Top-down leadership and bottom-up solutions.
Harald Friedl is a recognised global leader in the field of the circular economy, having been involved in a variety of roles and organisations with different stakeholders, from governments to businesses and academia. For the last 15 years, Harald has worked in the field of societal change through organisations such as the UN and Circle Economy. Before joining Circle Economy in 2017, Harald spent five years in Myanmar during which he co-founded Myanmar’s first pre-incubation programme for social enterprises. After three years as CEO of Circle Economy, Harald is currently involved in initiatives at different scales, from advisor to the COP26 team, to ambassador for Green Deal Circular Festivals and co-founder of a social enterprise.
Harald, pleasure to host you for a conversation. With all that’s happening in the world, hard to choose where to start from…
It’s time for a major reboot. We now have this short window of opportunity. Some days ago a business person said to me ‘we have now a chance to influence the 20% that will change after the crisis’. And I think we should aim for that, because many things will go back to normal. Sure, industries will change but let’s be realistic: I don’t believe the situation will change a hundred percent. In circular economy discussions, we often talk about tipping points. If we are able to change this 20% permanently, then this may be a tipping point, giving us the hope to get to structural changes much quicker. These times allow us to have a new way of looking at materialism.
I see a couple of parallels between the climate change and circular economy debate, and the debate we currently have about the virus.
Which ones?
The first one is from a talk by Jeff Sachs: we have been warned. And we also know that climate change is, in the long-run, a much bigger risk for our health than this emergent disease. Second, both in climate change and the disease, growth is exponential. Third, there has been a certain complacency—maybe sometimes even arrogance—in leaving it that some countries are hit harder than others. The discussion is very often Western-focused, both with Covid and climate change. Fourth, there are practical solutions and we know them. Fifth, we need new leadership. Some countries are already showing it, looking into the opportunity to ground in this crisis the emergence of a new economic paradigm.
So, five parallels: we knew it; we are facing exponential growth; we have been complacent; there are solutions; and, we need a new leadership.
Let’s start the discussion from the business context. When engaging business actors on the circular economy story, we often hear ‘this makes sense, it’s logical’. However, sometimes I get the impressions that—from a structural point of view—things are not truly moving, or not fast enough. How do we accelerate the circular transition inside corporates?
I see two things. It’s both top-down and bottom-up, and there are opportunities in both. Without the leadership from the top, it’ll be very difficult to get to the good answers. When you work to instil circular economy strategies into very big companies, it feels like an open heart surgery - you need a very good team that is well aware of what they are doing to perform such a change.
“When you work to instil circular economy strategies into very big companies, it feels like an open heart surgery”
And it cannot happen without the groundswell of people who want to get engaged and don’t accept anymore that companies are merely extractive. When a bottom-up approach looking for solutions and top-down leadership come together, we can move the businesses forward. Only in this way we have a realistic chance of really changing businesses.
We can’t have all businesses go bankrupt, but we need to have business models that—maybe not always work perfectly in the short-run—but are fit for the medium- and long-term. And we have seen it with good examples that are often mentioned, like Patagonia. For us, as consumers, it’s key to support early adopters and brave leaders.
Nowadays, we often hear that we need new leadership. To give substance to the claim, what elements should be part of this new business leadership?
It’s a kind of leadership that redefines the role of the business in society and in the world, that sees a broader horizon than just the profit line. People like Paul Polman, with the discussion with shareholders saying that they don’t want to report every quarter or every year. I think that’s the right way to go. Or like Philips CEO, Frans Van Houten, showing a very clear commitment to turn the company circular.
Call it comprehensive leadership—mid-term and long-term focused—or call it leadership that integrates the heart and the mind. We need to look at the whole and be full of compassion, towards ourselves and the consequences of our behaviour, and towards others. Leadership that gets us out of the rat race and looks again at what is really important.
“Leadership that gets us out of the rat race and looks again at what is really important”
Coming to the topic of circular business models, I feel we are not yet fully aware of the true potential and implications of these models. In the fashion industry, for instance, companies renting/leasing clothes rather than selling them might have the unintended consequence of greater consumption and less care for the materials from the side of consumers. How can we realize the true potential of circular business models and ensure that they create true circular change, and not just profit with a different name?
That’s a very interesting one. We see different companies experimenting with circular business models and, as you say, we don’t know what the effect will be. I think it has to be studied more to investigate whether it actually brings the change we want to see. But to see whether business models like leasing clothes do actually work, we’ll need a longer time horizon.
The big change will come when consumers start to change their behaviour. The fear that these business models are now used to window-dress is there, and it’s a realistic one. But with good data and proper research we can hold people accountable to make sure that it’s not only for the one percent. We all remember the C&A first circular t-shirt, which was a big hit, and led C&A to step up the game and say “we are changing all our products in a circular way”. We are at the beginning, the more we can show that there is a business case behind them, also in the mid-term, the better our chance that we will reach the desired change.
