LOOPED IN with Carl Warkentin

From Pilot to Scale: Why Circularity Is Europe’s Next Competitive Advantage with Matthias Ballweg

• Carl Warkentin • Season 1 • Episode 11

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What if the most sustainable business model was also the most profitable? In this eye-opening conversation with Mazze Ballweg, we dive deep into why circular economy has evolved from an environmental nice-to-have to an economic imperative for businesses across Europe.

Mazze takes us on his journey from traditional consulting at McKinsey and strategy work at Volkswagen to the moment sustainability "hit him" in 2019, prompting his career pivot toward circularity. With refreshing clarity, he explains why material circularity tackles multiple planetary boundaries simultaneously - revealing how 90% of biodiversity loss and 50% of climate impacts stem from material extraction and processing.

The heart of our discussion centers on CIRCULAR REPUBLIC's groundbreaking work transforming supply chains by connecting large corporations with innovative startups. Their battery recycling pilot perfectly exemplifies this approach: combining startups specializing in reverse logistics, automated disassembly, and advanced recycling technologies to create a more profitable alternative to traditional processes. This isn't just theory - it's practical implementation that's changing how businesses operate.

What makes this conversation particularly compelling is Mazze's economic framing of circularity. "No one needs to care about planetary health to invest in circular economy - the business case alone is compelling," he explains. As global supply chains fragment and resource security becomes increasingly uncertain, circular approaches like urban mining and regenerative materials become essential for Europe's competitiveness.

Whether you're a business leader seeking new opportunities, an entrepreneur developing circular solutions, or simply curious about how our economy is evolving, this episode offers valuable insights into how circularity is reshaping business models across industries. Listen now to understand why circular economy isn't just good for the planet - it's vital for future business success.

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Carl:

Welcome to LookedIn, the number one podcast about circular economy and regenerative business models. After years of closed-door conversations with investors, founders and corporate leaders, I've decided to take these discussions public, so together we are exploring how to scale impact, build profitable businesses and redesign our economy for a better future. Please make sure to subscribe. Thank you for tuning in and enjoy this episode. Matze, welcome to another episode of Looped In. Thank you for being here. Thank you for taking your time. We're sitting in munich, in the office of the munich zero waste innovation hub in the munich urban collab, where also our offices are from the circular public initiative. We know each other now for more than three years built this amazing circular public initiative. So today I would like you to introduce yourself. Maybe. Um, who is matze balvik?

Mazze:

thank you, carl. Very honored uh to be uh now also part of the podcast and, yeah, curious where our conversation goes and maybe quickly a few words on on myself. I am now doing circular economy topics for some six years. Started with that in 2019, but before that I had a very classical career that had almost nothing to do with circularity. I did consulting after university often a little bit technically focused, but always top management consulting with mckinsey and then shifted to the volkswagen group, did a strategy for trucks, did my truck driving license. I was very much involved in the decision towards alternative drivetrains, focusing on battery electric mobility and not so much on fuel cell, which was really pioneer work back then and I loved it.

Mazze:

But in 2019, something special happened and sustainability somehow hit me. I really wanted to make a difference. It's hard to tell where exactly it came from. I was also frustrated how the speed of these topics was going in the large volkswagen group and especially, and in the trucking part of it, and really wanted to run faster. And that was the first time where I made an unusual career move. Before it was very straightforward going from consulting to a large car maker a very classic career, but then it was really the curiosity to delve deeper into sustainability topics because I was convinced that this is what would make a difference.

Mazze:

And then I joined Systemic Systemic, back then already very established as a sustainability think tank, sustainability consultancy. I always loved to call it a system change company. It had very different vehicles, investments, advocacy, coalition building and really coming from a theory of change. How can we change a system for good, bring a good disruption that helps business to grow, that helps economy to grow, but at the same time, does it in a way that it's increasing planetary health and not costing planetary health, and you always need different types of that. Business can't do it alone. You need the government bodies to act accordingly, you need civil society, and what I loved about systemic was it tried to take all these angles and I did that work mainly in mobility, helped building the Munich office, worked a lot in Geneva with the World Economic Forum. Back then we founded the Circular Cars Initiative 2020 at the World Economy Forum in Davos. I worked quite a bit in Brussels writing reports how to think a European Green Deal, also as dematerialization or decarbonization, and during my time I'm more and more focused from overall sustainability topics to circularity and happy to also delve a little bit deeper in, like why that was.

