Road-as-a-service.pdf

Pursuing Financial Reality of the Circular Road: A pathway to Road-as-a-Service

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Circle Economy and ICLEI have partnered up to initiate the go to knowledge hub of case studies about the circular economy in cities. The Cities Collection is a repository of case studies that demonstrate the role of cities in the circular transition, and includes policies, business cases and research articles. Cases in the Collection flow into an ecosystem of digital products which support users in transitioning cities to circularity, for example [Ganbatte](https://ganbatte.world/cities/) and <a href="https://circulars.iclei.org/" target="_blank">ICLEI Circulars</a>, both part of the <a href="https://circulars.iclei.org/circle-lab-for-cities/" target = _blank">Circle Lab for Cities Programme.</a>

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Circular Cities

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Article / Report

Direct and indirect effects that increase revenues or the potential for new revenues, for example from new products, customer segments, partnerships or business models

Revenue Potential

Impact on the ease of innovation, and facilitating uptake of innovations

Innovation

Reduced use of virgin materials and/or an increase of the use of secondary and bio-based materials

Reduce Material Consumption (SDG12)

Minimise waste through diversion: Instead of sending waste to landfill, it is redirected into other industrial processes for handling, treatment, recycling, recovery, or reuse in various forms. 

Minimise waste through design: At the outset of a process of project, plan and design such that there is zero waste or minimal waste during production, use, and at end of life. 

Minimise Waste (SDG12)

Providing air, water, rail, and land transportation and related services for the distribution of goods, such as air freight, air courier and logistics services, maritime freight, marine courier and logistics services, rail freight, rail courier and logistics services, land freight, land courier and logistics services, including package and mail delivery and customs agents, as well as storage and warehouse facilities

Logistics Services

Producing building materials and finished and semi-finished building products for construction

Construction Materials and Products

Consider opportunities to create greater value and align incentives that build on the interaction between products and services

Rethink the business model

Deliver products through business models that ensure maximum value

Product business models

Providing products through leasing, rental, or pay-per-use models instead of sales

Leasing, rental, pay per use

Providing services through a subscription plan with regular payment schemes

Subscription-based services

'Manage' influences the use and function of physical and material elements within the urban environment. 

Manage

'Mobilise' sets the direction of and builds momentum towards long-term change, while also determining how this direction is determined and governed.

Mobilise

Govern the Transition

Institutional design to enable circularity

'Regulate' changes the rules of the systems to achieve compliance through enforcement. 


Regulate

Legislation

Review and update regulation

Asset Management

Circular use of public-owned assets (land, buildings and equipment)

Other legislation

Redesign systems to lay the foundation for circular activities and enable the transition to a circular economy 

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Rethink

Do better with less by using and supporting infrastructure, processes and products that are designed to minimize material, water and energy use and waste generation from production to end of use


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Reduce

Facilitate cross-collaboration by engaging city departments, industries and businesses on ambitious, closed-loop circular projects.

Support closed-loop systems and cross-sectoral synergies

Put enablers in place that allow circular businessesto grow, thrive and innovate (e.g. incubators, start-up funding, partnerships, innovation deals, business capacity building and testing groundsfor new business models).


Support circular and resource-efficient business innovations

The built environment, including housing, commercial buildings, and the necessary infrastructure for mobility, is essential for our livelihoods, but:
- the extraction of minerals used to produce construction materials is responsible for a quarter of global land use change,
- approximately 40% of global GHG emissions can be attributed to buildings’ construction, use and demolition, and
- construction and demolition processes drive nearly one-third of all material consumption. 

