what generally undergirds most of the relationships and partnerships that we work on.

00:08:35:06 - 00:08:59:23
David McGinty: First is the principle that sustainable development, with a focus on urgent management of global warming and species loss, has to be seen as a profitable investment into long term, successful innovations not seen as a cost. And I think the previous speaker, we're speaking to this, that if you're thinking about laws and regulations as your reason to work on on this, on these topics, then you've missed the boat here.

00:08:59:24 - 00:09:23:01
David McGinty: This has actually got to be seen as an innovation opportunity, a first to market opportunity instead of a cost. And the second sustainable development based on smart resource management is the new investment and innovation paradigm that will determine business and country's competitiveness. So where are we on the journey? I think there are a lot of positive development, so I'm not going to be comprehensive here at all.

00:09:23:01 - 00:09:45:12
David McGinty: And I think Pace's existence. So the organization that I runs, existence is one of those examples. The simple fact that we have a coalition of 100 public and private leaders from around the world working on circularity is an example in and of itself, of the momentum. But a few kind of broader examples are in this last climate cop in November.

00:09:45:14 - 00:10:26:10
David McGinty: Over 70 countries out of the 120 the updated their NDC, so their nationally determined contributions under the Paris Agreement. Over 70 of them incorporated circularity and material use and efficiency in their NDCs. This was a huge step over six time or five time increase from the previous round in February. So just two months ago at the UN Environment Program General Assembly, they approved the member states that are part of the UN Environment program, approved the move to move into negotiations to develop a global treaty on plastics and focusing on single use plastics.

00:10:26:10 - 00:10:56:05
David McGinty: And then we're seeing alliances similar to Pace and in different formats forming in different regions. So in Latin America, for example, there's a coalition of governments working on circular economy in Africa is well hosted by the African Development Bank and their longer term existing coalitions and alliances in Southeast Asia and East Asia. So what's happening in in your industry and in the built environment and construction, you know, across commercial housing, infrastructure, etc.?

00:10:56:06 - 00:11:27:29
David McGinty: We could kind of go into those different, different areas and look at it differently. But I'll just start with some general points. And first here I'll be clear. Like I used to tell the graduate students what I thought, I reserve the right to not know everything and to make mistakes. So I hope we keep the Q&A friendly when we get into your industry details, because it's not my specific area of expertise, but what I often hear in our work around buildings and housing infrastructure is really in the context of energy efficiency.

00:11:28:02 - 00:11:56:15
David McGinty: Given that energy efficiency counts for or energy related CO2 emissions from the built environment contribute about 40% of the total. So embodied carbon, though, wasn't really on the agenda until about five years ago. But I think we're at a real moment of opportunity where where it's really starting to become a closer to mainstream topic. So but what is projected by 2050?

00:11:56:16 - 00:12:21:23
David McGinty: I gave some general statistics on, on our resource use, but by 2050, global demand for industrial materials such as still cement and aluminum are projected to increase by a factor of 2 to 4 by 2050. So even if you take the materials that are the kind of core materials of your industry, we're still looking at a doubling to quadrupling of of that material use.

00:12:21:25 - 00:12:53:24
David McGinty: And in my, my experience that usually the approach taken by a lot of what I would call impact driven peace, meaning you've got a very specific outcome target like emissions reduction or avoidance is to target the bad actor. So we look at we look at the problem as a steel problem or a cement problem. But construction and infrastructure, I think, really present the world with a unique set of issues, especially given that it's a local industry.

00:12:53:27 - 00:13:29:06
David McGinty: So the building regulations, these are things you know better than I do. But for those among us who might not be as familiar, building regulations tend to be set at a national level. But ambitions and process, for example, like permitting, are set at the local level. So we can't approach circularity or systems type changes in the sector the same way we do in others, like in textiles, where we can engage primarily at a national level and we can engage maybe industry aggregators, because a lot of the throughput of the material comes through a smaller group of partners there.

00:13:29:06 - 00:14:02:19
David McGinty: I use like plastics as the the opposite example of the built environment where you can get together in a room, you know, companies that represent 20, 30% of the actual material production in the world. And so you can really start to address issues if you can get that group to work together. The built environment is just a really different situation, which, you know, so let me just say a few things that I think we can do that can can make sure that when we look at circular economy, it's more of a fit for purpose approach for the built environment.

