Resources & Publications

"Unlocking fashion's true potential means reimagining the way we make, use and reuseclothes. It demands innovation, showing the entire industry what's possible and thentaking solutions that work to scale." - C&A Foundation Annual Report

Circle Economy is delighted to announce a new partnership with Fashion for Good, the global initiative to make all fashion good. Through this partnership, Circle Economy and Fashion for Good will work together to encourage the widespread adoption and implementation of circular principles, strategies and technologies in the fashion industry. Fashion for Good, an initiative launched with an initial grant by founding partner C&A Foundation, convenes brands, producers, retailers, suppliers, non-profit organisations, innovators and funders, united in their shared ambition to make all fashion good. By reimagining the way fashion is designed, made, used and reused, Fashion for Good focuses on sustainability and redesigning the global supply chainFashion for Good has six complementary programmes:

1. Accelerator Programme: Fashion for Good works with Plug and Play, a leading Silicon Valley accelerator, to give promising start-up innovators the funding and expertise they need to grow.
2. Scaling Programme: Fashion for Good finds innovations that have proof of concept and helps them scale by offering bespoke support and access to expertise, customers and capital.
3. Apparel Acceleration Fund: IDH, The Sustainable Trade Initiative, is scoping a fund that aims to catalyse access to finance where this is required to shift at scale to more sustainable production methods.
4. Good Fashion Guide: This open-source guide proves that Good Fashion is feasible today and shows brands how to embrace it. The online guide provides practical tips, a self-diagnostic tool and a step-by-step guide to production, based on lessons learned while creating the world’s first Cradle to Cradle CertifiedTM GOLD cotton t-shirt produced in Asia, at scale, at a value retailer price point.
5. Launchpad exhibition of the Fashion for Good Experience: Fashion for Good has opened three floors to the public in its historic building in a first step to build a community around the ambition to make all fashion Good. With vibrant displays, thought-provoking messaging, and a call to action, the launchpad will inform and inspire its visitors to be part of this larger movement of Only Good Fashion. In 2018, the launchpad exhibition will evolve into a permanent Experience Centre.
6. Circular Apparel Community: Fashion for Good has rented a historic building in the heart of Amsterdam (our first hub) in order to bring like-minded organisations and partners together, including the Sustainable Apparel Coalition (SAC), Zero Discharge of Hazardous Chemicals (ZDHC) and Made-By. This community will embrace collaboration to create change and build a vibrant eco-system of entrepreneurs and innovators in the name of circular fashion.

We look forward to the collaboration ahead!

[hr]

Together with our strategic partners, we develop game-changing, circular solutions that have the potential to transform entire industries. Through this pioneering work, we develop practical insights, tools and frameworks, that open up new opportunities to scale up and accelerate the transition towards a circular economy.

[cta link="http://www.circle-economy.com/work-with-us/strategic-partnerships/"]Join us[/cta]

On July 14th, Circle Economy opened its doors for another edition of Open Office Hours and welcomed circular fashion and textiles enthusiasts for a tour of what the Circle Textiles team has been working on over the past few months.

We're here to 1. Be merry 2. Put our finger on the pulse 3. Share our work! #openofficehours pic.twitter.com/tEeozWw4Ff

— Circle Economy (@circleeconomy) July 14, 2017

As circularity gains new ground, our team of textiles experts continue to work hard on ensuring the missing link to close the loop in fashion is accounted for. Brands can source recycled content, design for cyclability, and collect and resell used garments, but without the right infrastructure and technology in place, the majority of our clothing will inevitably end up landfilled or incinerated. This is where our work comes in: from Beyond Green and Fibersort to Circle Market, our Circle Textiles Programme is constantly pioneering and investing in the projects that will move the textiles industry beyond the why and get down to the nitty-gritty of how to make circularity a reality in fashion. Learn more about the Circle Textiles programme.

Watch the live stream.

‍

Beyond Green 2017 will dig deeper into our 5-step plan to circularity. [cta link="http://circle-economy.com/beyondgreen2017"]Why not join us?[/cta]

‍

This is the second step of our 5-step plan to circularity. Read step 1 here.Designers are often seen as being at the helm when it comes to driving sustainable change in the fashion Industry. And it's no wonder why, when an estimated 80% of a product's environmental and economic impact is determined at the design stage. But with great power comes great responsibility, and we must ensure that designers have both in equal measure. In order to inform and empower designers to effectively drive this change and enable a circular fashion industry, we’re expanding on  two of the design principles we believe are critical in moving past the concept of waste.

