In an era marked by geopolitical tensions, the quest for sustainable and resilient supply chains has become crucial for businesses worldwide. René Kleijn, Professor at Leiden University and a leading expert in supply chain resilience, as well as a keynote speaker at the Swedish Sustainability and Innovation Summit 2023, shared his expert insights on how companies can navigate the complexities of global supply chains while prioritising sustainability and innovation.
Navigating Supply Chain Vulnerabilities in a Changing World
René Kleijn emphasises the importance of assessing supply chains to identify and address vulnerabilities. “I think what businesses need to do is to really look into their supply chains and whether there are any vulnerabilities there,” he notes. His approach to creating “resilient supply chains” involves a thorough examination of suppliers and production networks to ensure that critical materials are sourced securely and sustainably. He points out that Europe’s dependence on certain countries for critical raw materials used in renewable technologies presents a significant challenge. “Opening new mines might seem like a solution,” he adds, “but it’s not just about extraction; it’s also about the complex production processes required.”
This focus on resilience has become even more important as businesses face evolving market conditions. The experience of relying heavily on a single source for critical materials underscores the need for supply chain diversification to mitigate risks.
The Challenge of Implementation
While the technologies required for the energy transition are largely available, René Kleijn highlights that the primary challenge is implementation. “In terms of the technologies that are needed for the energy transition, a lot of that is already available,” he says. “The technologies have become a lot cheaper, a lot better over time.” However, he points out that the obstacles are increasingly tied to protectionism and national strategies. “Even though we are collaborating within the European Union, there are still political hurdles based on national policies,” René Kleijn explains.
This focus on protectionism and strategic autonomy reflects a desire not to be “completely dependent for very important technologies and raw materials from one single country.” As René Kleijn observes, “Divergent national regulations and policies create barriers to cohesive global action, which is essential for effective implementation.”
Material Shortages and Circular Economy Opportunities
A key challenge in the energy transition is the availability of raw materials, particularly metals, needed for renewable energy infrastructure. René Kleijn clarifies that, despite concerns, the actual amount of material required is less than often perceived. “If you purely look at the amount of material needed for energy, we actually need less mining instead of more,” he explains. While different materials have varied impacts and mining locations, the overall need for extracting new materials decreases in a renewable energy system compared to a fossil-fuel-based one.
The long-term vision involves designing products for durability and recyclability. “In theory, if you design products right and foster these stocks in society, you can recycle materials eternally,” René Kleijn asserts. He emphasises that there’s no lack of materials for building batteries or solar cells; the challenge lies in dramatically increasing production and recycling capacities within the required timeframe for the energy transition.
René Kleijn also highlights that while the initial shift to renewable energy requires substantial raw materials, effective recycling can mitigate future shortages. “If you take care of the materials and recycle them, there’s no lack of materials,” he says.
The Circular Economy and Its Impact on Industries
René Kleijn underscores that the transition to a circular economy is crucial for sustainable development. “We have been talking a lot about the circular economy but doing very little,” he observes. The circular economy involves redesigning products to be more durable, repairable, and recyclable, which will significantly impact industries. “Industries need to rethink their business models—from selling products to offering services, focusing on repairability, and embracing less material-intensive approaches,” he advises.
This shift will challenge traditional business models, which often favour planned obsolescence and rapid product turnover. “We have to move away from a model of products designed to break down quickly,” René Kleijn explains. Instead, businesses should focus on creating longer-lasting products and developing efficient recycling systems.
Innovation and Economic Advantages
René expresses optimism when asked about the economic potential of embracing circular economy principles. “There will be winners and losers,” he predicts. Businesses that proactively adapt to circular models and sustainable practices will likely thrive, while those that resist change may struggle. “The industries that innovate and adapt will find new business opportunities,” he says, encouraging companies to view this shift as a chance for growth and profitability rather than just a challenge.
The Role of Industry Leadership in Sustainability
Government involvement is crucial in developing a viable business model for the circular economy. “Governments should make it so that there is a business model for a circular economy,” René Kleijn advises. He notes that, “if there’s no business model for recycling, then you can have regulations on recycled content. Once you have that in place, then there is suddenly a new market created by the government for these recycled materials.”
One major obstacle in the shift to circular practices is the cost disparity between raw materials and secondary materials. René Kleijn points out, “One of the biggest problems of circular economy is that raw materials are very cheap and labor is very expensive. Anything that you do in terms of repair, recycling, etc., will often be more expensive than just buying new raw materials from the market.” This cost imbalance emphasises the importance of regulatory action to ensure that recycling and repair become more economically viable options for businesses.
Conclusion
In conclusion, René Kleijn’s perspectives offer valuable guidance for businesses aiming to thrive amidst evolving supply chain dynamics and sustainability challenges. For companies deeply invested in tech and innovation, the focus should be on enhancing supply chain resilience by diversifying sources and securing access to critical materials. Embracing circular economy principles presents a strategic opportunity to drive growth and profitability by prioritising durability, repairability, and recycling. Leveraging these practices not only mitigates material shortages but also opens new avenues for market expansion. Government policies and incentives play a pivotal role in shaping the economic viability of these initiatives. Companies that proactively adapt to these shifts will be positioned at the forefront of a sustainable and innovative business landscape, leading the way in transforming industry practices and achieving long-term success.
By Alexandra Gummesson/Liv Månsson for Swedish Chamber Insights
