SCALinG tHECiRCULAR BUiLt
EnViRonMEnt
pathways for businessand government1

S C A L I N G T H E C I R C U L A R B U I LT E N V I R O N M E N T

pathways for business and government

EXECUTIVE SUMMARY
The circular economy has great potential to help meet global sustainability targets and the Paris Agreement's
goals in particular. The built environment, consuming almost half of the world's resources extracted every year
and responsible for a massive environmental footprint, is a fundamental sector in the transition from a linear
to a circular, more sustainable world.
Moving towards a circular built environment involves a shift in roles and business models for stakeholders
active in this sector. However, barriers related to culture, regulations, market, technology and education are
slowing down the transition.
The private and public sector need to create a level playing field in order for circular materials, products
and services to become the new normal in the built environment. This requires bold leadership from bothcompanies and policy-makers who have to transform the market (e.g. by introducing new valuation methods)
and implement long-term policies that encourage the scaling of circular solutions (e.g. through circular
procurement). Standardization, new forms of collaboration and co-creation processes are essential elementsin the transition. Digital innovation, education and information sharing can further drive the change in mindset
and culture that is needed to turn the circular built environment into reality.

Table of contents
CHAPTER 1

CHAPTER 2

What is the circular built
environment andLhow
E A RtheN circular
economy can helpus
meet
& INSPIRE
crucial sustainability
challenges?
p3

What change is needed totransition from linear tocircular business models?

CHAPTER 3

CHAPTER 4

What is holding us back andwhat can stakeholders do?

How can the private and public
sectors create a level playing
field and drive the scaling of
the circular built environment?

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1. INTRODUCTION
The built environment puts significant pressure on
our resources and contributes significantly to global
greenhouse gas (GHG) emissions. Transforming the linear
built environment into the circular built environment
creates huge opportunities to lower the impact of thebuilt environment and to create a sustainable andfutureproof sector. We need to accelerate this transition.

1.1 It’s time to step up!
Every year Earth Overshoot Day1 comes earlier. In
2015, research by Rockström and Steffen showed that
we exceed four of our nine planetary boundaries onbiochemical flows, land system change, biosphere
integrity and climate change. We need to act and weneed to accelerate change. We are using our earth
resources at a pace and quantity that will dramaticallychange earth and harm its population.
The built environment has a considerable impact on ourplanet. Approximately 40% of global materials are used
for construction. In the European Union (EU), current
construction and demolition (C&D) waste accounts forapproximately 25-30% of the total waste generated andconsists of numerous materials, including concrete, bricks,
gypsum, tiles, ceramics, wood, glass, metals, plastic,solvents, asbestos and excavated soil, many of which canbe recycled.2 Rubble produced during the construction
and demolition of buildings, which accounts for 26% of thetotal non-industrial solid waste produced in the UnitedStates and 12% of total waste in Europe,3 includes many
recyclable materials from steel to wood to concrete.4
The world produces more than 400 million tonnes ofsingle use plastics annually, of which 16% is produced
for the built environment.5 Plastic waste causes vast
economic damage. Plastic waste in the Asia-Pacificoceans alone affects tourism, fishing and shipping
industries annually by costs up to USD $1.3 billion.6

With great dependency on virgin materials, the building
sector is challenged by resource scarcity. Global steel
demand is expected to increase annually by at least
1.1% through 2030, driven by the demand of emerging
economies.7 For concrete, while the raw materials
are generally abundant and found locally worldwide,some materials such as natural sand and lime stone
suffer local scarcity. For unbound applications, as wellas concrete, we need to extract 30 billion tonnes ofsand each year,8 equivalent to nearly four tonnes perperson. The majority of this sand is extracted in riverand coastal areas, which increases the vulnerabilities
of coastlines, where an important part of humansettlements is located.9 With increasing pressure fromsociety to sustainably source materials, including theuse of biobased materials, the building sector needs
to find new ways to use and reuse the existing stock of
non-virgin materials and to integrate biobased materials
into its day-to-day activities.
If no action is taken to improve energy efficiency in thebuilding sector, energy demand is expected to rise by
50% by 2050.10 To limit global temperature rise to 2°C as
set out in the Paris Agreement, we need to achieve an
estimated 77% reduction in total carbon dioxide (CO2)emissions in the building sector by 2050 compared to
today’s level. The building sector is the largest energyconsuming sector, accounting for over one-third of
the final global energy consumption and an importantsource of CO2 emissions.11 In reality, this estimation iseven higher as the energy demand for production ofbuilding materials is not included. Moreover, around
20% of global GHG emissions are building-related.12
With developments such as population growth,
continuing urbanization, climate change and resource
scarcity, the sector needs to dramatically change
the way it works. The global floor area in buildings
is expected to double to more than 415 billion m2
by 2050.13 We will need to achieve this growth while
operating within planetary boundaries.

Reader’s Guide
The circular built environment provides concrete opportunities to help meet the targets as set out in
the Paris Agreement and contributes significantly to meeting challenges such as resource scarcity (seechapter 1). Five business models play a central role in the CBE, but to achieve their full potential, we needto change the way we work (see chapter 2). This change not only applies to the characteristics of the CBE,
but also to the roles of stakeholders in the building process and the value chain (see chapter 3). We needto tackle five key barriers that prevent scale at a level playing field (see chapter 3). Both the private andpublic sector have the power to address these barriers, create scale in a level playing field and make the
CBE a success (see chapter 4).

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pathways for business and governmentCircular economy can be part of the solution of
mitigating the impact on the sector while dealing withthe challenges posed to the sector.

1.2 Circular economy oﬀers huge potential
to develop a sustainable building sector
The circular economy presents huge potential for global
economic growth while accelerating society towards asustainable future. The circular economy (as a whole)is a USD $4.5 trillion opportunity.14 This benefit is
not exclusively reserved to the traditional developed
economies. Compared to the current development path,a circular economy development path, could bring India
annual benefits of USD $624 billion by 2050 – equivalent
to 30% of India’s current GDP. According to the Ellen
Macarthur Foundation, material saving can result in anannual cost saving of USD $630 billion for the consumer
goods that have an average longevity (including
construction materials), and material savings of 20% in
products with a short lifespan sector (e.g. packaging,also used in construction activities) which equates tocost savings of over USD $ 700 billion.
The size of the prize in the circular built environment not
only translates into quantities of materials returning touse cycles. It also has an impact on the balance between
new build and renovations. Although the latter is often
more circular and less costly, it is not always possible.
The circular economy ought to be measured in terms ofsaved material costs, energy costs, water costs, saved
spatial resources, reduced accountable externalities andin terms of local job creation, (SME-driven) reuse, repair
and refurbishment market.
The size of the prize should also be defined in terms of
avoided costs on resource scarcity and the emerging
competition for resources. Decoupling economic growthfrom resource consumption can be an important way
forward to safeguard economic development in a worldin which resources become increasingly scarce. This isespecially the case in resource-scarce regions like theEuropean continent.
Overall, USD $36 trillion turnover is generated in thebuilt environment, contributing 39.6% to global GDP.15
Total built assets are valued at USD $10.4 trillion with
China as biggest contributor and with India as one of
the fastest growing built assets economy (with a growthin asset value of 19% since 2014).
The market for circular economy is growing and it isestimated that over the next 10 years, it will boost
economic growth by up to 4%.16 It is estimated that in
the UK alone 200,000 jobs may be created by 2030,
which could double with further development andimplementation of new circular business models.17

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There is huge potential for reuse of materials. A 1%
increase in resource efficiency is worth as muchas €23 billion for business.18 C&D waste provides amassive opportunity. Best performing Member Statesof the EU recycle about 95% of their C&D waste. 226
million tonnes of mineral waste from C&D in the EU28
is recycled. With 308 million tonnes reported to begenerated, 73% is recycled in total in the EU. The circular
economy therefore has the potential to reintroduce
293 million tonnes of secondary materials in the EU, if
all EU Member States recycled 95% (66 million tonnes
more than today).18 This is an underestimate, as muchdisposed C&D waste is not reported. Arcadis and IDEA
assessed the real quantities at 410 million tonnes, basedon average generation figures.19 This would make thetotal estimated available quantity 389 million tonnes or
163 million tonnes more than today. Similar percentages
and material gains can be expected from comparable
markets like North America. The environmental andfinancial opportunities are substantial.

Companies have to
see circularity as abusiness opportunity.
That requires action
leadership!
Petran van Heel

Sector Banker Construction& Real Estate, ABN AMRO

KEY CHALLENGESIN CLOSING THE
CIRCULARITY GAPWith a global economy that is only 9.1% circular, weare facing a massive circularity gap. 20 The Circular Gap
Report (2018) showed that the built environment has amajor stake (41.1 gigatons) in the amount of materials
that our society consumes (84 gigatons in total), whilecycling rates remain low if downcycling, backfilling andincineration are not taken into account. Closing the
gap will not only be a matter of reducing material input
and cycling more, it will also be crucial to optimize andextend the lifetime of what has already been built.
The challenge to bridge the circularity gap in the built
environment can be divided in two. In some regions, especiallyin western countries, it is paramount to keep and maintainthe stock that has already been built. In Europe, for instance, amajor opportunity lies in renovating and transforming existingbuildings. In other regions, circularity is a matter of preventing
the lock-in of materials in new construction. Emerging
economies with high rates of urbanization, like China andIndia, require circular design strategies that aim at optimizing
building lifetimes and increasing the possibility of reusingmaterials at the end of a lifecycle.