Making the built environment more circular must prioritise a heavy reduction in material use—while also closing the loop on materials and bringing secondary and renewable material choices to the fore. Our four key solutions for the built environment are:
- Make the most of what already exists: Make the most of existing materials by reusing, repurposing, upgrading and renovating following circular approaches. Where new builds are needed, use secondary materials and be as efficient as possible with urban planning solutions that follow circular design principles so that buildings can be reused, repurposed, and easily disassembled in the future.
- Be as energy efficient as possible: From the design phase, utilise circular strategies to create material- and energy efficient buildings. Couple these designs with a rollout of clean energy solutions, and prioritise energy-efficient appliances and retrofitting. 
- Utilise secondary materials: Maximise the high-value reuse of buildings and components where possible. Ideally, enable the utilisation of construction and demolition outputs and ensure that as much of it as possible is recycled to avoid the need for virgin materials, such as sand and gravel.
- Prioritise circular materials and approaches: Transition to using renewable wood, timber or cross-laminated timber instead of steel and concrete, or move to other locally available materials. Utilise mainstream modular construction and prioritise lightweight frames and structures to reduce cement and steel use, as well as green roofs where possible.



🏢 Built Environment

The demand for transport is rising globally—but current modes are heavily material- and fossil-fuels-intensive. Emissions from the transport system could grow by 60% by 2050, and transport is the number-one user of oil worldwide. GHG emissions result not only in warming global temperatures, but also in ocean acidification, which has severe consequences for entire ecosystems and further destabilises our climate. The transport system also drives land-use change and biodiversity loss through the development of infrastructure—also releasing harmful pollutants into the ocean. Key circular solutions:

- Embrace and enable car-free lifestyles
- Invest in high-quality public transport
- Rethink unnecessary air travel
- Electrify remaining vehicles

🚌 Mobility Systems

Businesses

Governments

Impacts

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Industries

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A framework of policy instruments that enabled and encourage the transition to the circular economy

Policies

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A framework of policy instruments that enable and stimulate the transition to the circular economy

The principles of a circular economy concern designing out waste, regenerating ecosystems and keeping items in use. Decoupling the economy from material flows—improving the rate of resource productivity faster than the economic growth rate—is also a consistent guide. By evolving with the growing number of applications of circular economy principles, and consolidating these strategies across thematic areas, Circle Economy’s Key Elements Framework (KE) renders the elements of the circular economy salient and serves as a basis to derive contextual strategies and interventions. 


The Framework consists of:
- Core Elements: Activities directly handling product or material flows; and uniquely,
- Enabling Elements: those that remove obstacles for core actors.


Key elements of the circular economy

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Circle Economy's framework of strategies and activities that define the circular economy

The Circular City Actions Framework provides urban changemakers with five complementary strategies they can use to start working towards a more circular system. 

The framework is action-based to provide users with concrete strategic directions and showcase the desired outcomes of each strategy. 
The framework consists of five complementary **strategies**, under which **sub-strategies** provide further detail. Finally, each sub-strategy consists of a diversity of tangible **solutions** which are framed in relation to key thematic areas. 

Note: solutions are currently focused on:
- 🍏 **Food systems**
- 🏢  **Built environment**
- 👕📱  **Consumer goods**
- ⚡ **Energy Systems**
- 🚌 **Mobility Systems**
- 💧 **Water Systems**

More thematic areas are coming soon...

'Click through each of the five strategy cards below to explore the framework and circular economy case studies in more depth!'



This framework was developed in collaboration with ICLEI, Metabolic and Ellen MacArthur Foundation with support from the MAVA Foundation. Read more about it [here]( https://circulars.iclei.org/action-framework/). 



Circular City Actions Framework

An action-based framework for local governments working towards circular cities

Thematic Areas

City Stakeholders

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Amsterdam

Netherlands

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Nyenrode Business University

ABN AMRO Bank

Open University

Avans Hogeschool

 Rabobank 

OUR MISSION IS TO ACCELERATE THE PRACTICAL AND SCALABLE IMPLEMENTATION OF THE CIRCULAR ECONOMY

At Circle Economy, we believe in a visionary future for our planet — one in which we do not have to compromise in order to achieve economic, social, and environmental prosperity. As an impact organisation, we connect and empower a global community to create the conditions for systemic transformation. With nature as our mentor, we work alongside businesses, cities and governments to identify opportunities to make the transition to the circular economy, and provide a powerful combination of practical and scalable solutions to turn these opportunities into reality.
‍
Our 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.