DESIGN FOR DURABILITY

After WW2, the bid to encourage ‘consumption as a way of life’ triggered a unanimous drive toward mass-produced, disposable goods, and new levels of hyperconsumption were made possible through the twin methods of planned and perceived obsolescence. Today, both strategies continue to be adopted by the fashion industry, and with success: between 2000 and 2014, for example, consumers have increased yearly consumption by 60%, but use their clothing for about half as long. The first cornerstone in beating planned and perceived obsolescence is to design garments that last: extending the life of clothes by an extra nine months of active use alone would reduce carbon, water, and waste footprints by around 20–30% each. Physical DurabilityWhether it is using high quality materials, finishings, and construction, or ensuring that style and fit are timeless and not trend-sensitive - physical durability is all about designing and constructing a garment so that it can resist damage and wear, and serve a long and useful life. In the past, this was common practice (who can forget these infamous unbreakable stockings from the 1950s!) but now it is a novelty and a niche, with a few pioneering souls pushing durability to the max. Emotional Durability That said, durability this is not all about quality - emotional durability plays an important role too. After all, why is it that we cling so dearly to the 80s denim our mother gave us, or the sweater we bought during college years? Research posits that by designing garments that engage and delight the consumer over time, such as Patagonia's pre-loved Worn Wear collection, our heightened emotional attachment to and satisfaction with them can ultimately save them from landfill. Mythbuster:Some scientists and design experts are questioning whether longer garment lives are always necessarily a good thing. A new school of thought, trialed by Filippa K and Mistra Fashion Futures, is pushing for fashion to adopt appropriate lifecycles. The groundbreaking research is debunking the notion that 'slow fashion' is always preferable to ‘fast fashion’. When designed with intent, could a short-cycle, hyper-recyclable garment be the future of fashion?

DESIGN FOR CYCLABILITY

While designing for long life is a basic and critical principle, the unavoidable truth is that all garments will eventually be disposed of by the consumer. And what then? All good things must come to an end, and good design will plan for this inevitable moment of disposal. The extension of a long-life garment, is a garment that is built to have multiple lives. Design for Repair and RedesignWhile the repair and reuse of garments is often tackled through the business model itself - e.g. Mud Jeans’ jean leasing scheme or the LENA library -  clever design and the application of disassembly and modularity principles can further optimise such strategies. Conducting research and user testing to assess where the damage is likely to occur in a garment allows us to design in such a way that product parts can be easily replaced, upgraded, or fixed. Design for Recycling At present, many design approaches to recycling are ‘reactive’ as they attempt to work with existing waste streams at the point of disposal. Designers need to adopt a more ‘pro-active’ systems-based approach that identifies potential barriers to recycling at the outset and in doing so ‘design out’ complicating factors. In order for this to happen in practice, manufacturers and designers must first understand the processes that occur at a product’s end-of-life, so that they can ensure their products have effective ‘inbuilt’ recycling routes and can be easily (and fully) incorporated back into the material cycle. Basic guidelines include the use of mono fibre and mono material for ease of recycling (Kate Goldsworthy’s collection is a great example!), the elimination of hazardous toxins, dyestuffs, and coatings, and the elimination of heavy hardware and/or electronics. Of course, designing for cyclability is context-dependent and should be flexible, as technology is in constant development. Therefore, it is critical that designers foster active and ongoing relationships with the recovery solution providers themselves, to move beyond 'guesstimate' principles and co-develop dynamic and comprehensive design guidelines that match the input material requirements of available and advancing recycling technologies. Mythbuster: Unfortunately, just because a garment is technically'recyclable' does not mean that it will be practically recycled. No matter how much care is put into the design, after a garment ‘made for recycling’ has reached end of use, to expect it to get back to a producer with the recycling capabilities needed to actually turn it back into usable fibres is currently unrealistic. Approximately 75% of post-consumer textiles are never even collected and from the 20% that is collected most is sold on for re-use or downcycling. Keep an eye out for step 5 in the series, where we will explain what is needed to overcome this leak in the system. Here’s what you can do to get started!