The challenges that face are reflected in the layers of abuilding (described in more detail on page 14). Generally
speaking, for existing buildings, it is more important tofocus circular strategies on the inner layers (i.e. services,
space plan and stuff), such as renovation of installations
and refurbishment of furniture. For new buildings,
emphasis should be given to designing the structure,site and skin such that a building can optimally serve
one or more purposes, facilitate circularity in the
inner layers and can be readily disassembled for a
new lifecycle. Hospitals, for instance, can be designed
for flexibility such that they can be repurposed intoa shopping center or apartments, while apartment
blocks can be designed in a modular way and easily
reassembled. The underlying social layer is equally
relevant to both existing and new buildings.
Looking through the lens of the two challenges for current
building stock versus new building stock - an importantfocus of the new Circularity Gap Report (expected in
January 2019) - enables businesses and governments
operating in different parts of the world to better prioritize
the pathways described in this report.

Figure 1. Link between building layers and priority to apply circular strategies

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pathways forpathwaysfor businessbusinesses
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government

OUTER LAYERS

FOCUS
FOR NEW BUILDINGSINNER LAYERS

FOCUS
FOR RENOVATION OF
EXISTING BUILDINGS

1.3 The linear and circular built
environment•

What is a linear built environment?

Linear building can be referred to as a take-makedispose process. It assumes no limit on the availabilityof (natural) resources. Finite primary (or non-renewable)
resources are extracted and used in building materials.
These materials become parts of buildings andafter the functional life time has expired and thebuilding is demolished, the materials are disposedof, primarily as waste or in low-value applications.
In a linear built environment, materials are lost for
future use. Improving sustainability is focused on ecoefficiency: maximizing economic gain, with minimized
environmental impact (e.g. amount of waste discarded
per Euro turnover per product group).

DID YoU KnoW?
ENEL is decommissioning 23 of its
former thermal power plants in the
Futur-e project. ENEL aims to find a new
purpose for each of the plants insteadof dismantling them. For each location
the company initiates a custom madeco-creative approach involving the
local stakeholders. All the facilities aremanaged as a single portfolio and bestpractices for the application of tailor-maderedevelopments are shared across sites.

In a linear economy, ownership of an entire building (itsconstruction, content, surroundings, etc.) is transferredfrom one entity to the next. New owners take over
responsibility for all actual and future environmental,
economic and social impacts. In each stage ofownership (i.e. planning, design construction, use anddemolition) the owners are responsible for their own
actions and there is limited notion of the next step andrelated responsibilities.
•

What is a circular built environment ?

In a circular economy, resource use is decoupled from
economic growth, meaning that economic development
no longer requires similar rates of resource
consumption. Resources are used more efficiently
and the economy becomes less dependent on nonrenewable resources. The circular economy is basedon an emerging economic model that covers bothtechniques and business models to keep materials
and resources in use as long as possible, and ideally
forever, in a closed cycle of extended use, reuse andrecycling.
Critical components of the circular economy areindustrial symbiosis, renewable materials, sharedeconomy, ‘product as a service’, a close relation
between producer and consumer, proximity
economics, reuse, recycling and upcycling, urban
mining, detoxification of material cycles andsustainable consumption and production. 21
Opposite to the circular economy are single use,
programmed obsolescence, downcycling, legacy
substances or loss of value. 22

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In traditional building
projects, working
intensively with suppliers
is not common practicefor architects. In a
more circular economy
suppliers and architects
will need to share
responsibilities.
Peter van Assche
Architect, bureau SLA

1.4 Circular economy at the core of sustainability
Rather than a target in itself, creating a circular economy contributes to achieving the goals that are set out in the Paris
Agreement in 2015 and the and the Sustainable Development Goals (SDGs).23 Society, environment and economy all stand tobenefit, especially when material, water and energy use is all managed in a circular way that reduces impacts on climate.
Organizations from both the public and private sectors have have embraced the SDGs as a frame for their sustainability
strategy and ambitions. The circular built environment contributes in several ways and provides an essential framework forachieving the SDGs. The table below provides more details around how a circular economy contributes towards the SDGs.

SDG

3

Good health andwellbeing

The circular economy avoids and removes hazardous substances frommaterial use cycles, decontaminating the economy and allowing recycling
without risks to nature and human health (e.g. phasing out asbestos or theuse of leaded paints).

6

Clean water andsanitation

Most of the circular economy principles on material reuse, recycling,
resource efficiency and industrial symbiosis are equally applicable to water,thus increasing the quality and the accessibility of clean water.

7

Affordable andclean energy

Circular energy solutions result in reduced energy demand. Sharing energy,
using geothermal energy, increasing buffering capacity and using of
renewable energy sources changes the way we use energy and stimulates
clean energy use.

8

Decent workand economic
growthNew business models lead to new companies and job opportunities.
Circular economy business models in which companies collect or take back,repair and refurbish products are usually more labor intensive than linear
models and create additional job opportunities.24,25 In many emerging
economies, waste collection supports a vast informal economy that lacks
safe working conditions and fair remuneration.

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Industr y,Innovation andInfrastructure

The circular economy requires large-scale innovations in the built
environment. This relates not only to industrial or technical innovations but
also to infrastructural innovations. Circular economy is part of the solution,
making industry more sustainable and resilient at local and global scale.

11

Sustainable
cities andcommunities

The circular economy, with its focus on local production, repair and leasing
and extended producer-consumer contacts, requests a new, small-scale,spatial design to which cities should be adapted.

12

Responsible
consumption
and production

The circular economy requires that: responsible care for products
extends to the use and the post-use phase; that use of virgin materials areminimized; and that programmed obsolescence is phased out.

Climate Action

The circular economy can contribute to GHG reduction in many ways. Using
secondary materials instead of virgin materials often requires less energy
when considering energy associated with extraction. For example, reusing
steel instead of having to mine ore and process it into steel can dramaticallyreduce GHG emissions. In addition to this, circular energy production andwater management are key in climate change mitigation and adaptation.

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2. The Circular Built
Environment
The circular built environment is in a state of transition.
We are moving from a linear to a circular economy.
This change will affect all characteristics of the built
environment and applies to all layers of a building. Thistransition will lead to new business models that will
drive the circular built environment.

2.1 A transitional state
How do we transform the built environment fromlinear to circular today and at scale? We are alreadyon our way, as demonstrated by reductions in raw
material extraction, implementation of product asa service models and the creation of new financial
instruments. Nevertheless, we are in an intermediaryphase. Recycling is an intermediary step that can often
be considered downcycling: a part or a product used
for a lower grade purpose which reduces the (added)
value of the material or product. Many larger companies
are increasingly adhering to circular principles in the
sectors of finance, technology, resource management,client relations and ownership structures. Smaller
companies (Small and Medium sized Enterprises orSMEs) and start-ups are more progressive in theirbusiness model reforms, more agile in applying new
disruptive technologies and market approaches.
However they do not have access to large markets
and finance as multinational companies do. A circular
built environment requires collaborating and finding
synergies between SMEs and multinationals to scale up
today's efforts.
•

The different dynamics in circular renovationor circular building

The circular economy is about preserving the added
value of existing things, both materials and buildings.
Therefore, when possible it is preferred to engage inrenovation of buildings to save the added value of its
existing elements. Renovation is especially relevant ineconomies with a vast amount of existing buildings,
such as those in Europe or North America. Extensions
to existing buildings (e.g. top-up floor or subterranean
extensions) can help to address the need for
additional living and working space without requiringhorizontal expansion.
Renovation becomes a challenge when the structureand design of old buildings does not support
refurbishment, reuse or selective deconstruction.
Existing buildings may contain legacy substances or
hazardous components such as lead paint, asbestos

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or PVC that hinder its reuse. Likewise, these buildings
may be constructed in a way that hinders separation ofmaterials for recycling, such as irreversible adhesives.
Their construction may not be adapted to thereplacement of the skin. New buildings can, from design
to decommissioning, take into account flexibility andpossibilities to replace or rejuvenate layers, to selectcircular materials or to adapt to selective deconstruction
at the end of their lifespan.
Newer economies therefore have an advantage if they
apply circular approaches in their building activities
today, while older and replacement economies will havethe advantage of immediate reuse but will need to copewith technical barriers associated with the embedded
resources and their harvesting feasibility.
In Europe and Northern America, the transition towards
a circular economy takes place in an environment with avery rich building history, rapid urbanization, decreasing
birth rate and economies where secondary materials
are abundant and the cost of labor is high. In emerging
economies, new cities grow rapidly, compounded withhigh population growth, labour is relatively cheap incomparison to materials and secondary material is
scarce. This is a different environment in which thecircular economy is developing. These different contexts
create different opportunities for business models andimplementation of a circular built environment.

2.2 The five emerging business models
in the circular built environment
The circular economy offers practical opportunities for awaste-free, resilient economic system. The circular built
environment has a strong relation to landscape andecosystem services as well as technical material cycles.
Bio-based and biodegradable materials are applied
where relevant and available, while being sustainably
produced and sourced. In the circular built environment,
buildings are designed to be integrated in the natural,industrial or urban landscape with consideration for
heritage and experiential value.
New business models are emerging that enable thetransition and constitute the circular economy. Five
specific models that are based on the characteristics ofthe circular built environment have been identified. 26
The table on pages 10-11 outlines the five models andtheir characteristics.

