Strategies for transformation of the European Union’s economic model demonstrate the need to spread the vision of a circular economy. For businesses, this means they need to reexamine all stages of their products’ life cycle. KPMG has developed a comprehensive service to support companies in this transition.
What is the circular economy, and why is it so important?
Until now, the dominant, linear economic model has been based on the principle of “take–make–dispose.” This contributes to negative environmental effects due to the growing demand for (limited) natural resources, as well as a loss in the value of manufactured products and raw materials due to failure to extend their life cycle or recover materials.
The answer proposed for these and other challenges of the previously dominant model, such as risks to supply chains, is the circular economy, where waste from one production process becomes a valuable material for another, and where the priority shifts from maximizing production to maintaining the maximum value of each product and the raw materials it contains. This is a model that drives practices such as eco-design, the right to repair, and solutions in the spirit of the sharing economy. The focus shifts from simply possessing a product, toward accessing services or meeting needs that can be realized through the circular model.
Circular economy model
To properly assess the process of transition toward a circular economy, it is essential to monitor achievement of the aims. Every company needs indicators appropriate to its business profile, infrastructure conditions, and geopolitical situation. These indicators link circular economy measures to the UN’s Sustainable Development Goals (SDGs), the Circular Economy Practices and Eco-Innovation Index developed and monitored at the EU level, and Corporate Social Responsibility Reporting (GRI).
These indicators take into account consumption and environmental impact across the entire area covered by the circular economy model. The methods used include life cycle assessment (LCA) and material flow assessment (MFA). Their main advantage is promotion of low-waste solutions by using raw materials from secondary sources, reducing and improving transport, and eliminating hazardous substances.
And at the local level, the National Plan for Energy and Climate for 2021–2030 sets climate and energy goals for Poland, to be achieved through implementation of circular economy measures in many sectors of the economy. A group of products have been singled out for priority in this respect:
Batteries & Vehicles
Packaging
Plastics
Textiles
Construction & Buildings
Food, Water & Nutrients
Circular economy challenges for companies
In the coming years, companies will adapt to the trends observed on the market today:
- Ensuring that sustainable products become a Euronorm in the EU—products placed on the EU market should be durable, easy to reuse, repair and recycle, and use recycled materials as much as possible
- Empowering consumers through access to reliable information on issues such as reparability and durability of products
- Focusing on sectors consuming the most resources, and where the potential for circularity is high
- Waste reduction—converting waste into high-quality secondary raw materials as part of a well-functioning secondary raw materials market, reinforced by increasing EU requirements for the amount of waste to be recycled.
Alongside the opportunities arising from changing business models, all of these trends also generate a number of challenges that every business must face:
- Reconciling local regulations with the circular economy concept
- Poor access to waste management infrastructure
- Lack of recycling technology
- The requirement for cooperation at multiple levels
- A multitude of possibilities and technologies that can be used to achieve circular economy targets.
What will you gain by implementing a circular economy strategy in your company?
The circular economy is one of the pillars of the EU’s environmental, climate and economic policies, so all companies will need to implement this model in their management and operating model. In addition to adapting to regulatory requirements, the circular economy also responds to a number of challenges:
- Efficient management of raw materials increasing resilience to friction in global trade.
- Reduced expenses on energy generation and waste management.
- Financial benefits thanks to the possibility of selling waste on to buyers as a valuable raw material, as well as reducing environmental fees (including by reducing CO2 emissions).
- Reputational benefits from gaining the image of a company that takes environmental issues into account in its operations, minimizing the risk of greenwashing accusations.
KPMG’s support for organizations transitioning to the circular economy model
KPMG specialists analyse the regulatory landscape, identifying risks and opportunities for the client and the industry in which it operates. As part of the project, KPMG offers the following services:
- Identification of the possibility of implementing the circular economy approach
- Developing a circular economy strategy for the company
- Product life cycle assessment (LCA) for process optimization
- Preparation of environmental product declaration (EPD) documentation
- Optimizing the efficiency of raw materials and waste management
- Understanding regulatory trends.
We carry out this process for clients transitioning to a circular economy model in three phases:
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