• Consider the purpose of your garment and what the appropriate lifecycle for that function is.  
• Consider what parts your garment is made of (tags, zipper, basic fabric, buttons, etc.) and research and assess the impact, durability and recyclability of component parts.
• Consider what will happen to your garment at end-of-life and how you can design your product so that repair, reuse and recycling is not only possible, but probable.
• Get inspired by those who are pushing the boundaries in this space including MUD jeans, Freitag, and Filippa K.
• Deep dive into the topic:

• Circular Design Guide (EMF/IDEO)
• Close the Loop
• The Sustainable Clothing Action Plan

‍

We will dig deeper into our 5-step plan at Beyond Green 2017. [cta link="http://circle-economy.com/beyondgreen2017"]Stay in the loop[/cta]

‍

Jump to the full conversation.The circular economy holds enormous promise for the fashion and textiles industry to revamp its current systems and move away from unsustainable practices. But while the ‘why’ of circularity is increasingly understood, the ‘how’ is still largely unanswered. What’s holding back the supply chain from moving beyond intent to action? What are the barriers to circularity, and what can brands, designers, and consumers already do to get started?On June 21st, The Next Closet, Loop.a.life, and Stating the Obvious joined our Circle Textiles team (Gwen Cunningham, Traci Kinden and Jade Wilting) on Twitter to discuss both the current state and the future of circular textiles. Here are insights from our conversation.

Start sourcing right

There are many ways to go about sourcing circular materials. You can start with giving materials a second life by using recycled materials or mono-materials whenever possible, sourcing excess rolled from traders/jobbers, or using manufacturers’ offcuts for small runs!

A1: 1 option is to focus on giving used materials a new life by sourcing recycled materials like @RecoverUpcycled cotton or RPET #circlechat

— Stating The Obvious (@Helene_STO) June 21, 2017

A1a: Check out @ReverseResourcs to use manufacturers' offcuts and rolled goods #circlechat

— REvolveWaste (@REvolveWaste) June 21, 2017

Dig deeper into the topic here.

Meet the pioneers

Some companies are already leading the way. The Next Closet, for example, operates as a reselling platform to give luxury clothes a second, extended life; Loop.a.life transforms post-consumer garments into beautifully designed, high value products; Mud Jeans is making important strides in designing for disassembly and cyclability; Kate Goldsworthy only uses mono materials in her collections; and Filippa K and Mistra Fashion’s Circular Design Speeds initiative is challenging designers to use constraints as a springboard for circularity.

A2: @KusagaAthletic is doing great work. #circlechat https://t.co/GZXje6TCZJ

— costrike (@costrike) June 21, 2017

A2a: @mudjeansNL is a nice example of Design for Cyclability. Labels printed on fabric and working on screw on/off buttons. #circlechat

— Stating The Obvious (@Helene_STO) June 21, 2017

yes and aside from @thenextcloset let us not forget @LENAlibrary where you can borrow/exchange clothes like a library. Love it! #circlechat

— Stating The Obvious (@Helene_STO) June 21, 2017

Know of any others? Tweet us!

Finding freedom in our constraints

Designing for circular fashion is not without its hurdles. The number of constraints designers have to work around, coupled with a lack of understanding of just how much of an impact they have on the end of life of a garment, and a mismatch between what designers intend for a garment’s disposal and what consumers actually do with it, all make designing for circular fashion seem borderline impossible.However, with the right training and tools, we can empower designers so they find inspiration rather than frustration in these constraints and make informed decisions to design for a more circular fashion industry.

A3. Designers' freedom seems to be a recurring barrier in the research - If it's not in the brief... @circleeconomy #circlechat

— Rhiannon (@_rhiannonhunt) June 21, 2017

A3a No zippers, no buttons, no lurex, no elastan, etc, etc, etc. #circlechat

— Loopalife (@loopalife) June 21, 2017

A3 Getting an education in sustainable design is critical @AMFI #circlechat

— Gwen Cunningham (@Gwenhams) June 21, 2017

The power of take-back

Reasons abound for brands to invest in take-back schemes: they foster brand value and loyalty; they allow brands to retain control over precious resources by turning consumers into suppliers; and they provide great alternatives to fashion-conscious consumers not quite ready to shop second-hand. Perhaps more importantly, they help raise awareness and shed light on just how much textiles waste we continue to dispose of around the clock.And it can be done. Patagonia, ever the environmental champion, has been ahead of the game for a while with their Worn Wear initiative, but fast-fashion giants like H&M and Zara are also starting to pull their weight.

A4 Leasing models give brands control of resources for the long term. Hello sustainability, good bye resource scarcity. #circlechat

— Jade (@notjaded) June 21, 2017

A4 long lasting relationship with the consumer. Clothing as service #circlechat

— Ricardo Weigend Rdz (@RichoWeigend) June 21, 2017

A4 Fosters brand value and loyalty. Your consumer is now your supplier & missing link in the chain! #circlechat

— Gwen Cunningham (@Gwenhams) June 21, 2017

A4 Used goods can become secure inputs for new materials @mudjeansNL #circlechat

— REvolveWaste (@REvolveWaste) June 21, 2017

Learn more about our post-consumer textile waste problem.