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Circle Economy

Overijssel Province

Dura Vermeer

Groningen University

A pilot project of Dura Vermeer and Overijssel Province has provided a practical case for investigating how a circular road can be exploited as a&nbsp;Road-as-a-Service. A white paper on this project, launched by a new coalition for circular accounting, demonstrates how to modify and rethink current financing and reporting practices for the circular economy. A discussion about contractual structuring and its implications has led to new insights. Dura Vermeer wants to retain the economic ownership of the road while providing its functionality (i.e. the use of the road) as a service to their client Overijssel Province. This incentive ensures that it will maintain the road as well as possible from its knowledge and expertise. This will ultimately lead to a higher residual value.The participants formed a Coalition Circular Accounting (CCA). This is a collaboration between&nbsp;Circle Economy,&nbsp;Sustainable Finance Lab,&nbsp;The Netherlands Institute of Chartered Accountants&nbsp;(NBA),&nbsp;Dura Vermeer,&nbsp;ABN AMRO,&nbsp;Rabobank,&nbsp;KPMG,&nbsp;Provincie Overijssel&nbsp;and scientists of&nbsp;Erasmus University,&nbsp;Open Universiteit,&nbsp;University of Groningen,&nbsp;Nyenrode Business University&nbsp;and&nbsp;Avans University of Applied Sciences. The CCA was co-funded by&nbsp;Nederland Circulair! To sell or not to sellThe fundamental question is “to sell or not to sell”, according to CCA. Financial reporting is about economic ownership and the transfer of risks and rewards. If at the end of the contract, economic ownership is transferred to the client (in this case Overijssel Province), it still appears on their balance sheet from the start as it would in a ‘normal’ sale. The alternative is to specify explicitly the ongoing nature of the agreement, which excludes a transfer. This ownership question has implications for the reuse of the road and its materials at the time of harvesting. The owner of the road is incentivised to optimize the durability of the road, its maintenance and (re) use of raw materials, with potential effects such as a longer lifespan, lower overall maintenance costs, and higher residual material value.&nbsp; Combining different financial structuresThis above decision has important consequences for the balance sheet of both parties and how to obtain financing for the investment. When no sale takes place, we have to alter our traditional financing perspective. A possible solution is to create a combination of financing projects, while also having some corporate debt that should lead to a different type of financing. A surprising result is the fact that the actual accounting of the circular road turned out not to be the main challenge in this case. Creating a financial incentive for circularity is the foremost objective. A contractual agreement should express circular incentives and the distribution of risk and reward. The actual accounting ultimately follows.

The Circular Facade.pdf

Business case

Archetypes

CE Materials

Materials

Nace Sectors

Whilst no two countries are the same, there are still obvious similarities between some of them, with discernible development patterns and parallels in evidence. Common problems and shared solutions help place unique country identities and individual issues in context.

Whilst this classification is far from clear-cut and exhibits some overlap, it does underline how the discourse on transitioning to a circular economy needs to account for both differences and commonalities, if we are to arrive at a more strategic and instructive analysis. It also allows to highlight a set of key themes that are likely to be central to the countries that fall under the respective profiles. 

Country profiles (Build, Grow, Shift)

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A framework to distinguish between different country profiles and their circular transition needs.

Browse case studies by type of implementing stakeholder.

Implementing stakeholders

Triodos

Sustainable Finance Lab

Blitta

Alkondor

De Groot en Visser

KPMG

Allen & Overy

Rabobank 

Invest-NL

In its second whitepaper, the Coalition Circular Accounting (CCA) explores Facades-as-a-Service as a method to battle waste and increase the circularity of buildings. The Facades-as-a-Service will provide a customisable, dismantable facade that provides a building with ventilation, sunlight regulation and energy generation, all adjustable by remote control. The Product-as-a-Service business model benefits circular construction by incentivising manufacturing companies to retain responsibility for their product and their performance before, during and after its lifespan.&nbsp;‍However, current financing models can present major barriers for companies with circular business aspirations. Asset ownership for example, characterized by an extended balance sheet, is unpopular amongst financiers and suppliers, whilst essential for incentivising a long term business perspective.‍In light of these current and persistent financing barriers, the Coalition Circular Accounting has launched a white paper that elaborates on the opportunities and risks of Product-as-a-Service business models. The paper proposes a new contractual structure as an enabler and raises the issue of the misfit between current financing structures and circular business models.

