Resources & Publications

The 'Building Value' report launched today demonstrates the radical potential in the built environment to accelerate the circular economy. The industry should re-think how to calculate value in buildings and how to finance them.  

This report identifies key reforms to current methods of valuation and financing to stimulate circular construction. An alternative pathway is mapped from a case study of the Fridtjof Nansenhof social housing project in Amsterdam, due for redevelopment in 2020.

Download the full report

The report is a collaboration between Circle Economy, Sustainable Finance Lab, ING, Allen & Overy, Eigen Haard, The Royal Netherlands Institute of Chartered Accountants (NBA),  Alfa Accountants and Advisors, Madaster, Arcadis, Arup, and DOOR architecten, co-funded by Nederland Circulair! The participants formed a Community of Practice (CoP), to develop relevant, transferable tools to guide circular construction.

Rethinking Construction: one building, six layers

The report argues that each building should be conceived as six individual layers, each with their own lifespan. Applying circular principles, strategies can be developed to maintain the value of each layer.  

The EPM hierarchy

Value can be maintained within each of the six layers by prioritizing reuse in this order: elements, products, materials (EPM). New business models, such as Product-as-a-Service, enable effective reuse of EPMs.

Market for reusable elements

Prioritizing reuse will require a developed market for building elements. Technology has enabled actors within the built environment to increasingly collect, store and exchange data. Reliable governance of EPM data is essential to respect privacy, security and transparency.

The business case

Accurate valuation of individual layers and EPMs is key. The Community of Practice conducted a scenario building exercise to compare the long term (financial) performance of circular features for two building layers. The business case is shown to be highly dependent on assumptions for factors including depreciation, discount rates,  lifespan  and market development.

Valuing circular construction

Distinguishing between building layers, when realizing the value on the balance sheet, is necessary to explicitly show the value of layers and EPMs as part of the overall value. The traditional emphasis on location value as part of the total value has eclipsed the importance of building layers and EPMs. These factors should be reported separately on the balance sheet to guide investment decisions.

"Separating location and building elements on the balance sheet should result in a different way of valuing and financing buildings when the developing market for repurposed building elements is more established.”

Jan van der Doelen, Sector Banker Building & Construction, Real Estate at IN

Bringing future value into present financing

Financiers play a crucial role in identifying and mitigating risks in the transition to a circular economy. Circular business models capture value over a longer time horizon, reflected in higher future values. Investment decisions should assess this future value: "The business case of a circular construction project is based on the ambition to reduce our demand for natural resources. If a small extra investment results in increased flexibility of the building in the long-term, then it is a smart investment. This long-term investment vision could be further incentivised if financiers make circular construction an investment criterium.” says Dries Wijte, Manager Back Office Finance at Eigen Haard.  

Next steps

On the 16th of January the Community of Practise hosted an event, inviting industry professionals to further the conversation and challenge the report findings with the market. Several of the CoP partners have already committed to continue to build on the knowledge and support the implementation of a circular built environment.

The 'Building Value' report demonstrates the radical potential in the built environment to accelerate the circular economy. The industry is re-thinking how to calculate value in buildings and how to finance them. Within the Community of Practice, we formulated key reforms to current methods of valuation and financing to stimulate circular construction. An alternative pathway is mapped from a case study of the Fridtjof Nansenhof social housing project in Amsterdam, due for redevelopment in 2020.

Five key lessons:

1. Circular construction depends on the development of a market for used elements, products and materials.

2. Unlocking the potential of circular construction requires new valuation methods, distinguishing between land and buildings conceiving the building as six individual layers, each with their own lifespan.

3. Circular construction can successfully be financed when risks and future potential are balanced. This can be supported by detailed financial modelling and leveraging key strengths of circular buildings as securities.

4. Social housing corporations are ideally suited to implement circular economy business models since both favour long-term inclusive value above mere financial profits.

5. Collaboration and transparency support the creation of synergies between different fields of expertise (business, technical, legal, financial), needed to tackle the challenges of circular construction business models.