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The fivebusinessmodels of thecircular built
environment

Circulareconomycharacteristics

Circular
Supplies

Product asa Service

Reduce the consumption of
raw materials, use non-toxic,
high grade materials that canbe reused and recycled or
procure renewable materials(bio-based or biodegradable).

Deliver a service instead of a
product and retain ownership.
Monitor and stay in control of raw
materials. Relieve clients of theburden and ensure their long-termloyalty.

Material use minimization

Circularity in businessmodelsA circular built environment
focuses on compact and lightweight constructions that require
minimum material usage. Design
is purpose-driven. Renovation andpartial or full refurbishment ispreferred over new construction.
New construction is only relevant
when old ones need significant
improvements that exceed impact
of new construction.

The application of life cycle
thinking on materials
Avoid life cycle environmental
impacts of materials and minimize
waste generated during resource
extraction.

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The product as a service
business model (PAAS) is a clear
example of a new and emerging
business model that drives thecircular economy. Pay per use
models also emerge. Paying fora service rather than a productcan be established as a leasing
formula or repurchasing clause
whereby the ownership of thematerials and products remains
with the developer or producer.
As a result, the residual value ofthe materials is secured.

Product
Lifetime
Extension
Maintain and extend lifetimes
through smart maintenance,
repairs, upgrades and renovation.

Material lifespan extension
and avoiding waste streams
Buildings have a flexible designfor multifunctional and continued
use. This can be achieved byintroducing modular components
for future refurbishment.
These designs are based on
durable materials that increase
the technical lifespan of thematerial and use digital material
documentation.

Reuse, maintain andrefurbish is preferred overrecycling
Reuse relates to several phasesin the life cycle of a building:reusing materials in thebuilding design and harvesting
reusable materials duringdeconstruction or refurbishment.
It requires more complex stock
management and modular (de)construction. Reuse refers to raw
materials and products. Reused
products (building elements orcomponents like a window ordoor) typically have a higher
value than raw materials.

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Sharing
Platforms

Resource
RecoveryCombat underutilisation or surplus
capacity by sharing products orassets and optimizing their use.

Use waste from used products andresources and process to makenew raw materials and products.

Industrial symbiosis andsharing economy, co-creationand long-term customer
relationships

Circularity in material use

Sharing materials and industrial
symbiosis refers to using wastematerials or products of thirdparties as inputs for construction
projects. Industrial symbiosis
opportunities may be foundbetween demolition yards,
construction sites and local
industry. For example, plasterboard may be produced using
gypsum created by the chemicalindustry. Symbiosis and cocreation occurs when two or morecompanies, often from different
industries or sectors, exchange
resources (i.e. byproducts,
information, assets).

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Maximum re-introductionof materials in the use cycles
after disposal.
This primarily refers to material
recycling. Buildings become
recipients for recycled materials.
Materials are selected on theextent to which they can berecycled without downcycling. Thisrequires excluding materials withhazardous substances that canremain as legacy substance in thematerial stock.

Extended producer
responsibility
The relationship between
producer and client does not stopat the delivery of the building or attransfer ownership. The extended
responsibility of the producer will
have an impact on cost reductions
for maintenance and adaptation
within the use phase for theoccupant and at the end of life.

BusinessmodelsWhatneeds tochangeCircular Supplies

Material use minimisation in the circular
built environment

Business models in the circular
built environment• Before deciding to construct a new building theopportunities for renovation of available existingbuildings are examined.

In general, circular business models
apply different ownership structures
where materials remain in the handsof the seller or where the seller has
buy-back obligations. No longer the
products, but the service these products
offer during their useful life are sold,after which the products return to the
producer. Companies expand theirservices from producer of materials to
include construction and maintenanceservices. Companies emerge that play
an intermediary role, such as contract
management of a series of service
providers within one building.

• The design of a building considers (virgin)
material use minimization from the first concepts
onwards, preferring to maximize the capacity while
minimizing surface (compact building).
• Each layer of a building is designed in a way thatit can be renewed without destroying or impacting
the layers above or underneath.
• Creating multiple functions of build space.
Finding and designing a building for more users
and reducing the need for more materials thannecessary.

What needs to change• Create awareness on global resource scarcity.
Architects need to be enabled to design with focus
on resource optimization.
• Avoid surplus material use for non-essentialfunctions.
• Purposefully reduce material use for each layer ofa building in design.

Key stakeholders to drive this change
are: Architects, building and construction
companies
Life cycle thinking for materials in thecircular built environment
Alternatives for material choices are evaluatedtaking into account life cycle thinking. Life cycle
assessment (LCA) and life cycle costing (LCC)
are two tools that companies can use when
implementing life cycle thinking. A hierarchy isapplied in which biobased, renewable, local andabundant materials are preferred over fossildependent, exhaustible, imported and scarcematerials.

What needs to change• Use of LCA and LCC techniques in evaluating
materials before selection, including the cost of
replacement and maintenance.
• Use life cycle performance as a selection criterion.

Key stakeholders to drive this change are:Architects, suppliers and vendors

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Product as a Service

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What needs to change• Introduce circular business models at
both the building and materials level.
• Architects integrate circular businessmodels into their design.

Key stakeholders to drive thischange are: All stakeholders inthe building value chain

Sharing
Platforms

Product Lifetime
ExtensionMaterial lifespan extension in thecircular built environment
As a building usually survives its initial use,
it is designed in view of later adaptation
possibilities and built to last.

What needs to change• In designing the building, consider longterm circular solutions and create flexibility
in the design to enable future adjustments.
• Adaptivity should be taken into accountby the architect and welcomed by the firstclient. More structural dimensions may berequired so that it can expand, adjust andaccommodate various functions over its
extended lifetime.
• Select materials that go along with the life
time of the layer it is serving (focusing on the
durability and CO2 impact of materials).
• Coordinate the different life spans of
all layers prior to construction to avoid
unnecessary adjustments once built.

Key stakeholders to drive this change
are: Architects, owners and users
The circular built environment
A building is seen as a stock of reusable
materials. It is well known where thesematerials are and how they can be
harvested for reuse. The materials are
adapted to reuse, and they are mounted in a
way that they can easily be disassembled.

What needs to change• Material selection on use and technicallifespan, with a view on later reusability.
• Use of flexible modular components
focusing more on the layers with a lower
lifespan while going up.
• Apply building techniques that are nothindering later reuse possibilities.

Industrial symbiosis
and share economy, cocreation and long-term
customer relationships
Sharing materials andindustrial symbiosis refers
to using waste materials or
products of third-parties
as inputs for construction
projects. Industrial symbiosis
opportunities may befound between demolition
yards, construction sites
and local industry. For
example, plaster board may
be produced using gypsum
created by the chemicalindustry. Symbiosis and cocreation occurs when two
or more companies, often
from different industries
or sectors, exchange
resources (i.e. byproducts,
information, assets).

What needs to change• Collaboration in the value
chain, including futureoccupants and between
resource exchanging
companies, needs to be
included in the businesspractice of developers andusers of built infrastructure.
• Co-creation and integrated
design needs to become theconvention in new building andrenovation projects.

Key stakeholders todrive this change are:All stakeholders in thebuilding value chain

Resource Recovery

Circularity in material use
Maximum re-introduction of materials
in the use cycles after disposal.
This primarily refers to material
recycling. Buildings become recipientsfor recycled materials. Materials are
selected on the extent to which they
can be recycled without downcycling.
This requires excluding materials withhazardous substances that can remain
as legacy substance in the material stock.

What needs to change• Use broader criteria to select materials,
including their recyclability and usability intheir secondary life.
• Use the time between initiating anddesigning a building to find materials andresources that can be used in the building.
• Regulations and policies need to stimulate
the reuse of materials and renewable
resources. They should allow for innovative
approaches.

Key stakeholders to drive thischange are: specialised construction
and installation companies,
architects, deconstruction anddemolition companies, waste
treatment companies
Extended producer responsibility
The responsibility of the producer (realestate investors, building company
or producers of building materials)
continues when an asset is sold, until its
final recovery.

What needs to change• Business relations and responsibilities
need to be extended beyond the date ofpurchase. This can be done through privateagreements or legislative intervention.

• Waste companies, demolition companies
and waste collectors need to connect for
information exchange on the availability andquality of materials.

• New contract structures need to be
developed and intermediary organisations
need to take up the role of contract
managers.

Key stakeholders to drive this change
are: Deconstruction and demolition
companies, specialised construction
and installation companies andsuppliers and vendors

Key stakeholders to drive thischange are: real estate investors,
building companies and their clients13

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Information technology is an essential
enabler to realize the potential of the fivebusiness models

Thinking about buildings as a combination of layers
enables one to understand more tangibly how
circularity influences it. Different stakeholders are
involved in each layer. For example, architects,
engineers and construction companies determine thestructure, whereas installation companies determine toa large extend the services. The users and owners mostsignificantly influence the circularity of a building in theuse and maintenance phase in the life cycle.

