Enabling circular economy for supply chain visibility: Interview with Dutch startup Circularise

Aimed to facilitate transparency and traceability across global supply chains to enable a shift to a circular economy, Dutch startup Circularise was established in 2016 to provide solutions based on blockchain technology to bridge the information gap.

Although it is just a 5-year-old company, its technology has already been adopted by Porche, Mitsubishi and Marubeni and their supply-chain partners. Circularise enrolled in the Garage+ accelerator of the Epoch Foundation in Taiwan in 2021 to expand their customer base among the supply chain players in Asia.

"Each member of the team fundamentally believes that we need to create a sustainable transition to allow today's generation and future generations to maintain an equitable balance and lifestyle," said Dr. Phil Brown, Circularise VP of business development and strategy, talked to DIGITIMES online to explain how the solution works without compromising customer business secrets and their plans for future expansion.

Circularise is a company grown out of research at the Technical University of Delft in the Netherlands, co-founded by Mesbah Sabur and Jordi de Vos. Dr. David Peck, who researches critical materials and circular design at the Technical University of Delft, supports the two co-founders to find initial funding to expand on the core idea of Circulairse. Later, he connected Phil Brown, whom he had met while he was a Schmidt MacArthur Fellow with the Ellen MacArthur Foundation. Dr. David Peck was also supportive of Brown's move to the Netherlands to pursue his Ph.D. research into collaborative innovation for a circular economy.

"During my studies on inter-organizational collaboration for the circular economy, I found the key challenge of trying to connect innovations across the supply chain was the need for a mechanism to share data end-to-end and in a secure, transparent as well as protected way," said Brown, adding that there are two sides of the coin for transparency. "On the one side, you want to be transparent with the data to share this to downstream actors such as consumers, recovery actors or regulators, etc. But on the other side, information about materials such as where those materials are from, or the composition of materials, is very sensitive because it can also be the competitive advantage of companies."

Blockchain technology to create a digital footprint

Circularise uses the distributed ledger, cryptography, and immutable data features of blockchain technology to create a digital twin; similar to a unique 'fingerprint' for the material, component, or product that is being tracked. Circularise also incorporates zero-knowledge proof commitments, which were developed from research at MIT and have been implemented in the gaming and Decentralized Finance (DeFi) industries. Zero-knowledge proofs can validate transactions on a blockchain without revealing data. Circularise combines these technology developments with its smart questioning (Patent-pending) technology to overcome the challenges of privacy and data protection.

Smart questioning technology supports two functions. One in the form of push questions, which can be determined in advance by creating approved question lists such as those required by procurement, regulation, or legislation within a specific sector. The other is pull questions, which are bespoke questions that are not listed in the existing question lists. What would happen in that scenario, is that a downstream actor would post a question that they would like to ask, and the Circularise system would send a ping notification to all actors that had handled the digital twin. "We provide the digital infrastructure for actors at different ends of the supply chain, and then they would receive a request asking do they have the data, yes or no? And are they willing to share an insight based on the data? Yes or no? So in this construct, we deal with the two sides of that coin of transparency and traceability," explained Dr. Brown, stressing that answers are only provided with a range, not the specific material composition, so no trade secrets of customers will be compromised.

For example, if a recycler wants to know if the plastic includes flame retardant chemicals, companies on the supply chain would then give the answer yes, or no. If it is "yes", Circularise's system would aggregate the data about the specific asset and provide a percentage range to the downstream actors. The parent company always owns its data and controls what they share, selecting a range they are comfortable with unless required directly to share a specific data set by regulations within the specific geography. And then the downstream actor receives aggregated answers and ranges, which can also be validated by 3rd party auditors or certification bodies on the Blockchain.

Mechanism of the solution

Data is only the first stage Circularise plans to deliver services. Step one is to create the infrastructure for data about materials, environmental impacts, provenance, fair working practices to be shared. Step two is to enable customers on how to use that data to inform upon their product design, business model, and ultimately upon how materials flow and are recovered within an ecosystem. This is to support meeting the ultimate aim of a circular economy, which is to reduce material throughput, waste and environmental impacts whilst maintaining or increasing revenue capture opportunities across the supply chain.

The third step, according to Brown, is to connect actors within a supply chain via mechanisms such as Taken-Back Options, which provide increased value to the brand and OEM who is selling the product, but also provide that value back upstream, as well as the consumers, so that each benefit from the increased sustainability action and revenue capture from the circular product or service.

For example, if a base material provider wants to create a preferred buy-back option for their materials. A blockchain-enabled system with smart contract features and smart questioning can support this process. When the product would reach the end of life a recycler can access the digital twin that would state the preferred buyback option on the specific material. This means the recycler doesn't need to find a market for that material, they can sell it back directly to the base material provider.

Expansion to Taiwan and the entire Asia

Circularise joined the Garage+ accelerator of Epoch Foundation to seek investment and also engage with brands, OEMs, and manufacturing customers in Taiwan, said Brown, "Taiwan is a key player in the electronic supply chain. The computers that we are all using right now, regardless of the brand, will probably have components that are made by Taiwanese companies within them. So, this is why we are actively approaching companies here." Mesbah Sabur, Co-founder of Circularise takes this one step further by saying "Taiwan and by extension Asia is where a lot of materials are being sourced for electronics and most products are being manufactured there so it's extremely important for traceability. No engagement with Asia means no end-to-end traceability.

Circularise is expanding beyond plastics and chemicals material streams and they are working on projects related to critical materials and metals both in research and innovation actions within the European Union and by direct engagement with companies in North America, Europe, and Asia. This expansion across material streams is needed to service different verticals such as automotive, electronics, plastic packaging, textiles, and construction. "We are looking for many partners and companies in the Asian market," Brown added that the company already has a Japanese representative and would look to replicate this model across Asia such as in Taiwan, Korea, Singapore, Thailand, and ultimately in China. "Having a physical representation for the different countries within the region to service the clients as they grow their engagement in these areas is important," said Brown.

The company is currently raising a series A fund with the target of 6 million euros, but due to their research and innovation funding opportunity and portfolio, they expect to match this with a further 4 million euros of grants.

Source: Circularise