For those of you who have been following Circle Economy for a few years now, you might remember the very first version of the Knowledge Hub – our online, open-access library of circular case studies.
In its very first version, the Knowledge Hub was a simple wiki-style tool powered by Atlassian Confluence that we used in our own work to keep track of interesting cases to feature in workshops, presentations and reports.
In 2018, we launched the Knowledge Hub in its current version, as part of a broader digital ecosystem: Circle Lab.
In the next few months, we are thrilled to be launching V3 of the Knowledge Hub, which will finally enable our online community–that’s you!–to make it truly their own by contributing, updating and curating cases in our ever-growing database. The new version will also enable users to create and grow dedicated collections and to share them with their audiences online.
Circle Economy, with the support of the Goldschmeding Foundation, has initiated a project during which we aim to define the optimal circular textiles value chain for both people and resources in the Netherlands.
The project strives to establish a current baseline of the existing jobs and skills pertaining to the textiles industry in the Netherlands and develop scenarios outlining various circular value chains. Research will quantify the potential job creation and job losses related to these circular supply chain scenarios, and in particular, qualify their potential to open up employment opportunities for vulnerable workers. The skills needs related to the scenario with the highest potential for positive social impact will be identified.
Running during 2020-2021, the project aims to support the Netherlands’ aim to be fully circular by 2050. The corresponding necessary shift to circularity in the Dutch textiles industry will have a vast impact on the workforce involved as the transition to circularity entails shifting roles across the end-of-use value chain.
To date, existing jobs and corresponding skills might not meet the requirements of a circular textiles industry. Pursuing a circular economy for textiles - and more broadly for all consumer goods - in the Netherlands will have socio-economic effects, locally and abroad. However, the implications and opportunities of the changing nature of work and associated skills for the textiles industry are still very much unknown.
During the project, we expect to validate findings with pilots as well as develop recommendations for the government, industry and education sector toward the implementation of the highest potential circular supply chain scenario, both for textiles specifically and consumer goods in general.
This project is now ongoing. Final results will be published in May 2021.
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The Coalition Circular Accounting has explored the ambition of three Dutch facade builders—Alkondor, Blitta and De Groot & Visser—that aim to offer Facades-as-a-Service: a pilot for a customisable, dismantable facade as a method to battle waste and increase the circularity of buildings.
Our global economy has hit a new milestone: for the first time in history, it is consuming 100 billion tonnes of materials a year. Concurrently, the global reuse of resources is in reverse, with the global circularity rate falling from 9.1% in 2019 to 8.6% in 2020. In reversing this trend, the built environment is a prominent sector to consider as it is the world’s most material intensive sector consuming 42.4 billion tonnes annually. By 2050, the European building stock alone will have grown by 13%. Within this sector, sustaining and extending the lifetime of buildings and infrastructure and appreciating the future value of built assets can have great impacts in reducing the CO2 footprint and becoming more circular.
In its latest whitepaper, the Coalition Circular Accounting explores the ambition of three Dutch facade builders — Alkondor, Blitta and De Groot & Visser — that plan to offer Facades-as-a-Service as a method to battle waste and increase the circularity of buildings. This is a pilot for a customisable, dismantlable facade that provides a building with ventilation, sunlight regulation and energy generation, all adjustable by remote control. Instead of being sold, this facade will be realised as a service and consequently remain in possession of its builders. However, current financing models can present major barriers for companies with circular business aspirations. Asset ownership for example, characterized by an extended balance sheet, is unpopular amongst financiers and suppliers, whilst essential for incentivising a long term business perspective.
The Facades-as-a-Service case: Insights and takeaways
The three facade builders, Alkondor, Blitta and De Groot & Visser, are collaborating with area developer AM, in the realisation of the pilot project ‘Facade-as-a-Service’ in the Bajeskwartier area development by AT capital, Cairn and AM in Amsterdam. By retaining ownership of their facades, the three Dutch builders aim to expand the lifespan of their products, maintain control of valuable assets and generate a profitable revenue on the long run. The Product-as-a-Service business model benefits circular construction by incentivising manufacturing companies to retain responsibility for their product and its performance and environmental impact before, during and after its lifespan.
In light of the current and persistent financing barriers facing circular companies in the built environment, the Coalition Circular Accounting has launched a white paper that elaborates on the opportunities and risks of Product-as-a-Service business models. The paper proposes a new contractual structure as an enabler and raises the issue of the misfit between current financing structures and circular business models. The main takeaways of the Facades-as-a-Service case are:
We tend to view circular business models from a traditional perspective. Product-as-a-Service (PaaS) is characterized by access to the product, the performance of the product and the services around the product. With Product-as-a-Service, the value for the consumer does not lie in owning the product but in the option to use a service, thereby unburdening the consumer from the responsibility for maintenance and repairs.