Mazze:

And that's where all my circularity excitement then grew and developed.

Mazze:

And from this very holistic work around circularity, at some point in time the phone rang here from this innovation ecosystem at Unternehmertum in Munich that told me hey, matze, there are large companies like BMW that are willing to invest into circularity. They do see the potential. They want to implement it and bring it to the ground. And that for me was the perfect thing, because all the theories we developed, all the direction setting work we did in large coalitions where partly bmw was also part in the circular cars initiative and so but to really bring it to the ground now with specific projects and make material flow circular felt like to finally being able to implement all the strategic work I did before, and that's what we're now doing for three years I would love to understand a bit more why and I think that's generally a good question, but also, especially with your personal background why circular economy was the, the specification you went for, and also probably why circular economy in general is so crucial when, when I looked at the whole space of sustainability topics.

Mazze:

The energy transition is a hugely important topic, but for me it always felt like intellectually solved right, let's stop burning gas. It's, that's not a simple task. There are hard to evade industries, obviously, but also for those there are solutions sketched out in reports. You need a few market mechanisms, you need a CO2 price. It's like a train who is already on the rail Right and it's running, not the right speed yet, but the direction is set and you need to increase speed and there are quite a bit of initiatives helping to do so. We have peak combustion engine cars since 2017. Since 2017, combustion engine cars are in decline, like this year. I think it was less than one percent five percent of the additional electric electricity capacity on the planet in coal, oil and gas. Every new electricity source we built on this planet is renewable already and we still need to increase the speed. But it's, it felt, somehow solved. And I was intellectually, for my curiosity, much more triggered by the topic of material, because it also affects much more sustainability dimensions.

Mazze:

Some in the sustainability space might know this topic of carbon tunnel vision that basically says sustainability is much more than co2. We do have different planetary boundaries. We have the health of the oceans, we have biodiversity topics, we have topics around the nitrogen cycle. So there are quite a few dimensions where we need to act more sustainably and they are also super severe Even if we solve the CO2 and the climate questions. If we don't solve the biodiversity questions, planet is doomed. That's how you can actually put it.

Mazze:

And the special thing around circularity, which deals with material not with energy, but with material is if we reduce the material footprint, we are addressing most of these planetary boundaries. 90 of the biodiversity loss is caused by take scrapping materials out of the ground and then refining them, and uh. 50 of the climate crisis is addressed by material uh mining and refining. So there is uh. If you focus on materials, we're also addressing a little bit of the co2 question, but also a lot of these other sustainability questions a little bit of the CO2 question, but also a lot of these other sustainability questions and it's much more unsolved. There are much more question marks how to really do it, no train that is already on the rail, but really interesting work to be done to solve these questions, and that was always triggering me, right and I and I love it that circular economy tackles all of these topics and the same time, not only with the argument of sustainability but also with.

Carl:

It is a business model and, as I think we like to say in our pitches sometimes, the only viable business model in the future. So sometimes the only viable business model in the future. So let's go back to the work you've done in in Davos and with the, with the whole car industry and I think the battery passport right that you also implemented can you share, like I think there were already a couple of projects that you were involved in with circular economies before joining Circular Republic.

Mazze:

Yes, happy to talk a little bit about it and let's maybe make sure that we also shift a little bit. To focus, then, on this different motivation, because we are now coming from my personal motivation to join this topic of circular economy, which is indeed a sustainability-driven one, but I really feel that's changing. No one needs a sustainability-driven one, but I really feel that's changing. No one needs a sustainability-driven motivation or needs to be interested in planetary health to invest in circular economy. We're past that point already and that's especially cool about circular economy for me.