For all five business models, information technology isan essential enabler. We need to better understand whatmaterial is available, its quality and when the materials
become available for reuse. We need to be able to follow
the quality during the use phase of buildings and use thisinformation to retrieve materials from buildings in a timely
manner that enables reuse. Initiatives such as Madaster andmaterial passports capture information about the materials
in buildings. In scaling the circular economy, standardizationof quality criteria and a common language is needed sovarious initiatives can connect. Connection systems suchas digital marketplaces to Building Information Modelling(BIM), LCA databases and standards such as BREEAM, LEEDand WELL Building is essential to reach scale.

The layers themselves offer different opportunities toincrease the lifespan of a building. The outside layers could
be replaced or refurbished without touching the lower
layers, thus increasing the flexibility and the lifespan of thebuilding. The lifespan of the inner layers should take into
account those of the outer layers. When an inner layer needs
replacement, it will be subject to limitations of the outerlayers. Each layer has its own dynamics and sensitivity. The
site should be integrated, the structure should last as longas possible, the skin and services should be accessible andreplaceable, the space plan should be flexible, the stuff
should be reusable and the social setting should be good forthe people living or working in the building.

The circular built environment increasingly supports
product as a service business models. Information
technology is essential in monitoring the state ofmaterials and products in buildings and enabling quality
management for an entire building in which several
PAAS solutions are integrated. In itself, this creates new
business opportunities.

The design and life cycle of a new building can be
entirely circular. All its layers are designed andconstructed from scratch. There is a different dynamic
in existing buildings. In particular, the inner layers(services, space plan, stuff and social) are renewed
or refurbished to expand the lifespan of a building.
This may extend to the Skin layer, but in general the
Structure layer is left out of scope. Occasionally,
structural adjustments may be required, such as
reinforcement of structural elements.

2.3 The layered complexity of the built
environment
Each building is unique. The variety in market demands,
environment, available resources, and local culture
determines its identity. Nevertheless, we can identify
seven layers in buildings (adapted from the shearing
model of Steward Brand). 27 The lifespan of each of theselayers is different as stipulated in the figure below.
Figure 2. Building model consisting of six material
layers (after Steward Brand (1994) and David Bergman(2011)) and a seventh social layer.

1. STUFF

1-5 YEARSThe furniture, storage, carpeting,plants, etc. that is placed in buildings

100 YEARS

4. STRUCTURE

50 YEARS

5. SKIN

INFINITE

6. SITEThe construction of a building, which
involves the structural skeleton of thebuilding and determines its basic
shape.

2. SPACE PLAN

10 YEARS

The way the ﬂoors arecompartmentalized into separate
spaces with diﬀerent purposes, thetype of materials used forcompartmentalization.

3. SERVICES

25 YEARS

Services such as smart energy
systems, lighting, air-condition that
support the internal climate in abuilding.

The outside layers of a building suchas the façade, including windows,
surface material and insulation.

The surface area and environmentthat the building is situated in. This
determines the context the building isplaced in. The environment caninﬂuence the energy and water
management of a building (forexample passive solar design).

STUFF

7. SOCIALTOTALLIFE SPANSPACE PLAN

How the occupants live, work and use thebuildings; how their behaviour
inﬂuences the circularity of a building.

SERVICES

STRUCTURE

SKIN

SITE
SOCIAL

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5

10

20

40

80

160

320

YEARS

3.1 Who is involved in the circular built
environment?

3. Changing roles of
stakeholders andbarriers
The transition towards a circular built environment
requires stakeholders to adapt or change their role in thevalue chain. To accelerate this change, we need to conquer
the barriers that hold us back.

Multiple stakeholders are active in the built
environment, each with their respective but interlinked
roles and interests. The stakeholders and their roles willchange in the transition from a linear to a circular built
environment. The following stakeholders take a central
position in the transition to a circular built environment.

Figure 3. Key stakeholders in the built environment

STAKEHOLDERLOOPDEVELOPERS(CREATING BUILDINGS)ARCHITECTS,
ADVISORS AND
ENGINEERSSUPPLIERS AND
VENDORSBUILDING
COMPANIESWASTE TREATMENTCOMPANIESFINANCIALINSTITUTIONSAND BANKSREGULATORS AND
LEGISLATORS

WHOLESALE

DECONSTRUCTION OR
DEMOLITION COMPANIESREAL ESTATEINVESTORSOWNERSUSERS
SPECIALISEDCONSTRUCTION AND
INSTALLATIONCOMPANIES15S C A L I N G T H E C I R C U L A R B U I LT E N V I R O N M E N T
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FACILITY
MANAGERSDEVELOPERSA R C H I T E C T S , A DV I S O R S
AND ENGINEERS
The architects, advisors and engineers are thestakeholders who plan, design, calculate andreview the construction of buildings in accordance
to a set budget and design requirements.

Developers understand the requirements forcircularity in the user and decommission phase.
They expand the scope in requests for tenders andtheir activities to support circularity in the use anddeconstruction phases. Their role is more complex
as a key stakeholder in collaborations for the userand deconstruction phase.

Architects and consultants, together with theirclients (e.g. clients developers, design-built
contractors) and investors, apply a lifecycle
perspective to design. Particularly in the early
design stages, they jointly determine new roles ofsuppliers, building companies and installers.

Developers will increasingly become partof a collaboration (e.g. in sharing platforms)
with a more holistic approach, and as joint
effort to reduce CO2 emissions and thetotal footprint of a building. Developers
will need to use their leverage to convene
these sharing platforms and to stimulate
integrated design.

Architects will need to familiarize
themselves with new material solutions
and options to use secondary materials
and reusable products. They need tounderstand the lifecycle costs involved
when their role also includes developing abusiness case. The availability of existingmaterials needs to be considered at thestart of the design.

CIRCULARLINEAR

Developers construct, redevelop or refurbish
buildings. They consider a building as a shortterm asset. The goal is making a profit. They hire
third parties to execute design, construction,
maintenance and demolition.

Developers will need to stimulate andsupport new business models such as
product as a service.
Their actions will increasingly be influenced
by certifications and benchmarks such as
BREEAM, LEED, GRESB and WELL Building
standard among others, despite thesesystems mainly apply to the commercial
market.

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They need to participate in sharing
platforms and be aware of resource
recovery. Furthermore, a database andmarket venue (real-time or digital) for
reusable material supply and demand is
crucial to connect with supply.
The deconstruction of a building requires
full attention in design.

B U I L D I N G C O M PA N I E S

CIRCULARLINEAR

SUPPLIERS AND VENDORS

A party that supplies goods such as primaryresources, building materials and products or thatprovides services. A supplier can be distinguishedfrom a contractor or subcontractor, whocommonly adds specialized input to deliverables.
The general contractor is responsible for
procuring the majority of the materials. In alinear economy this is mostly cost-driven withlimited room for improvement and modifications.
Change orders and alterations to the construction
documents can turn into planning or capital risk.

A building or general contractor oversees theconstruction of individual and multi-unitbuilding projects.

Suppliers are not only offering and developing
new sustainable, non-toxic and renewable(bio-based) or recycled materials but alsooffer additional services such as leasing or
remanufacturing. The extent to which they can
expand their business model depends on the typeof goods and the country in which they operate.
Products will need a material passport oranother way to demonstrate their circular profile,source and quality. Suppliers will have to deliverproducts with such a ‘passport’ to meet theirclient demands for transparency. For example,
Environmental Product Declarations (EPDs) will
include carbon footprint information produced
from LCAs.

Building companies integrate additional expertiseand services. They become chain director forthe project, involving installation companies,
wholesalers and others. They may expand
their services to decommissioning or to facility
management, using their knowledge and data
about the building and materials to help theowner use its building optimally.

Suppliers will develop materials, products
and services in co-creation and raw
materials will become renewable or recycled.
Single-use, virgin materials and toxic
elements will need be phased out as muchas possible. This will dramatically influenceinnovation.

CHANGE

Suppliers will expand their business modelto add more service-based solutions, suchas resource recovery in products andmaterials, providing additional services incombination with their products.

17•

Transparent communication about thesustainability performance of products
becomes increasingly important (EPDs,
LCAs, material passports).

•

Suppliers will need to better understandthe environmental and social impact of
their products and be able to communicate
this to clients.
Suppliers and vendors increasingly provide
new guarantees and apply new validation
processes to demonstrate the quality of
their products.

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Activities of building companies expand
beyond the construction phase toinclude maintenance, operation anddeconstruction.
•

Contractors may provide – especially forlarger and more complicated projects – BIM
models that can be transferred to or usedby the building control system.

•

Contractors reevaluate the different
companies involved in the design and build
to assure the circularity of the building.

•

Apart from large builds, contractors
will also execute smaller refurbishment
projects where they work with reused
and refurbished materials. This requires
reconsidering existing business models.
Extending the use phase of the building
becomes a key objective (as opposed to a
one-time building project) with an increased
focus on user health and well-being.

WHOLESALER E A L E S TAT E I N V E S T O R S

Investors evaluate the real estate market tobuild long-term wealth. Sustainability is mainly
considered in long-term investments (e.g. bypension funds), but there is limited attention
to sustainable aspects on the short-term.
Sustainable considerations are typically not partof the risk management systems.

Wholesalers become material banks, expanding
their role as suppliers to include consulting,leasing or buy-back. Wholesalers then becomechain directors.