Our world is only 9% circular and the trend is negative. The circularity gap is not closing. In 12 months since the launch of the first Circularity Gap Report, the upward trend in resource extraction and greenhouse gas emissions has continued and key indicators confirm that the problems of a linear economy are 'baked in' to the global economy and we are heading in the wrong direction. On 22 January 2019, Circle Economy launches the second annual Circularity Gap Report in Davos during the World Economic Forum Annual Meeting. In the report, Circle Economy positions the circular economy as a tool for the paradigm shift we so desperately need. It offers the prospect of a global economy which is regenerative and abundant.

Interested in winning a free trip to Amsterdam and attend Beyond Next, including travel and accommodation? Interested in contributing to a circular economy with your research and ideas? Well read on, because we have partnered with Amsterdam Fashion Institute, ABN AMRO, Gemeente Amsterdam and HEMA to run challenges to accelerate the transition to a circular economy.

You can now submit existing research, facts and figures, inspirational examples, and other key insights related to these challenges. The challenges cover four major themes of education, product as a service, organic waste in a circular city, and single use plastics.

We will synthesise and openly share the results of this crowd-based exploration on Circle Lab, the online platform for the circular economy, for everyone to find inspiration in, learn from, and use in developing new solutions.

These results will also support attendees of the Beyond Next Challenge Track as they ideate and prototype new solutions to the challenges throughout the two-day festival.

THE PRIZE

Send in some research and you could win a free trip including entry tickets worth €150 and accommodation and travel expenses up to €1,000!

Eight winners will be chosen based on a combination of the number and the quality of their contributions.

For more information on the challenges and how to contribute, check out the challenges below:

Beyond Ownership >
How can we promote access over ownership in the household? 
Brought to you by ABN AMRO

Beyond Plastics >
How can we transition to a system free of single-use plastics?
Brought to you by HEMA

Beyond Education >
How can fashion education equip students for a ‘new reality’?
Brought to you by the Amsterdam Fashion Institute

Beyond Leftovers >
How can we effectively collect and use organic waste throughout the city?Brought to you by the Gemeente Amsterdam

Cities and regions hold huge potential for circular disruption. Their secret weapon? Policy! Circle Economy is excited to share 300+ examples of circular policies from over 40+ countries to the Knowledge Hub - the world’s largest open-access case study library of circular initiatives, technologies, and now, policies. By sharing practical examples of circular policies, cities and policymakers throughout the world can share their knowledge and expertise to overcome the barriers towards a circular future. The collection of inspiring cases have been collected in collaboration with ICLEI, and with the support of the Goldschmeding Foundation.

Visit the Knowledge Hub for Cities

Breaking down the barriers to circular knowledge

In 2017, Circle Economy recognised the huge need for a single location that assembles practical knowledge, expertise and example of circular solutions that are proven to work. The solution? The Knowledge Hub - the world’s largest case study database of circular businesses, initiatives - and, now, circular policy is added to that list. The platform provides an open-access platform for cities and policymakers to connect and further share their experience and expertise on circular policy.

Throughout the world, successful circular policies are blooming. Yet, all too often, this knowledge and experiences of these circular policies are held in silos, hidden away. Now, the Knowledge Hub for circular policy aims to break down these walls.

300+ circular cases across 40+ countries

Building upon the policy framework created by the Ellen MacArthur Foundation in 2015, the 300+ circular policies span 25+ policy instruments that are boosting the transition to a circular economy throughout the world; from circular procurement to collaboration platforms; landfill bans to green bonds. To give a taste of some of the innovative circular policies that can be found on the Knowledge Hub, here are three inspiring examples from European cities and regions;

• Flanders' pay-as-you-throw waste collection scheme charges household depending on the quantity of waste they generate;
• The Catalan Eco-Vouchers Programme aims to foster eco-innovative projects and solutions that would help SMEs pursue circular innovation;
• London's FoodSave Scheme has supported the reduction of unavoidable food waste through free waste audits for participating local food restaurants and cafés;

As the recognition of the circular economy continues to grow, globally, so too will the library of circular policies in the Knowledge Hub. Open-access and collaborative, this digital platform will continue to empower and inspire a global community of circular changemakers. We invite cities and policymakers to share their knowledge, experiences and best practices on circular policies to accelerate the transition towards a circular economy.