Consumers deserve better

Consumers are currently both unaware and unable to gain proper access to education and information about the impact of their consumption choices. Sustainable fashion brands have also done a poor job at marketing to them, focusing on the niche rather than the mainstream and often missing the mark with the eco-fashion value proposition. But clothes are incredibly personal, and getting consumers to be part of the transition to a circular fashion industry requires us not only to inform and admonish them, but attract them and reel them in.

A6 Circular fashion can be sexy and exciting: communicate it can have a positive impact on consumer @circleeconomy #circlechat

— Orange Fiber (@OrangeFiber) June 21, 2017

A6 lack of education, information and accessibility. Unattractive marketing for consumers. Movement not yet as big as it should #circlechat

— Ricardo Weigend Rdz (@RichoWeigend) June 21, 2017

Totally agree! Even the fair fashion industry must be consumer oriented! We should also act on consumers to close the gap #circlechat

— Massimiliano Böhm (@Massimiliano982) June 22, 2017

Check out the @AMFI Hello Goodbuy activist group for constant inspiration! https://t.co/jnmEhrlBFM

— Gwen Cunningham (@Gwenhams) June 21, 2017

More work needed

For all the pieces of the puzzle to fit together – for take-back schemes to serve their purpose, for consumers to get on board, and for designers to make the right decisions – we still need to build the right infrastructure to support our current, disjointed efforts. This both includes the physical infrastructure needed to close the loop, but also the research, resources, and incentives needed to drive change.

A4a: Take back schemes need an effective recycling infrastructure. Few high-end brands have invested in this. We fill the gap. #circlechat

— The Next Closet (@thenextcloset) June 21, 2017

‍

We're taking a break for the summer but #circlechat will be back in September! We’ll also be releasing the full calendar for the next few months soon. [cta link="http://circle-economy.com/twitter-chat-signup"]Sign up to get it here.[/cta]

Do you have a suggestion for a topic? Let us know!

Look back on the full conversation here.

Circle Economy is excited to launch the Beta version of our Knowledge Hub!Throughout the past 5 years, we have discovered countless inspiring and innovative case studies, articles, and reports that highlight the circular economy in practice. Now we want to share them with you!Our ambition is to make the Knowledge Hub a go-to source for circular economy knowledge. By bringing together information that is currently spread across various organisations and industries, we hope to bring all of the insights, best practices, and research on the circular economy to one place.We invite you to search, discover, and request features and additional content you wish to see included to help us grow this open-source hub.Join us in co-developing the Knowledge Hub to create a community of collaboration and knowledge-sharing to make the circular economy a reality![cta link="http://www.circle-economy.com/knowledge-hub" ]Get Access[/cta]

Supporting partners

Matthieu Bardout (Circle Economy), Jelmer Hoogzaad (Shifting Paradigms)A transition to the circular economy requires significant investment into research, developing, piloting and scaling solutions. Given its potential to contribute to climate mitigation efforts, climate finance should be pursued to support the transition. This blog post, the last of the series, provides insights into the way forward.

1. Understand the state of play

Climate finance refers to local, national, or transnational financing for climate action, which may be drawn from public, private, and alternative sources of financing. It includes USD 100 billion per year pledged by developed countries under the Copenhagen Accords in 2009 and many other sources of funding that contribute to mitigating or adapting to climate change. Total climate finance was estimated to be approximately USD 927 in 2014.Ideally, climate finance flows would reflect the mitigation potential of available approaches, with some degree of correction for the ease of implementation. That, however, is not the case. Within the broader definition of climate finance, an estimated 31 percent is invested in renewable energy and 36 percent in energy efficiency (own analysis based on UNFCCC). While tackling fossil-based energy use is critical, this limits the funding directed to other promising mitigation approaches. For example, approximately 67 percent of global energy use is linked to material management*, whereas low-carbon materials and dematerialisation strategies are seldom looked at within climate finance.The significant mitigation potential of the circular economy is thus overlooked, despite ambitions to make climate finance more innovative and transformative. Institutional investors should therefore analyse their portfolios to understand how investments cover the circular economy and how these investments also relate to climate finance efforts. For example, the European Bank for Reconstruction and Development (EBRD) recently conducted an analysis of 368 investments made between 2014 and 2016 and found that 80 projects used circular economy measures and another 73 had potential to use circular economy measures. During the same period, 30 to 35 percent percent of the EBRD's investments were also accounted for as climate finance.Further reading: Circular Economy: A key lever in bridging the emissions gap to a 1.5 °C pathway