A Product-as-a-Service company is often asset-heavy. Namely, ownership shifts from the consumer to the service provider. Therefore, one cannot simply compare PaaS companies with traditional companies. PaaS companies keep control of their assets which is reflected in a growing balance sheet. Where a growing balance nowadays is still interpreted as risky, in the circular economy this will signal that companies are taking long term responsibility for their products.
A fundamental principle of the circular economy is the infinite use of raw materials. Assigning a value to these resources is essential, wherever they are. The term residual value (the estimated value of an asset at the end of its useful life) detracts from this circular idea. That is why we prefer to talk about harvest value. Harvest value is not only important in principle, it can also be the decisive factor for the success of a circular business model since it creates new business opportunities by for example serving as security for financing
In the transition to a circular economy, we regularly run into laws and regulations that are obstructive or lacking. In the circular economy—as is the case with Product-as-a-Service—it may be opportune to shift ownership from a consumer to a service provider. In the built environment, this leads to problems because building components that are offered as a service legally become part of the building (otherwise known as accession). That is why new legal structures have been created that make Product-as-a-Service in the building sector easier to implement.
Financiers are attempting to translate new circular business models into appropriate financing structures. Pre-financing assets are at the core of the Product-as-a-Service business model. The underlying security of Product-as-a-Service is a combination of the cash flows and harvest value of the assets. Because the Product-as-a-Service model is still not commonly used and financiers have to operate within the current standards of the regulators, the market is still reluctant to finance these types of business models. The interpretation of financial ratios and underlying securities must be adapted to circular thinking.
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Coalition Circular Accounting: Concrete challenges, replicable solutions
The Netherlands Institute of Chartered Accountants (NBA) and Circle Economy founded the Coalition Circular Accounting to identify accounting related challenges in the circular economy. Together they create solutions and best practices to overcome these barriers. The coalition includes experts and scientists in the field of finance, accounting and law from: Invest-NL, ABN-AMRO, Rabobank, Triodos Bank, KPMG, Allen & Overy, Sustainable Finance Lab and scientists associated with Nyenrode Business University and Avans University of Applied Sciences.
Throughout 2020, the coalition will bring together experts to discuss and work out three specific, existing circular business models with a valuation or reporting issue. These cases are chosen to cover a diverse range of challenges. The presented findings and solutions are generalized to be applicable to other cases elsewhere and made freely available in the form of whitepapers.
Want to know more?
Find the full report here to learn more.
If you are interested in participating in the Circular Accounting Coalition, or would like to know more, please contact us here.
If you would like to stay up to date on the Circular Accounting Coalition, please sign up to the newsletter here.
Today, Circle Economy launches the first structural analysis of the relationship between the circular economy and social-ecological resilience. Amid the social and economic fallout caused by the covid-19 pandemic , calls to 'build back better' often couple the need to increase the resilience of our systems with the circular economy. Our research now provides the necessary analytical support for the relationship between the two concepts, but warns that, if not managed effectively, some circular economy trends may compromise resilience. Governments and businesses are advised to carefully integrate resilience thinking into their transition plans.
Two circular economy practices in particular build resilience. First, the use of secondary and renewable resources boosts resilience by increasing the diversity of feedstock available to industry. Second, decentralised value chains—a growing trend in circular economy developments—are less vulnerable to global shocks and support localised and therefore swift decision making.
For a circular economy to succeed, the labour market also needs to change. In particular, transferable skills among workers will be necessary to enable the transition to new business and service models, and a culture of lifelong learning will be crucial when the types of skills that are needed continuously change. If promoted, these two characteristics of the labour market could make for a mobile and agile workforce that is less vulnerable in the face of shocks as it can quickly adapt to change.
The paper also highlights two potential trade-offs between circularity and resilience that could compromise resilience in the transition if they are not aptly addressed. First, the circular economy's propagation of resource efficiency could backfire when regular activities are interrupted, such as during the covid-19 pandemic. By designing out redundancies, circular strategies reduce the amount of materials and products available to act as buffers when supply chains are disrupted. Second, flexible labour contracts, which are rising in prominence in the circular economy through peer-to-peer marketplaces, business-to-consumer services or on-demand manufacturing, could increase individual workers’ vulnerability.
Based on these insights, the paper provides key recommendations to help governments and businesses ensure their circular transition also strengthens their resilience.
