Setting circularity scopes for impact and material measurements innovation
Companies are struggling to measure their circular economy performance and the corresponding impact following the emerging standards and regulations. Working through these challenges with businesses, about a year ago Deloitte and Circle Economy Consulting recognised that scope and boundary setting guidance was something that was lacking from the dialogue. The boundary setting framework presented in this article is the result of our joint thinking and testing in response to this. Amongst others, we were supported by four businesses that were willing to use their circular solution to test and refine this emerging thinking.
A well-defined boundaries framework is an essential building block for businesses aiming to enhance circularity efforts by establishing clear operational boundaries that allow them to effectively define their control over resource flows These resource flows can represent profound sustainability and economic impacts, such as emission of greenhouse gasses, negative impacts on biodiversity, pollution, or dependency of critical materials. The draft Circular Economy Boundary Framework (CEBF) delineates four distinct scopes—A, B, C, and D—each representing varying degrees of influence and control over circularity metrics, see the figure below.
Scope A: Direct Control over the Environment
This scope encompasses the resource flows that a company directly manages, including the extraction of natural resources and the disposal of waste. Understanding this scope is vital for assessing immediate environmental impacts.
Scope B: Direct Control within the Value Chain
This includes material flows that the company directly influences within its supply chain, such as resources sourced from suppliers and products delivered to customers. Companies can leverage this scope to enhance procurement strategies and product design.
Scope C: Indirect Control across the Value Chain
This scope extends beyond the company’s direct operations and encompasses the resource flows influenced by the company's decisions throughout the entire value chain. Understanding this scope allows businesses to take responsibility for their broader supply chain impacts.
Scope D: Influence on the Wider Ecosystem
Capturing macro-level resource flows, this scope assesses a company’s role in shaping circular consumption patterns and impacting resource use across sectors.
To illustrate the practical application of the CEBF, four case studies highlight innovative circular solutions implemented by prominent organisations:
Signify: Light-as-a-Service
This case study demonstrates how a Product-as-a-Service (PaaS) model can enhance the circular economy performance of businesses over time, showcasing the effective management of Scope B and C flows to promote resource efficiency.
Gestamp: Closed Loop Recycling of Manufacturing Waste
This example illustrates how closed-loop recycling initiatives can lead to upcycling, assessing the impact on greenhouse gas emissions and upstream resource use within Scope B and C.
JLR: Repurposing EV Batteries
By examining the remanufacturing and refurbishment of electric vehicle batteries, this case study highlights the differences and benefits of Scope B, C, and D in measuring avoided resource use and increasing material productivity.
Hempel: High-Performance Coatings
This case highlights how enabling solutions can help customers transition towards circular practices, demonstrating the broader impacts captured in Scope D.
Let’s make this work.
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