The Circular Economy

Q: What are the challenges in the transition toward the circular economy?

Challenges arise in different areas: Political regulatory: A framework for more clarity, harmonization, and promotion of the circular economy is needed. A lack of collaboration between actors in the Circular Economy (companies, academic institutions, NGOs, etc.), which could be fostered by regulations. Regulators need to take a holistic perspective that allows the transformation of the economic system rather than focusing only on end-of-life measures like proper waste management. Awareness and behavior: Consumer behavior and lifestyle decisions are predominantly shaped by linear thinking. A change in behavior and preferences is needed. In many cases, circular economy opportunities and risks are not well considered in corporate strategies or decisions because there is a lack of awareness for the topic. Technology and expertise: Internal expertise on the circular economy is often poor and the benefits of circular measures are underestimated. Investment in technology development and research and data collection is needed. Education on the circular economy as well as cooperation and exchanges of experience need to be enhanced.

The circular economy is a sustainable economic model, thriving within our planetary boundaries and transforming our current linear economic system into a circular and regenerative one.

Lead by example and contribute to a future-proof system change

which not only solves ecological issues but also improves your business performance and lowers expenses.

What is the circular economy?

The circular economy is an economic model that exists in contrast to a linear economy, where the processing of materials and product manufacturing predominantly result in high rates of waste disposal. In a circular economy, waste and different types of pollution are avoided as far as possible by keeping products and materials in use at a high economic value. The recovery of materials at the end of a product’s life reduces the demand for virgin materials. Additionally, eco-friendly product design is fundamental.

Why is the circular economy important for businesses?

A circular business model is not an extra mile but will be crucial for companies to work on in the future. Circular Economy is one of the main pillars of the European Green Deal and plays a key role in decarbonization and achieving climate neutrality by 2050 and fighting pollution. The new circular economy action plan puts the whole life cycle of products into the spotlight and describes specific requirements and regulatory changes that affect a broad range of sectors like electronics & ICT, batteries & vehicles, packaging, plastics, textiles, construction & buildings, and food.

At the end of product life cycles within these industries, we face a lot of environmental problems like e-waste, plastic pollution, disposal of hazardous materials, or leakage of heavy metals. Companies are now asked to integrate circular economy aspects into their business and sustainability strategies, prepare themselves for regulatory requirements and define circular measures and roadmaps. However, although that may sound like pure necessity, circular business concepts also entail economic and corporate benefits while contributing to the regeneration of natural systems.

Benefits through circular economy solutions

The circular economy is beneficial on an economic, environmental and social level.

Economic:

Cost reduction through the reuse and re-manufacturing of resources and better material efficiency
Significant CO₂ reduction potential across the whole value chain
Protection against linear risks (shortage of raw materials, raw material price volatility)
Competitive advantage by differentiating from competitors in terms of price, quality, durability, etc.
Increasing investor attraction by improved ESG performance
Economic opportunities thanks to new revenue streams, opening up new markets and securing niche markets

Environmental:

Social:

Developing circular economy business strategies

EY denkstatt builds on its long-term experience in strategy development, knowledge transfer, assessments and analyses that will help companies find their place in the circular economy. We support you in the design and implementation of a circular economy strategy. Together we define a roadmap in alignment with your long-term business goals and existing strategies by setting clear targets and responsibilities.

Additionally, with the following services, we focus on specific aspects of your transformation journey:

Circular economy workshops

Identify opportunities, gain knowledge about the concept among your departments, and build a first sense of your place in the circular economy.

Circularity training

Introduce the concept in a 1-day workshop in your business to create a common understanding, raise awareness and prepare for upcoming legislation.

Cost-benefit analysis

Make fact-based decisions with a feasibility check of your circular ideas in terms of environmental and economic costs and benefits.

Material flow analysis

Recognize the hotspots in your material flows and optimize the use of resources with the help of clear results for complex issues.

Legislative impact assessment

Ensure you make the right decisions by assessing the implications for your business and products due to legal developments.

Eco design

Increase the environmental friendliness of your products or services throughout their entire life cycle by applying eco design.

Circular packaging

Establish guidelines, choose the right material, and partner up with key stakeholders to increase the circularity of your packaging.

Waste management

Reduce waste, optimize costs, and gain the acceptance of employees in terms of environmental benefits with our trainings and workshops.

FAQ

Frequently asked questions on the circular economy

What is a circular economy?

The circular economy is a concept of a sustainable economic system that owes its increasing public awareness to the Ellen MacArthur Foundation and other organizations. It follows principles like avoiding waste and pollution, keeping products and materials in use at a high economic value as long as possible, and regenerating natural systems.

Which business practices support a circular economy?

In general, business models and processes that maximize the value of resources and increase the longevity of products are following the principles of the circular economy. This can include resource efficiency, sustainable product design, closed-loop supply chains, a well-designed waste management concept, or a Life Cycle Assessment.

What is the difference between the Circular Economy and Recycling?

Whilst recycling is certainly a part of the circular economy, the concept of the circular economy covers much more. Through business model innovation, it aims for a system change where our linear economy is transformed into a circular and sustainable economic system. The approach of reuse, repair, and recycling certainly plays a crucial part in the circular economy.

What is a material flow analysis?

A material flow analysis – short MFA – captures, quantifies, and presents the interaction of material flows and their changes through processes. It provides clear results for complex issues at a country, region, group, or company level and can help you to optimize the use of resources or take sustainable measures in waste management. In the form of a Life Cycle Inventory, an MFA is the starting point for a Life Cycle Assessment, the determination of the PCF or the creation of an EPD for your product.

How can companies improve their waste management?

To optimize a company’s waste management, first, the existing solutions and their handling in practice need to be evaluated. Afterwards, a more appropriate solution can be developed considering cost optimization, acceptance of employees or residents, and environmental benefits. Moreover, it is important to look at the big picture of local solutions. Our waste management consultancy services help you to find the right solution for your company.

What are the challenges in the transition toward the circular economy?

Challenges arise in different areas:

Political regulatory:

A framework for more clarity, harmonization, and promotion of the circular economy is needed.
A lack of collaboration between actors in the Circular Economy (companies, academic institutions, NGOs, etc.), which could be fostered by regulations.
Regulators need to take a holistic perspective that allows the transformation of the economic system rather than focusing only on end-of-life measures like proper waste management.

Awareness and behavior:

Consumer behavior and lifestyle decisions are predominantly shaped by linear thinking. A change in behavior and preferences is needed.
In many cases, circular economy opportunities and risks are not well considered in corporate strategies or decisions because there is a lack of awareness for the topic.

Technology and expertise:

Internal expertise on the circular economy is often poor and the benefits of circular measures are underestimated.
Investment in technology development and research and data collection is needed.
Education on the circular economy as well as cooperation and exchanges of experience need to be enhanced.

The Circular Economy

Lead by example and contribute to a future-proof system change

What is the circular economy?

Why is the circular economy important for businesses?