Real estate investors look at the Total Cost of
Ownership and Usage. Investors ensure optimalbuilding performance through smart maintenanceand regular renovations. They determine newroles for architects, suppliers, contractors,
installers and real estate managers.
Real estate investors sell materials to demolition
and recycling businesses or construction
companies.

CIRCULARLINEAR

Organizations, such as distributors, buy large
quantities of goods from various producers orvendors and resell these to traders and end
clients. The awareness of the sustainability
performance of bulk goods is limited due to poor
reporting and minimal transparency across thechain of custody.

The structure of wholesalers changes sothey become a provider of circular supplies.
These supplies may include reusableor renewable materials and products,
diverting away from single-use anddowncycled, virgin resources.
Wholesalers become a centrepiece of thecircular built environment, connecting
resources to clients and contributing tosharing platforms. Their activities may
expand to resource recovery.

Real estate investors update their businessmodel to include residual material value
and product streams. They will apply abroader scope to an investment to better
manage risks associated with circular
economy. Investors will see a shift in
focus from ownership to maintenance andresidual value of their assets.
Second-hand materials can be considered atechnology risk and investors will apply newmodels to deal with increased risk profilesof circular buildings.

CHANGE

Investors need not only invest in a building
but also in a stock of materials within it.
The valued residual materials andcomponents within the building will
become available at end of life.

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USERS

FAC I L I T Y M A N AG E R S

Facility management is responsible for ensuring
the operations within a building. They are
responsible for contracting of lighting, IT facilities,
utilities and waste management.

Buildings transcend beyond objects with a single
purpose to meet user needs. They become part ofthe environment. Asset prices are influenced by
the level of sustainability of a building. Buildings
will be designed to not only serve a specific use,
but also create a healthy environment for living
and working. As the conception of a building
changes, the role of a user may change to include
a wider range of activities during the user phase.
Current users may become more aware of theneeds of the next user of the building.

Facility managers expand their role to obtaining
and analyzing data. Data management of thebuilding performance allows Facility managers
to recognize patterns and anticipate problems or
maintenance needs. Facility managers provide upto-date inventories to be used in the end-of-life
phase of the building.

CIRCULARLINEAR

Users view a building as an object that fulfills aspatial need or function. There is a direct relation
between client demands and the asset price.

•

The increased understanding of users aboutsustainability of buildings, circular economy
and the impact of material use on theplanet fundamentally changes the design,
construction, operation, maintenance anddeconstruction of buildings.
Users demonstrate more sustainablebehavior which can be facilitated (e.g.
by smart technical solutions and smart
building infrastructure) and stimulated (e.g.
by smart tools to better manage energy andwater consumption). This leads to productlife-time extension.

CHANGE

Users will engage in co-creation throughsharing platforms with architects,
investors and developers to achieve
tailor-made solutions.

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Facility managers will increasingly need to
manage data.
Their role may expand to manage more
contracts with a service providers and lease
constructions. The different components
of a circular building will be increasinglyinterconnected and as a consequence, themanagement of the building can become
more complex.
New companies enter into the managementof contracts. They will be responsible forthe contract management of buildings
when building systems become servitized.
Investors will be more likely to invest
in an asset once the complex contract
management is secured by theseintermediary companies. Facility managers
may take up this role.

S peciali z ed
C onstruction A N D
I nstallation C ompanies

OWNERS

The owner of a building considers it an asset (bothshort- and long-term) and wants to guarantee
the highest value of the building and operating
margin. Maintenance is based on profit. Owners
can also be the users of a building and in thiscapacity act as developer.

Construction and installation companies deliver
services and keep ownership of (often high-tech)products or services. As they remain owners,
they disassemble their products at the end oflife and take it back to be refurbished, reused or
recycled. They may extend their activities to thedecommissioning phase.

Besides design and construction, the value of acircular building is determined by its function,level of circularity and the behavior of its users.
As buildings increasingly become a collection ofdifferent contracts and providers of materials,
the role of owners will evolve from the asset
ownership model used in today's linear built
environment.

The business model of construction andinstallation firms may expand to include
product as a service, leasing constructions,take-back clauses and demolition services.

As buildings become resource banks comprisedof service agreements, the owner's role inherits
responsibilities like contract management, data
management, provider of smart solutions andsupport for optimal use.

CIRCULARLINEAR

These companies sell and install specialty
products in both new construction and renovation
projects. During the operational phase of thebuilding, these companies perform maintenanceand replacement activities.

They need to understand how to recover
their resources. When these companies
retain ownership, maintenance anddecommissioning of their products will
become more relevant.
As these company remain owners of
the products and are responsible forrefurbishment, reuse or recycling, theyneed to better understand the compositionof the products and their environmental
and social footprint.

CHANGE

Material passports are an essential tool tosupport this. However, these companies
will need to spend additional efforts tocollect information during operations (i.e.
maintenance costs).

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D econstruction or
demolition companies

WA S T E T R E AT M E N T
C O M PA N I E S
Waste treatment companies collect waste topartially recycle, to incinerate for energy recovery
or to dispose of in landfills. These companies alsocollect waste that is not related to demolition ofbuildings such as paper or household waste.

Demolition and recycling businesses become
suppliers of materials and elements and advise
architects and engineers on material lifespan.
They separate the individual elements of abuilding to prepare them for reuse, refurbishment
or recycling aiming to preserve the highest
value of these elements (materials, products).
They work together with service providers suchas installation companies to retrieve valuable
elements. On the other hand they either
collaborate with traders and wholesalers tosell materials or are an essential stakeholder
to provide information to the market about
the availability of resources (quantity, quality
and timing). They may expand their business toinclude the role of supplier.

Waste treatment companies play a key role inrecycling the materials into new use cycles.
They take over the responsibility for waste
management from their clients and apply
sophisticated technical solutions to separate
waste streams into individual components.
Waste treatment companies are suppliers of
secondary materials. This may be complementary
to demolition companies or deconstruction
companies or as a joint effort where the wastecompanies process the waste of demolition
companies.

Demolition companies will increasingly
focus on high value resource recovery ofmaterials and are already responsible forphasing out pollution in building resources
such as asbestos or leaded paint.

The position of waste companies willchange in the value chain as they further
develop into providers of resources
instead of the end point caretaker of waste
streams. As waste will be separated into
different resources, the volumes that areincinerated or dumped on landfill sites will
reduce to zero. This can have a huge impact
on existing business cases and companies
need to adjust.

CIRCULARLINEAR

Demolition companies bring down buildings,
separating bulk waste streams of limited value.
Demolition contrasts with deconstruction, which
involves taking a building apart while carefully
preserving valuable elements for reuse purposes.

They will become a supplier of resources
and take part in sharing platforms.
They need to find technical solutions todeconstruct a building into high-value
elements in collaboration with architects
and construction companies.
They will need to work on a more integrated
value chain that transcends individual
phases.

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Waste companies need to manage
resources for full recovery, recycling, reuse,etc, and need to connect to the market
to sell their resources that will get a new
application.

R E G U L AT O R S A N D
L E G I S L AT O R S

F inancial I N S T I T U T I O N S
A N D banks
Financial institutions and banks are key drivers forthe economy, applying evaluation and risk models tomaximise profit across their portfolio. They support
the building sector through investments, loans andother traditional financial banking products.

Regulators and legislators implement measuresthat drive the built environment towards circularity.
These measurements encourage innovation andwork towards leveling the playing field.

Financial institutions develop new financial
instruments that are adapted to the circular
economy and characterized by a more complex
ownership structure. Financial institutions will
expand their services to include consultancy
on development of new cases and businessmodels that support clients. One potential
service they could offer is market analysis
for areas of the built environment that lacka proven return on investment. Financial
services will have to adapt their perception ofrisk. To do so, they will require more insight
into processes and possibilities of the circular
economy as well as promising entrepreneurs.
Financial institutions will have to adjust risk
models to address risk associated with the use of
secondary materials and products, more complex
approval procedures and maintenance risks.

CIRCULARLINEAR

Through legislation and policy, regulators protect
users, citizens, companies and employees
against unfair and adverse impacts. Regulationand legislation is risk-based. Regulators apply
measurements that influence the market but
sustain a linear built environment (e.g. taxing
labor instead of physical resources)•

Regulators and legislators improveawareness about the circular built
environment•

Drive a co-creative effort to develop
legislative measurements that stimulate
the circular built environment. Legislationneeds to drive market mechanisms aiming
at incentives that create benefits forcircular solutions over linear solutions.

•

incorporating the externalities in the risk
assessment of non-circular alternatives,•

adapting the risk assessments to multipleownership structures,•

absorb more risk in innovative solutions,

In their own day-to-day activities,
governments (legislators and regulators)
need to take a lead on circular-stimulating
policies, such as circular public
procurement policies.

•

accounting for new financing models likecrowdfunding, which are adapted to moreinnovative businesses.

CHANGE•

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Banks and financial institutions need to adapt
their business model and their products to
support the circular economy by:

Accounting principles (i.e. IFRS or GAAP) andvaluators are key in new depreciation practices
and residual value estimation.

3.2 Barriers for the Circular economy
In the previous sections we have discussed thechange needed to move from a linear to a circular
built environment and the evolution in the role ofvarious stakeholders. As mentioned, elements ofthe circular built environment are already emerging.
Nevertheless, there are barriers that must be addressed
to make these elements mainstream. We identify
five cross-cutting barriers that apply to the changing
roles of stakeholders, the five business models andthe characteristics of the circular built environment.
Examples of barriers that prevent a level playing field
for circular solutions are subsidies for extracting
virgin resources or inconsistencies in policies between
neighboring jurisdictions.