The Fibersort is a promising technology that can automatically sort post-consumer textiles by fibre type, but its success depends on being able to sell its outputs; these sorted post-consumer textiles. Without a demand for post-consumer textiles, there is no market for the Fibersort.

This report outlines the amount of post-consumer textiles that could potentially be Fibersorted and used as feedstock for textile-to-textile recycling. Recycling technologies often process feedstocks with a specific composition, so quantities of each fibre type are important to consider. It is also important to understand the costs of these post-consumer textiles, however, it must be noted that the prices for these materials may vary greatly - similar to virgin commodities. The report provides an indication.

Processing recycled content brings considerable environmental and social benefits. However, materials are traded throughout the supply chain and can rarely be tracked. In order to make claims on the recycled content of their products, brands and retailers often dependent upon certifications and standards. An overview of the main certification schemes for recycled content is therefore provided.

While the Fibersort project looks to commercialise a technology, it is much more than this. Fibersort has the ability to transform non-rewearable garments into feedstock for textile-to-textile recycling. To do so we must develop recycling technologies, support an industry where brands feel comfortable using post-consumer textiles as raw material to create new garments, and support the market transition through measuring, reporting and monitoring the current conditions for post-consumer textiles. This report is one step towards this goal.

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Katowice, Poland, 5 December 2018: Today at COP24 in Poland, The World Business Council for Sustainable Development (WBCSD) and Circle Economy, in collaboration with Arcadis, released a report describing the changes required for the circular economy to become mainstream in the built environment. The report was developed with ABN AMRO, ArcelorMittal, CRH, DSM, EDGE, Enel, Madaster, Rabobank, Renewi, Saint-Gobain, Bureau SLA, Solvay and Stora Enso.The “Scaling the Circular Built Environment’’ report explains the way leaders in both business and government can help level the playing field for circular business models, which are currently hindered around the world.Key recommendations include:

• Remove key financial, legal, technological and political barriers that prevent companies from adopting circular business models
• Ensure companies are able to access the market equally and plan for long-term investment and innovation
• Accelerate the development of relevant regulations and legislation to support new business models under the circular economy
• For both private and public sector to start collaborating across the value chain and start integrating circular principles in standard purchasing practices.

The circular economy presents a huge potential for global economic growth while accelerating society towards a sustainable future and helping to meet the goals of the Paris agreement to mitigate climate change.Within the built environment the opportunities are evident: this sector consumes over 40% of the world’s yearly extracted resources and it is responsible for a vast environmental footprint that contributes 33% of global carbon emissions.Moving from a linear model of take-make-dispose to a circular model where buildings, facilities and materials enter a longer lifecycle and reuse model, offers enormous economic and environmental advantages.However, this transition is hampered by significant barriers that are slowing down the shift in changing roles and business models that are necessary for the transition.

“This report shows the economic opportunity that circular built environment brings to companies in terms of avoided costs, reduced resource risks, and environmental benefits. Circular materials, products and services must become the new normal in buildings. To achieve this, we need bold leadership from companies and policy-makers who can implement solutions to support and scale the circular economy.” said Maria Mendiluce, Managing Director of Climate, Energy and Circular Economy at WBCSD.“Accelerating the circular built environment can make a considerable contribution to carbon reduction, but it requires a shift in mindset and culture. For this to be effective we need new business models, supported by new valuation methods and standardization, along with new forms of collaboration and co-creation that will help to take the circular economy mainstream. However, companies cannot do this alone. Governments will need to favour circular solutions over business as usual, as this now impedes rapid progress.” Besides that, it is important not to wait and try to make your projects as circular as possible. You already can do a lot, we know out of experience,” said Joost Slooten, Director Sustainability for Arcadis.The built environment has an oversized environmental footprint. “ We urgently need to accelerate the transition to the circular and low carbon built environment. Governments should develop long-term policies that encourage innovations and investments to bring these to scale. Business needs to adopt new valuation methods, new forms of collaboration and digital innovations to improve information transfer along the building value chain.” Said Roy Antink, SVP, International Policy Coordination, Sustainability for Stora Enso.

