Resources & Publications

The Circularity Gap Report 2020, launched in Davos, finds that the world is now only 8.6% circular. Of all the minerals, fossil fuels, metals and biomass that enter it each year just 8.6% are cycled back. This has fallen from 9.1% in the two years since our annual report was first launched in 2018. Today, for the first time ever, our global economy is consuming 100 billion tonnes of materials each year and circularity is stuck in reverse.

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About the Circularity Gap Report

Circle Economy has launched the first Circularity Gap Report in 2018 because we recognised the need for improved metrics to lead impactful action. The Report, which will be launched annually, will continue to provide insights into the circular state of the world and additionally focus on specific aspects of circularity. From launching the first global metric in 2018, the industry focus in 2019, to the country perspective in 2020. The focus will be on the topics Circle Economy feels are vital to drive action or where momentum is building. The main goal of the Global Circularity Gap Report is to provide key players that can implement the circular economy with the insights, data, knowledge and network to accelerate change.

In this case of Road-as-a-Service (RaaS) the Coalition Circular Accounting (CCA) has done a deep dive into the circular business model and the need for more guidance on applying accounting rules for a Circular Service Contact (CSC), in particular for a Road-as-a-Service agreement. Our main conclusion is that there is no necessity for adapting or fundamentally changing the accounting rules, but that we have to change our accounting perspective. In attracting capital, the ratios may change negatively, which require another risk assessment by financiers.

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The Fibersort project aims at realising the widespread implementation of the automated sorting technology by validating it as a key value adding innovation to enable textile-to-textile recycling.

While the challenges and opportunities of used textiles are increasingly in the spotlight of governments, industry, and civil society, considerable system changes are required to transition towards a circular economy for textiles. Throughout this report, policy recommendations are formulated showing the legislative, economic and soft instruments that regional, national and the European governments have at their disposal to allow the Fibersort, as well as other automated sorting technologies, to live up to their full potential.

The Fibersort project aims at realising the widespread implementation of the automated sorting technology by validating it as a key value adding innovation to enable textile-to-textile recycling.

While the challenges and opportunities of used textiles are increasingly in the spotlight of governments, industry, and civil society, considerable system changes are required to transition towards a circular economy for textiles. Throughout this report, policy recommendations are formulated showing the legislative, economic and soft instruments that regional, national and the European governments have at their disposal to allow the Fibersort, as well as other automated sorting technologies, to live up to their full potential. 

[cta link="https://www.nweurope.eu/media/8244/fibersort-52-policy-recommendations-20191030.pdf"]Read the Full Report[/cta][hr]

We are actively seeking textile collectors and sorters, recycling technologies, brands and retailers, and other circular textiles projects to join our team of collaborators.

[cta link="http://eepurl.com/duHwYz"]Be part of the change[/cta][hr]

The Circular Brands Workshop brings together the world of strategic innovation consulting and creative brand building. Where the common understanding and analysis of circularity starts from the supply chain perspective, Circular Brands makes marketing, branding and consumer culture the starting point for circular opportunities.

The power of brands

We live in an era of creativity, where we can redesign everything from the ground up – including how we do business. Brands have the power to do this. They have the opportunity to drive business innovation and change consumer culture and consumption. But how do we create brand & business growth whilst creating a positive impact on society?

We invite you to learn from circular leaders sharing their best practices, insights, experiences and tools to become the driver of a circular vision, able to envision and map a circular future for your brand. Learn how to apply design thinking methods to create a portfolio of circular brand opportunities with your team and join the growing network of circular brand pioneers.

Join the Circular Brands Workshop

Circular Brands is a one-day innovation workshop rooted in a co-creation approach. Brands can participate with a multidisciplinary team of creative, brand, design and marketing leaders, and other leading brands. The workshop is led by a team of circular experts, creative/design coaches and experienced innovation facilitators.

During the workshop brands will map and create a circular future vision, define brand-led business opportunities and develop brand concepts, products and services, and create a roadmap for implementation and circular leadership development.

Are you interested to join our Circular Brands Workshop? The Next edition will take place on the 11th of December in Amsterdam

Contact us for more information!

Circle Economy launches The Product-as-a-Service Question Kit

The circular economy offers great business opportunities. In 2015 McKinsey and the Ellen MacArthur Foundation estimated that it could even generate a net economic benefit of 1.8 trillion in Europe by 2030. But, the circular economy can never lift off without businesses putting the concept into action. And with innovative circular companies like Product-as-a-Service Models (PaaS) struggle to find financing, this remains a big barrier. On the other hand, we see that many financiers are starting to set ambitious targets to grow their circular portfolio. but to this day the PaaS love story between entrepreneurs and financiers has been lost in translation. 

The main issue is a lack of knowledge on both sides and the absence of a financial narrative for Product-as-a-Service models that fit within the risk parameters of financiers. More concretely, PaaS models are, sometimes falsely, perceived as risky due to the way businesses present themselves and how financiers assess risk. 

To close the knowledge gap between circular entrepreneurs and financiers, Circle Economy has developed the PaaS Question Kit: A comprehensive guide to PaaS business models. The Kit leads both entrepreneurs and financiers through a series of questions they need to ask themselves before starting their conversation. The ultimate goal of the PaaS Question Kit is to remove the knowledge barrier and open up more financing opportunities for circular companies.