For example, to manage the potential trade-offs of resource efficiency, businesses are advised to strike an effective balance between redundancy and efficiency. This requires a mindset shift from scarcity to abundance, searching for alternative or more highly available resources, and the standardisation of components. Governments should support and facilitate circular value chains by creating networks between regions, countries and industries, supporting the establishment of the required infrastructure through innovation and incentives. Both should develop impact indicators and measurements that move beyond measuring only overall efficiency and take resilience into account.
As we continue to navigate uncertain times, reshaping our systems to be resilient to ongoing and future shocks is imperative. Our paper highlights the need to carefully evaluate how circular economy trends and resilience thinking will impact one another in practice. Governments and businesses need to integrate the two concepts across circular economy strategies such as the EU’s Circular Economy Action Plan. Applying resilience thinking to shape the transition towards circularity ensures the creation of positive value for both society and planet.
This project was made possible thanks to the support of the Goldschmeding Foundation.
August, 27, 2020– Today, Circle Economy and Circular Norway launch the Circularity Gap Report Norway. The report finds that the Norwegian economy is only 2.4% circular. This is compared to a global average of 8.6%, 9.7% in Austria and 24.5% in the Netherlands.
But Norway has enormous potential: with the right interventions, the country could see a 20-fold increase in its circularity.
The Circularity Gap Report Norway is an in-depth analysis of how Norway consumes raw materials—metals, fossil fuels, biomass and minerals—to fuel its societal needs. Currently, 97.6% of materials consumed each year never make it back into the economy. Norway also has one of the highest per capita consumption rates in the world at 44.3 tonnes per person. If everyone were to live like Norwegians, we would need the equivalent of three and half globes worth of resources.
In the face of the climate emergency and the EU's decision to strive for full circularity, Norway's need for a circular transition is urgent. Our report shows that the country can become 45.8% circular by restructuring business and industry. The report dives into six scenarios for a potential way forward and explores how governments and businesses can facilitate circular consumption and prepare the labour market for the transition. With a good tripartite cooperation in Norwegian employment, a highly-educated and digitally competent population and a long history with renewable energy and plastic recycling, Norway is well set to become a pioneer in the circular economy.
‘The report shows that the framework for success in a transition to a circular economy is in place, but it requires effort. We are impressed by the breadth of Norwegian business and industry that supports the report and are willing to adapt to the circular economy’, says Leif Nordhus, CEO of Circular Norway.
‘We are all operating in a world that is only 8.6% circular and the legacy of the linear economy is embedded deep in Norway’s society too. Now, with its own Circularity Metric and analysis, Norway has the tools to cement its circular future. A future that can withstand the struggles of the 21st century world ’, Marc de Wit, Director of Insights at Circle Economy
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About Circle Economy's Circularity Gap Reporting Initiative
The Circularity Gap Reporting Initiative highlights the urgent need to transition to a circular economy. We aim to empower key decision makers in both government and business to coordinate action to accelerate that transition. We do this by measuring current states of circularity and by bringing together stakeholders from businesses, governments, academia and NGOs to input and evaluate our findings on the state of the transition based on the latest scientific evidence.
Dive into the global Circularity Gap Report 2020, the Netherlands, and Austria.
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Circular development in the world’s cities will be essential in achieving global climate goals. 45% of emissions come from how we make and use products, and how we produce food. The circular economy provides a framework for using resources differently, allowing us to better operate within the confines of the planet. However, a report by Circle Economy earlier this year found that our global economy has become less circular since 2018, indicating that we are heading in the wrong direction.
The principles of a circular economy are thus highly relevant to cities, yet for many this is a new topic that at first is not easy to relate to city functions. Since 2015, Circle Economy’s Cities Programme has worked with over 20 cities to develop well-informed circular economy strategies based on material flow data and the local socio-economic context. To allow more cities to conduct these assessments, the process is being digitised in the form of an open-access online tool called the “Circle City Scan Tool”.
The Circle City Scan Tool aims to allow any local government or city change agent to identify and prioritise circular opportunities for their city or region, based on socioeconomic and material flow data about their context. The tool has been developed in its prototype version by Circle Economy with support from the MAVA Foundation.
To ensure the tool can be adapted to fit different regional contexts and addresses the practical needs of cities, ICLEI experts will be testing the tool with 10 pilot cities from 3 world regions (see full list below) and will provide recommendations for improvements to the tool based on their long-standing expertise working with local governments on local sustainability plans and circular economy projects.
The ten cities participating in the pilot include:
1. Accra, Ghana
2. Cape Town, South Africa
3. Nairobi, Kenya
4. Rabat, Morocco
5. Batangas, Philippines
6. Bogor City, Indonesia
7. Bogor Regency, Indonesia
8. Quezon, Philippines
9. Bonn, Germany
10. Turku, Finland
“We are excited to be testing the Circle City Scan Tool to identify priorities for the circular economy transition that complements Batangas City's ambition to be a liveable green city vis-a-vis being a premium agro and highly industrialised city. There is a pressing need to strike a balance between being eco-friendly and safe and urbanisation.” says Mayor Beverley Rose A. Dimacuha from Batangas City, one of the 10 pilot cities.
