Austen Bates, Sustainable Solutions Associate at Ramboll, explains the findings of a new research report from WBCSD and Ramboll, which shows how a circular economy approach can produce economic, environmental, and social value to built environment projects.
Consuming over half the world’s virgin resources and accounting for nearly 40% of global carbon emissions and solid waste streams, the construction sector is ripe for a low-carbon transformation.
A circular economy approach is critical for the sector to reach net-zero carbon emissions and other UN Sustainable Development Goals. A circular building, for instance, maximises value over time by optimising the use of resources while minimising waste throughout its whole life cycle from design and operation, to maintenance and deconstruction.
‘The business case for circular buildings: Exploring the economic, environmental and social value’ report (released by World Business Council for Sustainable Development which Ramboll supported as lead author) demonstrates the values and practices for industry stakeholders to pursue circularity in building projects.
The report shows construction industry stakeholders typically consider circularity for innovative new projects whose economic value is mainly in market differentiation and find it hard to measure economic return on investment. However, circular approaches can be applied in both new builds and retrofit projects to reduce carbon emissions, waste, and costs, as well as lead to higher asset valuation and a positive brand image.
Below are some of the key learnings from the Report.
Setting a standard for circularity
It’s hard for the industry to agree on what constitutes a circular approach, as each stakeholder has a nuanced idea of what value can be added by circular approaches. For example, a building developer values lower maintenance cost, where a demolition contractor can spur job creation, or even resell or reuse demolished project materials for other income streams.
The report says the complexity and magnitude of the circular economy does not allow for a single performance value or index. Instead, the circular economy should be seen as a set of interconnected social, environmental, and economic benefits with nuanced importance relative to geography, culture, and demographics.
Using literature reviews, case studies, and surveys, the report determines how value is created in a circular economy and who can benefit from it. This is urgently needed, as nearly a third of stakeholders surveyed for the report said they didn’t know how to develop a monetary business case for circular performance.
The report’s overall business case for circular solutions are presented below and categorised as economic, environmental, and social benefits.
Economic value of circular solutions
If the circular economy is to become mainstream, circular strategies must result in positive economic outcomes, such as:
- Avoided costs from new land acquisition and landfilling costs by prioritising existing land use. The study shows a 6% overall decrease in acquisition and maintenance costs compared to a standard building. The Clarion case, for example, showed a circular strategy resulted in a £5 million cost savings for waste disposal and materials purchases.
- Increased value of products and services by accounting for residual material value and reduced deconstruction and landfilling costs, especially after using material passports
- Market differentiation and rapid sales via enhanced branding and local community buy-in by being visibly environmentally responsible.
In addition, the report suggests complying to circular principles can put businesses ahead of the curve to meet future policies and standards for operating in the built environment and mitigating regulatory risks.
The report emphasises the need for more quantitative data on financial benefits to mainstream circular economy practices in the construction sector.
Environmental value of circular solutions
According to the report, the environmental benefits are the greatest known “value impact” from implementing circular economy methods, including:
- Lowered carbon emissions for projects promoting circular economy techniques, especially as stakeholders increase use of whole-life carbon analyses to estimate carbon emission reductions, reduce use of virgin materials, and minimise waste across materials, energy, and water
- Reduced biodiversity loss by fundamentally transforming the way the sector currently extracts, processes, uses, and consumes natural resources
- Improved material transparency of projects via material passports, which can help financial assessments of retained material value and inform decision-making all lifecycle phases
Almost 75 percent of those polled agree, circular economy principles have a tangible influence on carbon emissions and waste reduction. Two cases from Upcycle Studios and Resource Rows reduced carbon emissions by up to 45 percent by reusing materials and installing recycled items.
Social values of circular solutions
Social value is project-specific and outcome-oriented, requiring material benefits to be qualified to local communities and stakeholder needs.
The report points to a number of social benefits, such as preservation of cultural heritage and improved public image of circular projects in the local community and greater opportunities for innovation, research, and development. Arguably the most compelling value proposition is local job creation and stimulation of small- to medium-sized businesses, as well as new business opportunities in selective demolition, reuse, and recycling.
With the adoption of the Paris Rulebook, EU Taxonomy, and increasing sustainability reporting requirements, the case for adopting a circular approach is only growing stronger.
As the building sector increases its appetite to deliver on the net zero mission, the circular economy approach provides the opportunity to account for true cost and value on a life-cycle basis. While the report outlines strong business cases for a circular economy, several constraints, including a lack of market data and measures, still impede the shift to circularity.
About the report’s authors
The World Business Council for Sustainable Development (WBCSD) is a global, CEO-led organisation of over 200 leading businesses working together to accelerate the transition to a sustainable world.
Ramboll is a global engineering, architecture and consultancy company founded in Denmark in 1945. Ramboll’s 16,000 experts create sustainable solutions across Buildings, Transport, Water, Environment & Health, Architecture & Landscape, Energy and Management Consulting.
Photo by Scott Blake