Are you ready for the circular economy?

The necessity of an integrated approach.

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The circular economy in the Netherlands is booming. Initiatives spark and investors are interested.

Yet major players take only small steps, and the results remain limited. And even though companies have enough reasons to address the issue, a real breakthrough fails to appear.

EY believes that if companies want to benefit from a circular approach, rigorous choices need to be made. This will potentially impact all aspects of contemporary business models such as product design, restructuring of financial models, cash flow forecasting, tax, change management and legal consequences.

In this publication EY brings the importance of the circular economy to your attention and presents an integral circular approach.

Why a circular economy?

By 2050, global resource use is expected to have tripled. At the current consumption rate, some elements are expected to last no longer than 20 years. This will increase pressure on society and the environment, and creates major risks and challenges for companies.

What is the circular economy?

The circular economy is defined as: “an industrial economy that is restorative by intention.

It aims to enable effective flows of materials, energy, labor and information so that natural and social capital can be rebuilt. It seeks to reduce energy use per unit of output and accelerate the shift to renewable energy by design, treating everything in the economy as a valuable resource.”

A business that makes yarn out of used textiles should research the value of used textiles in comparison with virgin material. What is the sustainable profit? Franc van den Berg, partner Cleantech and Sustainability

How will a circular economy change your business?

In a circular economy, the relationship customers have with the products and services they purchase, will change radically. It is likely that access and performance will become more important than ownership.

The shifting relationship would not only allow companies to retain product ownership – for easier repair, reuse and remanufacture – but might even result in producer responsibility obligations being extended to users as part of the purchase agreement.

What are the benefits of a circular economy for your business?

There is a lively ongoing debate on the advantages of a circular economy for different stakeholders and its implications for employment, growth, and the environment.

The circular economy helps to contain risks:

  • If specific materials are crucial to your process or product;
  • If there is fierce competition for your materials;
  • If resources make up a large share of your cost structure.

The circular economy offers opportunities to:

  • Extend and strengthen customer relationships;
  • Tap into new markets;
  • Become more efficient;
  • Yield extra income.

What are the main challenges for companies?

To switch towards the circular economy means change on several levels: on the product level, on the level of internal organization and cooperation, and on the levels of chain cooperation, leadership and finance.

How can EY help?

At EY, we are committed to building a better working world. A better working world must foster sustainable growth based on strong fundamentals – increased productivity, innovation and a broader talent pool.

A circular economy can contribute to these fundamentals. Taking steps towards a circular economy is a complicated process, which needs to be analyzed and resolved from a multidisciplinary perspective. EY has the knowledge and the network to be your partner in this transition.

In this publication, we have illustrated EY’s circular business approach.