Corporate-startup collaboration: an accelerator for the circular transition?

On January 1st, 2020, we woke up into the Decade of Action: 10 years that should lead us to the realization of the Sustainable Development Goals (SDGs). ‘Should’ because—despite some progress being made on the agenda—action is not happening at the scale and speed required. Time to wake up.

Who is certainly called on doing more are businesses, whose role has been widely recognized for delivering on the promise of sustainable and inclusive development. As of today, 732 companies globally are taking science-based climate action and 312 companies have approved science-based targets. Looking at corporates’ websites, you would hardly find anybody without a 2030 or 2050 sustainability commitment.

But, what are companies currently doing to achieve these targets? More importantly, do they have strategies and concrete roadmaps in line with the goals they’ve set? Having had the opportunity to be in contact with over 90 corporate sustainability teams in the past 8 months, I have noticed that despite the (rightly!) ambitious targets, many still lack a clear actionable plan on how to achieve them.

SDG 17 talks about ‘Partnerships for the goals’. In the B2B space, collaboration between corporates and start-ups has been gaining attention as an accelerator for the transition, able to leverage both corporates’ resources and start-ups’ innovative technologies and business models. To gain more insights into this topic, we went and asked an ecosystem of experts the following question:

How can corporate-startup collaboration contribute to accelerate the transition to a circular economy?

Here is what 12 voices from the ecosystem told us:

"Our climate change challenges are increasingly pressing, and need speedy and adequate business and policy responses. Collaborations are essential to scale up novel and impactful circular economy propositions - combining the novel ideas and agility of the start-ups with the resources and knowledge of corporates."

Nancy Bocken, Professor in Sustainable Business at Lund University

“To progress the circular economy, we desperately need material brokers. Start-ups are ideally placed to be these intermediaries - to collaborate with corporates and connect their waste streams with recycling or upcycling opportunities elsewhere in the industrial system. Start-ups are also proving agile in bringing new technologies to assist corporates with advancing the circular economy. An example is Circularise, which is working with Domo Chemicals and Covestro to use blockchain track-and-traceability for plastics.”

Wayne Visser,  Professor of Integrated Value at Antwerp Management School

“Collaboration between corporates and start-ups can only be transformative if the corporate is intrinsically driven and externally forced to move away from business as usual, and the start-up able to translate, transfer and diffuse the principles, ideas and lessons that were developed. This requires clever governance of and support for such collaborations: based on shared guiding principles and offering the mechanisms to combine the scaling strength of corporates with the transformative power of start-ups.”

Derk Loorbach, Director of DRIFT and Professor of Socio-Economic Transitions at Erasmus University Rotterdam

“The circular economy approach has to go well beyond resource efficiency and waste management. It should also work on the social and economic aspects of sustainability in order to make real sense. Jobs need to be created. Innovation needs to be intensified and human development in all parts of the world improved. In particular start-ups have the potential to make this work rapidly and in tune with our fast changing society. I hope they will keep surprising us with new business ideas, closing the loops and making the transition work for all. Governments and researchers need to facilitate this with solid research and policies, and financial incentives where needed. In the end, a resource efficient circular economy will be the norm and we will look back in amazement about the throw-away economic model on which so many of our old economies were built in the past.”

Bas de Leeuw, Managing Director of the World Resources Forum and Member of the Club of Rome

“No company can deliver circular products and services on its own. Collaboration between large companies committed to doing circular business and their suppliers is crucial to create transparent, circular value cycles. Their joint effort can open up new business opportunities, innovation and value creation. At the same time, government action is urgently needed to move from circular niche markets to mainstreaming the circular economy.”

Arthur ten Wolde, Director of Ecopreneur.eu, European Federation of Sustainable Business

“Startups help corporates at two levels: they cut the best pieces aside and then glue them together. They are visionary and able to identify what is missing in the wider puzzle. Thanks to their flexibility, they are able to choose the best parts of a large corporate, come up with their valuable add-ons, and glue the best parts together to create a unique Blue Ocean experience. Since done collaboratively, such solutions become not only viable economically, but they also address either environmental or social (or both) challenges, while on top leapfrogging the corporate partner reputation to a new level. Bundles and Miele is such an example.”