00:14:02:21 - 00:14:38:02
David McGinty: One is that every city and region, from my viewpoint, needs a life cycle or materials roadmap there. You know, cities tend to have a pathway to its operating emissions, but material use continues to go up and hasn't reduced much or not at all when it comes to submit and glass. But their technology is available and they're not being used because of cost and incentives, etc. so I think this type of road mapping and and lifecycle approach can really help at the city level.

00:14:38:03 - 00:15:06:17
David McGinty: And Amsterdam is a great example. One of our partners, Circle Economy here has helped them with something they call their city scan tool. And they come in and they do an assessment of the material flow happening within a specific city or region. And they did that for Amsterdam. And of course, they find out that organics of food, food waste value chains and construction are the two primary areas where there's an opportunity for action and also massive impact in the city.

00:15:06:17 - 00:15:28:24
David McGinty: And when they their findings included that if they took action in those two areas, just sorry, just in the in the construction sector, that they could create about $85 million of value per year by applying circular business models and create up to 700 additional jobs in the sector. And so I would refer you to their report again, circle economies.

00:15:28:26 - 00:15:58:22
David McGinty: The report I think is called Circular Amsterdam. The second thing that I would point you towards is looking at new financing and collaboration models built around local networks. So one example here in Europe is a new initiative called Built by Nature that's been sponsored by a philanthropy called Loudest Foundation. And they're looking to promote the expansion of mass timber buildings, not circular in and of itself, even though it could be part of a circular solution.

00:15:58:22 - 00:16:28:06
David McGinty: But the the interesting thing about is instead of starting at these kind of national level coalitions, they're starting at a city level with local industry partners and regional industry partners, instead of going to, say, a global engineering firm or an advisory firm, they're going really local, establishing local connections, local kind of hub type approach, similar to like World Resources Institute and other partners.

00:16:28:08 - 00:16:53:23
David McGinty: Cities are yeah, buildings accelerator. It's what it's called. So I think that's a really interesting model to think about your industry or the the kind of product line that you might be in. And is there an approach that you could copy there? And what they're doing is setting up a what might have a centralized financing mechanism, but then having localized blended financing models to help companies step in and test out these different approaches.

00:16:53:25 - 00:17:21:07
David McGinty: The third is is easy to access tools, obviously. So I point you to one example, which is Arab, the engineering firm, as a tool called the Circular Buildings Toolkit, which they developed with a group of their partners. It's another great resource, and it's a kind of consistently updated platform that includes case studies and tools to help support you and your team in applying circularity to your projects.

00:17:21:09 - 00:17:55:19
David McGinty: The fourth, and I'll just kind of go to two more points. The fourth is looking at different approaches by the market. So for example, a simple, significantly underexplored even in looking at circularity in the built environment, even though that's an emerging topic, but definitely still underexplored is looking at local construction materials. So rammed earth and aerated concrete, concrete straw as inserts and prefab panels, cross laminated timber across laminated bamboo, etc..

00:17:55:19 - 00:18:22:05
David McGinty: And looking at what that you know, what does a resource efficiency in the built environment look like in a developed a developing economy, or a pre emerging or low growth middle income country is really different than, for example, a lot of the examples I'm sharing, which are built in Europe or or North America. And then my final point is there's a lot of research and policy questions that that need to be addressed.

00:18:22:05 - 00:18:45:16
David McGinty: So taillight a few of those those points. One is understanding and mapping out these decarbonization pathways for industries and cities and regions. So if I'm saying cities need these roadmaps, that means they also need to understand what those potential pathways could be for different types of cities or regions. The second is linking together three topics that are often addressed separately.

00:18:45:16 - 00:19:10:09
David McGinty: One is buildings, the second material flows in, the third is waste. Those are often treated as three separate topics, even in communities that we work with. So the whole visual from forest all the way to waste use could be a very compelling piece of research that could help the industry move forward. The next is how do we create markets for circularity and building materials.

00:19:10:12 - 00:19:34:22
David McGinty: So right, right now there's a lot of global momentum and narrative about translating these concepts for low. Like I was saying, low and middle income countries as well as high growth countries. And part of that's going to have to be about what's that kind of market opportunity really look like. And then a final one is just the application in low income and affordable housing.

00:19:34:27 - 00:19:55:26
David McGinty: I think that's where there's a huge potential one, because you can use government procurement or blended finance. Instruments that exist are proven to test out these models. And oftentimes a lot of the solutions are talking about do result in kind of lower cost in materials or lower material needs.

