What is next for organisations who want to unlock the financial benefit of circular economy?

As the population size continues to grow and emerging nations become wealthier, there is increased environmental pressure. This in turn is shining a light on the management of resources and waste. The Global Reporting Initiative (GRI), as the world’s most widely used sustainability reporting framework, is now embracing the principles of a circular economy. Adopting this framework may allow organisations to capitalise on the fundamentals of a circular economy and develop your overall sustainability strategy.

Our waste: a paradigm shift

Globally, 90 billion tonnes of raw materials are extracted and used each year such as biomass, fossil fuels, metals and minerals. This is projected to almost double by 2060.

Only 19 percent of waste is recycled and composted, while the remaining 81 percent is incinerated for final disposal, landfilled or openly dumped.

As opposed to the traditional ‘take-make-waste’ linear model, a circular economy is a closed-loop approach that aims at ‘designing out’ waste. This model is gaining momentum in a variety of jurisdictions such as in the EU with the ‘European Circular Economy Act’.

Pursuing a circular economy is a win-win:

According to the Ellen MacArthur Foundation, adopting a circular economy could reduce Greenhouse Gas (GHG) emissions by 22–44 percent in 2050 compared to the current linear model and would contribute towards achieving the Paris Agreement targets. Transitioning to a circular economy supports the achievement of 12 of the 17 UN Sustainable Development Goals (SDGs) and also makes economic sense - according to the World Business Council for Sustainable Development it can unlock global GDP growth of up to $4.5 trillion by 2030.

So how can organisations benefit from a circular economy?

Adopting circular economy principles and elevating them to the strategic agenda can help organisations to:

• cut costs through reduced needs for raw materials,
• reduce energy consumption in the value chain,
• improve organisations carbon footprint,
• differentiate brand and products,
• contribute towards improving resource security and
• potentially increase supply chain resilience.

The revised Standard includes the following key changes:

What are the next steps if an organisation is looking to align with the revised Standard?

While alignment is not required until January 2022, early adoption is encouraged.

In this context it is timely that the GRI has recently released a revised version of its Waste Standard – GRI 306: Waste 2020 (the Standard).

What’s changed in the revised Standard?

The revised Standard now has a focus on enabling organisations to embrace the circular economy.

The table below shows the changes to the Standard’s structure.

As organisations looks to transition to the revised Standard, we recommend the following is considered:

• Conduct a gap analysis of revised disclosures against current waste disclosures considering local legislative and regulatory requirements. This gap analysis should also look at aligning internal reporting frameworks, to enable consistent and effective reporting
• Prepare for the transition by ensuring robust systems and processes are in place to capture the revised data points – especially when it comes to measuring the impacts of activities for extended supply chains
• Develop and communicate waste management targets in line with the GRI disclosures.

Besides informing organisations stakeholders, waste disclosures are a tool for an organisation to take accountability for its environmental impacts, understand the key factors and implications, which can guide decision-making and ultimately support a sustainability strategy.