Mazze:

But some projects we worked on on, for example, the circular cars initiative, where we had 90 players from the automotive industry, from basf, delivering very early raw materials to different tier two, tier one suppliers, car makers, but also workshops, end of life companies, where we try to find holistic solutions that increase circular, circularity very much on a concept level, flow and jointly defining also the business impact and making sure people understand the topic, finding joint commitments Also.

Mazze:

For example, that was one of the large topics we worked on. We also have set up with the German, funded by the German government, actually a battery foundational work around what actually needs to be defined in the Battery Passport as dynamic data or the static data? What should be part of the upstream footprint and whatnot Not a specific IT solution and whatnot Not a specific IT solution? There are now plenty of IT solutions available for product passports in general and battery passports specifically, but we engage a lot in the foundational work on what data should be included, which is now foundations that everyone who provides an IT solution for a battery passport is able to use.

Carl:

I love that example and when we will later talk about how we started Circular Republic, we will stay actually in the same industry, right, because the first big project we had was in the batteries industry and you mentioned before. For you it was so interesting to start Circular Republic because of you know, to actually start implementation of those things. Maybe you can share more about that and basically explain what Circular Republic in that sense is all about.

Mazze:

At Circular Republic we are working a lot with large companies. We're working a lot with large companies. Yes, we're having a full overview of the landscape of startups in the circularity space and we're trying to involve them in our projects as much as possible. But the focus of our work is transforming supply chains value chains with large companies. We're having a large training portfolio that serves as an enabler. But once we get specific, it's about moving material on the ground, and a good example is that battery project.

Mazze:

It was the first one we did at Circular Republic, where we took a couple of tons of used batteries scrap, basically from large OEMs, which was said to be sent to recycling. But that's, in Europe, still a process where you need to invest money. So no one is buying a broken battery. You need to put more than 1,000 euros per ton on top of it. So someone is collecting it because it's a very special transport, and then it's manually dismantled and then it's put into a blast furnace with 1400 degrees celsius and and yes, then you can recover nickel and cobalt. But it's still quite an energy and labor-intense work process and that's what makes it expensive, and we realized that already in the Unternehmertum Munich startup ecosystem we have so many startups that have solutions for part of it.

Mazze:

Startups that have solutions for the reverse logistics stackable, inflammable boxes, which is a lip cycle as a startup A startup like CircleLine that has automated disassembly, a robot arm that identifies the screws itself and is able to decide do I need to drill it or can I just screw it, which saves a lot of manual labor.

Mazze:

And a hydrometallurgy startup that is having a wet chemical process and recovering graphite and lithium as well, which get lost in the normal process. And these capabilities we brought together and piloted it with a couple of tons of old batteries, tested it and brought everyone to the table the engineers from the large OEMs like BMW or MAN or Webasto, a large tier one supplier and the different startups SAP, for the topic of the passport and the data behind it and demonstrated, for a couple of tons of batteries, a circular supply chain. And from here now it's developing and people are starting to work together bilaterally in small consortia. Our role was to build functioning pilots that show a way that is more profitable than status quo Ideally much more profitable than status quo Ideally much more profitable than status quo and now we're doing this for all kinds of different industries, but it started with the battery project and that's still partly a blueprint for how we bring together startups and large companies to jointly test new supply chains.

Carl:

Is this what makes circular republic special? Because I mean, I I personally obviously can mostly speak about the textile industry and there are so many initiatives from accelerating circularity, elemick, arthur, the footwear collective, uh, then we have here our neighbors from circular valley Valley, also in Germany. There's so many different initiatives in various industries. What does make Circular Republic in that sense special?

Mazze:

So there are a couple of things that are specifically attractive around this ecosystem ecosystem and I don't think that, uh, that's something everyone else doesn't have all of these initiatives to have an enormous value and it actually needs much more initiatives and coalitions uh, like circular public, like al macarthur and others. There are not enough of these coalitions, and yet, nor for the strategic parts, neither for implementation, but within this implementation part, there are a couple of nice assets we bring together here. First is this innovation ecosystem Now, for the second time in a row, ranked also by the Financial Times as the largest, most successful startup ecosystem in Europe, which means we're having access to unprecedented amounts of circular economy startups, having a super clear radar what technologies are available for repair, for different recycling technologies, etc. And can bring in all those startups, and startups typically love to cooperate with this ecosystem, which makes it easy to bring in new technologies and innovation in those projects Easy as, I think, as easy as can be nowhere else.