Having businesses engage in it is a first good step. Holding them accountable is a second one. And also be clear about the potential downsides of a circular economy. If we can show that these business models can also have a positive employment effect, we’ll give policy-makers another incentive to support such business models and kick-off a positive spiral towards a much healthier economy.
Coming to political leadership, you have participated in the latest World Economic Forum, which is a yearly gathering of world political power. In your experience, how do you live your role in such a context? Quite a difference to be an activist in civil society, and when sitting at such tables, I can imagine…
I see myself as an activator, an instigator for change. It’s always been my passion, to not only shout on the street, but to actually steer change in the political sphere. It is hard work, and I could see it from what I did in the past, trying to instil change in the UN, bringing systems thinking into Human Rights Watch to not only have a human rights agenda, or when working with the old generals in Myanmar.
We need the knowledge to work with the incumbents. We need to be willing to engage with those that need help to change, because they don’t have the answers either. The old paradigm has been working for such a long time that vested interests and the normal behaviour of people are sleepwalking in old systems. It’s important to acknowledge that we have to sit down with them, help them, and have compassion grounded on the fact that we all need each other for the change. We also need to talk not only to people’s minds, but also to their hearts. I believe people are innately positive and want positive change.
“We need to be willing to engage with those that need help to change”
This attitude requires many virtues…
Yes, it requires a lot of skills. Sitting down and actually having the patience to understand somebody’s problems—and not just trying to fix it with your own state of mind—is a very difficult exercise. And to facilitate safe spaces for real transparency and radical collaboration is also a very difficult thing to do. For this, we need to ask people to not only think, but also use their hearts. The most powerful thing to do is to have convinced people that can run by themselves.
An interesting experiment that has been gaining attention lately is the adoption of the Doughnut Economy framework by the city of Amsterdam. And this is something you contributed to with Circle Economy, organisation among the partners of the project. What conditions are required to seriously adopt such a vision and put it in practice at the city level?
There is always this tension between ‘it’s not easy’, but ‘we are running out of time’. And in that tension, Amsterdam is a very interesting guinea pig, where we were able to galvanize this. To make it happen you need the right people and parties around the table and the right way of collaborating.
In the case of Amsterdam the right people were Kate Raworth with her vision on how to make it happen, Circle Economy as an organisation able to translate this drive to engagement with local stakeholders, and—more and more—the businesses and the citizens. This project allowed the city council of Amsterdam to engage with businesses and civil society in a new and refreshing way. That’s always difficult for policy-makers, but I think Amsterdam has made very brave decisions with a vision to have a city that is owned by the citizens, and is for the citizens.
It’s been a very interesting collection of partners, which was created to go beyond a pilot project—we are all tired of pilot projects—with a built-in approach to scaling immediately. We didn’t only look at circular economy, but also at biomimicry and nature-based solutions, so we collaborated with an organization called Biomimicry 3.8. Finally, the collaboration with C40 made sure that anything that is done in Amsterdam can easily be replicated for all the other cities in the network, which can adapt the learnings to their local context. I think that’s a good setup for success.
Let’s shift to the community level. During one of your TedX talks, you made a small scale example of what it means to be involved as citizens in the circular economy. It was about a different way of sourcing vegetables for your family, investing into a local community of farmers. What does it mean to you to engage with the circular economy as a citizen and member of a community?
I think it starts with re-evaluating our own values. When I say this example about a community garden, some people might say: ok, but what is circular about that? For me, the circular economy has always been more of a philosophy, and that’s what motivated me to engage. And it starts with choosing small loops for your own material needs. When we want to be part of the circular economy, we have to be ready to change our own values and challenge our values and way of thinking.
“It starts with choosing small loops for your own material needs”
To give such examples is always dangerous, because the ‘purists’ might criticize you, but I think it’s important to make it more approachable such that people don’t get stuck in definitions and can get to action. Another example I give is about transport. I don’t have a car, which is highly annoying with three children as you try to facilitate their lives. But, now I see time differently. It takes me two hours instead of twenty minutes to get my son to a soccer match, but I choose for it. It’s a conscious decision. I take time for that, and I have the opportunity to bond with him in a very different way. I choose not to go the linear-minded, efficiency-driven path where I use a lot of resources, like fossil fuel and the aluminium and thousand plastic pieces in the car.
Not the easiest choice, given the way our systems and infrastructures are designed today…
It is difficult, but once you commit to it, you see the positive sides alongside the negative ones. I’m willingly giving up my convenience, and I think it’s important for both the old and new generations to challenge this convenience-driven lifestyle. We don’t always need the newest stuff. We don’t always need to be as efficient as possible. And for this purpose, the community can be a safe place for experimentation. So we need to look much more at communities when we are talking about the economy of the future. Can we afford in the future people driving two hours to an office or commuting from one country to the other? This is the interesting question.