2. Clarify linear risks for investors

Risk management is critical to investors, and they cannot ignore the risks associated with climate change and the linear economy. For example, the carbon bubble suggests that fossil fuel companies valued based on the resources they plan to extract may be overvalued, as these resources would exceed the global carbon budget if burnt. This kind of risk is prompting regulators and institutional investors to mandate climate risk reporting, which exposes the vulnerability of fossil investments and can drive climate finance in the right direction.The risks associated with resource scarcity, access, and price volatility are also increasingly felt in a range of other industries such as agrifood or mining. The concept of linear risk, defined as the risk of operating with linear business practices, can also be extended beyond resource-related risks to include market, operational, business, legal, and reputational risks**. 'Linear' companies, for example, are less able to adapt to shifting supply chains, to meet extended producer responsibility requirements, and to connect with a new generation of consumers. As they offer solutions to both linear risks and climate change, circular economy strategies should make it to the front of climate finance pipelines.

3. Evaluate public policy and financing instruments

We need to evaluate existing public policy and financial instruments to understand if and why they have been (un)successful at supporting the circular economy, and to develop new instruments that can effectively 'push the snowball down the hill'.Front-running countries such as The Netherlands have already demonstrated the importance for public actors to give clear signals in favour of the circular economy. The country’s ambition to become circular by 2050 has prompted a wide range of economic actors - industry, finance, research organisations, etc. - to engage with and rethink their position in a circular economy. This has boosted the country’s position in Europe and helped major companies such as Philips or DSM announce bold circular strategiesThe circular economy also requires continued public support for research and development in order for us to improve both our understanding of material flows and our consumption patterns, and to develop innovative technologies that can overcome the weaknesses of our linear economy. For example, the use of waste-as-a-resource is an important pillar of the circular economy, but behavioral changes and new technologies are still needed to increase recovery and recycling rates. Public support can catalyse both.Furthermore, the circular economy calls for a rethink of how business models respond to society’s functional needs. Product-service systems, for example, can reduce the need for physical assets and mitigate emissions, yet they have less of a track-record and are typically perceived to be riskier by investors. Public finance could therefore have a role in de-risking such investments.

4. Incentivise private finance

The staggering gap between public and total climate finance, combined with the well-understood need to urgently scale climate finance, highlights the importance for public actors to leverage private sector finance. The circular economy is particularly promising in that respect as it promotes business approaches compatible with sustainable economic, social, and natural capital creation. New business models*** are being tested by front-running businesses of all shapes and sizes: disruptive startups (e.g. Bundles’ ‘washing machine as a service), SMES (e.g; Fairphone’s modular phone) and established multinationals (e.g. Philips’ remanufacturing plant in Best, NL). These new models are increasingly successful and front-running companies are demonstrating that they can add value by following circular principles.For example, many waste management companies seek to use waste as a resource, seeing an opportunity to diversify revenues by adding secondary material sales to conventional waste management activities. Considering that about 1.5 billion tonnes of carbon dioxide equivalent are emitted from wastewater treatment and municipal solid waste disposal annually, that only 20 percent of global municipal solid waste is recycled, and that 80 percent of wastewater is released untreated into the environment, there is both ample mitigation and commercial potential in avoiding waste and improving the recycling of valuable materials. 5. Implement new metricsSetting new carbon metrics will improve our understanding and measurement of the mitigation potential of the circular economy, and will help direct climate finance effectively. Using consumption-based rather than territorial accounting can broaden the scope of mitigation action and better reflect the actual contributions of different countries. Indeed, although territorial accounting is more straight-forward, the commitments under the Paris Agreement do not currently add up to a reduction level in line with the 2°C target.Governments, companies and investors need to broaden their perceived span of influence beyond factory gates and national borders, as our economies have become too integrated and supply chains too international for any other approach. This is something the green climate fund already recognises in its call for transformational impact, and this is where consolidating and implementing new metrics will prove critical, as climate finance turns to investing in low-carbon options rather than focusing on making traditional industries more efficient. Under a consumption-based accounting scheme, governments may understandably fear a dramatic increase in the scope of their responsibility. The voluntary nature of the Paris Agreement, however, is favourable in this respect as it promotes collaboration across value chains and serves as reassurance for signatories to safeguard their interests. *UNDP, "Circular economy strategies for Lao PDR - A metabolic approach to redefine resource efficient and low-carbon development" (forthcoming), a project with Shifting Paradigms, FABRICations and Circle Economy**Circle Economy and its partners will release a paper on linear risk during the course of 2017.*** See for example the five business models proposed by Peter Lacy and Jakob Rutqvist in 'Waste to wealth: the circular economy advantage' (2015): circular supply chains, recovery & recycling, product life extension, sharing platforms and  product-as-a-service[hr]

The circular economy features high on public and private agendas and promises to help mitigate climate change. In the past weeks, we have explored how it can add t current climate policies, contribute to the the Paris Agreement and leverage climate finance. There is considerable scope for action and an urgent need to put the circular economy into action. Now is the time to make it a driving force for the ambitious climate action we need!