Alexandre Lemille, The Circular Humansphere

“David Kahneman suggests that the ‘engine of capitalism’ is the abundance of entrepreneurs whose overconfidence compared to their abilities generates so much activity. If a circular economy is a business opportunity then it’s possible to sacrifice themselves here too. The result of all this might be knowing what actually works and what really needs the appropriate shift in system conditions. The two forces are interlinked.”

Ken Webster, University of Exeter Centre for the Circular Economy, Ellen MacArthur Foundation Associate

“Start-ups have the audacity to explore the unknown. Without them most innovation would be killed. They can walk the talk. Without them a transition towards a more sustainable, circular and socially inclusive society would be much more difficult to explore.”

Jan Jonker, Professor Sustainable Entrepreneurship, Nijmegen School of Management Radboud University

“When contributing to the circular economy, start-up companies and incumbents alike should focus on creating societal value, instead of focusing on financial value creation. This means that doing business needs to be purpose driven, which requires a completely different mindset and attitude. In other words, contributing to the circular economy requires contributing to the twin-transition of building a sustainable economy and societal value creation.”

Egbert Dommerholt, Sustainability, Circular Economy and New Business Models Expert at Hanze University Groningen

“In today’s fast moving and increasingly competitive world, corporations often lack the time, resources and competences to exploit the novel business ventures that are opening up in relation to the global mega-trends, not least the new paradigm of the circular economy. For this reason, partnering up with external start-ups that are intrinsically devoted to innovation and the delivery of cutting-edge brand-new products and services, can become an alternative worth exploring, at minimal costs. Which is what some forward-looking companies have already started doing. Take Renault, the French car-maker. In central Paris, it has established a place where different stakeholders--primarily startups--can meet and work on new ideas to shape the future of mobility with the circular economy in mind. In a different industry, global megabrand Nike has created a dedicated website where it promotes a range of circular economy oriented start-ups.”

Nicolò Cristoni, Co-author “Strategic Management and Circular Economy”

“There are already a lot of incredible, financially feasible, circular economy solutions and innovations that have been developed by startups across the world. However, these solutions currently lack scale and many have yet to establish themselves fully. If we want to quickly transition towards a circular economy, these solutions need to be scaled up rapidly to address the ever increasing global resource challenges and environmental impacts. Corporations have the size and resources to be able to scale these new innovations, and so greater collaboration between startups and corporations is essential to accelerate the transition towards a circular economy. The question is how do you convince corporations to adopt and scale these innovative circular solutions while moving away from the linear status quo, and I think there are a variety of factors at play there beyond just the business case argument. This is something I hope to uncover in my PhD research.”

Shyaam Ramkumar, PhD candidate at the University of Milan

“Startup knowledge and innovative business ideas can be symbiotically exchanged for expansion, venture capital, and/or global network contacts from the multinational corporation - resulting in mutually beneficial outcomes and further emergence of circular innovation. Public events - such as innovation challenges - can serve as learning spaces for incumbent regime actors (including average citizens) to acquire knowledge about circular innovations, offer a space for exposure and potential diffusion of circular entrepreneurs, and allow for a physical connection between actors of the two distinct levels. This engages regime actors while empowering niche innovators, providing a connecting platform and space for creation and support. Forming these connections can accelerate the speed and breadth of innovation diffusion, which is particularly relevant in helping to allow them to reach their maximum potential in widespread carbon emission reductions, among all other benefits of transitioning to a circular economy - e.g. better air quality, diminishing of global warming potential, and reduction of health care costs.” 

Rachel Greer, PhD candidate at DRIFT, Erasmus University Rotterdam

Now, it’s your turn.

Is corporate-startup collaborations something that we should foster—and experiment with—more?

23rd January, 2020

Facilitated by Emanuele Di Francesco