00:19:55:28 - 00:20:13:03
David McGinty: And then so where are we going? Let me just highlight a few things and then we'll open it up. So where are we going. There are a few things that we really want to do I it's pretty exciting. I've been a little bit sick. So I may not sound that that excited right now, but we're just at the beginning.

00:20:13:03 - 00:20:36:01
David McGinty: We're a long way in, but it's still just the beginning of the level of action that needs to happen. But it's happening. And as pace last year, our board, you know, set out a mission to help double global circularity in the next ten years in line with the Paris Agreement that, okay, doubling sounds fine into years of anything but why?

00:20:36:02 - 00:20:55:24
David McGinty: And if I talk about global circularity being 8.6% and going to 17, why is that? Why is that interesting? Well, it's because to get there, there's a lot of work to be done because actually the trend is going in the wrong direction. So it's not just about doubling, it's about reversing a trend and then doubling, which is which is really hard.

00:20:55:24 - 00:21:16:25
David McGinty: So what are we doing? First we need to measure progress, which means when we talk about circularity, if you really want to get down to what we're talking about, you talk about metrics. And there's a lot of metrics out there that are being developed where people are trying to figure this out, both on the industry side, government side, as well as in between.

00:21:16:27 - 00:21:46:14
David McGinty: So you can look at has a set of metrics called the circular transition indicators. The Arthur Foundation has what they call circular six indicators. ISO is coming out with new standards on circular metrics. Also, circularity or material flow is being incorporated into a lot of the current thinking on investor facing ESG metrics, which is something that certainly this industry would need to to take care of or take a point of.

00:21:46:14 - 00:22:09:28
David McGinty: And then countries and regions, you know, certainly here in Europe, the European Union's Green Deal has a lot of content and metrics around circularity, which include the built environment. So that measurement piece and figuring that out and making sure we're measuring what matters is critical. The second is just translating this work into action. There's nothing like just doing something to to make it all makes sense.

00:22:09:29 - 00:22:33:10
David McGinty: And within our partners, the way that we did that was to bring people together to agree by industry on the top ten priorities, where we need leaders to step in and we need demonstration projects in place, or either examples where there's demonstration that needs to scale. So there you can refer to our action agenda. You go to our website Pace Circular and see that list of of examples there.

00:22:33:10 - 00:23:01:05
David McGinty: And in those documents you'll find over 80 examples of circular economy best practices applied to different industries. And then next is partnerships. And so that's why we're here today. There's no circular approach that can happen by one partner, whether that's in your supply chain or outside of it. And so thanks for having me. I look forward to the discussion.

00:23:01:07 - 00:23:34:16
Sara Gutterman: Thank you so much, David. I really appreciate you being here. And you just had some incredibly interesting things to say. I do have a list of questions, and then I'll open it up to Mike for some audience questions as well. As you mentioned in the beginning, in contrast to our current take in waste model, a circular economy is designed to decouple growth from the consumption of finite resources by sharing, leasing, reusing, repairing, refurbishing and recycling existing materials, natural resources, products and energy as long as possible.

00:23:34:22 - 00:23:44:19
Sara Gutterman: Can you give us some examples of industries that are doing a very good job of implementing circular economy fundamentals?

00:23:44:22 - 00:24:08:12
David McGinty: Yeah, maybe. Let me give a way to to to frame the thinking about which industries are leading the way. So one is, you know, one way to think about circular economy. Do you remember the old three R's reduce, reuse and recycle and circular economy. A lot of times we talk about the nine Rs. So you can Google just the nine Rs of the circular economy.

00:24:08:12 - 00:24:43:29
David McGinty: And the first is refused. The next is rethink reduce reuse repair refurbish remanufactured, repurpose then recycle, then recover. And those have a increasing value that I started with. The more circular things the reviews rethink reduce and then you get to the middle of the reuse repair, refurbished manufacture then to the recycling. So I would what I would say is when thinking about who's leading the way in which industries are doing well, think about who's doing you know what at different levels.

00:24:43:29 - 00:25:13:00
David McGinty: And I'll say there's no clear industry that's just got it all figured out. So we have classic examples like industrial symbiosis. So, you know, recycling waste or water from production back into production facilities or to another to another partner. You have, you know, food and beverage companies using food waste from production to produce animal feed, things like that.

