Appunti Circular economy business model

MEASURING CE

Why measuring CE:

 Awareness -> I need to provide evidence that my company is circular

 Support assessment of investments -> euro/level of circularity ratio -> what is the best investment

to reach quicker the desired level of circularity.

 Monitoring and decision making

 Determination of objectives -> internal

 Communication

Risks in measuring:

 Not measuring

 Fuzzy measuring -> what to measure and how

Risk in measuring CE:

 Risk of commoditization of CE -> safety standards for compliance, not a strategic point.

 Risk of diluting CE -> more generic generalizable concept -> many ways to obtain the score even if

not according to theory.

 Risk of non-use of the measure -> too complex so not applied since is voluntary.

The regulatory approach: ISO -> ISO/CD 59020 about measuring circularity -> defines a set of indicators

(problems related to not a clear distinction between linear and circular company -> fuzzy measuring)

 Categories: what I am measuring

 Input flows -> % of: material reused, recycled, renewable

 Output flows -> % of output recycled, average life span

 Waste -> % of: reused waste, waste recycling

 Energy -> % of energy from RES, energy per unit of economic value

 Water -> water consumed and quality

 Economics -> not available indicators yet

 Indicators: how I measure for each category

The MCI (material circularity indicator) of EMF (Ellen MacArthur Foundation) -> one comprehensive

measure that tells you how much you are circular -> (works on measuring physical quantities and ignore

communication etc.) -> 100% is sustaining cycle infinitely without waste (impossible) 0% is all virgin goes all

to land field. Problems: It could lead to easy not optimal solutions, doesn’t identify the actors involved.

Sources of input: virgin, recycled, reused components

Sources of output: Components for reuse, material for recycling or material going to land field/energy

recovery

World business council for sustainable development: CTI (circular transition indicator) (good what but

difficult how to measure). I don’t get a final value of the measure but just indication of 3 areas.

Categories:

 Closing the loop -> % of: incoming circular flow, circular outflow, water circularity, renewable

energy.

 Optimize the loop -> % of: critical materials (not all have same value for CE, limited resources), type

of recovery

 Valorise the loop -> productivity of circular materials (euros in vs euros out), revenues from

circularity (coming from the loops)

The EU model -> circular economy package -> 10 indicators to measure the level of the different countries

in Europe. Most are related to waste reduction and not CE. Internally assessed.

Categories:

 Production & consumption -> % of key materials used in the EU and produced in EU, % of large

public procurements in the EU with environmental requirements, production of waste per capita

and per unit of GDP, amount of food waste.

 Waste management -> % waste recycling, % recycling of packaging, WEEE and biodegradable waste

 Secondary raw materials -> % of secondary raw materials on the total demand for raw materials,

imports and exports of recyclable raw materials

 Competitiveness and innovation -> investments employees and added value in the sector of CE,

patents relating to waste management and recycling -> only good part of this model.

The UNI regulatory approach UNI/TS 11820: first attempt to get a certification of CE. 71 indicators taking

also service into account. Italian standard. Can measure an organization (micro-level) private or public or a

groups of organizations (meso-level), no macro level-> no countries. Can assess both products and services.

Both small and large companies. Score on a 100 basis. Environmental, economical and social aspects.

Indicators can be quantitative, qualitative or semi-qualitative).

Inspiring principles:

 Value creation

 Value sharing

 Resources availability

 Resources traceability

Operating principles:

 Systemic thinking

 Collaboration

 Circular value generation

 Circular value optimization

 Value preservation

 Awareness

 Innovation

 Inclusivity

Where to get the data for assessing the indicators:

 Design

 Supply

 Production

 Distribution and sales

 Use and consumption

 End of life

Characteristics of indicators:

 Applicability -> to every target to evaluate

 Coherence -> systemic way of assessment

 Comparability -> keep track over time

 Transparency

 Completeness

 Traceability

 Data reliability -> good sources.

 Spatial and temporal scales -> every space and time you can repeat the evaluation

 Systemic interdependence -> interaction with stakeholders

Data acquisition process: (some data could not be available or cannot disclose -> alternatives methods such

as proxy data -> average of the sector, or not calculate the specific KPI)

1) I need to define the perimeter of measurement and data quality criteria

2) Valuation category identification

3) The data quality criteria -> if good proceed otherwise step 1

4) Value chain phase attribution (optional) -> establish KPI of each phase of value chain

5) Indicator calculation

Classification of the indicators:

 Valuation object:

 Product

 Service

 product and service -> in this case the company must do both separately.

