Circular business models to enhance sustainability in infrastructure23 January, 2020
ING and partners aim to enhance sustainability in infrastructure through exploring circular business models. More insights can be found in the report from the Business Models and Value Cases working group of the Open Learning Environment Circular Bridges and Viaducts in the Netherlands.
Infrastructure construction projects have a heavy environmental footprint. At the same time, large parts of existing infrastructure require renovation and there is a growing future need for additional infrastructure that is safe, durable and economically viable.
There is a clear need to explore how we can merge the requirement for increased sustainability in infrastructure with the practical requirements. Circular business models potentially hold the answer to this question.
Taking a step further than being a thought leader, ING is committed to taking actions which lead the way to a circular economy. One of those actions is the Orange Circle, ING’s circular economy programme, which has the ultimate ambition to help our clients to transition to circular business models. Two key pillars of the Orange Circle program are Partnerships and Innovation, which perfectly come together in ING’s previous Circular Supply Chain Accelerator (CiSCA) and also in ING’s active participation in the Open Learning Environment Circular Bridges and Viaducts.
Open innovation to spur the transition to a circular economy
ING is convinced of the circular economy’s potential value and is keen to play an active role in advancing the circular economy. A true transition can only be realised however when parties throughout the value chain cooperate. Last year therefore, ING took the lead in setting up the CiSCA. The aim was to stimulate a more large-scale adoption of circular business models. As a first live trial of the CiSCA proposition, a pilot was set up with a large Dutch construction company (1) that developed a circular proposition with its main supplier and client. This pilot confirmed the value of an outsider view and complementary skills that ING can offer to companies through CiSCA.
CiSCA got a follow-up in the form of ING actively leading the Business Model and Value Case working group that was part of the Open Learning Environment Circular Bridges and Viaducts* in the Netherlands, a unique public-private partnership whose value truly lies in the diversity of the partners connected with this initiative and that participated in the discussions.
As a result of this collaborative work, the working group published a report with detailed findings on four possible circular business models for infrastructure. The four circular business models include:
1. Coordination of modular infrastructure by a government agency
2. Buy-back guarantees by infrastructure companies
3. Viaduct As a Service
4. Infrastructure companies and its clients jointly operating in consortia (‘All-in Consortium’).
All four business models bring challenges that need to be jointly addressed. A good residual value calculator and a digital database/marketplace with information on such aspects as the quality, materials used and availability of existing building blocks would greatly facilitate the transition to more circular business models.
From the four business models, the All-in Consortium scenario was deemed most circular by truly sharing long-term pains and gains for all relevant parties involved. The extent to which the market is willing to adopt such transparent and collaborative way of working is to be seen.
On the basis of shared insights, the working group also recommends criteria for inclusion in the first circular infrastructure tender in the Netherlands. Recommendations address circular infrastructure requirements, yet also suggest that public funds can be used to develop important enablers to circular infrastructure, such as residual value calculators and solid data management systems.
The fruitfulness of the Open Learning Environment and specifically the findings of the Business Models and Value Case working group was presented at the World Economic Forum (‘WEF’) Annual Meeting in Davos earlier today in a Platform for Accelerating the Circular Economy (PACE) meeting. Both ING and Rijkswaterstaat are connected to PACE, a group of interconnected partners working on advancing the circular economy, which provided explicit support for the presented report.
* By viaduct we mean a bridge-like structure composed of several smaller spans that crosses a dryland, wetland or valley or that forms an overpass or flyover.
(1) VolkerWessels’ infra subsidiary, Van Hattum en Blankevoort
ING joined the working group dedicated to Circular Infrastructure Business Models. This was part of the Platform for Accelerating the Circular Economy (PACE), a public-private collaboration mechanism and project accelerator dedicated to bring the circular economy at speed and scale.