00:25:13:01 - 00:25:41:26
David McGinty: There are lots of those examples. There's lots of momentum around plastic packaging, but less discussion around durable plastics, which is actually where a lot of the emissions comes from. There's a lot of action in textiles, but not at scale. And recycling is certainly continues to be a challenge there. They're bright spots, but not at scale. And the energy sector and the built environment in transport.

00:25:41:26 - 00:25:57:08
David McGinty: So I guess all that's to say is there are a lot of things happening across the board. I would say no industry could really claim that they're the, the, the science that everyone would should follow at this time.

00:25:57:10 - 00:26:23:17
Sara Gutterman: Thanks, David. I really like the nine hours, and I love the fact that the first one is refuse. And that brings me to my next question, which is about the the market driven forces. How much is the circular economy and circularity as a concept, being driven by the market and primarily millennials and older Gen Zs who we know are very mission driven and values based.

00:26:23:18 - 00:26:49:16
Sara Gutterman: They understand the sharing economy. You know, many of them have kind of grown up on ride sharing and and very localized version of that circular economy versus driven by companies that are setting a strategy, a circular strategy for cost savings and resource efficiency and streamlining supply chains, and in certain cases, perhaps, policy and requirements.

00:26:49:18 - 00:27:19:26
David McGinty: Yeah, different companies come to this agenda for different reasons, you know, in the first instance. Right. So, you know, even if I look at the origins of pace, those, those kind of early days, some companies are looking at what do I do with SDG 12, which is responsible consumption and production. Do I have some voluntary or involuntary reporting requirement or thing that I should be considering some qualitative concept I should be considering.

00:27:19:28 - 00:27:42:06
David McGinty: Some come to it as a as an innovation opportunity. So what's the is there a new market here? Is there a way to extend my relationship with a customer by extending the life of my product? And it's, you know, so that's an interesting thing about sharing models or leasing models. Can I go from a one off transaction to having a 20 year relationship with you?

00:27:42:08 - 00:28:00:20
David McGinty: And a good example there is the shift to light as a service. It's so you light bulbs or I can sell you light in your office for the next 20 years. And regardless of the light bulb, because you get you get the service and then some are actually coming for that material scarcity or risk or supply chain risk.

00:28:00:21 - 00:28:26:00
David McGinty: I think what's interesting right now is those things are kind of converging, and we're finding more partners coming to the agenda for all of those reasons. And I'll say there's just kind of finished with this. There is one reason why we certainly whether whether it's the reason why partners come to the agenda, it certainly has to be considered in their circular economy action, which is emissions.

00:28:26:02 - 00:28:55:19
David McGinty: And so, you know, knowing that these approaches will either enable or not go against their commitments on climate has been really important. And so we we engage in discussions around climate and decarbonization more than any other impact area related to this agenda. Three, four years ago, that wasn't even kind of the the main topic or not even probably a top five topic in circular economy.

00:28:55:22 - 00:29:23:27
Sara Gutterman: Interesting. You mentioned light as a service. I think we're starting to see the very early phases of that in our industry. So things like appliances as a service or even a house as a service. When you look at some of the models that really innovative prefab manufactured home manufacturers like devil are implementing where they're really looking at, you know, rather than selling you a home per se, they're selling you the service of a home.

00:29:23:27 - 00:29:54:25
Sara Gutterman: Over time, I think we saw that concept really open up in our sector with solar, with power purchase agreements, so that instead of homeowners or building owners or businesses having to purchase entire solar systems, they could invest basically in solar leases where the solar companies retained ownership and of the system, the components themselves, and then was in charge of operations and maintenance.

00:29:54:27 - 00:30:14:06
Sara Gutterman: And so it was just a different model. So I think we're starting to see some of that shift in our industry with companies that are indeed looking at that as an innovative approach for a new type of business model and a new type of ongoing revenue stream.

00:30:14:08 - 00:30:35:06
Sara Gutterman: Oh, sorry. Did you want to respond? Okay, so let me shift gears. I'm interested how how have world events like war and the pandemic impacted the development and the advancement of the circular economy? Have you seen any effect at all?

00:30:35:08 - 00:30:57:23
David McGinty: Well, the war is almost like two big of a topic to touch, so I'll not touch it. But the pandemic, we've had a little bit more time to to to see it through. So first I mean like I kind of I mentioned briefly in my talking points, I the pandemic, it didn't bring out new issues in the circular economy.