The Circular Facade: Building a sustainable financial reality with Facades-as-a-Service

Valorising Residual Resources.pdf

Valorising Residual Resources: Mitigating food waste - how cooperatives can boost the circular economy


Impact on increased knowledge and understanding as a result of the case study

Increase Awareness

Direct and indirect reduction in economic costs

Cost Savings

Scalability

Producing and gathering crop and animal products from land and water through farming, hunting, and fishing

Agriculture

Processing and producing food and beverages for consumption

Food and Beverage

Utilise waste streams as a source of secondary resources and recover waste for reuse and recycling

Use waste as a resource

Work together throughout the supply chain, internally within organisations and with the public sector and communities to increase transparency and create joint value

Team up to create joint value

Reuse, repurpose, and recycle waste streams within other industries

Valorise waste streams - open loop

Industry peers to industry peer collaboration to create joint value and identify synergies

Industry collaboration

Engaging in discussions with industry stakeholders to share circular economy best practices and push the industry towards greater circularity

Guidance, dialogue with industry stakeholders

Working together with industry peers to engage in business activities or exploratory projects that advance the circular economy

Joint industry ventures, projects, pilots

Cross-departmental collaboration and engagement

'Incentivise' sends market signals and support to businesses, citizens and governments to promote certain activities.

Incentivise

 Fiscal Frameworks

Maintain and repair city-owned spaces and infrastructure to increase longevity, and support opportunities for residents to do the same for privately owned items and property

Support reuse, repair, remanufacturing, maintenance of existing resources, products, spaces & infrastructure

The food system nourishes populations and employs 50% of the global workforce, but:
- it currently drives a quarter of the overshoot on the climate change planetary boundary due to its greenhouse gas (GHG) production, 
- animal farming alone uses over one-quarter of all land, equivalent to the size of the Americas,
- nearly a quarter of freshwater resources are lost due to rampant food waste, and
- it is the single largest driver of biodiversity loss.

A circular food system must address the whole value chain, from production to consumption to waste management. The four key solutions for the food system are:
- Put healthier, satiating foods first: Prioritise satiating and healthy foods with a lower environmental impact—ideally shifting calories from meat, fish, and dairy towards cereals, fruits, vegetables, and nuts.
- Go local, seasonal, and organic: Prioritise the production and consumption of local, seasonal, and organic produce (sometimes in combination with GMO to reduce pests and disease loss on crops), which can lead to a significantly reduced need for chemical inputs, fuels, and processing services that contribute to environmental impacts.
- Mainstream regenerative agriculture: Scale up agricultural practices that regenerate ecosystems, recirculate nutrients and sequester carbon by design. 
- End avoidable food waste: Minimise food loss and valorise waste following the food waste hierarchy along the supply chain and at the consumer level through better management of transport and storage, more refrigeration and smart planning, and technology at the consumer and food service levels.



🍏 Food Systems

This report by the Coalition Circular Accounting (CCA) finds that residual resources, which are now often categorised as 'waste', can be reused at their highest potential value if fair pricing is ensured. Using the example of IntelligentFood, a cooperative that turns residual biscuit dough into new products, the report shows how value chain partners can collaborate to add value and mitigate food waste, working together towards common circular goals. The report further provides insights into the financial, accounting and legal aspects of valorising food waste and the organisational challenges of being circular in a linear world.‍About the Coalition Circular AccountingThe Coalition Circular Accounting has been founded by the Royal Netherlands Institute of Chartered Accountants (NBA) and Circle Economy to identify accounting related challenges in the circular economy. The coalition includes experts and scientists in the field of finance, accounting and law, who together create solutions to overcome barriers to circularity. Learn more about the coalition in this launch article. Previous publications of the CCA‍The Circular Phone | Facades-as-a-service | The Circular Road

