Satrup ecosystem in Circular Economy in Japan

About circular economy

In contrast with mass production and mass consumption, so called a linear economy, a new economic system, “circular economy”, is rapidly spreading out. Circular economy is a system to use resources efficiently and cyclically throughout its entire value chain and product lifecycle, while making effective use of stock and maximizing added value through services. In the case of Japan, through economic policies that promote resource circulation within a country, it will eliminate risks caused by disruption of international resource supply as much as possible. It also aims to make its resource circulation system within the country more autonomous and robust, which also gains competitiveness in an international market. Japan is now trying  to create a “resource-independent economy” that achieves sustainability and economic growth.

Startup ecosystem in Japan

Startup ecosystem in a circular economy in Japan is developing rapidly these days. Key stakeholders such as entrepreneurs, enterprises, investors, governments and educational institutions, are coming together to form sustainable business models that aim to use resources more efficiently and reduce environmental impact. A number of startups are also establishing new business models, driven by increase in an interest in environmental issues, government policy support, and enterprises’ commitment to corporate social responsibility (CSR).

Components of startup ecosystem Source) Created by Social Bridge

The components of the startup ecosystem include:

1. Company: Startup, other enterprise
   • Startups: In Japan, many innovative startups are emerging in the circular economy field. These companies provide products and services that promote efficient resource use, waste reduction, and reuse. Key areas include recycling, energy efficiency, plastic waste reduction, and product repair and leasing.
   • Enterprises: Large companies are collaborating with startups to introduce new business models and promote technological innovation in order to realize a circular economy. Collaborations between major companies and startups are increasing, particularly in areas related to product recycling, sustainable manufacturing processes, and energy efficiency.
2. Investor/financial institution:
   • Venture capital and angel investors are actively supporting companies in a circular economy in Japan. Impact finance is under development as well, following in the footsteps of European countries.
3. Government:
   • The Japanese government has implemented various policies and laws to promote a circular economy. In particular, governmental supports are provided to reduce waste, promote recycling, and shift to renewable energy.
   • (For details, seeColumn “Circular Economy and Social Bridge Approach in Japan”)
4. Incubator/Accelerator:
   • The number of incubators and accelerators have assisted circular economy startups. These provide businesses with mentoring, networking, and funding, creating an environment for further growth of startups.
5. Community:
   • In Japan, there are networking events and communities where entrepreneurs and experts in the circular economy field get together. These venues create opportunities for idea exchange and collaboration, and share resources and knowledge.
6. University:
   • Universities offer a growing number of educational programs and workshops regarding circular economy and business development in the field. It is expected to foster the next generation of entrepreneurs and business leaders.

In this field, a number of companies have implemented various initiatives described as follows:

Japanese companies in a circular economy (selected) Source) Created by Social Bridge

1. Recycling: Collecting waste and reusing it as new resources
   • Material recycling:
     • It is a method of processing waste and returning it to its original form using physical methods, including shredding, cleaning, compressing, or reconstituting materials for reuse as renewable materials. Although this method is relatively simple and cost-effective, it may result in poor quality depending on the material.
     • Target materials: plastic, metal, paper, glass
     • Examples: crushing plastic bottles and using them as recycled plastic; compressing and reusing aluminum cans; reprocessing waste paper and turning it into new paper products.
     • Company examples: Panasonic, Ricoh, Asahi Kasei, Fast Retailing, ESA, Remare
   • Chemical recycling:
     • It is a method of converting waste into its original materials and chemicals using chemical reactions which is especially used to recycle complex plastics and mixtures. Since the quality of the recycled material is maintained, it is possible to obtain higher quality recycled products than mechanical recycling.
     • Target materials: plastics (especially complex plastics), chemical products
     • Example: Chemically decomposing PET bottles to new plastic raw materials; decomposing plastics into monomers and converting them into new products.
     • Company examples: JEPLAN, Idemitsu Kosan, Toppan Printing, R Plus Japan
   • Bio-recycling
     • It decomposes organic wastes using bio processes such as microorganisms and enzymes to produce new organic matter and energy (e.g. biogas). This methodology is especially applicable to food and agricultural wastes.
     • Target materials: food waste, agricultural waste, wood chips, paper
     • Examples: Composting food waste applied as fertilizer; converting agricultural residue into energy as biogas
     • Company examples: J Bio Food Recycle, Mitsui Chemicals, Takeei Green Recycle, Kobec
   • Upcycling:
     • It is the process of turning waste into something with new added value. It makes it possible to increase the value of the original product or material.
     • Target materials: old clothes, wood, metal, glass, paper
     • Examples: Using old denim to make new bags and accessories; using scrap materials to make furniture and artwork.
     • Company example: fabula, fermenstation
   • Traceability:
     • By building a system that can track the life cycle of products, it promotes more efficient recycling and the procurement of high-quality recycled materials.
     • Example: Putting a QR code on a product so that consumers understand what materials can be recycled and how to recycle them
     • Company examples: digglue, Recotec, Amita Holdings, NTT Data
2. Reduce: decreasing resource consumption and wastes
   • Redesign if a product
     • Modularization:
       • It is important that parts are replaceable as well as a product has a structure that can be disassembled and reused.
     • Energy efficiency:
       • It is necessary to use energy efficiently in the production process and minimize the environmental impact. Additionally, it is recommended to design throughout its product life cycle with energy conservation.
   • New materials application to reduce an amount of virgin materials:
     • Bio-based materials (biomass materials)
       • Bio-based materials are made from renewable plant-based materials, which can replace petroleum-based plastics and chemicals. Some of them are biodegradable, leading reduction of  their environmental impact.
       • Examples: PLA (polylactic acid), PHA (polyhydroxyalkanoate), bioplastics
       • Company examples: Biomass Resin Holdings, Toray, Mitsubishi Chemical, Kaneka
     • Cellulose material
       • Cellulose is a major component found in plant cell walls. It is abundant so that it is expected as a useful renewable resource. Materials made from cellulose are applied to make paper, fibers, films, etc..
       • Example: Cellulose Nanofiber (CNF), Verita Cellulose
       • Company examples: Nippon Paper Industries, Daio Paper Industries, Oji Holdings, Chuetsu Pulp Industries
3. Reuse/Share: focusing on reusing items and parts as they are
   • Product as a Service (PaaS):
     • The idea is not to own it, but to use it only when needed. Rather than purchasing a product, the product is provided as a “service”. When the product is no longer needed, it is collected and reused.
     • Examples: car sharing; shared house/co-working space
     • Company examples: Uber, NearMe, Airbnb, ADDress, Sanu, wework, Kaman, Class, Social Interior
   • Refurbishing
     • Products that have been returned to the manufacturer due to initial defects are resold in like-new condition after being repaired or adjusted.
     • Examples: Online marketplaces for used and refurbished goods; refurbishment services for smartphones and computer equipment.
     • Company example: Back Market
4. Repair: fixing a defective part of a product so that it can be used again

With the vision “creating a culture of resource circulation”, Social Bridge promotes a circular economy through reducing wastes by collecting and recycling. Our main businessbusiness is to collect and wholesale used paper. Based on resources and experiences in this field, a new project called “WAKERU” was launched  in 2024, aiming to create a new resource recycling culture by separating resources and waste.