The Circular Economy Handbook
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The Circular Economy Handbook outlines the transition from a traditional linear economy to a circular economy, emphasizing strategies for maximizing value capture through five key business models and enabling technologies. As the demand for sustainable practices grows, industries are presented with a $4.5 trillion opportunity by 2030, driven by innovation and the adoption of circular principles. The book provides a comprehensive framework for organizations to pivot towards circularity by addressing operational, product, cultural, and ecosystem dimensions.
The Circular Economy Handbook
- 2. From Waste to Wealth to The Circular Economy Handbook Wefirstarticulatedthecompetitive advantageofa circulareconomyinWastetoWealth(2015).Thisbookhighlightedtheopportunityforvaluecapturebyadoptingfive newcircularbusiness modelsandtenenablingtechnologies. 2 Worked for and collaborated with clients and partners to deliver leading circular economy strategies around the globe. Found that efforts mostly focused on “quick wins,” small-scale initiatives, or programs can could be retrofittedinto business-as-usual environments. Since 2015 Analyzedmore than 1,500 circular case studies viaTheCircularsprogram, the world’s premier circular economy awards program run in collaborationwith theWorld Economic Forum. Rising political and economic tensions, the pace and scale of technological change, along with the urgency of the climate crisis and resource scarcity are dramatically altering the landscape. We have an unprecedented opportunityto transform these challengesintoopportunities, creating financial and economic value for businessand society.Our research shows the value at stake is $4.5 trillion of upsideby 2030. In seizingthe circular advantage, businessescan spur innovation, create new markets and wisely pivot the global trajectory toward one that is more sustainableand resilient. It is time to turn theory into practice andact now. Now
- 3. 3 The circular economy handbook is divided into three parts Where are we now? How do we get there? Setting the foundations: Exploring the five circular business models, and the disruptive technologies of the 4th Industrial Revolution Making the pivot: Uncovering the path to circular maturity across the four organizational dimensions of Operations, Products & Services, Culture & Organization, and Ecosystem Where do we need to be? Scaling industry impact: Identifying the biggest challenges and opportunities for value capture across ten major industries
- 4. 4 Wherearewe now? Setting the foundation Wheredowe needtobe? Scaling industry impact Howdowe getthere? Making the pivot 1 2 3 Copyright © 2021 Accenture. All rights reserved. 4
- 5. The circular business models Thesecanbemappedacross thevaluechain,focusonbothproduction andconsumption, andprovideaprovenframeworkforcircular transformation. 5 Resource recovery Design Manufacturing Logistics Product of use End of use recycling Reverse logistics Sourcing Resource recovery Circular inputs Product use extension Sharing platforms Product as a service Resource recovery: Product use extension: Sharing platforms: Product as a service: Using renewable sources, bio- based materials and man-made materials, that are recycled or highly recyclable, to enable partial or total elimination of waste. Using the embedded materials or energy at the end-of-use of a product and recovering through collection, aggregation and processing. Retaining ownership of products and selling benefits through a service model. Product’s use extended through design considerations, repairs, reconditioning, upgrades and resale for second use. Optimizes utilization rates of products and assets through shared ownership, access and usage. Circular inputs:
- 6. 6 There are five key enablers we found through analyzing 1500+ case studies which are essential to capturing the full potential of the circular business models. Consumer engagement Re-shape what it means to consume to support evolving customer demands and to drive new behaviors. Create takeback loops by managing the return and recovery of products back into the value chain. Accelerate with 4IR innovations to enable the smart use of resources and create new opportunities. Embrace the power of external engagement and build new networks to unlock circularity at scale. Design Plan for product clarity to enable longer use-cycles and end-of-use recovery. Ecosystems Reverse logistics Disruptive technologies
- 7. Disruptive 4IR technologies are the single most important enabler accelerating the transition to a circular economy 7 Technologies based on computer, electronics and communication sciences, which make use of the increasing volume of information and connectedness of physical resources. Technologies based on basic properties of materials, energy, forces of nature and their interactions. Technologies based on biological aspects, including, but not limited to: biological systems and living organisms (or derivatives thereof), to make products and processes for specific uses. Digital Physical Biological
- 8. The most competitive businesses deploy combinations of technologies to achieve the best performance 8 Design Manufacturing Logistics Product of Use End-of-Use Recycling Reverse Logistics Sourcing Digital Physical Biological DataAnalytics Using aeroponics and predictive analytics for agricultural productivity, reducing resource consumption & waste generation while increasing quality output. Aeroponics MachineVision Using AI-enabled robotics and machine vision to fundamentally change the costs of recycling.The accuracy of waste sorting system has improved over time to reach 99%. Robotics
- 9. 9 1 2 3 Copyright © 2021 Accenture. All rights reserved. Wherearewe now? Setting the foundation Wheredowe needtobe? Scaling industry impact Howdowe getthere? Making the pivot
- 10. Cross-cutting themes are driving the circular transition of industries Copyright © 2021 Accenture. All rights reserved. 10 The need to sustainably meet challenges of growing demand—to do more with less, while reducing negative impact—is being felt across industries (e.g. produce more food with less deforestation). Policymakers are targeting industries with regulations focused on accelerating transition (e.g. regulations focused on appliance recovery and recycling). Public awareness of waste-related issues (e.g. plastics, ‘fast fashion’) is driving consumer pressure on both B2C and B2B industries—from FMCG to chemicals and mining—to address their concerns through circular solutions. Technology advancements are happening across industries, enabling new circular opportunities, from machine vision to reduce food waste, to pressurized CO2 to eliminate water from the textile dyeing process. Opportunities for industry cross-over and transformation (e.g. at the intersection of end- of-use recovery and circular inputs) are growing, as technology and infrastructure unlock new possibilities.