00:30:57:24 - 00:31:35:09
David McGinty: What it did is I think it put a lot of those existing issues in sharp relief, or it showed how they could be exacerbated. So our interdependency was already there. Our dependency on on having rare earth metals sourced from specific places all the time, and supply chains fitting in very certain ways the the limitations of just in time manufacturing and those sorts of issues just exposed the vulnerability of the of the supply chains that we had and expose the interdependence on our human health.

00:31:35:11 - 00:31:58:19
David McGinty: And so to that extent, I wouldn't say that that the pandemic was something big. And a lot of the short term shifts that we saw in consumption or consumer behavior, we don't know yet if those are long term. So, you know, we certainly saw a lot of photos of mass and saw a lot of the actual ones, but, you know, mask floating in the ocean.

00:31:58:19 - 00:32:22:22
David McGinty: So we had this increase in certain types of single use materials that, you know, once you put health as as a criteria, then, you know, people are at this point can can be okay with, with single use items. And we also saw shifts in our use of resources. So office space I'm sitting in the the office right now as a simple example.

00:32:22:24 - 00:32:49:10
David McGinty: We don't know if that's longer term you know. So maybe I'll just call back to something I wrote. And then we can can think about how that comes out and about this time. So I think it was May of 2019, I wrote an article directed towards the EU who was considering the new stimulus package under the Green Deal and saying, you know, how could they think about circular economy in the light of the stimulus package investments?

00:32:49:10 - 00:33:22:17
David McGinty: And one was to use the green stimulus packages to ensure progress on the circular economy was not reversed by the Covid 19 crisis. The second was promoting more resilient safeguards against resource shortages and supply chain risk. And then the third was promoting European kind of global leadership on the circular economy through more cross-sector cooperation in general. Some that those are the high kind of way to say it.

00:33:22:17 - 00:33:50:13
David McGinty: You can see that read article in your active. But in general, I would say we had the positive influence meaning like that. The issues were brought into sharp relief by Covid. That has continued to be in sharp relief today. Right? So we're still three years on. The pandemic has not gone away, but we've moved our, you know, companies have started to figure out their supply chains and other things.

00:33:50:13 - 00:34:09:04
David McGinty: But we were able to see some, you know, able to continue the momentum of the discussions we were having as a result of the pandemic. And I think that's helped us in a way, not not to say that it made a good of the pandemic.

00:34:09:06 - 00:34:20:18
Sara Gutterman: Thanks, David. Let's talk about innovation and technology advancements. What is circularity innovation look like? And talk about the evolution of circular products and solutions.

00:34:20:20 - 00:34:45:02
David McGinty: Yeah, maybe I'll say one way to think about it is everything we're talking about is innovation. If you use the most generic definition of innovation being something that's new to you, then if you don't have a circular business, then it's all innovation, right? So, and like I was saying, a lot of people coming to this work are talking about in and of the innovative business models.

00:34:45:04 - 00:35:09:19
David McGinty: And so introducing those into new markets or new industries is important. Like you're talking about sharing. Well, sharing of office furniture is not new. Sharing of lighting is sharing of capital assets is, you know, you know. So that's a business model applied to a new product or a new product class. So I'd say any kind of innovation approach applies.

00:35:09:19 - 00:35:38:23
David McGinty: But maybe I'll just emphasize the digital side of innovation. So one sensors for example, you're looking at sensing parameters, looking at identification of objects becoming really important. You know you see that in recycling. You see these scanners going through and identifying the different composite, the materials that are in composite products. And so the use of sensors is a big discussion looking at big data.

00:35:38:24 - 00:36:14:07
David McGinty: So big data driven sustainability insights how to enhance, how to understand and enhance product lifecycles requires certainly big data and integration of diverse data across different types of supply chains, across different kinds of of data repositories and users is important. We've seen the blockchain being used a lot around transparency and communication, supply chain performance, like group decision making and creating incentive mechanisms.

00:36:14:07 - 00:36:22:22
David McGinty: So where you have distributed supply chains, especially distributed use, so can you use the blockchain to help.

00:36:22:24 - 00:36:51:27
David McGinty: Globally located users determine what to do with their kind of end of life products and where to send them, and then applications and things like AI and similar in decision support systems and information mining and intelligence, etc.. So I think really across the board, because it's an innovative approach, you can look at all the emerging technologies and there are ways that they're being applied.

00:36:52:00 - 00:36:54:07
David McGinty: The board.