“We need to look much more at communities when we are talking about the economy of the future”
What are you pointing to?
Should people that work locally be rewarded by policymakers? This could be a new way of thinking about it. We need to ask the broader question and redesign such a system with a tabula rasa, to look for practical and logical solutions for the future. We need to engage as many people as possible to make the solutions accepted by the people. It should not be, and cannot be, top-down again. It all starts with a change in our personal way of thinking.
Recently we read some bad news related to the results of the latest worldwide Circularity Gap Report. The fundamental question this Report by Circle Economy tries to answer is how circular the world is today. In 2019 it was 9.1%, while this year the result was 8.4%. Is it data noise or should we be worried that we are going backwards?
It should be worrying us. Datasets from different sources—like the UN or the International Resource Panel—are showing that we are not going in the right direction. This is another confirmation of that. The caveat is that we are not looking at real-time data, but data that is 1 or 2 years old. So if we keep with such hard material extraction, next years won’t show a betterment either. But, at the same time, the report was also about galvanizing action and saying: we can do something about it! And you can do something about it if you are in a big business, in a startup or in an organisation that is helping the ecosystem to flourish. That’s what I love about the circular economy concept. Let’s take this result as a serious advice to change and to start action today.
What makes you optimistic nowadays?
At the beginning of the year, I was to going to the World Economic Forum in Davos with skepticism and many doubts. What energizes me today is the awareness of people. And I am talking about top political leaders, civil society, activists and businesses. I think people are aware that it’s time to roll up our sleeves, and it’s much more fun to do it together. And it’s the only option, anyway. We’ll actually be richer and more prosperous when we engage in this activity. It would be great if we got a place where people would feel missing out if they were not engaging in net-zero commitments.
I think it’s our responsibility to listen to more people than we did in the past. It’s not only CEOs and political leaders that should be talking, but also mothers, religious leaders, and all those people that have wisdom in society and are carriers of long-standing cultural traditions. We need an unlikely ally of people, because an inclusive debate will be key to inspire us for a healthier future.
“An inclusive debate will be key to inspire us for a healthier future”
At a personal level, you are also currently in a transition, coming out of three exciting years as CEO of Circle Economy. What will you be busy with in the upcoming period?
Indeed, three cool years, in which we scaled up an organization from startup to scaleup and reached a stable team of around fifty people. It was very exciting to create global partnerships and be part of the global debate with the Circularity Gap Report. I am happy that everybody in the team is in a good place and the journey can continue.
About my current activities, I joined the COP 26 team because I’m convinced that the best people are needed there at the moment, people who drive ambition. It’s a unique opportunity for us to come forward with concrete plans and commitments. The COVID crisis is spurring up our inspiration. Now that it has been postponed, we have a couple of months more to prepare in terms of coalition building in very difficult industries, to bring the focus on emerging technologies.
At the same time, I am also part of a bottom-up initiative called Solution Revolution, which is trying to drive a new way of innovation, presenting logical and practical solutions that come from the people. It’s by the people and for the people. We are currently trying to get traction for it and have the financials sourced. I am super excited to be working on both top-down and bottom-up initiatives, because that’s what is needed.
Let’s close the loop of our conversation going back to the beginning, the current situation dominated by COVID-19. Even though during the peak phase of the pandemic many leaders were promising to fundamentally re-build our socio-economic system—and its ecological balance—I am afraid we’ll forget about our propositions once we’ll be over this disease. How do we avoid going back to the toxic normality we were used to, once this imminent threat won’t be there anymore?
We have to be as clear as possible on the solutions that we have to work on, and work on them quickly. Let these learnings that we are all going through at the moment sink into ourselves and make it a new normal when it comes to our behaviour. I am hopeful that we can instill behaviour change from this common experience, shift our consciousness and work with policy-makers on very clear solutions. I hope that we get the 20% changed, and that acts as a tipping point for a broader systemic change.
To create practical solutions, we need everybody sitting around the table, with an inclusive spirit, real transparency, and radical collaboration. Working together with governments and policy-makers, we can find the right ingredients to come up with a strong recovery plan that has these incentives front and center. The European Green Deal is a good signal thereof. In the meantime, we are seeing communities re-emerging, neighbourhoods reshaped and the abundance of nature coming back as we let it rest for a couple of months. I absolutely believe that the definition of a new relationship between scarcity and abundance will be key to reshape our thinking.
June 2020 (recorded May 2020)
A conversation between Harald Friedl & Emanuele Di Francesco
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