- 11. Industries can generate financial value and maintain or improve market share through circular opportunities 11 Value at stake by 2030 Value addition through reducing costs, such as through designing leaner products, sourcing circular materials, improving forecasting to reduce unsold product or producing more efficiently. Now Value migration between industry players or from one type of product/service to another, driven by growth in alternative products (e.g. EVs in automotive; renewables in utilities) and refurbished/second-use markets (e.g. fashion, electronics devices). Value addition through new sources of revenue, such as circular business models, brand differentiation and market share or premium pricing in some industries. Value Addition:Cost Value Migration Value Addition: Revenue $ USD Billion $500 $400 $100
- 12. Each industry is at a different stage 12 $80 bn Oil and gas $5 bn Household $300 bn Electricity $135 bn ME&I $80 bn Devices/ICT $5 bn Personal Mobility $300 bn FMCG $135 bn Fashion in their circular transition with unique waste challenges, but there is potential to realize significant value through large-scale adoption
- 13. 13 1 2 3 Copyright © 2021 Accenture. All rights reserved. Wherearewe now? Setting the foundation Wheredowe needtobe? Scaling industry impact Howdowe getthere? Making the pivot
- 14. The wise pivot provides a roadmap for the transition to a circular business 14 Transform the existing value chain to remove waste, reduce value erosion and drive up investment capacity. 02 Grow the core business organically with circular offerings embedded to sustain fuel for investments. 03 Invest in disruptive growth opportunities that will take organizations’ circular journeys to the next level. Wise pivot Transformthe core Growthecore Scalethenew 01
- 15. 15 Organizations must mature across four fundamental dimensions in order to successfully pivot to circularity: Ecosystem Collaborating and partnering with public- and private-sector actors to create an enabling environment for collective transformation. Rethinking the design, lifecycle and end- of-use of a product or service to optimize usage, eliminate waste and close product loops. Embedding circular principles into the fabric of an organization through redefined working practices, policies and procedures. Addressing the value lost through the operations and by-products of business processes across energy, emissions, water and waste. Operations Products & services Culture & organization
- 16. Investors and policymakers must help remove barriers to support organizations in the global transition by targeting new approaches which overcome linear structures and systems. 16 Investors Reevaluating measurements of financial risk Adapting the “corporate finance toolkit” 1 Mobilizing the required capital, $3.9tn a year in developing countries alone 2 Policymakers Steering regulations towards practices that yield the highest value of waste & scarce materials Incentivizing circular behavior through taxation Investing in infrastructure to recover & recycle materials and integrate back into production Redefining waste definitions to avoid discarding material with unlocked value Refining product quality and safety regulation to reduce limits on product reuse 1 Katherine Garrett-Cox, CEO of Gulf International Bank (UK) 2 UNCTAD, “Promoting investment in the sustainable development goals,” 2018,
- 17. 17 The circular economy handbook $4.5 trillion Global value at stake by 2030 Disruptive technologies Case studies Business models 5 27 1500 Industries 10
- 18. How can you capture your circular advantage today? Contactustolearnmoreat [email protected] www.accenture.com/circulareconomyhandbook Copyright © 2021 Accenture. All rights reserved. 18