3. Delays in permitting due to longer approval processes;
4. Lacking consensus within local, national and global
governmental bodies (e.g. systematic and consistent
approach to waste management).

C. Market
The ‘market’ mechanism is a key driver and barrier forthe circular built environment. Once circular alternatives
deliver comparable or better results than conventional
solutions, according to market principles (better profits,
lower risks and costs, etc.) the transition to a circular
built environment is expected to accelerate rapidly.
The barriers that are related to the market include:
1. Low virgin material prices;
2. Circularity is scarcely considered in asset valuation;

A. Culture and beliefs
Company culture and personal beliefs influence thepace at which the transition takes place. It can become abarrier when organizations or people are uninformed or
unconvinced. Factors that may serve as barriers in thiscontext are:
1. Company culture;
2. Reluctance to collaborate in the value chain due tocompetitive, cultural or trust issues;
3. The reluctance of consumers to buy ‘used’ products
and materials or pay a reasonable price;
4. Status quo bias, or the comfort of operating in a known
and trusted linear system versus the discomfort of a
new circular world.

B. Regulations
Legislation and regulations are an important driver
for the economy. They influence a level playing field,
protect fair trade, address health and safety issues,
protect humans and the environment, among otherissues. Legislation can stimulate economy, as when
new ambitious (long-term) laws drive innovation. As
regulations typically follow public opinion, legislation
may not always account for a rapidly growing, global
trend like the circular economy. Examples of regulatory
barriers that inhibit scaling the circular economy in thebuilt environment include:
1. Limited commitments to circular green public
procurement;
2. Laws, regulations and technical standards that do
not support the innovations that are needed in thecircular economy, such as applying re-used products(construction/installation) within a new building;

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3. Better understanding of the risks involved in thelinear economy compared to the circular economy.
Lack of experience can lead to higher perceived risks
and reluctance to provide financial support.
4. High upfront investment cost, such as in productinnovation or in mobilizing an integrated design
process;
5. Limited subsidies or market incentives for secondary
materials and products;
6. Lack of market volume or economies of scale for new
and innovative circular products.

D. Technology
The transition towards a circular economy also requires
innovation to address technical challenges observed
today, such as waste stream separation. Developing
new technology is resource intense (time, money) andneeds a clear business case. Technological barriers toscaling the circular built environment include:
1. Harvesting and supplying remanufactured products;
2. Limited experience with circular design within built
environment;
3. Lack of large-scale demonstrations projects andexperience with new technologies;
4. Sharing information about the availability, quality,
location of circular materials;
5. Lack of data on environment footprint, technicalperformance, tracking and reuse planning.

E. Education and information
Education about the circular built environment, its
implications and expertise involved is needed to alignand connect the value chain. The topic is currently
known to a limited circle of environmental experts.
Scale can be reached when circular economy is an
integral part of education, lessons are shared, andactors can build on experience from others. Information
sharing is still very limited and is a barrier for
acceleration and scaling. Examples of this include:
1. Limited attention to circular economy in architecturestudies and design;
2. Lack of education programs in circular thinking forprimary and secondary school, vocational and higher
technical education;
3. Limited communication about circularity of buildings;
4. Lack of knowledge-sharing in the physical world;
5. Limited sharing of best practices in the building
environment and translation to different contexts;
6. No capacity or time for market actors to follow
informative courses about the benefits and theapproach of circular economy;compliance (regulations) are limited, and that depends
on the adoption of suppliers who have limited
awareness of circular alternatives, the market will notreach a scale in which circular becomes more favorable
than the linear convention today.
Development of regulations and legislation that drives
the circular economy further is challenged by the lackof good examples and broad experience with circularsolutions. There is no broadly recognized standard on
circular design and construction upon which regulations
can refer to. Lack of clear and standardized regulations
are needed to drive the circular market.
•

Public and private sector collaboration

There is a responsibility and opportunity for public
and private sectors to work together on accelerating
the transition towards the circular built environment.
Public and private sector must collaborate to organize
the market to stimulate circular activities. Regulations
and legislation are essential drivers for a more circularoriented market. This will be explored in the final
chapter below.

7. Different level of knowledge and awareness in thevalue chain;
8. The lack of consumer and investor awareness andinterest in circular economy•

The five barriers are linked

The transition towards a circular built environment
will lead to a cultural change: our way of looking at theworld and the role of buildings in it needs to change
dramatically. Cultural change is one of the mostpowerful drivers, and at the same time emerge as
the main impediment. 28
The cultural change follows the market change that,in turn, is stimulated by regulation. The absence ofmarket mechanisms that favour circular solutions overlinear solutions are a key barrier for progress. Stringent
regulation hampers much needed technologicalinnovations and lack of awareness prevents large-scale
adoption of new ideas and opportunities.
The lack of technology and education similarly slows down
the transition. Design strategies will need to change to
identify new technological solutions. When technology is
integrated into the market, consumer behavior and culture,
circular innovations can be scaled if enabled by regulations
and the market.
Due to strong links between the barriers, it is complex
to resolve a single barrier individually. In a sector
that typically solves challenges in a conservative way(culture), where incentives for approaches beyond

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pathways for business and governmentMore circularity in thebuilt environment will
deliver increased growthand value for the entire
building chain.
Pascal Eveillard

Deputy VP Sustainable Development,
Saint-Gobain

•

4. THE WAY foRWARD
In the previous chapters we defined the circular built
environment, the value chain changes that are needed
and the evolving roles of different stakeholders. We
identified five barriers that are currently inhibiting thetransition. There are two broad stakeholder groups
that hold the power to collaboratively to stimulate
acceleration of the circular built environment: theprivate and public sector. Both have an essential role inthe creation of the circular market by organizing a levelplaying field and scale29.

4.1 The key to the next step in the circular built
environment: scaling in a level playing field•

Cultural change is driven by the market

In order to change culture and behavior the market
barriers to the circular economy must be addressed.
Circular alternatives should be economicallyadvantageous (e.g. through price, access to finance,etc.). Circular options must become cost-competitive,
convenient and dependable in addition to any
environmental benefits.

The market must favor circular over linear

Market dynamics must favor the features of acircular built environment. The economic feasibilityof the circular economy needs a push to address theurgency of today's environmental challenges. The
costs for a circular building as a whole are currently
estimated higher than the costs of a conventionalbuilding. However, the cost of a circular building is stillmeasured in a linear way: land, material, design andconstruction costs. The industry must start interpretingcosts differently to create an advantage for circularsolutions. For example, life cycle costing should be the
new normal. Sustainability and energy efficiency havesteadily integrated into construction documents andvalue models. Two examples of sustainability valuation
integration are the European Union's Horizon2020
project RenoValue and RICS Redbook. 30,31•

Availability and performance of secondary
materials are critical to achieving economies ofscale and ultimately, lower costs.

Insufficient secondary resource supply and thetechnology needed to integrate those materials backinto the cycle challenge the feasibility of a circular
built environment. In particular, the validation and thetechnical performances of recycled or reused materials
needs more attention. Circular materials and products
should meet or exceed the same specifications for theirlinear counterparts.

Figure 4. Drivers to scale circularity in the built environment

SCALING
Technology

CircularCultureEducation andinformation€
LEVEL PLAYING FIELD
Regulations

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Market•Regulations can drive markets and level theplaying field

Market for circular solutions may result from resource
scarcity challenges or regulatory measures like
subsidies or public procurement policies. Regulations
that stimulate the circular economy are most powerfulwhen they are applied in a level playing field, providing
equal commercial opportunities for all organizations
active in a certain area, region, continent or at global
level. When considering the global scale of a circular
built environment, a level playing field becomes
essential to drive the transition.

How scaling in a level playing drives thecircular built environment•

The importance of scaling

The transition needs scale. In addition to regulatoryinterventions, the price for circular solutions is affectedby availability and trust. Scarcity of non-renewable
resources is expected to drive market prices for building
materials. This may create a better market for secondary
materials as prices become competitive. However, thesupply quantity and quality of circular materials areinconsistent compared to virgin materials. Scaling up ofmaterial recovery and recycling are required to improvethe market for circular solutions. Recovered materials
need to have similar qualities as their virgin alternatives.
Collection and processing costs of secondary materials
must be comparable with extraction and processing
costs of virgin materials. Again, scale and efficiency isneeded to make this happen.
Experience and familiarity with circular solutions (e.g.
product as a service models) is still relatively limited.
There are many initiatives ongoing, but with limited
scale and in many cases very context specific.
As society's demographics and priorities change, so does
culture. New generations are more open to product asa service innovations, multinational companies have astrong sustainability drive, and cities are taking more
responsibility. As adoption of circular built environment
principles grows, the economic, environmental and social
benefits will become apparent.
Why we need a level playing field
For the private sector, a level playing field is essential
for long term planning, investments in innovation andcorporate strategy. A unified, global market is essential.
A level playing field supports scaling as solutions
become applicable in a larger region. The European
Union has an opportunity to create a regional, levelplaying field for a circular built environment.

