What can we learn about the circular economy from social entrepreneurs?

Interview with Stephan Kampelmann, Co-founder and Managing Director, Sonian Wood Co-op

Every year the city of Brussels imports over 60 000 tonnes of wood, when the wood could be sourced from the Sonian Forest just outside the city. Instead, most of the wood sourced from the forest is exported to Asia to be processed and sent back as finished products. The Sonian Wood Co-op was launched in 2019 to change this dynamic. The co-operative’s innovative business model is building strong local and circular value chains that respect the environment, empower people and build community capacity.

Why and how did you start the Sonian Wood Co-op and why was the co-operative model particularly well suited for your purpose?

The issue that led to the creation of the Sonian Wood Co-op is a common one: local value chains for wood are almost absent in Europe. In our case, the situation was particularly dramatic. We are based in Brussels, a city with a strong and growing demand for wood. More than 60 000 tonnes of wood are imported into the city every year, from all over the world. At the same time, the city has one of the largest periurban forests in Europe: the Sonian Forest. But the large quantities of wood produced by this forest are almost exclusively exported to Asia… only to come back in part as finished products.

Importing large quantities of wood while simultaneously exporting locally available resources is increasingly out of touch with environmental objectives. Yet local value chains for wood are also great economic, social and cultural opportunities. They create value and fiscal revenues, local employment and have reduced conflicts and frustrations among all stakeholders related to our local forest.

Forests today tell a story that spans many generations. The Sonian Forest as we know it was planted in the early nineteenth century with the objective of producing wood and energy for the city of Brussels. Generations of forest managers have kept this heritage alive. It is a common good that should be used to benefit the local community. This is why we opted for the form of a co-operative. In our case, the co-operative includes members representing different steps of the value chain of local wood, including a lumber jack, sawyers, and carpenters, but also institutional members that represent the public authorities who own forest resources. Whereas a standard company will prioritise an objective of growth – which is less compatible with the limited resources in a spatially confined ecosystem – our co-operative pursues a different kind of mission: the creation of a local value chain for wood from the Sonian Forest.

As a co-operative, how does the Sonian Wood Co-op contribute to regional strategies for the circular economy and open opportunities for public-private partnerships? 

While the form of a co-operative is different from business-as-usual companies, it has also several advantages over other social economy entities such as NGOs, foundations or informal associations. Creating a local value chain for wood is capital intensive: we had to buy machines, purchase large quantities of wood to create an inventory, make upfront investments in storage space and transformation that can only make a return once the wood is dry enough to be used in woodworking projects. This process can sometimes take several years. Contrary to non-profit organisations or associations, a co-operative can raise this kind of capital. It is relatively easy to issue shares without creating the risk of losing control over the mission of the co-operative. The legal framework of co-operatives in Belgium is specifically designed to simplify the integration and exit of members at minimal administrative costs. At the same time, shares in co-operatives are typically not traded and it is therefore almost impossible – and not attractive – for an external investor to buy a majority of shares and change the mission of the co-operative. This is why the co-operative model has been used by many family business to protect them from takeover by investors that could be interested in short-term profit.

I think regional strategies for the circular economy are increasingly moving beyond investing in niche projects and models. Instead they are looking for ambitious investments that can operate at scale. Co-operatives are an interesting vehicle for ensuring that initiatives stay on track in terms of their environmental and social objectives while allowing for the kind of investment and scale that is necessary to make structural changes to our economy. Moreover, it is perfectly possible to incorporate public capital and private entrepreneurship in a co-operative model. Some of our biggest shareholders are public institutions, but these institutions would not have been able to channel the entrepreneurial energy that was necessary to build a local value chain for wood.

What advice would give to others looking to start similar endeavours or to policy makers looking to support the social/circular economy?

I have been working in the circular economy for quite a long time now, first as a consultant and then as an academic. Now I am more involved in the entrepreneurial side of the circular economy. There are so many diagrams, toolboxes and guidelines on how to build a circular business model/neighbourhood/city/region/etc. that it sometimes looks as if things can be extrapolated from one place to another, or as if there are recipes that will work in different places. But I think that many initiatives and policy makers tend to underestimate the specifics of the local context and the importance of local entrepreneurship.

Before I started the Sonian Wood Coop, I studied how local value chains for wood worked in different places around Europe and North America. Once you look beyond abstract issues that are indeed similar in different regions – i.e. the famous “loops”, “Rs”, “types of stakeholder”, etc. – you see that things work really quite differently in each initiative. This is perfectly normal if you think about the way that business models work in the reality. While academics are able to classify them in large categories, in the real world each business develops differently – even if they work with the same raw material and in the same sector.

Sometimes I feel that policy makers are so eager to support the transition towards circular economy that they take action – for example in the form of objectives, guidelines, incentives, grants, plans, programmes, etc. –  that are not always aligned with the local entrepreneurial scene. I believe that nothing replaces the intuition and energy of (social) entrepreneurship. If there is no vibrant local entrepreneurial scene, it has to be built first before other tools can become effective.

What’s next for the Co-op?

We are satisfied with the development of the co-operative so far, but we are a young start-up that still faces a lot of risks and uncertainties. The task for the months and years ahead is to strengthen our activities and business model. We have also been contacted by people from other regions who are eager to develop local value chains in their area and we are happy to help them on their way by exchanging experiences.

• To learn more about the OECD’s work on the circular economy, check out the OECD’s latest Policy brief on making the most of the social economy’s contribution to the circular economy, as well as the OECD Programme on the Circular Economy in Cities and Regions and the OECD RE-CIRCLE project on resource efficiency and circular economy.

• OECD related event: https://www.oecd.org/local-forum/workshops/social-circular-economy.htm

• OECD/EC Publication: Making the most of the social economy’s contribution to the circular economy

• The new OECD report Future-Proofing Adult Learning in Berlin, Germany  also provides further examples of how Berlin is preparing and improving its adult learning system to adapt to the rapidly changing demand for skills.

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