Armenian businesses start considering circular economy models

16.12.2019 | 09:40 Home / News / Articles /
#Tatev Petrossian #Revolve Consulting #circular economy
Circular economy is gaining momentum worldwide as the strategies embedded in this new framework are becoming more and more popular. Revolve Consulting has set for its mission to raise awareness of this new economic system innovation in Armenia. The founder of the company Tatev Petrossian has sat down with to talk global trends in circular economy and its prospects for Armenia.

Bringing circular economy to Armenia

Born in Yerevan, Tatev Petrossian grew up in Nice. After moving to Paris for her studies in Business School she started her career in private equity investment, working on the Caucasian portfolio of an alternative assets fund based in Paris. She then navigated across various positions from sell-side to advisory-side in London and Moscow, and in 2018 Tatev Petrossian returned to Armenia and founded Revolve Consulting.

Revolve Consulting is the first consulting firm in Armenia committed to raise awareness of alternative business models with a special emphasis on circular economy-focused strategies. By restructuring organizations’ business model and mapping the resources flows, Revolve Consulting allows enterprises to consider their business’ value creation by disconnecting it from the ecosystem’s finite resources. Enabling organizations to embed purpose into their profit optimization model while minimizing their footprint on the planet is what Revolve’s mission is fundamentally.

3 fundamental principles

Circular economy is a closed-loop resource optimization approach to industrial and commercial systems, where reduce-reuse-repair-recycle mechanisms are predominant. As opposed to sustainability, it is trying by design to keep things in the system as opposed to just reducing their negative impact.

“Circular economy differs from recycling in that it is based on the asset’s lifecycle optimization. Following these principles, we are able to identify gaps in the overall value chain system whether the negative externalities happen at the manufacturing stage or at the supply chain, and we are trying to optimize the asset life at its highest utility rate, at all times,” said Tatev Petrossian.

While the taxonomy behind this phenomenon is still in development, Ms Petrossian noted, the Ellen MacArthur Foundation has made a tremendous job at gathering consensus around the definition of circular economy. As opposed to the linear economy, the circular economy is characterized by three fundamental principles. The first is designing out waste and pollution at the idea conceptualization stage from the very beginning. The second principle pushes for innovative and technology-enabled mechanisms to keep materials and resources in use.

Tatev Petrossian

“A good example of that second principle is the Netherlands-based company, Fairphone. The company tackles programmed obsolescence of electronics and eliminates the use of conflict metals throughout the value chain by building a movement for fairer electronics, while opting for a design-for-disassembly strategy, where any parts or the whole can be sent back to the manufacturer for repair or remanufacturing. Another interesting example is IKEA, global leader in the furniture industry, which has put in place a leasing mechanism where products are provided for the services we make of them rather than ownership of the product,” explained Tatev Petrossian.

The third principle refers to restoration of our natural ecosystem through preservation and enhancement of its natural capital. That implies implementation of a more regenerative agriculture, in which the production waste (output) of one organism or product becomes wealth (input) for another.

The “journey” of a pair of jeans

“The pair of jeans we buy from our favorite retail stores has actually travelled a 65,000 kilometers journey before it reached our closet! The journey starts in India, where the cotton is extracted and processed. Then, it goes to Pakistan and turns into yarn before being transported to Xintang in China. Also known as the “capital of the jean”, Xintang accounts more than 3,000 jeans factories and produces 800,000 pairs of jeans a day. From Xintang the fabric is sent to Tunisia, where the assembly is done, with buttons coming from the Democratic Republic of Congo, zippers from Japan and rivets from Australian. Then and only then, it reaches the shelves of our favorite Parisian high-street fashion stores,” said Ms Petrossian.

She then adds that throughout the entire value chain, from extraction to purchasing, a single pair of jean consumes 11,000 liters of water. Although the journey might slightly differ from one manufacturing company to another, Tatev Petrossian believes this example succeeds at illustrating the gaps of the current linear system.

"The most striking element of this story is that the fabric of jean, “denim” was initially created in the 16th century in a small town in the south of France - Nîmes, which is what originated the name of the fabric: “de Nîmes”, that is, “from Nimes”. Thus, the gaps of our current system become even more alarming and absurd as to the 600-kilometers-long Nimes-Paris journey, our jean’s journey has been multiplied more than a hundred times” she said.

Building up on this example, Tatev Petrossian points out that some companies now that have adopted circular economy principles: they collect worn-out jeans, which are turned them into furniture stuffing production before being used in construction sites as insulation material. After so many applications, the material is so degraded that it makes it possible to return it to our soil as bio-fertilizer.

Successful business example

Tatev Petrossian is adamant that we can and even have to develop business models in line with the principles of circular economy in Armenia. The business event “Circle Up Yerevan” was organized in November for the first time in Armenia to inform participants about the basic idea of the circular economy and how it could be applied to their own operations. The participants represented a diverse crowd of entrepreneurs and experts from both the public and private sectors across driving industries of the Armenian ecosystem.  

During the half-day event, the participants dived into workshop sessions where they were asked to brainstorm in group on Armenian companies and on how they could shift their respective operations from linear to circular model. The participants also attended live webinars presenting two international circular champions’ insights, Shifting Paradigms and Resortecs. Jelmer Hoogzaad, founder of Shifting Paradigms, supports identification and implementation of circular economy strategies and policies in low- and medium-income countries. He presented to the participants the latest publication of Shifting Paradigms, a metabolic assessment on circular opportunities in the city of Almaty, Kazakhstan.

Revolve Consulting is currently developing a consortium with Shifting Paradigms to conduct similar international publication applied to the Armenian case.

The second speaker, Belgium-based Cedric Vanhoeck shared his perspective as a circular economy entrepreneur. He founded Resortecs, a company that invented a patented innovation which facilitates repurposing and recycling of clothing to give it a second life.

“Processing textile items today is very complex and challenging as they are not designed to be disassembled for recycling. From buttons to zippers and other materials used in the making of a cloth or furniture, all of the parts are sewn together in a way that makes it almost impossible to separate the parts for potential recycling. That’s exactly what our ‘Smart Stitch’ enables, a 130°C dissolvable thread that makes repairing and recycling a breeze, helping therefore fashion companies to reduce both their environmental impact and the costs of their supply chain and waste management,” he said.

Business benefits

Tatev Petrossian believes that undertaking this radical system shift from linear to circular won’t happen by focusing the message solely on the environmental impact. Indeed, her experience led her to notice that unfortunately for a lot of economic players and change-makers, the environmental impact is not at all in their priorities’ landscape. However, promoting a system that has the potential to unleash new capital value and create additional revenue streams resonates differently in people’s ears.

“When I tell a business owner that they can have 40% revenue optimization by acting upon X or Y externalities, they currently have in its operations, the responsiveness to act on it will be completely different. Circular economy provides great opportunities for generating more disruptive business models while optimizing cost, and it present itself as the most pragmatic and proactive approach for the actual sustainability of a company’s outcome and long-term success,” concluded Tatev Petrossian.

Revolve Consulting’s founder assures that the feasibility of the ideas and thoughts engaged during the event will be processed in 2020 with relevant stakeholders, which will lay the ground for assessing the potential of a circular strategy blueprint for Yerevan.

Gayane Yenokyan
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