Article
A Circular Transition
The topic of Circular Economy (CE) continues to gain traction in sustainability discourse and programming. The topic is notably included in political agendas such as part of the EU Green Deal, while consumer preference increasingly favours recycled content. And yet a narrow interpretation of CE often causes organisations to miss out on the full value of sustainability initiatives by focusing on recycling alone.
The CE transition includes a broader range of possibilities and applications than recycling alone. And while the transition may require contribution and buy-in from more stakeholders than a linear economy alone, the benefits can likewise be just as diverse with a successful implementation.
A Circular Transition
More than just recycling
While the underlying principles are not new, Circular Economy only somewhat recently entered mainstream practice and academia. Today, CE has become a guiding principle in many countries’ policies – including the EU’s Circular Economy Action Plan – and has been the focus of business advocacy bodies such as the Ellen MacArthur Foundation.
A common misconception is that CE centres almost exclusively on recapturing resources through recycling and other end-of-life activities, which would otherwise be preferable to a linear “take-make-waste” economy. However, as a concept, Circular Economy’s broader focus is on keeping resources in the product cycle loop at their highest value for as long as possible which can include any of the following resource economy transformations2:
“A circular economy describes an economic system that is based on business models which replace the ‘end-of-life’ concept with reducing, alternatively reusing, recycling and recovering materials in production/distribution and consumption processes...”1
Far from being a simple departure from the traditional linear economy for resources, there is a hierarchy ranking the R’s in terms of their desirability within CE. For instance, studies suggest up to 80% of a product’s circularity may already be determined at the design stage.3 Transitioning to a Circular Economy thus requires fundamental changes to the way materials are sourced, products are designed, produced, sold, used and disposed of.
Benefits beyond resource preservation
When considering the transition to a CE programme, change agents can sometimes overlook critical benefits to their organisation. The benefits from closing loops in a product’s supply or value chain can frequently address internal and external compliance requirements. In some cases, the transition to a closed loop system can even result in the creation of new and exciting revenue opportunities for the organisation. Examples of potential benefits to an organization when considering a shift to circular economy can be found in the box on the right.
Our Approach
Deloitte offers support to our Clients independent of the maturity of their CE journeys. The Inspire to Execute model enables flexible support options to design, build or scale – ensuring maximum value is captured for the Business and targets are achieved.
As part of the Inspire phase, we help clients who are just beginning their CE journeys, from opportunity identification in value chain mapping, through to Business Case development and delivery. Under Execute, we help our Clients realise their CE ambition through support in pilot and scaling.
CE Benefits to the Business
- Cost reduction and efficiency gains
- Externality reduction
- Risk reduction
- Increased enterprise resiliency
- Regulatory compliance
- Access to financing
- Competitive advantage and market entry
Contacts
Marcel Meyer - Partner
Phone: +41 58 279 7356
Email
Marcel leads Deloitte Switzerland’s Sustainability services, Investment Management practice and is a member of the Board of Directors. He has 20 years of experience auditing and advising domestic and international clients primarily in the financial services industry, but also in real estate, trading and technology. As head of Sustainability services, he helps clients integrate sustainability in their strategy and operations focusing in particular on climate change and sustainable finance. He also provides independent assurance on sustainability reports and compliance with necessary regulatory requirements.
Peter Vickers - Director
Phone: +41 58 279 7200
Email
Peter has been working with Industrial Equipment & Service companies for more than 20 years both in industry and as a consultant. His focus is in Supply Chain & Operations where he helps his clients achieve measurable, double-digit cost and cycle-time improvements.
References:
- Kirchherr, J., Reike, D., & Hekkert, M. P. (2017). Conceptualizing the circular economy: An analysis of 114 definitions.
- Bocken, N. M. P., de Pauw, I., Bakker, C., & van der Grinten, B. (2016). Product design and business model strategies for a circular economy. Journal of Industrial and Production Engineering, 33(5), 308-320.
- Ellen MacArthur Foundation. (2017). What is the Circular Economy. Retrieved from
https://www.ellenmacarthurfoundation.org/circular-economy/what-is-the-circular-economy - Reike, D., Vermeulen, W.J.V. & Witjes, S., 2018. The circular economy: New or Refurbished as CE 3.0? — Exploring Controversies in the Conceptualization of the Circular Economy through a Focus on History and Resource Value Retention Options. Resources, Conservation and Recycling, 135, pp.246–264.