Ecology and economy in harmony
Michel Baars - CEO of New Horizon
Those who want to be able to compete in a linear sector like construction must have the courage to change the rules of play. This is a role that fits New Horizon’s Michel Baars, a specialist in urban mining, like a glove. Michel’s mission is to show the world that circularity can be beneficial at every level, both for the planet and the (construction) budget.
What, for you, is the main reason to embrace circularity?
Because we are losing sight of society and the environment, with all the attendant consequences. For me, the circular economy is the economic model that brings together apparent opposites: ecology and economy united in harmony. And personally, as an entrepreneur, I think my role in society is to persuade people who do not yet understand the added value and necessity of a circular economy.
Why would a company choose to be circular?
All companies are concerned with the continuity of their business, and matters like scarcity and availability, as well as environmental and social impact, directly influence this continuity. As a director, I consider circularity to be the only winning strategy. Though the linear economy may not break down in the short term, a circular economy is not only better, it is inevitable. Inevitable because negative environmental impacts will be taxed — such as through a CO2 emissions tax — and buyers are already frequently applying circular purchasing. Moreover, a circular economy is better because it has less of an environmental impact. And, thanks to repairs and renovation, among other things, it provides more jobs for more people, throughout the chain and locally, through increased craftsmanship. This creates new jobs, including for the people at a distance from the labour market.
New Horizon specialises in urban mining. We dismantle buildings, harvest the subsequent raw materials and then sell these secondary building materials. According to calculations by the Dutch Institute for Building Biology and Ecology (NIBE), these building materials have a far lower environmental impact. Circular concrete, for example, has at least half the impact. Grant Thornton has not yet completed its calculation, but I estimate that we’ll save at least 80,000 tonnes of CO2 in 2020. And that’s the actual environmental impact achieved by using secondary materials that avoids the purchase of new materials. In other words, non-recovered material that lies in the warehouse.
New Horizon is already competitive, despite the extra work this approach entails. And we’ll only become more competitive once the CO2 tax is introduced. In short, circularity is a win on all fronts. Another advantage of the circular economy is that it’s more regional by nature — local employment, local raw materials — which makes us less dependent on other countries. This means that a crisis like we have now with the coronavirus will not hit us as hard in the future.
What current trends are you seeing that will increase the importance of circularity?
Eventually, the government will tax CO2 emissions and possibly primary (new) raw materials, as is already the case in Sweden. When that happens, linear construction materials will become considerably more expensive in a very short amount of time; depending on the product, between 40 and 400% more expensive according to NIBE calculations
““Circular is the standard, linear the less attractive alternative””
At present, environmental costs are already being charged for large infrastructure projects. This is the socalled ‘Environmental Cost Indicator’ (EDI), a kind of life-cycle analysis. The environmental damage incurred during the construction and use of the infrastructure is assigned a price derived from this analysis. During the tendering process, this amount will be deducted from the price at which you offer your services as a supplier. So, your offer might be more expensive than the competition, but you still win the tender because your project will result in far less environmental damage. At the moment, it’s still expensive to map out these environmental costs. But there are more and more data available, and there are faster and smarter methods to make these costs clear and transparent. Once enough calculations have been performed and incorporated into digital models, they will also be applied to small projects and become compulsory.
This means that in the construction and real estate sectors, more and more demands are being placed on the environmental performance of building materials. It also affects how buildings are dismantled. After all, by applying urban mining, building materials can have a substantially lower environmental impact.
I’m also seeing the first signs of scarcity. Not directly due to a shortage in the world as a whole, but due to a shortage of materials at the right time and in the right place. A concrete example is the low water supply we’ve been dealing with for a long time, which has directly resulted in a shortage of sand and gravel. This is something new, and we must be able to anticipate it.
How do you persuade clients?
A sustainable or circular product does not automatically sell itself on our market, not even when the quality is comparable and the price competitive. The secondary building materials we sell are not more expensive and they offer the same guarantee. In addition, the demolition does not take longer and it’s even cheaper. Plus, our materials make an enormous positive environmental impact. However, in order to persuade our clients to try these materials, we must understand their motives, why they’re organised as they are, and we need to show empathy. Projects in the construction sector are often financially large in scope and have a high risk of failure and relatively low margins. So it’s preferable to work with known parties and products, according to an existing routine and to avoid the risk associated with innovation. In this context, it’s difficult to be open to a better but — as yet — unknown alternative. Breaking through that system not only takes hard work and perseverance, but it also means assuming risk. Once a player crosses over, the whole apparatus cooperates immediately and it all suddenly proceeds remarkably fast.
How do you break through the system?
““Breaking through the system
requires hard work,
perseverance and gaining trust””
By changing the rules. Demolition workers, because of their revenue model, benefit from as much demolition waste as possible. Asbestos removal workers have a vested interest in the largest possible amount of ‘contaminated’ building material. They then shift the risk of the additional work on to a client who is unable to properly assess that risk.
My interest is the same as the client’s: to throw away as little as possible, to reuse as much as possible and — within the rules — to classify as little as possible as being ‘polluted with asbestos’. I conduct a careful analysis that allows to me to thoroughly assess the risk, and then I assume that risk. When it comes to asbestos, I deliberately use the word ‘pollution’ rather than ‘contamination’. It is less scary, and the association is highly relevant. The question is, are you minimising or maximising the problem?
How do you prevent greenwashing?
In conversations with buyers, I look for the points of tension. I only want to supply circular concrete to the right project, not as greenwashing for a project that is non-circular. I see myself as a producer who would like my materials back in due course. This can be achieved either by retaining ownership of the material or by placing a deposit on it. I look for the middle ground and directly ask buyers, ‘Why should I supply materials to you?’ ‘What do you bring to the table?’ Afterwards, I request that a donor building be dismantled. I do this to show that circular building materials are only available thanks to urban mining. It cannot and must not be the case that companies who purchase circular concrete, thereby realising huge CO2 savings, choose not to organise their own projects in a circular way and end up with construction and demolition waste.
Which classic CEO mindset needs to change?
As leaders, we have to steer clear of that oft-quoted objection: ‘That’s not what the market demands.’ That mindset blocks innovation. Instead of pointing fingers at one another, take responsibility and get to work. This can be as a frontrunner or as the first one to follow, depending on what suits your organisation. In my opinion, this means sharing knowledge unreservedly. Indeed, many dilemmas go unresolved due to the lack of knowledge.
Recognise that circular is the new standard and linear is the less attractive alternative. If you change your company now based on this insight, you’ll keep up with the times. But if you make changes out of a sense of urgency, you’ll definitely be too late!
New Horizon provides construction companies with high-quality building materials extracted through urban mining (the reuse of components reclaimed from depreciated buildings). Reusing or up-cycling the maximum possible amount of materials while dismantling (harvesting) buildings enables those materials retain the highest potential value. This allows New Horizon to compete with the traditional ‘linear approach’.
