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Circular economy

From linear to circular: material flows that create value

The days of “take, make, throw away” are over. Circular economy is no longer on the fringes of business operations, but is at the heart of future-proof organizations. From resource scarcity to new legislation, from cost savings to competitive advantage: a thoughtful circular strategy determines whether organizations will only survive or truly thrive.

What does circular economy mean for your organization?

Circular economy is an economic model in which existing materials and products are shared, leased, reused, repaired, refurbished and recycled for as long as possible. It is all about closing cycles: what is waste now becomes raw material tomorrow.

For organizations, this means a fundamental shift from a linear to a circular business model. From cost savings through reduced material consumption to new revenue streams through take-back programs. From risk management in resource scarcity to compliance with increasingly stringent legislation.

The four pillars of circular value creation

Material Efficiency

Fewer raw materials for the same result. From modular design to smart manufacturing processes, efficiency is the basis of circular business cases.

Life Extension

Keeping products in use longer through repair, upgrade and refurbishment. This creates new services and customer relationships.

Circuit Creation

Waste streams become raw material streams. From cascading to industrial symbiosis: what is waste for one becomes input for another.

Value retention

Material value maximized through high-quality recycling and remanufacturing. This often requires cooperation in the chain.

Why circular economy is urgent now

The Netherlands must be fully circular by 2050. The CSRD mandates comprehensive reporting on material use. The CSDD goes further with due diligence in the value chain. Looking away is no longer an option.

Globally, material flows are becoming increasingly critical. Geopolitical tensions are making Europe aware of its dependence on critical raw materials. The Draghi report highlights the need for commodity security.

Customers, employees and investors expect concrete circular action. Financiers integrate materiality and circularity into their ESG criteria. A circular strategy strengthens reputation and customer loyalty.

Circular business models offer cost savings and new revenue streams, but require investment in new systems and processes. Forerunners actually create competitive advantages.

Practical steps to circular economy

Step 1: Mapping material flows

Start with a Material Flow Analysis (MFA). Where do materials come from? How are they used? Where does waste occur? These insights form the basis for all subsequent steps.

Use LCAs (Life Cycle Assessments) to understand the full environmental impact. LCAs help improve a product’s overall environmental performance and demonstrate benefits to customers. EPDs (Environmental Product Declarations) make impact transparent to stakeholders.

Step 2: Apply circular design principles

Design products with circularity in mind:

  • Durability: Longer service life due to robust materials and construction
  • Repairability: Easy access to parts and repair instructions
  • Modularity: Parts replaceable and upgradeable
  • Dismantling: Materials recoverable at end of life
  • Reusability: components suitable for second life

Step 3: Build partnerships in the chain

Circular economy requires chain collaboration. Work with suppliers on materials selection and quality criteria. Develop take-back programs and service services with buyers. Explore industrial symbiosis with other sectors.

Step 4: Explore new business models

From selling to service. Product-as-a-Service keeps ownership with the manufacturer and optimizes use. Leasing, subscriptions and pay-per-use models create new value propositions.

Step 5: Set measurable goals

Formulate SMART goals for circularity:

  • X% reduction in primary material use within Y years
  • Z% of products designed according to circular principles
  • Waste reduction from A% to B%.
  • Circular Material Use Rate (CMUR) of C%.

Monitor progress with concrete KPIs and report transparently on results.

The business case for circular economy

Direct financial benefits

Cost savings
Reduced material costs through more efficient use and reuse. Lower waste disposal costs through prevention and recycling. Energy savings through smart processes.

New revenue sources
Product-as-a-Service models create recurring revenue. Refurbishment and remanufacturing open new markets. Take-back programs become revenue streams.

Risk reduction
Less dependence on primary raw materials reduces supply risks. Diversification of material streams increases resilience. Compliance with legislation prevents fines.

Long-term strategic benefits

Access to capital
Green financing is becoming more accessible to circular business cases. ESG criteria are increasingly determining investment decisions. Circular organizations are attracting sustainable investors.

Competitive position
Early adopters get ahead of legislation and market changes. Circular innovation creates distinctiveness. Partnerships in circular chains strengthen market position.

Talent and reputation
Employees want to work for organizations with social purpose. Circular companies attract and retain better talent. Stakeholders value transparency and real impact.

Tools and methods for implementation of CE

LCA creates a global balance sheet that takes into account impacts across the entire life cycle. It shows where circular strategies actually reduce environmental impact and where they may cause other impacts.

EPDs describe the environmental footprint of a product throughout its life cycle. They provide standardized communication about environmental performance and support transparent choices.

From refuse to recover, the 10R strategies provide a hierarchy for circular interventions. The higher up the ladder, the greater the impact. Refuse and reduce have more impact than recycle and recover.

International set of standards developed specifically for the circular economy, aimed at consistent and measurable application of circular principles.

More on circular business
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CE legislation and compliance

The Corporate Sustainability Reporting Directive (CSRD) requires comprehensive reporting on material use and circular economy (E5). From policies to KPIs, from inflow to outflow: all aspects must become transparent.

The Corporate Sustainability Due Diligence Directive (CSDDD) goes beyond reporting. Organizations must actively address wrongdoing in the value chain and implement climate transition plans.

The Netherlands wants 50% less primary resource use by 2030 and 100% circular by 2050. The National Circular Economy Program contains concrete measures and incentive schemes.

From problem to opportunity

The beauty of circular economy: it forces innovation. Organizations that approach materials flows strategically discover new opportunities. More efficient processes, lower costs, better relationships with stakeholders.

Circular economy is no longer a cost, but an investment in the future. A way to be ahead rather than behind the times. A chance to show what your organization is really capable of.

Ready to move from linear to circular? Empact helps organizations develop practical and effective circular strategies. From an initial materiality analysis to the full implementation of new business models.

Start making an impact