ICLEI experts will guide the pilot cities through the tool, support data collection and stakeholders engagement. The analysis will provide the pilot cities with an overview of how much of the materials flowing through their jurisdiction are consumed and wasted, and where they can intervene to shift their economies toward circularity.
“The Circle City Scan Tool will enable us to learn more about the circular economy and further advance our environmental sustainability initiatives” says Ms. Andrea Valentine A. Villaroman from the Environmental Protection and Waste Management Department of Quezon, one of the pilot cities.
“Through the piloting of the Circle City Scan Tool we aim at identifying additional, more qualitative features that could be integrated into the platform to make it as collaborative and inclusive as possible, in line with how we frame Circular Development across our network.” Burcu Tuncer, Head of Circular Development at ICLEI World Secretariat.
Circle Economy and ICLEI will work together to incorporate these additional features and resources to complement the tool in the lead up to the ICLEI World Congress 2021.
“This exciting collaboration with ICLEI will provide valuable insights into cities’ circular economy needs, which will help to strengthen the tool and make it more useful to a wider range of cities. In time, we hope that the tool will help ICLEI’s regional offices to guide many more cities on their journey toward circularity, creating positive impact at a global scale.” Blake Robinson, Senior Strategist at Circle Economy
If your city needs guidance on its transition to a circular economy, please let us know what kind of help you need via this 15 min survey.
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About ICLEI – Local Governments for Sustainability: ICLEI is a global network of more than 1,750 local and regional governments committed to sustainable urban development. Active in 100+ countries, ICLEI influences sustainability policy and drives local action for low emission, nature-based, equitable, resilient and circular development. ICLEI's Members and team of experts work together through peer exchange, partnerships and capacity building to create systemic change for urban sustainability.
About Circle Economy: Circle Economy is an Amsterdam-based impact organisation that connects and empowers a global community to create the conditions for systemic transformation toward a circular economy. Their Cities Programme works with businesses, cities and governments to identify opportunities for transition, and provides a powerful combination of practical and scalable solutions to turn these opportunities into reality. Circle Economy has helped over 20 cities on their journey toward a circular economy.
Circle Economy is pleased to be collaborating with RECYC-QUÉBEC to enable Québec's stakeholders to monitor the transition to a circular economy based on a solid analysis.
To do so, we will develop a 'Circularity Gap Report for Québec' (CGR Québec), where we will:
RECYC-QUÉBEC’s mission is to lead Québec to reduce, reuse, recycle and recover residual materials to promote a circular economy and fight against climate change.
Fundamental to their mission as a government corporation, the circular economy represents a future avenue for Québec and as a first-line actor in this transition, RECYC-QUÉBEC has put forward numerous projects aiming to roll out different circular economy strategies and has shared its expertise as part of several events and presentations.
This partnership inscribes itself within the Circularity Gap Reporting Initiative: a Circle Economy initiative that highlights the urgent need to transition to a circular economy by delivering an annual global circularity report that measures the state of the world economy and identifies key levers for the global transition, and by providing insights into the circularity gap of individual countries and sectors.
The first edition of the Circularity Gap Report introduced the world’s first global circularity metric in 2018, and delivered a sobering statistic: the world was only 9% circular then, and in 2020, this figure dropped to 8.6% circular. The metric has provided a common framework and fact base to measure the world's state of circularity and to monitor annual progress in bridging the gap.
All three editions of the Global Circularity Gap Report were presented on stage at the World Economic Forum, with significant global media coverage from The Guardian, Forbes, La Tribune, The Economist, the BBC, National Geographic, and more. As the last edition of the global report invites countries to lead the circular transition, national circularity gap studies have now also increased, with studies done in Austria, the Netherlands, and Norway.
Over the next few months, we will be inviting representatives from different organisations and sectors in the province of Québec to join a coalition and contribute their insights to the report.
For more information, get in touch through the Circle Economy contact form.
'Creating City Portraits', the methodology for downscaling Kate Raworth's Doughnut to the city, is now available for cities to use and adapt. Combining local aspirations with global responsibilities, the methodology provides a tool for cities to transition to an ecologically safe and socially just place.
The methodology is the first of the suite of tools that will be developed in close collaboration between Circle Economy, DEAL, C40 Cities and Biomimicry 3.8. Our joint Thriving Cities Initiative takes cities on a journey to become thriving places, while respecting the wellbeing of all people and the whole planet.
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