Alfa Accountants & Adviseurs

Europastry

Impact Institute

IntelligentFood

Residual resources, such as food processing surplus streams—now often categorised as ‘waste’—can be reused at their highest potential value if fair pricing can be ensured, finds the third report of the Coalition Circular Accounting. In their&nbsp;Valorising Residual Resources&nbsp;report, they elaborate on the financial, accounting and legal aspects of valorising food waste and the organisational challenges of being circular in a linear world.&nbsp; Annually, 88 million tonnes of food is wasted in the European Union alone. An estimated third of that waste occurs before food items even hit the shelves. In some food categories, waste is particularly hard to avoid because of a lack of knowledge, logistical challenges or expiration dates. But in a time when climate change and hunger threaten millions of livelihoods around the world, minimising food waste is a must, resulting in higher food security and a reduced industry footprint.&nbsp; A current go-to solution for many food manufacturers is to downcycle and sell waste streams as animal feed. But when these resources are of premium quality and fit for human consumption, this is a massive loss. To ensure efficient resource use, the circular economy aims to maintain the highest possible value of resources for as long as possible. But producers need a stronger incentive to valorise all their waste streams—an incentive the linear economic system does not provide. The Coalition Circular Accounting (CCA), led by the Royal Netherlands Institute of Chartered Accountants (NBA) and Circle Economy, has identified opportunities to salvage and valorise residual resource streams before they are turned into input for the production of animal feed or waste. Using biscuit dough as an example, the coalition teamed up with cooperative&nbsp;IntelligentFood&nbsp;to explore the challenges they are facing and identify promising pathways for circular ways of working that can be applied to a multitude of other types of residual streams.&nbsp;‍The cooperate as circular enabler‍IntelligentFood is organised as a cooperative that receives residual biscuit dough from Europastry—a leader in the frozen bakery dough sector—and joins forces with value chain partners to add value and create new products. Members can contribute either as an employee, as an organisation, in cash or in-kind. All members that have contributed value share in the profits, following a distribution key.&nbsp; The CCA has found that the cooperative governance structure of IntelligentFood offers great incentives for partners to collaborate, create value and share risks. As a cooperative, IntelligentFood does not own production facilities, nor employs chefs or has any logistical capacities. Their primary role is to develop new food concepts that use residual food streams and connect different external parties—from resource input to final product sales—on its platform. They take on the role of a&nbsp;Circular Value Chain Director, connecting and redirecting resources between stakeholders, processes and industries to ensure their highest potential and value.&nbsp; Fair pricing is key‍The CCA once again confirmed that what gets valued, gets managed. The business case proved that residual resources should also have financial value. However, determining a fair price for these resources has sparked a debate about valuation theory versus market value. Moreover, the report provides potential options for accounting for the residual resources, based on a situation where profit margins&nbsp;after sales&nbsp;of the final product constitute the value of the resources used.&nbsp;&nbsp; Accounting for true impact‍Lastly, it becomes clear from the research that our current accounting models do not incorporate impact. Currently, accounting models and investors focus too much on profit and do not take environmental or societal aspects into account.&nbsp; The Coalition Circular Accounting will tackle this topic in their next case study. Together with Impact Institute, they will investigate how accounting can standardise impact assessment in order to better reflect the environmental and societal impact. This report is scheduled to appear in the first quarter of 2021.&nbsp;

Impact on the quantity or quality of jobs, and shifts in the labour market

Jobs

Impact on the health and happiness of human populations

Well-being

Efficiency gains on operations or transactions either through cultural or technological shifts

Productivity

Reduced green house gas emissions released into the biosphere

Reduce Emissions (SDG13)

Reduced use and withdrawal of water and rate of recycling and reuse of water

Save Water (SDG6)

Reduced use of fossil fuel energy sources and/or increased use of renewable energy

Reduce Energy Consumption

This white paper details the importance of measuring circular impact and using it to steer decision making in business. Using the case study of Meerlanden, the paper shows how data on circularity can bolster profitability in business while limiting negative environmental and social externalities through two avenues: integrated profit and loss and multiple balance sheets. Next steps and recommendations are provided for companies, financiers and accountants.&nbsp;