Thank you for reading! Please contact us for questions & follow-up.

[cta link="https://circle-economy.com/climatechangeseries"]Read the full series[/cta]

In a unique bundle of expertise, Fairphone, PGGM, ING, ABN AMRO, NBA, Allen & Overy, Circularise, MVO NL, Circle Economy and Sustainable Finance Lab will work together in the “Fairphone-as-a-Service Community of Practice” (CoP). The aim is to gain insights into the possibilities of and preconditions for a viable business model that no longer sells smartphones, but offers them as a service instead. The CoP is organized by the Sustainable Finance Lab and Circle Economy within the Netherlands Circulair programme and will run from June to October 2017.Fairphone aims to incentivise the industry to design and commercialise long-lasting, repairable smartphones. In order to accomplish this, product ownership needs to be left in the hands of the manufacturer rather than the customer. Manufacturers can then be responsible for the product, and customers can be assured that their device is both functional and durable.

Photo credit: FairphoneThe CoP is using Fairphone as a springboard to explore how contractual agreements between stakeholders, such as financiers, suppliers, insurers and customers, can enable product-as-a-service business models; what possibilities and opportunities these business models afford, and the scenarios where they are both achievable and financeable. The goal? To practically apply the service model to Fairphone business customers.Participating organisations bring together cross-disciplinary knowledge and expertise: from lawyers, insurers, bankers and accountants, to software developers, business economists, academics, and other experts in the field of the circular economy. Their combined efforts will be exploring the challenges, roadblocks and opportunities that lie ahead. The learnings will be documented and published in a white paper for other businesses, the financial sector, governments, and other interested parties to learn from. The ultimate goal is to practically apply the service model to Fairphone’s business to business customers.The CoP members actively contribute to the development of new business models that can bring the circular economy closer.Learn more about Fairphone's goals and ambitions here.

[hr]

Interested in learning more about the outcomes of this Community of Practice?

Contact us or subscribe to our newsletter.