00:36:54:10 - 00:37:17:13
Sara Gutterman: Thanks, David. Yeah, we're keeping our eye on things like artificial intelligence, AI and blockchain as well, particularly in the building sector, to facilitate circulate the, you know, circularity, resource efficiency and just streamlining, you know, construction projects and job site functions. So that's pretty interesting.

00:37:17:15 - 00:37:36:25
David McGinty: I can give just a very a just a basic visual, you know, in the US on the back of food products, you have food labels, right? It tells you the contents of the product. So how do you have that for a building? So imagine if you could just visibly visualize that label on the side of your house.

00:37:36:28 - 00:38:02:03
David McGinty: And it would tell you not only it not only have to say how much copper is in the house, it have to say copper the allied with this and there's this much and that's there, and it's located in that wall. But the cop and it's got this red wire, right. So that when you go to disassemble the house, you can actually extract out and mine those different materials.

00:38:02:03 - 00:38:20:25
David McGinty: Well that's interesting. If you could slap it on one house, now you need to slap the label on every house and you need to put it on maybe infrastructure that exists, like the house that was built a hundred years ago. And then you need to give a city insight into that data so that they know that infrastructure and you need businesses to know what the throughput is going to be of that.

00:38:20:25 - 00:38:36:26
David McGinty: So that's really what we're kind of talking about. Is that a simple concept of knowing what's in your in a building is easy when you think of the new things, really hard when you think of all the composites and you think of of things that might exist.

00:38:36:28 - 00:39:02:28
Sara Gutterman: It's a it's a beautiful vision. And it is in such a nascent phase in the building industry, you know, we are starting to see things like environmental product declarations or PDS for products in certain categories. We're about to launch a 220 home community demonstration project with a leading kind of high performance, healthy home builder, community builder called thrive and the Front Range in Colorado up in Fort Collins.

00:39:02:28 - 00:39:24:26
Sara Gutterman: And one of our goals with that is to have that kind of reporting. Unfortunately, we're going to fall short because it just doesn't exist, right? Like there's no ePDM in the door category, right? There's just no companies that have, you know, in that category yet. Now, I know there are some that are working on it, and we're doing everything we can to help expedite that.

00:39:24:26 - 00:39:50:06
Sara Gutterman: But truly, I think your vision of, you know, being able to see all the inputs of a house and understand, you know, what the what the inputs are, what the circularity elements are, what the health impacts are, what the energy and water use and conservation components of that house is. I mean, that's that's really that's advanced thinking in the sector.

00:39:50:06 - 00:40:06:03
Sara Gutterman: But, you know, I'm hoping that due to your efforts and Pace's efforts and other folks in the circular circular economy sector will translate over into into our industry. I have just a couple more questions. Oh, I'm.

00:40:06:03 - 00:40:36:25
David McGinty: Sorry that if you want to know how that's happening today, then again, Google's wonderful or your preferred search engine. Just look at Europe product passports, okay. And you'll see the regulations that are coming out now. And you'll also see work on batteries, which. So I think batteries for EVs. One of our partners called the Global Battery Alliance has been working on this is what what's an appropriate kind of labeling system for batteries so that you can disassemble.

00:40:36:28 - 00:40:52:18
David McGinty: Again these are small examples, but they are that is a complex supply chain that does have relevant say to the energy systems going into into buildings and could be a way to to stimulate the discussion.

00:40:52:21 - 00:41:32:05
Sara Gutterman: Great. Thank you. I will definitely Google that. And I encourage everyone else to Google Europe product passports. Clearly, as you said, Europe is so far ahead of us in terms of this, but hopefully we can catch up quickly here in the US. Can you talk about obstacles? You know, what are the obstacles involved in developing circular economies? You talked about how they're very localized in some ways, but yet we need policy at a national level, you know, can you give some examples of countries, companies or sectors that have overcome those obstacles that we can look at as case studies?

00:41:32:08 - 00:42:19:12
David McGinty: Yeah, I mean, there's there's on one hand there's there's a plethora of examples. What I wanted you to this action agenda that you can see on our website. What we did there was try to lay out by industry what the key barriers are. So getting agreement on those cross-cutting issues like external externalities not being accounted for, which I referenced earlier, looking at lack of incentives to design for extended useful life, limited access to circular design, know how those sorts of kind of cross-cutting issues, and then industry specific areas, like in some like a textile, for example, there's a high sensitivity to higher prices for fibers.