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The level playing field and regulations that support
it, should be organized in a way that renewable andsecondary materials are more favorable than virginmaterials. The built environment will continue todepend on virgin resources throughout the transition.
However, a thorough assessment of circular options
should be considered prior to specifying materials or
products that use virgin, finite reosurces.

What can be done to stimulate scaling
in a level playing field?
•

Legislation

A level playing field can be stimulated by standardized
legislation based on a strong, long-term vision.
Countries should commit to these regulations andprevent local interpretations or exceptions. Manycompanies are active in the global arena and will benefit
from a unified, international regulatory framework.
•

Criteria and certification

Scaling can be achieved by integrating circular criteria
into standard terms of reference. Circular criteria
should become the core of procurement (both public
and private sector). It should not be limited to ‘green’
procurement but should set the standard for all typesof procurement. The circular economy should also be
integrated in quality certification and labelling. This will
also improve competition with primary raw materials.

The European Union's Level(s) framework is avoluntary reporting mechanism designed to
improve the sustainability of buildings. Using
existing standards and as part of the EU
Circular Economy Package, Level(s) provides
a common EU approach to the assessmentof environmental performance in the built
environment. This framework can be used
for unified procurement frameworks.

The Urban Mining Collective (UMC) is acollaboration that uses cities as mines.
Partners of UMC work together to realize
circular buildings, such as a 100% circular
temporary building for the Dutch Design Week.
This collaboration crosses the entire value
chain, from design to wholesale and banks.

We strongly support alevel-playing field where
secondary resources
are cheaper than virginresources.
Kim Meulenbroeks

Stora Enso develops and shares design
manuals for collaborative use. Thesemanuals help architects and constructors
implement circular materials into circular
design and construction.

•

Manager Consultancy, Renewi

4.2 Both the private and public sector canstimulate acceleration
The private sector and governmental bodies are
powerful actors that can jointly help accelerate thecircular built environment.

4.2.1 Actions for a leading private sector
The private sector needs to find ways to create scale
and to cluster experiences and efforts. The circular
built environment requires collaboration across theentire value chain, connecting all phases of a building's
life cycle. Consumers are increasingly becoming awareof and demanding circular features. In order to create
scale in a collaborative effort, the private sector should
focus on the following actions:•

Collaborate with peers

Collaboration between peers (industrial symbiosis) isneeded to create new technologies in a pre-competitive
arena. At the start of any project or process, companies
should explore how partners can be part of thesolution. This may be identifying circular building
materials or sharing water and energy between
facilities. By putting circular thinking first, companies
create scale and support a different mindset.

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Scale up collaboration between large green
companies and SMEs

SMEs offer innovative solutions but lack the capacity
to scale up. Multinational companies can invest in
SMEs or support them in other ways through advice,guarantees, etc.
•

Co-create across the value chain

Value chain companies will find opportunity inco-creation. Companies will connect with various
stakeholders in the value chain and design solutions
that relate to the use and users of a building (e.g. Design
Thinking). Architects and contractors will work together
with demolition and recycling companies to develop
efficient technical solutions designing for end-of-life.
Users will also be involved in the process. The users will
benefit from better alignment with their demands whilematerial suppliers will depend on them to retrieve thematerials in optimal state and value.
Financial institutions should be involved in the entire
process to understand the risks and opportunities
involved and identify new solutions. Ideal collaboration
would see co-creation between those at opposite endsof the conventional building value chain. For example,
architects should connect to suppliers, constructors anddemolition companies, and vice versa.

•Develop common standards for circular materials

To help companies to collaborate, a common
standard for circular materials should be considered.
Standardization relates to the nature, compositionand dimensioning of materials and products. To allow
companies to take back materials that are produced byanother company, it would be beneficial for products
to be developed according to a standard range of
specifications that all companies comply with.

Mitsubishi offers an elevator as a service.
The elevator can be deconstructed inelements that can be used in another elevator
without significant modifications.
This requires standard design and dimensions
that architects can readily use in their plans.
With Mitsubishi’s M-Use®, the elevatorremains in ownership of Mistubishi. In
exchange for an annual fee, Mitsubishi
takes care of maintenance and operational
management for the owner.

•

Expand product stewardship to include service
through new business models

Companies may improve product stewardship andcustomer relationships by engaging in service contracts
instead of conventional single-transactions. The productas a service model incentivizes companies to improve
product lifetime and durability as they take them backat end of use.

Katerra provides not only prefabricatedbuilding elements but also construction
services for assembly onsite. The company
has become an end-to-end building company.
Philips Lighting offers commercial lighting asa service. As opposed to the original businessmodel of selling lamps and ballasts, thecompany now provides a full service that
includes maintenance and operations, smart
technologies and take-back.

•Invest in scaling through pilots

One of the recurring barriers to take steps into thecircular economy is the lack of experience. Small-scale
pilot projects are necessary to capture initial learnings
without too much investment or costs to the company.

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ABN AMRO developed the CIRCL buildingin Amsterdam as a demonstration of how
circular design and construction can be done
without compromising function or aethetics.
Albron, a catering company, created The
Green House to develop a feasible andsustainable circular food concept.

•

Provide non-financial support and invest in
education

Companies should work to improve internal
understanding about circular economy principles. The
more employees that understand circularity, the more
opportunity for scale. Non-financial support can be afirst step in helping internal and external stakeholders
set up circular initiatives.
•

Integrate circular principles in procurement

To support scaling up the circular built environment,
companies need to start with integrating circular criteria
in their procurement strategies (i.e. reduce single-use
plastic, transport, waste, etc.) and stimulate suppliers toinnovate in open, collaborative discussions. In relation
to creating scale for SMEs, large companies can build
procurement alliances with SMEs or invest in pilots.

As a sustainable
developer, we arecontinuously on thelookout for futureproof solutions. Recent
advances in circularity
have largely shaped
the way we innovate.
Sandra Gritti

Product Excellence Director,
EDGE Technologies

4.2.2 Actions for leading governments
Government bodies are undoubtedly the mostimportant actors that can support a level playing fieldat (sub-)national and global scale. They can implement
regulatory and financial instruments that facilitatecompetitiveness of circular solutions while stimulating
innovation. Fiscal incentives such as Value-Added Tax(VAT) and a shift from taxing labor to materials canbe relevant approaches. Governments can organize
design competitions or integrate competition elementsin their procurement strategies to stimulate innovative
approaches. More specifically, governments can
support the transition to a circular built environment by
the following actions:•

Develop long-term vision and ambition,communicate clear targets and holdorganizations accountable

The circular built environment needs a long-term
approach, and governments should be leading thetransition. The private sector can adapt its long-term
strategy to the government's ambitions and adjust risk
management accordingly. This vision can be alignedwith climate legislation, further creating a level playing
field and supports scale.

The Dutch government has issued agovernment-wide program for a circular
economy aimed at developing a circular
economy in the Netherlands in 2050. Many
governmental organizations have to meetthis challenging goal and integrate circularprinciples into their day-to-day operations,such as circular procurement criteria. In
establishing such a standard the government
creates a demand pull for circular supplies
such as recycled content.

•

Develop a single, international framework
for waste legislation

Waste and by-products are classified differently
according to regional and national regulations. One
clear framework for waste legislation that stimulates
free exchange of materials and that allows forrecycling of materials is needed. Existing regulations
need to provide sufficient room to reuse materials
that in a linear economy are classified as waste,
but with circular innovation can be reused. Existinglegislation and regulation that describes the policy
for traditional waste activities such as collection,

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recycling, incineration and landfilling requires updates.
Without threatening health and safety of people
and the environment, legislation should provide thefreedom to use secondary material flows. Landfillingof construction and demolition waste should bebanned, requiring these materials remain available in
the economy. The level of environmental protection
should remain at its actual strength, while markets forcircular economy should not be hindered by legislativerequirements. The European Commission is working
on this challenge through its Communication programon the interface between chemical, product andwaste legislation. Increased availability and trade insecondary materials stimulates the market for circularbuilding solutions. For example, using secondary
granulates may need an end-of-waste declarationaccording to European law. This is not always available
and procedures are diverging and complex.
•

Include circular criteria in government
purchasing standards

Governments can create scale by including circular
criteria as a standard for sustainable purchasing.
The public sector is one of the largest clients of theconstruction sector. For instance, in the Netherlands thegovernment (provinces, municipalities, water boards,
ministries) is responsible for more than 15% of allbuilding activity.
When circularity is fully integrated into purchasing
criteria, the government can contribute dramatically toscaling the demand for circular solutions.
•

Adjust legislation to stimulate developmentof new business models

At continental, national and regional levels, regulations
should facilitate the development of new businessmodels. The circular economy requires new ways of
doing business. Current legislation does not always
enable businesses to adopt these new models.
For example, financial regulations forbid banks fromtaking risks without sufficient capital backing. This mayhinder banks in developing products for circular multiowner settings.
Even the issuing of building permits fail to carry thecreativity and flexibility needed to account for changes
due to circular design and construction. Innovative
collaborative structures that join various partners in thevalue chain, such as alliance contracting, Public Private
Partnerships and Private Finance Initiatives, needlegislative support.

•

Develop more legislation and governmental
support to stimulate circular solutions

Government support for circular solutions is limited orabsent in most cases. Governments should considertransferring subsidies from linear resources to circularsolutions.
Governments should also identify how they can best
stimulate circular innovations locally. Instruments suchas revolving funds that support start-ups in their scale
up could be useful to kickstart and scale promising
innovations. Regulatory instruments should aim at
stimulating the market.