Mazze:

Then we have high power innovators, also from the corporate side by now, more than 20 companies that bring in their full innovation, power, their rates, to pull these projects at industrial scale. We're also aiming to do projects that are scalable and implementable and really change something in the companies, and that's quite an asset that we're, I think, past this subcritical size. We're really able to pull off also larger projects with quite a few tons of material because there are strong partners in the ecosystem. And then we also pull together some really cool talent Like you are for textiles, I think, one of the most reputed persons in circular textiles, at least across Europe, if not beyond, and that's an asset, right that helps us to bring always the right companies, the right startups and the right momentum for implementation to all our topics.

Carl:

Yeah, I mean our ecosystem of Unternehmertum, I think is really crucial and special. You mentioned startups and I think it's part of our Enable offering that we developed a matchmaking platform which is basically kind of like a big database of startups called Easy Match, and maybe you want to share a bit about that.

Mazze:

We are constantly thinking about how to bring this wealth of information that we have knowing all the startups and also all the details around the funder team, the funding, the founder team, the funding and also the details of the business models that is available in this ecosystem to those companies where it matters, that want to work with innovative players to test new value chains, and that's the simple idea. We do have a super large database. We have a couple of mechanisms to keep it up to date and fill it, and EasyMatch is part of that. It provides a front end for startups to help keep their own information up to date while we're also doing a lot of scouting work in addition and gives an access to companies where they can curate it by us, ask questions around circular technologies, circular business models they're interested in, and find the right startups yeah, I think that's I.

Carl:

I love that and it's such a value for investors, for the capital side, which is also playing a big role in unternehmertum with the companies, obviously, and in the startup. So it's really bringing kind of everyone together and I really love that.

Mazze:

There is one thing, I think, that also makes Circular Republic and Unternehmertum a little bit special and it's coming more and more in many other ecosystems as well and that's the narrative around circular business case. I think while we talked about sustainability in the beginning, from day one of Circular Republic, we defined success of Circular Republic not via sustainability KPIs. Yes, we do have a strong sustainability motivation. Yes, we do have sustainability KPIs, but first and foremost, we want to build successful circular circular businesses, and that's also because we're convinced that you can build successful circular businesses and that's also what makes this topic very attractive. It's business development people that are interested in working together with circular republic because those value chains are profitable, and it's great to have the backing of your sustainability manager because he also thinks you should develop those, those value chains.

Carl:

but that's really something that also helps to give those topics momentum and larger budgets and I love that you now put this out there, because my next question would have been and and it still is like a bit critical meaning do we still need more pilot projects? But I I understand the question of scalability, but I think you already started answering that a bit like what is your view on, on pilot projects and their meaning?

Mazze:

in the end, it's about scalability. However, we're still in the field of, of of innovating and testing and working together. Every scaled value chain starts with a small one, yet there is no scaled up circular battery value chain in Europe, and there are a couple of pilots, and you need both. You need to think hard and you need both. You need to think hard. Can I scale one of the existing ones or some some of the existing pilots, or can I test a different approach, different collaboration between players, to make sure it finally scales? And that's true for many textile value chains as well, though, obviously, if there is obviously nothing scaled up available yet, let's keep working harder To find something, and it also might be the definition of pilot.

Mazze:

Also, players that haven't worked together yet that start working together, would probably call their first joint project pilot. Even if it's two large companies that start implementing a return scheme for their products, and even if there is a scaled up return scheme in their industry available already, they would probably call it pilots, and in that sense, yes, we need much more pilot. Every company that does not have a scaled up circular value chain yet needs a pilot to get cracking.

Carl:

I like it and I think what also makes our ecosystem and Circle Republic so special is, yes, we do a lot of pilots, but they are, from the beginning on, designed in a way that they are scalable as well.

Mazze:

And that's the important thing, yeah.