00:42:19:15 - 00:42:50:22
David McGinty: Great. You might say that in construction as well, there's a high sensitivity to certain price fluctuations but not others. And then we lay out the kind of specific actions to be taken by industry. What I would say is that to to your point of where there are, I don't know if I can give a perfect example from the US, but where there are really good examples are, you know, I mentioned this nine hours before.

00:42:50:24 - 00:43:12:29
David McGinty: Another way that gets visualized sometimes Ellen MacArthur Foundation does is they call it the butterfly diagram. It's got two circles. One is that got a biosphere. The other is the technical sphere. So hard materials and products. And how do those loop back and then middle nine, the middle of those nine hours are in the middle of the reuse, remanufacturing, etc..

00:43:13:03 - 00:43:37:06
David McGinty: That's where most of the barriers and obstacles are being addressed right now on those monastery products like plastics. There's a lot being addressed in the recycling area looking at infrastructure. So different types of products and materials. So the companies are working there and then they're working on the the recycling part. There's not a lot of of happening in the middle area.

00:43:37:06 - 00:43:55:02
David McGinty: So what I would say is depending on the, the industry, the focus has really been on finding solutions in different parts, as opposed to looking at kind of the holistic system which is which is where our role comes in.

00:43:55:04 - 00:44:16:11
Sara Gutterman: Thanks, David. I have one more question, and then I'm going to kick it back over to Mike, because I know he has a couple of questions from the audience here in the US. You know, we see some actions being taken on a state level, for example, in California, to ban various different types of single, well, single use plastics in general.

00:44:16:13 - 00:44:49:17
Sara Gutterman: And we're starting to see some of that, you know, on the coasts more than anywhere else, perhaps where I am in Colorado as well. What do you see with respect to policy and regulations here in the US that are impactful for circularity? Do you think circularity as a concept is even really on the minds of policymakers at this point, or do you feel like there's a lot of kind of education that still needs to be affected here?

00:44:49:20 - 00:45:13:15
David McGinty: Yeah. Well, I mean, I think the US, what you're identifying is not necessarily strange or unique of of various different types of things that need to be addressed in the US, but because of the political structure. And so it might seem like things can progress in European countries differently, but it's because they don't have the federal structure in the government.

00:45:13:15 - 00:45:35:16
David McGinty: And so decision making there is a lot of different types of decisions that can be made at a national level there. And the countries that are exceptions to that have stronger leadership at the regional level, you know. So I would more think of the US in the context of, say, Canada, where you've got a lot more provincial level decision making than national decision making.

00:45:35:16 - 00:46:01:17
David McGinty: And so circularity, I think, is going to be important to be a state agenda. And there are states and I would say New York, by the way, is a is a leading state on the topic. Pennsylvania and Philadelphia are looking at it more. There's been a lot of discussions around the Midwest. And even with the US Chamber of Commerce Foundation looking at some initiatives around circularity in the Midwest.

00:46:01:20 - 00:46:21:25
David McGinty: So I think that's it. I think that's going to be the key for the US is figuring out what that state led agenda is. And groups at the federal government side, I can say we've had not just robust discussions we have, but we've also seen very tangible action, for example, in the EPA looking at government procurement of electronics.

00:46:21:28 - 00:46:59:11
David McGinty: That's something that's within their remit, and it's something where they've got a robust system and approach that working on. It can be improved for this last campaign. And in the current administration, there's discussions, you know, even to the white House on this topic, and it's becoming a little bit more of a part of the conversation. And to kind of 3ds the development diplomacy and then, well, not to feel it's not the third thing, but and then a final point, you know, you're definitely seeing, say, the US government step up its work in plastics at the federal level.

00:46:59:11 - 00:47:16:18
David McGinty: So even with USA, the aid agency for the US government looking at programing overseas in plastic waste. So you know, I wouldn't I wouldn't ding the US for being too far behind. But I would say there's a lot of need for state level mobilization.

00:47:16:20 - 00:47:22:29
Sara Gutterman: Thanks so much David and Mike. I'm going to hand it off to you to ask some audience questions.

00:47:23:02 - 00:47:46:17
Mike Collignon: Yeah, we've got a couple, David, if you don't mind. William sent in two questions. First is do you know of anyone, anyone being an individual or entity who is integrating both decarbonization and adaptation into their building decisions?

00:47:46:19 - 00:47:52:26
David McGinty: Decarbonization and adaptation into their building decisions?