The circular economy has been estimated as a USD $4.5 trillion opportunity. The paper describes the opportunities, business models and changes that are necessary to leverage this opportunity in the built environment. It also identifies the barriers that are currently hampering the transition and concludes with recommendations to both the public and private sectors on ways to level the playing field and scale the potential of the circular built environment.

A truly circular city requires an inclusive and prosperous job market for all of its citizens. But what is a circular job? Who will be doing this work? And what skills can allow citizens to thrive in a circular economy? Circle Economy presents the report "Circular jobs and skills in the Amsterdam Metropolitan Area", the world's first regional deep-dive to explore the character of jobs and skills in the circular economy. The report was produced by Circle Economy and Erasmus University Rotterdam for the City of Amsterdam and Amsterdam Metropolitan Area.

Method update

With the aim of continuous improvement in monitoring jobs in the circular economy, Circle Economy updates its methodology for quantifying circular economy jobs on a yearly basis. Since the publication of this report, the results for the Amsterdam Metropolitan Area have been recalculated based on the method update carried out in June 2020.

It follows that the results shown in this report differ slightly from the ones displayed on the online monitor. Please explore the data online via the Circular Jobs Monitor where you can also download the updated data file.

There is an abundance of theoretical knowledge on the advantages of new disruptive emerging technologies such as blockchain, but it is much harder to prove the actual benefits in practice. In the next 3 - 6 months, a consortium made up of Circle Economy, Sustainable Finance Lab, Nederland Circulair!, Rabobank, Bundles, Allen & Overy, ING,ABN Amro, Leystromen and De Lage Landen are bringing together enabling knowledge, technology and experts to test the possibilities of Blockchain for circular pay-per-use models in a Community of Practice. This Community of Practice (CoP) will explore how Blockchain technology can facilitate circular pay-per-use models. The CoP, co-funded by NederlandCirculair!, will pilot Bundles, a circular company that offers pay-per-use washing machines, on a Blockchain platform developed by Rabobank. Access instead of ownership is seen as one of the potential drivers for the transition towards a circular economy. Pay-per-use models are facilitating this shift and are widely seen as an important tool to put a circular economy into practice. In pay-per-use models, customers pay for the use of a product instead of possession. This model creates incentives for products that last, stimulates value chains to work together and places more responsibility on producers for the collection, processing and reuse of products.The challengeHowever, financing pay-per-use businesses is a challenge as the product is not sold, the payback period is longer, creating higher (upfront) capital requirements. In addition, transaction costs for each 'use' of the product are often high due to the high administrative burdens. And as a large number of (chain) partners are involved in the complex material, information and money flows, there is an urgent need to establish a fluent operational payment infrastructure.Bundles is such a circular company that tries to cope with all these challenges. The company offers clean laundry in a 'hybrid use model' in which the user pays 40 cents per wash on top of a fixed monthly fee. Ideally, however, Bundles would offer its customers a greater variety of prices for the use of short, long, cold or warm wash programmes, or the ability to differentiate between sustainable or unsustainable, loyal or flexible users. This way, sustainable use and maintenance of the washing machine can be even further incentivised.The potential solutionTo facilitate this need, Rabobank has set up a platform with the functionality of a virtual currency that allows for micro-payments and smart contracts for pay-per-use models. If this enables 'real-time' micro-payments at low transaction costs, Bundles' circular ambitions can become a reality. Moreover, financing would become easier because payments are automated and more reliable... Follow the challenge virtually on www.circle-lab.com!We also invite other entrepreneurs, financial institutions, blockchain experts, and other interested parties to contribute to this effort on Circle Lab, Circle Economy's open-source platform for cities, businesses, and citizens to learn more about and engage with the circular economy. The contributions collected during the online challenge will bridge insights from the crowd with those of the CoP. If the pilot is successful it could be groundbreaking for Bundles, and therefore for the circular economy. [cta link="https://circle-lab.com/group/25/ideas"]Explore the Challenge[/cta][hr]For more information about the CoP Blockchain for Circular Pay-per-Use: elisa@circle-economy.comFor press inquiries: melanie@circle-economy.com To stay updated: sign-up for our newsletter. [hr]