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CIRCULAR ECONOMY
How to unlock the Circular Economy potentialFebruary 2018
© 2017 Deloitte The Netherlands 1
INTRODUCTION
2
NUMBER #1 RISK
Deloitte research (2017)
3
System transitionCompletely new economic system
INTERNET BIG DATA SMART CITIES CIRCULAR ECONOMY
4
Circular EconomyConceptual Model
1.R
educe
2.Reuse
3.R
ecycle
4.Recover
1. Rethinking, redesigning, minimization, reduction, prevention of resource use and/or preserving natural capital
2. Reusing (excl. waste), closing the loop, cycling, repairing and/or refurishing of resources
3. Remanufacturing, recycling and or/ reuse of waste
4. Incineration of materials with energy recovery
© 2017 Deloitte The Netherlands
Recent Deloitte research Circular Economy
IDENTIFIED BARRIERS
Identified barriers
Other 15% (20)
24% (32)
Standartisation 15% (20)
Limited data availability (e.g. on impacts)
Limited circular funding
9% (12)
% and # of barriers businesses
40% (54)
37% (50)
25% (34)
26% (35)
28% (38)
35% (48)
Operating within a (mostly) linear business model
26% (35)
lacking circular designs
Too few large scale pilot projects
27% (37)
lacking global consensus
Limited circular procurement
35% (48)Willingness to collaborate in the value chain
40% (54)
50% (68)
45% (61)
Delivering High quality remanufacturing products
Obstructing laws and regulations
Low virgin material prices
Lack of consumer interest and awareness
Company culture
High upfront investment costs
© 2017 Deloitte The Netherlands 6
NEW ECONOMIC SYSTEM
© 2017 Deloitte The Netherlands
NEW ECONOMIC SYSTEM
Challenges
FOUR KEY AREAS
NEW BUSINESSMODELS
SOCIETALIMPACT
CULTURE &BEHAVIOUR
COLLABORATION & PARTNERSHIPS
© 2017 Deloitte The Netherlands
#1 NEW BUSINESS MODELS
Design to reuse, ownership & new product
#1 NEW BUSINESS MODELS
9
Design to reuseAffecting the production and purchasing chain
New productBased on revaluating waste
(as core material)
Ownership Option 1: keep ownership (e.g.
leasing) Option 2: Deposit and take back
management
Collaborationwith third
parties
© 2017 Deloitte The Netherlands
Examples
#1 NEW BUSINESS MODELS
10Ymere Sustainability Week
H&M
Swapfiets
Interface
© 2017 Deloitte The Netherlands
#2 SOCIETAL IMPACT
© 2017 Deloitte The Netherlands
Benefits
#2 SOCIETAL IMPACT
’’ASKS FOR A NEW ECONOMY (SOCIETY)’’
The report by the Ellen Macarthur Foundation demonstrates how the circular Economy represents a net material cost saving opportunity of
USD 520 to 630 billion p.a.* at EU level
TNO calculated that the potential of the circular economy for the Dutch
economy is over 7 billion and can create over 50,000 jobs
A report by the Natural Resources Defense Council demonstrates how the United States could reduce greenhouse gas emissions by at least 80 percent from 1990 levels by 2050, largely through scaling up clean
energy sources and strengthening the electricity grid.
© 2017 Deloitte The Netherlands 13Ymere Sustainability Week
#3 CULTURE & BEHAVIOUR
© 2017 Deloitte The Netherlands
From linear to circular thinking & acting
#3 CULTURE & BEHAVIOUR
START-UPS
INNOVATION
INVESTMENT MODEL
For start-ups it is easier tobe circular, because they can
start from the beginning
A way for firms to contributeto the Circular Economy is to
develop a seperatedepartment
The corporation build a investment model that fits
the requirements for a Circular Business Model
© 2017 Deloitte The Netherlands
Sense of purpose
#3 CULTURE & BEHAVIOUR
15Ymere Sustainability Week
© 2017 Deloitte The Netherlands
#4 COLLABORATION & PARTNERSHIPS
© 2017 Deloitte The Netherlands
Different kind of partners need to collaborate in order to close the loop
#4 COLLABORATION & PARTNERSHIPS
’’FROM INDIVIDUALISM TO PARTNERSHIPS’’
“Collaboration is essential, Nespresso is
constantly working with local partners to
find innovative solutions”
(Nespresso, 2017)
Why collaboration:
Knowledge Finance Environment
GOVERNMENT
BUSINESSES INSTITUTIONS
© 2017 Deloitte The Netherlands 18
WHERE TO START
© 2017 Deloitte The Netherlands
Financial Accounting
What is the impact of circular economy on financial accounting?
19
Closing loop When waste is raw material, is it an asset in stead of costs?
Ownership
Taxation
Other
When goods are not transferred but onlydelivered as service, what are the
consequences in the books
Implication on VAT if the circle of goods is (infinite) extended
What if all non-financial aspects requirefixed value through blockchain mechanisms