 Indicator category

 core (obligatory)

 specific (at least 50% of these)

 rewarding (optional)

Categories of indicators:

 material resources -> 14%

 energy and water resources -> 7%

 waste and emissions -> 9%

 logistics -> 8%

 product/service -> 39%

 HR, assets, sustainability -> 23%

Information for each indicator: each indicator gets a value between 0 and 1, if can’t compute is 0. Core e

specific have a 1 weight, rewarding 0,5. Oss. For qualitative indicators yes or no instead of numbers.

Procedure to level circularity:

1) Choose product related or service related valuation

2) Define perimeter of valuation

3) Collect data for computing indicators

4) Compile all core indicators

5) Compile at least 50% of specific indicators for each of the 6 categories

6) Select the rewarding indicators to compile

7) Compute the circularity level CL of the organization -> if higher than 100% round to 100%.

8) Compute the circularity level for each one the the 6 categories

How to claim circularity:

1) First party evaluation -> self-evaluation of the company

2) Second party evaluation -> by clients

3) Third party evaluation -> independent accredited body.

DIGITAL TECHNOLOGIES

Enablers of CE:

 Alliance of stakeholders

 Digital technologies/industry 4.0 -> necessary but not sufficient for CE

 Capabilities

What is enabled by digital technologies:

 Logistics (also reverse in CEBM)

 Circular Product design -> better match with customer needs

 Incentivize good customer behaviour

 Easier collaboration between different actors and geographical locations -> with platforms for

example

 Product management life cycle

 Service based models

Product design classical strategies:

 Narrowing -> reduce waste/use less

 Slowing -> use resources/product longer -> extend life

 Closing the loop with different cycles

Circular product design strategies to add to the previous:

 Regenerate -> cleaner inputs

 Inform -> use data to design products -> transversal (impact all strategies seen before) ->

(examples: design connected products, track the resources status, design to optimize and to

sharing, virtualize (use less in non-production related activities), use AI to discover new)

Relations between R-model and digital technologies:

 Data collection and integration

 Data analysis

 Automation bigger circle -> bigger discussion -> M6, M1, M7. No

link=general discussion.

M1: recycling -> monitor/tracking, find the best cycle for the product at that point of the life cycle. All

should be automated; no human intervention otherwise is too expensive.

M2-M5: extend life cycle objective, data collection and analysis (also forecast) are the most important DT,

data automation is still not clear.

M6-M7: most important strategies, most focus of M6 on efficiency thanks to DT. For M7 is important to go

back to product and understand how to change in order to apply CE principles -> innovations function of

DT.

Link between DT, dynamic capabilities (ability to extend what you can do) and CE practices

Dynamic capabilities phases: (CE enables more related to reduce concept)

 Sensing: increasing awareness -> general; knowhow -> simulation; implementation -> horizontal

 Seizing: allow better knowledge-> IOT; change in mentality of managers -> general

 Transforming: control -> data collection; traceability; changes in production process -> simulation;

future projects & investments

Which digital technologies enable CE: 17

Why the DT is used: 8

Where is the DT used: (CE wants to extend life cycle of product)

Putting together the 3 questions

 Generalist DT -> several functions

 Specific DT -> few functions

 Transversal DT -> in between PLATFORMS

Platform business model: model based on connection of different groups -> matchmaking. Connect

partecipants around a value unit. With filters partecipants find the value unit. The core interaction is what

satisfies the need of partecipants and earns money for the platform.

Why we need platforms in CE: In linear model you can have platforms, in CE we need platforms. If we talk

about platform we talk about downstream CBM. Platforms are not circular per se but introduce circularity

in a traditional model because they help match the demands. Whitout these we cannot immagin a circular

system that works.

 The efficiency of CE drops in case of competition because is based on assumption of monopoly -> to

rebalance the resources in case of competition we need platforms. Platforms enables connection

between companies in the same or in different industries.

 We also need platforms to manage the time between the put of the market of the product and the

moment it comes back.

Classification -> we can have overlapping areas.

 Swapping platform -> products are swapped among user -> not lasting in the long term because the

user is the owner. -> still good products -> no intervention needed. Most B2C clothes, B2B

construction.

 Sharing platforms -> products are shared among firms. -> little intervention needed (repair or

maintain). Most B2B with construction products.

 Looping platforms -> I am crea