00:47:52:29 - 00:48:08:18
David McGinty: I don't I think this is where I call on my my previous ability to say, I don't know. Yeah. Not that I can think of. I would probably have to be given a more specific example, but nothing comes immediately to mind. Sorry about that.

00:48:08:21 - 00:48:27:27
Mike Collignon: It's okay, it's okay. Yeah. The other question he had was service business models. He feels they're a start, but he's wondering if these actually accelerate wealth retention by the asset owners versus the users or the tenants.

00:48:28:00 - 00:48:39:24
David McGinty: Well, I mean, depends on how you value the asset and what the, you know, accounting. It can be quite different.

00:48:39:26 - 00:49:06:20
David McGinty: I there's possibilities to for it to. Yeah. So I think it depends on the, the product class. The question is is what the goal is trying to do. So if I think of my, you know, most of the things that we're talking about here, my, my washing machine or my car, those are not necessarily assets that that increase in value over time, but it doesn't mean that the actual component materials don't increase.

00:49:06:20 - 00:49:38:03
David McGinty: And as an individual user, I don't have an ability to monetize that material. So the question is, is can I receive the same service and perhaps get a little bit lower cost over, over the lifespan of the product or over its useful life, and someone actually then extract the value out of those materials. So I think it's an economic modeling and costing for the customer themselves to to figure out that price parity.

00:49:38:03 - 00:50:02:04
David McGinty: So there are examples of course, where you could see that someone, you know, someone retains an asset and charges an exorbitant a price. But I wouldn't presume that every shared model is more expensive than a non shared model. And I'll give a simple example I don't own a car. We live in the Netherlands. It's quite a different environment when it comes to infrastructure and other things.

00:50:02:04 - 00:50:30:26
David McGinty: And but we do use two different shared share car approaches. But if you look at the per use for the shared car, it looks crazy sometimes. I went to the store and it cost. I used to share a car and it cost $20 or $25 to go to the store and back. Well, that looks expensive if you if you think about needing a car every single day, all day, and you actually fully utilize it, it's actually really inexpensive.

00:50:30:29 - 00:50:55:11
David McGinty: When I look at our overall use of a vehicle for the year. So in our situation, would that current pricing, it really does make sense. And I think that's really where when you kind of extrapolate these business models out to scale, the markets, I think will start to correct where they're abnormalities of, of kind of profit being stuck in the wrong place.

00:50:55:13 - 00:51:05:12
Mike Collignon: And do you find that that affects behavior then to that, that per use cost there that you're talking about with the shared car.

00:51:05:14 - 00:51:30:02
David McGinty: The impact my personal behavior. Yeah I can but not really. Not because I you know, I, I sit down and I can do the calculations. So I think that's up to the marketing and the customer and the and the company to do that as well. You know, other examples would be like bulk purchasing instead of by individual products.

00:51:30:02 - 00:51:56:24
David McGinty: So your grocery store shifting to bulk purchases and bringing in reusable packaging instead of buying in an existing package. On one hand, you know, the company saves on transport of individual packages, they save on packaging costs as well. They'll figure out their business model, and if it seems like that bulk packaging costs more, then the market should correct back to to where it should be.

00:51:56:25 - 00:52:20:06
David McGinty: And you might need some government policy and regulation in places to make sure that the incentives are disincentives, are directing the producer behavior as well as the consumer behavior in the right direction. Maybe let me just finish with one point in circular when it comes to this. I think we can't put the burden for these changes on individual.

00:52:20:08 - 00:52:44:16
David McGinty: In some instances, there is a role for the individual to play in making these decisions, but given options, you can't expect people who are kind of facing financial restraints to make, you know, financial choices that are difficult when they don't have alternative options. And so I think that's where we get to a real market system working and making sure that they're viable options available.

00:52:44:16 - 00:52:50:23
David McGinty: And that's where incentives and disincentives start to come in.

00:52:50:26 - 00:53:08:20
Mike Collignon: Well, I know we can talk about this topic for quite a while, but we do need to get to our final panel of this year's symposium. And so I want to thank you for your time, David. I hope you get to feeling better. Thank you for joining us all the way over from The Hague. And any final comment?

00:53:08:23 - 00:53:11:24
David McGinty: Yeah, thanks a lot. Thanks for having me today. It's been good.

00:53:11:26 - 00:53:13:08
Mike Collignon: All right. Thank you sir.