In Japan, the recycling infrastructure isco-owned. The law requires consortia of
manufacturers to run disassembly plants,
ensuring they directly benefit from recovering
materials and parts. Manufacturers therefore
make long-term investments in recycling
infrastructure. Companies that own factories
and recovery facilities, let product designers
visit their factories to experience how design
features impact dissassembly and recovery.
Some companies test prototypes to optimize
the disassembly process for maximal
recovery. It is not only a technical success,but also highly profitable. Japan’s reuse andrecycling economy was worth £163 billion
in 2007 (7.6 per cent of GDP) and employed
650,000 people. 32
Since Netherlands adopted the objectiveof being 100% circular by 2050, more than
40% and 50% of architects and engineers
participated in circular projects as of spring2018. Contracting and installation companies
participated at rates of 20% and 25%,
respectively. 33

DID YoU KnoW?
DSM-Niaga redesigns products from theground up, using a simpler set of purematerials to make better products thatare 100% recyclable and fully sustainable.
Using the expertise of DSM in adhesives,the company develops new fully circular
products in co-creation with othercompanies in the value chain. Their
first product was circular carpet. The
company is an example of how circularcompanies expand their focus to seek
collaboration with other value chain
partners. For example, DSM educates andhelps carpenters apply circular design andmaintenance techniques to their products,
resulting in product lifetime extension.

We need innovative
business models.
Increasing floor
space could ensure
additional income andbe a model to fundbuilding renovation.
Jari Suominen

Executive Vice President,
Stora Enso Wood Products

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pathways forpathwaysfor businessbusinesses
andandgovernment
government

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14. Gonçalves, E. (2008) The WWF Pocket Guide to a
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resource_efficiency/about/key_questions/index_
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24. Brand, Steward (1994) How buildings learn: What
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FOOTNOTES
1.

https://www.overshootday.org/

20. www.circularity-gap.org

2.

http://ec.europa.eu/environment/waste/
construction_demolition.htm

21. The process of transforming waste or recoveredmaterials and products into new materials or
products with higher quality and/or value.

3.

figures eurostat: generation inert waste from C&D
activities compared to total waste generation 2016
datawase [env_wasgen].

4.

Ellen MacArthur Foundation (2013) Towards the
Circular Economy.

5.

UNEP (2018) Single use plastics. A roadmap forsustainability.

23. Circle Economy & Ecofys (2016). Implementing
circular economy makes Paris targets achievable.
Available at: https://circle-economy.com/
climatechange

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UNEP Single use plastics. A roadmap forsustainability, 201824. McKinsey (2015). The Circular Economy. Movingfrom theory to practice.

7.

https://www.oecd.org/industry/ind/Item_4b_
Accenture_Timothy_van_Audenaerde.pdf

25. https://www.circle-economy.com/Circular-Jobs

8.

UN Environment (2014)

9.

UNEP (2016) Roadmap for transition towards lowGHG and resilient buildings.

22. The process of recovering of materials orcomponents and reusing these in an application
with a lower value.

26. Accenture (2014) Circular Advantage; WBCSD (2017)
CEO guide to the Circular Economy; ABN Amro(2017) A Future Proof Built Environment.

10. IEA (2013)

27. Steward Brand is a writer that elaborated theshearing layers concept of Frank Duffy, applying itto the built environment.

11. IEA (2013) Transition to sustainable buildings,
https://www.iea.org/Textbase/npsum/building2013SUM.pdf

28. Kircher, J., Hekkert, M., Bour, R., HuibrechtseTruijens, A., Kostense-Smit E. & J. Muller (2017).
Breaking the barriers to circular economy.

12. UNEP (2016) Roadmap for transition towards lowGHG and resilient buildings.

29. A level playing field is a concept in which all players(i.e. companies) play by the same set of rules.

13. IEA (2016)30. http://renovalue.eu/

14. Lacy, Peter; Rutqvist and Jakob (2015)31. https://www.rics.org/uk/upholding-professionalstandards/sector-standards/valuation/red-book/
red-book-global/

15. Arcadis (2016) Global Built Asset Performance
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16. ING Economics Department (2015) Rethinking
Finance in a Circular Economy (Financial
implications of circular business models).
17. Morgan, J. and Mitchell, P. (2015) Employment
and the Circular Economy: Job Creation in a more
Resource Efficient Britain, Green Alliance and WRAP.
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resource_efficiency/about/key_questions/index_
en.htm (Accessed 07 Mar 2017).
19. https://www.arcadis.com/en/united-states/whatwe-do/our-capabilities/design-and-consultancy/
business-advisory/client-facing-informationtechnology/

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32. Ministry of the Environment 2010: Establishing asound material-cycle society: Milestone towarda sound material-cycle society through changes
in business and life styles. Government of Japan,
Tokyo. www.env.go.jp/en/recycle/ smcs/arep/2010gs_full.pdf
33. EIB (2018)

THIS REPoRT IS PART of
THE fACToR10 PRoJECT
of WbCSD
Factor10 is WBCSD’s circular economy project.
It brings companies together to reinvent
how business finds, uses and disposes of thematerials that make up global trade. It’s aplatform that will help to identify and remove
the barriers that exist and create scalable
solutions that businesses all around the world
can use.
By collaborating on solutions that go beyond
business as usual, Factor10 will deliver highimpact, large-scale results where resources
are used wisely, processes create the greatest
possible value, and nothing is wasted.
In order to reach Vision 2050 in which nota particle of waste exists, eco-efficiency ofmaterials must improve by a factor of 10. Thistarget was previously referenced by the Factor10
Institute in 1994 when they called for the tenfold improvement in resource efficiency.

Disclaimer

The information included in this publication
is based on sources considered to be reliable.
Arcadis and Circle Economy, and WBCSD
may not be held responsible for any errors it
contains. Views expressed are solely those of
the authors and cannot be modified without
prior consent. The use of this publication’scontents is only permitted if the source isclearly reported. Permission should be soughtfrom WBCSD, Arcadis, and Circle Economy,prior to the reproduction and/or disclosureof this publication. As a report co-author
and member-based organisation, WBCSD
acknowledges that not all members may
agree with every word of the report. WBCSD
engaged a sample of its members to capture a
representative membership perspective on thisreport.

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pathways for business and government

Organizations involved in the creation of this report:ColofonAuthors
David Thelen, Mike van Acoleyen, Wouter Huurman,
Tom Thomaes (Arcadis)
Carolien van Brunschot, Brendan Edgerton (WBCSD)
Ben Kubbinga (Circle Economy)
Graphics and Layout
Nicolas Raspail, Alexandru Grigoras (Circle
Economy)Acknowledgements
The authors would like to warmly thankPascal Eveillard (Saint Gobain), Petran van Heel(ABN AMRO) and Roy Antink (Stora Enso) who, in
their role as Chairmen of this report, have provided
expert guidance and valuable input during thewriting process.
The following people have shared their knowledge
and experience through interviews:• Karl Downey, Groupe sustainability Executive(CRH)• Roy Vissers, Global Circular Economy Lead
(DSM)
• Fabienne Cézanne, Associate Product Manager;
Sandra Gritti, Product Excellence Director (Edge
Technologies)• Luca Meini, Head of Circular Economy (Enel)• Petran van Heel, Sector banker Construction &Real Estate (ABN AMRO)• Leontien de Waal, Senior Market Analyst
Construction; Anke Verhagen, Business
Developer Sustainability and Circular Economy(Rabobank)• Pascal Eveillard, Deputy VP Sustainable
Development (Saint Gobain)• Roy Antink, SVP International policy
coordination sustainability (Stora Enso)

About Arcadis
Arcadis is the leading global Design & Consultancy
firm for natural and built assets. Applying our
deep market sector insights and collective design,consultancy, engineering, project and management
services we work in partnership with our clientsto deliver exceptional and sustainable outcomesthroughout the lifecycle of their natural and built
assets. We are 27,000 people active in over 70
countries that generate €3.4 billion in revenues. We
support UN-Habitat with knowledge and expertiseto improve the quality of life in rapidly growing cities
around the world. www.arcadis.com
Arcadis. Improving quality of life.

About WBCSD
WBCSD is a global, CEO-led organisation of over 200
leading businesses working together to accelerate
the transition to a sustainable world. Our member
companies come from all business sectors and all
major economies, representing a combined revenueof more than $8.5 trillion and 19 million employees.
Our Global Network of almost 70 national businesscouncils gives our members unparalleled reachacross the globe. Together, we are the leading voiceof business for sustainability: united by our vision ofa world where more than nine billion people are allliving well and within the boundaries of our planet,by 2050. www.wbcsd.org

About Circle Economy
Circle Economy's mission is to empower a global
community of businesses, cities and governments
to accelerate the transition to the circular
economy through practical and scalable insights
and solutions that address humanity's greatest
challenges. www.circle-economy.com
Publication dateNovember 201835

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World Business Council
for Sustainable Development
Maison de la Paix
Chemin Eugène-Rigot 2B
CP 2075, 1211 Geneva 1
Switzerland
www.wbcsd.org
Circle Economy
Mauritskade 64
1092 AD Amsterdam
The Netherlands
www.circle-economy.com

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