This is the third of four blogs in the Climate change and the circular economy series. Read part 1 and part 2 first.[hr]By Jelmer Hoogzaad (Shifting Paradigms) and Matthieu Bardout (Circle Economy)The Paris Agreement entered into force in November 2016, after receiving sufficient endorsement from national governments. Negotiators from 195 countries have since been defining rules and procedures, thereby shaping the way countries report on their emissions and mitigation ambitions, and agreeing on the modalities of international cooperation on greenhouse gas emissions mitigation.The latest UNEP gap report confirms that mitigation commitments submitted by the signatories do not add up to a decrease in greenhouse gas emissions that will secure a future without climate change exceeding  2°C, let alone 1.5°C. The circular economy can help do the extra heavy lifting to close this gap, but only if circular solutions are encouraged, recognised and facilitated by the Paris Agreement's implementation frameworks.Here’s how:1. Moving from offsetting to cooperation The Paris Agreement asks for voluntary climate action from all countries - industrialised and developing alike. That is unlike the Kyoto Protocol, which included emission targets for a selection of industrialised countries, who were allowed to use offsetting to invest in emission reductions in other countries and count these towards their own compliance. The Paris Agreement also relies on processes rather than strict mitigation goals.This makes the use of offset mechanisms complicated: although governments still welcome foreign investors to support domestic mitigation action, they also want to use 'low-hanging fruit' or low-cost mitigation options for their own mitigation ambitions. While offsetting under the Kyoto Protocol created an international competition for low-cost mitigation opportunities, the nature of the Paris Agreement calls for international cooperation, with all countries working together on low-carbon development and being able to exchange mitigation outcomes under Article 6 if investments made by one country lead to mitigation in another.Such cooperation makes sense since around 20% to 30%* of a nation’s carbon footprint typically lies in the embedded emissions of imported products. This means that a large share of global mitigation opportunities stretch beyond borders and across value chains. International cooperation is needed to tap into these opportunities. Since this is about the carbon footprint of the products and materials traded, circular economy principles point at mitigation options which have hardly been incentivised so far. Examples include: when the design of a product from one country helps reduce emissions in the use or end-of life phases in another country; when the substitution of carbon-intensive materials in one country reduces emissions related to their production in another country; or when a product can be completely replaced with a service.The Paris Agreement should make it easier for governments to take domestic and international action on extraterritorial emissions, seeking international cooperation to reduce emissions across value chains, and tapping into the collaborative principles of the circular economy.2. Collecting new data under the transparency frameworkThe Paris Agreement proposes a transparency framework for the disclosure and third-party review of national emissions and the implementation of climate action. This framework invites countries to report on their mitigation ambitions, using approaches from the Intergovernmental Panel on Climate Change (IPCC) that are based on sectoral and territorial accounting. Most activities under the Paris Agreement, such as policy support, climate finance, technology transfer and capacity building, rely on this data not only to track progress, but also to identify mitigation options.Unfortunately, territorial accounting does not show the potential for domestic actions and international cooperation to reduce emissions across borders through material substitution, circular design or replacing a product with a service. Likewise, presenting emission data per sector fails to reveal the potential for cross-sectoral mitigation action, while that is where the potential lies to use waste or underused assets from one sector as resource in another.These innovative and circular mitigation options tend to alter resource flows across borders and sectors. Consumption-based accounting - presenting emission data based on the service that an economic activity delivers to society - is better able to also disclose these mitigation perspectives.3. Elevating ambitionsIt is well understood that climate policies and national ambitions submitted to the UNFCCC to date fall short of reaching the 2°C or 1.5°C targets. More ambitious policies and new mitigation options are urgently needed. The Paris Agreement therefore includes a procedure for regular updates of national mitigation ambitions, inviting signatories to periodically increase the ambition of their emission reduction commitments or Nationally Determined Contributions (NDCs). This ratcheting mechanism provides an opportunity to introduce and encourage the use of circular economy strategies to bring emissions down even further. Since current NDCs make little use of these strategies, they enable governments to increase ambition. This does require a deeper understanding of  the mitigation potential of a circular economy, and its possible rebound effects, such that governments can make optimum use of circular strategies and both reduce the greenhouse gas and resource footprint of their economies.4. Promoting structural change in low emission development strategiesNext to submitting Nationally Determined Contributions (NDCs), the Paris Agreement invites national governments to submit the Low Emission Development Strategies (LEDS) which will reduce their emissions by 2020. To date, these strategies hardly consider circular economy concepts.This provides an opportunity to make circular economy development a structural part of a country’s low-carbon development ambition, which is also where it belongs. A lot of the development challenges which countries face are related to the linear nature of their economy, whether it is the adverse landscape impact of resource extraction, deforestation, the use of fossil fuels and related greenhouse gas emissions or the massive waste disposal challenge that they face. A focus on greenhouse gas emissions alone only addresses part of the problem. By providing the holistic or systemic levers to truly transform our economies, circular economy offers a range of solutions which often address greenhouse gas emissions and unsustainable resource use jointly. 5. Introducing new approaches to capacity buildingInternational cooperation builds on three pillars: finance, technology transfer, and capacity-building. Moving away from a linear economic model requires systemic change and insights into the resource and energy metabolism of an economy. Systemic or metabolic approaches are common analytical tools to identify and assess circular economy options and should be applied more often to identify low-carbon development options. With the exception of India, Lao PDR** and a handful of OECD countries, they have hardly been used. Because of their potential to elevate the mitigation ambition of the Paris Agreement, metabolic approaches should become a cornerstone of capacity building on climate action.*This estimate varies between different sources. According to S. Paulik (2014) “emissions embodied in international trade change the footprint of many countries by 30% or more”. According to G.P.Peters (2008) “22% of global CO2 emissions are embodied in international trade”.**UNDP, "Circular economy strategies for Lao PDR - A metabolic approach to redefine resource efficient and low-carbon development" (forthcoming), a project with Shifting Paradigms, FABRICations and Circle Economy[hr]

A transition to the circular economy will require significant investment to research, develop, pilot and scale promising solutions. The final blog in our series will delve into specific steps to mobilise climate finance to support this transition.

‍

This is the second of four blogs in the Climate change and the circular economy series. Read part 1 here.

[hr]By Jelmer Hoogzaad (Shifting Paradigms) and Matthieu Bardout (Circle Economy)Around 21 percent of the resources we extract* are fossil fuels that are used to extract, transport and process materials; as well as to deliver, use and dispose of products. As a result, 67 percent of global greenhouse gas emissions are related to material management**. Limiting global warming to well below 2°C or even 1.5°C by 2100 thus requires climate action to go far beyond incremental improvements to our economies. It requires profound changes in the way we produce, use, and consume products, materials and energy.The circular economy provides an attractive mitigation opportunity as it steps away from the negative and often punitive narrative of reducing emissions, and defines a more positive and inspiring vision of a circular future. It does not shy away from the systemic changes needed to get there and addresses both excessive resource use and greenhouse gas emissions in tandem.These key aspects of the circular economy can help in developing new mitigation options that combine effective climate action with the improved use of assets and resources, and give climate policies and strategies the ambition they currently lack. Here’s how:

1. Tackling systemic issues rather than making incremental improvements

The circular economy responds to a direct call from the climate community to address the fundamental issues behind our greenhouse gas emissions by promoting the collaborative, cross-sectoral approach we need to reduce greenhouse gas emissions and make more efficient use of available assets and resources. Moving away from the traditional 'take-make-waste' economic model that has prevailed since the industrial revolution requires systemic change. The Green Climate Fund, for example - the main vehicle for climate investments into developing countries - urges for paradigm shifts and calls on projects with transformational impact rather than the more incremental, single-installation investments that have been commonplace under current climate policy and project developments. Current efforts, such as renewable energy and energy efficiency measures, tend to focus on improving or developing individual assets. While they are important and should be pursued, the UNEP gap report confirms that there are clear limits to decarbonising current production systems. These measures only buy us more time, when we should be focusing on designing a low-carbon future.At industrial scale, this calls for industrial symbiosis, for example, in addition to merely improving the efficiency of individual factories. At national, regional, and urban scales, this means tapping into the many cross-sectoral opportunities that the complex metabolism of our economies and the ecosystems on which they rely have to offer.

2. Extending mitigation opportunities beyond geographic borders and across value chains

Around 20% to 30% of a nation’s carbon footprint can lie in the emissions embedded in the products crossing its borders. Yet under the UNFCCC, national climate policies and voluntary commitments, governments account for greenhouse gas emissions demarcated by geographic borders. With this approach, national governments are not encouraged to take action on the mitigation potential that lies outside their national borders.This is why a collaborative, cross-sectoral, and cross-border approach is needed to develop the full mitigation potential of national action. This is what the circular economy does, all the while advocating for effective material use: it encourages economic agents to coordinate efforts across global value chains and to reduce emissions in all parts of the chain.Designing an economy that is smarter about materials use- an economy that looks beyond factory gates and country boundaries- extends our mitigation impact as far up as the mines, quarries, wells, fields, and forests where our products are born.

3. Combining material efficiency with low-carbon development

Addressing both greenhouse gas emissions and excessive resource use yields significantly deeper reductions in global emissions. Scientific models also indicate that the combination of resource efficiency and climate action delivers higher environmental and economic benefits. Combining low carbon development with improved use of material resources also makes economic sense: the long-term economic benefits of resource efficiency and low-carbon development exceed the short-term costs of shifting to a 2°C emissions pathway. For some sectors, effective decoupling of resource use from economic growth alone is enough to reach the 2°C benchmark.

4. Understanding the societal needs behind resource use

The focus of mitigation efforts has traditionally been on the physical sources of greenhouse gas emissions: from energy efficiency of our boilers and engines, to capturing methane from landfills, coal mines and manure storages, mitigation efforts have often targeted the symptoms more so than the cause. However, many mitigation options do not require interventions at the emissions source at all, but rather an understanding of the societal need that underlying economic activities address in the first place. Only by understanding the needs that our products and materials satisfy can we explore new ways to address them. Substituting carbon-intensive materials with low-carbon alternatives, improving the use of existing assets, and providing products-as-a-service can then emerge as new mitigation options.

5. Reforming  taxes on all resources

Policy makers with a climate mandate often try to choose between introducing a carbon tax or relying on emission trading schemes that cap industrial emissions. Both options aim to correct markets for the negative externalities of greenhouse gas emissions by encouraging energy efficiency and renewable energy. Both options, however, also disregard the potential of resource efficiency. Extraction taxation, on the other hand, aims to discourage resource extraction and encourage the use of a resource with less environmental externalities: labour. It proposes that we tax what we want less of, and lower taxes on what we want more of. As such, it takes the concept of carbon taxation a step further and encourages a circular economy where resources are effectively used and renewable energy sources are prioritised.A tax reform where the added tax burden on resource-intensive products is immediately compensated with reduced taxes on labour also allows for public opinion to work in favour of the initiating government body.* Own analysis based on UNEP IRP (2016) Global material flows and resource productivity.** UNDP, "Circular economy strategies for Lao PDR - A metabolic approach to redefine resource efficient and low-carbon development" (unpublished draft), a project with Shifting Paradigms, FABRICations and Circle Economy.[hr]

Translating the circular economy into actionable, ambitious climate policies and strategies requires collaboration by governments across borders. This is also an opportunity for climate finance and the architecture of the Paris Agreement. We’ll dig deeper into these topics in our upcoming blogs in this series.