Circular Economy Ensures Business Resilience

The architecture, engineering and construction (AEC) industry has undergone abrupt changes in recent years, and according to McKinsey, 80% of executives in the industry foresee radical changes within the next 15 to 20 years. For example, in recent years there have been various disruptions, such as the increase in global population, shortage of water, and an urgent demand for more construction materials and processes. 

But during all these changes, AEC professionals have the possibility of turning these challenges into opportunities by implementing new processes and developing strategies to face disruption, such as the circular economy. With these, companies will be able to transform their operation and create advantageous industrial ecosystems for all.

The main objective of the circular economy is to keep materials, products, and services in circulation for as long as possible. Circular economy is becoming a key factor in determining future business success, this is partly due to the growing demand for customized design, and partly due to the ever-increasing pace at which competitors can innovate. According to the EPA, this means that the circular economic strategy keeps materials in the value chain as long as possible exploring the possibility of implementing new ways of designing, redefining, and monetizing value. Circularity takes a holistic approach to human efforts, actions and experiences focused on sustainability, seeking to design, redefine and monetize "waste" not as waste, but as resources.

According to the OECD, the construction sector is responsible for a significant part of the current use of materials. Globally, the construction industry accounts for approximately 30% of natural resource extraction and 25% of solid waste generation. 

To reduce the consumption of products, it is important to implement circularity and use of resources in the AEC industry. Nowadays, most of the EoL (end-of-life) construction materials are discarded or recycled due to the current design of the built buildings. The reuse of components and construction materials is a great opportunity for circularity in the sector since it significantly reduces the need for virgin building materials.

Benefits of Circular Economy 

Implementing a circular economy may seem like a difficult and radical change, but initial research shows its benefits:

Increasing Revenue and economic activity for businesses: Reusing materials and natural resources helps the results of a company and a country. A Sitra study found that by 2030, Finland's circular economy plan will increase the nation's economic impact by €3 billion (US$3,3 billion). While the International Labor Organization predicts that circular economic practices will cost the world 71 million jobs by 2030, it offsets this by creating 78 million jobs over the same time.

Cutting Material Costs: According to Gensler, it was found that by reusing existing materials, 30-50% could be saved on renovation projects; for example, using digital twins in buildings and products before production can cut down on unnecessary waste. 

Developing sustainable products requires a comprehensive approach to preserve natural resources. More and more companies recognize the life cycle of a product. By implementing responsible sourcing practices, they can reduce the environmental impact associated with extraction, shorten the resource chain and support local communities.

Furthermore, optimizing energy consumption, water use and waste generation throughout the production process contributes to the preservation of ecosystems and biodiversity, further enhancing a company's sustainability credentials.

How to Achieve Circularity: Any company regardless of its business or size can begin to adopt circularity through small and incremental changes toward a total change. One of the most important transformations is to design for less waste, an oft-cited statistic mentions that 70% of the life cycle costs of a product are determined at the design stage.

Better data management and material control can also reduce unnecessary waste. An example is the use of digital twins in construction. The digital twin creates a single source of information that improves collaboration and provides deeper insights for all involved, accurately assessing material and labor costs. A digital twin can bring together design, construction, and operational data to improve efficiencies and help reduce total cost of ownership. Companies can focus on sustainable supply chain management, from sourcing goods to how they are stored and shipped. Supply chain emissions are typically 11 times higher than operational emissions.

As companies progress into that circular economy maturity, they can unlock all the insights to make better decisions that will help them prepare for whatever tomorrow brings. They better position themselves to improve business outcomes and solve the world’s biggest challenges. From the top floor to the shop floor, from script to screen, and from building concept to construction, circular economy creates an opportunity to do things not only better but also completely differently.