Carl:

We have talked about enabling, we have talked about ACT. The third pillar of what we do is called inspire, what probably is something that we do right now, so maybe share a bit about what we do there from day one we were very clear about let's not do this in silence.

Mazze:

I mean, it was trained at mckinsey, where we always tried to not be loud about our work, do great work, support companies in doing things differently, but not shout that out into the world at least in most cases but rather silently support the companies that should change.

Mazze:

But at Circular Republic, we quickly realized we need to advocate for this topic.

Mazze:

This topic needs to be known much more because, uh, there are still so many people that don't realize the value of circular value chains, and also a lot of the value can only be captured through collaborative work in the ecosystem.

Mazze:

If SAP and BMW and Webasto and MAN do projects together, they can capture the value from it, and that means we do need to be loud around it, and that's why we're trying to tell the stories around our pilot projects, around the startups in the ecosystem, around all the successes as much as possible, so people get inspired and start doing similar things. It's part of scaling circular economy across Europe overall, because it's a vitally important thing for Europe and Europe's economic success to scale circular economy across europe overall, because it's a vitally important thing for europe and europe's economic success to scale circular economy. Uh, so that's what for us a lever also to scale our work, if we tell a lot about it and people can, with us or without us, start doing similar things yeah, and I think the success of of our events, uh, like the different forums and evenings that we offer, but especially the circular republic festival, contributes a lot.

Carl:

Think the success of our events, like the different forums and evenings that we offer, but especially the Circular Republic Festival, contributes a lot to the success of our project and allows a huge platform to communicate and educate. Before closing, you're such a visionary in that field. Let's take in 10 years from now 2035, where do we stand in terms of circularity? Pick an industry or overall? Um, so where do we stand? What and what does that mean, also for an initiative like circular republic and for you personally?

Mazze:

that's an interesting question and I I think there is hardly a way around scaling circular economy in so many industries in Europe, because I'm pretty convinced that global value chains will, to a certain degree, become more fragmented again, become more fragmented again.

Mazze:

We're entering a decade of global conflict, which is also, especially by climate change, accelerated, and trust on an international level is endangered and will be endangered for quite a while. That means that relying on global value chains for any industry is not that easy and getting harder, and circular economy is playing a crucial role for the competitiveness of Europe. So if I imagine Europe in 2035, there are quite a few unknowns on how we stand in the geopolitical sense in the world, but in any scenario where Europe is standing well and doing good and having a high competitiveness, there's definitely a super high degree of circular value chains, meaning Europe being able to not waste any resources anymore but really reuse everything we have around. Use the full potential of urban mining, use the full potential of regenerative material. Export also that knowledge. We don't have any relevant resources in Europe to dig out of the ground.

Carl:

We have our brains and if we build economic success from that fact, it's a circular economy you have a beautiful view on on the world and all the geopolitical influences, also when we have our events at the munich security conference. How optimistic are you that we are now getting there? I think what I realize and why I'm asking that is a lot of companies are now not really buying into the sustainability argument, but more obviously for economic reasons and for supply chain resilience and onshore production, urban mining are becoming more popular. How positive are you that companies are really investing in changing their business models and how they work?

Mazze:

That depends actually a little bit on the industry. Every industry that is working with critical raw materials, for example, now is focusing on circular economy. Necessarily, we do need to get also some resilience and independence around it. If we're working with copper, steel, graphite, etc. It's a different story for companies that work with plastics textile companies, packaging plastic, packaging plastic. It's much harder to find economically valuable, sustainable business models and value chains in those industries that work with the super cheap virgin plastics. You do need more of a sustainability motivation there, if you will, more of a sustainability motivation there, if you will. And I see a couple of ways how the change in the critical raw material driven industries can also, over time, accelerate the change in the other ones, and that's, for me, also part of the answer. But I realized that it's now starting with critical raw materials and there is more of a pioneer mindset necessary to quickly transform the other ones, which is something we still should urgently try.

Carl:

Thank you so much, matze. Thank you so much for your time. It's been a pleasure to talk to you today, but also over the last three years, to build this initiative together and work on the same mission, and I'm excited to continue to do so.

Mazze:

Absolutely. The game is still on.

Carl:

Let's continue.