After presenting the Kit to our network the initial responses from both sides have been positive. "The PaaS Question Kit gives a perfect overview of the advantages and the complexities of a PaaS business model. The questions and manual are an easy tool to use in preparation for financial interviews, both with financiers and end-users of our product" says Pim Dekkers, founder from Occony, a high-end circular furniture company.

Joost van Dun, Circular Economy Lead at ING Sustainable Finance commented: "Paas business models are seen as one of the most powerful business models of the Circular Economy. Within ING there is a clear ambition to increase our support to our clients who transition to this model. The PaaS Question Kit is a helpful tool in this process".

The PaaS Question Kit is available open-source. We would love to receive feedback from circular entrepreneurs and financiers alike to increase our understanding and make necessary improvements. We also provide tailored workshops and support to financiers and entrepreneurs on these topics.

We would love to hear from you! For more information, questions and comments please feel free to reach out to our finance team!

Explore the Kit

The circular economy offers great business opportunities. In 2015 McKinsey and the Ellen MacArthur Foundation estimated that it could even generate a net economic benefit of 1.8 trillion in Europe by 2030. But, the circular economy can never lift off without businesses putting the concept into action. And with innovative circular companies like Product-as-a-Service Models (PaaS) struggle to find financing, this remains a big barrier. On the other hand, we see that many financiers are starting to set ambitious targets to grow their circular portfolio. but to this day the PaaS love story between entrepreneurs and financiers has been lost in translation.

The main issue is a lack of knowledge on both sides and the absence of a financial narrative for Product-as-a-Service models that fit within the risk parameters of financiers. More concretely, PaaS models are, sometimes falsely, perceived as risky due to the way businesses present themselves and how financiers assess risk.

To close the knowledge gap between circular entrepreneurs and financiers, Circle Economy has developed the PaaS Question Kit: A comprehensive guide to PaaS business models. The Kit leads both entrepreneurs and financiers through a series of questions they need to ask themselves before starting their conversation. The ultimate goal of the PaaS Question Kit is to remove the knowledge barrier and open up more financing opportunities for circular companies.

The Coalition Circular Accounting (CCA) brings knowledge partners together to co-create solutions in overcoming the barriers to transition from a linear to a circular economy. In order to better reflect the financial reality of circular companies, it is vital to adjust existing economic principles and reporting rules. The CCA, co-financed by Nederland Circulair, is a collaboration between Circle Economy, NBA, Dura Vermeer, ABN AMRO, KPMG, Province of Overijssel and scientists affiliated with Erasmus University, Open University, University of Groningen, Nyenrode Business University and Avans University of Applied Sciences.

NEW PRINCIPLES
The circular economy is characterised by principles including reuse and value retention. In many cases, these principles require innovative business models in which parties form long term collaborations, and in which material cycles are closed. New, circular business models require an adjustment of economic principles and reporting rules.

COALITION CIRCULAR ACCOUNTING
The NBA, together with Circle Economy, has taken the initiative to set up the Circular Accounting Coalition. The aim of the coalition is to jointly identify accounting challenges in the circular economy and to work together to co-create solutions and best practice in overcoming these barriers, e.g. valuation issues in circular products during and after their lifespan. Members of the coalition include senior financial decision-makers (CFO, finance manager), users (financiers, shareholders), and advisers/auditors (accountants) alongside science and advisory experts. The NBA's Annual Reporting Committee will act as a consultative group.
Findings will be consolidated in a quarterly open-source white paper.

'Circularity, the energy transition, sustainable entrepreneurship or sustainability are about economic lifetimes, cost price determination, valuation issues, depreciation periods, residual values ​​and business models. That is 100% our profession'.

Fou-Khan Tsang, chartered accountant and booster Green Brigade NBA

CASE DURA VERMEER
The first case study is a pilot project from Dura Vermeer and the Province of Overijssel to operate a "Road-as-a-Service". The idea is that Dura Vermeer becomes the economic owner of the road and takes care of the maintenance while the Province pays a periodic fee for the use of the road. A crucial point is determining the residual value when entering into the contract and (being able to) include this residual value in accounting and financing. This
leads to the question: How can the residual value of the road be determined and what effect does this have on the revenue model and on the profit and loss account? The above parties will work on this case until November

Transitioning to a circular economy requires new business models that focus on optimising the lifespan and value of products. To unlock the value of a circular economy, we need to identify current barriers in accounting and valuation standards and redesign rules where needed.

Fieke de Haan, Lead Circle Finance Program, Circle Economy

RESULTS
The Coalition will deliver the following concrete results:

• Practical and applicable knowledge for financials and accountants.
• A memo (white paper) to be shared with the most important knowledge of the case.
• An Agenda with challenges that will be addressed in upcoming editions of the Coalition Circular Accounting.

MORE INFORMATION OR PARTICIPATION?
If you are interested in participating in the Circular Accounting Coalition or would like to know more, please do not hesitate to contact the project manager Aglaia Fischer