Circular Advantage Innovative Business Models and Technologies to Create

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1 Circular Advantage Innovative Business Models and Technologies to Create Value in a World without Limits to Growth Nobuko Asakai

2 Introduction to Accenture Committed to delivering innovation, Accenture collaborates with its clients to help them become high-performance businesses and governments. With deep industry and business process expertise, broad global resources and a proven track record, Accenture can mobilize the right people, skills, and technologies to help clients improve their performance High Quality Team Industry Relevance Proven Business Case Methodology Accenture (Global) Establishment: 1989 Employees: Approximately 246,000 in more than 120 countries Clients Accenture serves 92 of the Fortune Global 100 and more than three quarters of the Fortune Global of our top 100 clients in fiscal year 2011, have been clients for at least five years, and 92 have been clients for at least 10 years Industry Alliances Leadership in Sustainability Proven Governance Structures Copyright 2012 Accenture All Rights Reserved. Accenture Confidential Information.

Accenture Sustainability Services Projects Driving Growth and Innovation for Business and Smart Cities, Globally Madrid Urban Community of Madrid - Energy Efficiency & Waste Management London

4 Accenture Sustainability Services Projects Driving Growth and Innovation for Business and Smart Cities, Globally Madrid Urban Community of Madrid - Energy Efficiency & Waste Management London Building Energy Efficiency Programme Malmo A global model for sustainable urban development City in Southeast China A showcase for best practice sustainability technologies Songdo Compact, smart and green man-made island Copenhagen Yokohama Redevelopment of industrial harbour land for clean energy living CO 2 emissions reduction through smart energy systems and behaviour Ontario Fujisawa Multi-modal fare card system for the region s public transit A model project of an environmentally-minded city in action Baerum, Norway Kuala Lumpur Champion the Smart City model by enhancing a sustainable project A new international financial district in the heart of the city City in Mexico Amsterdam City in the Middle East A creative digital city driving Mexico s audiovisual creative services industry City initiatives to meet an ambitious carbon reduction goal Renewable energy & Intellectual Property creation Green field Brown field 4

UN Global Compact Accenture Study on Sustainability 2013 1,000 103 27

Source: UN Global Compact-Accenture CEO Study 2013; survey data Copyright based 2014 on

10 Resource use The link between economic development and resource use is strong Log plot of Resource use and Economic development (2010, 166 countries) 1 Tons/ Cap billion new consumers to join the middle class by 2030 (+100% vs. 2013)! Chile Australia Sweden China Brazil Germany 10 Niger India Colombia Bangladesh 1 GDP/Cap 100 1,000 10, ,000 Economic development 1 SERI and Dittrich, M. (2014). Global Material Flow Database, World Bank (2014) GDP per capita in current US$ (outliers Mongolia & Bahamas removed) 2 OECD Development Centre, Working Paper No. 285, The Emerging Middle Class in Developing Countries Copyright 2014 Accenture All rights reserved. 10

11 Unfortunately supply seem unlikely to catch up with our growth aspirations Global supply and demand for constrained resources to 2050 Billion tonnes Demand (business as usual) Supply Improved material management Copyright 2014 Accenture All rights reserved. Sources: Accenture analysis, Global Footprint Network

12 The supply / demand imbalance is bad news for business GDP and commodity price development Price index, 2010= % growth in GDP -0.5% commodity prices % growth in GDP +1.5% commodity prices 10 Energy Non-energy GDP Copyright 2014 Accenture All rights reserved. Sources: Accenture analysis, The Conference Board, Total Economy Database Key Findings, January 2014, The World Bank, World Bank Commodity Price Data (The Pink Sheet), December 2014, indexmundi commodities

13 Let s take a 4-dimensional view on waste instead! Growth potential to 2030 across four types of linear economy waste Wasted resources Wasted capacity Material and energy that cannot be continually regenerated Underutilized or unused products and assets $1.7tn $0.6tn Elimination potential 2030 $1.3tn Components, material and energy not recovered at disposal Wasted embedded values $0.9tn Premature end of working life of products Wasted lifecycles Copyright 2014 Accenture All rights reserved. Accenture circular advantage program

14 Circular Economy the emerging approach Framework From linear to circular Make Manufacture & Remanufacture Sell & Resell Use & Reuse Take Linear Value Chain Key focus areas Waste Restore & Re-process Circular Value Chain Take back Repurpose Return & recycling Reduce waste: waste management Sell volume Manage resources in production Resource efficiency Full lifecycle revenues Monetize waste: material management Sell performance Manage resources in markets Decoupling resource productivity Copyright 2014 Accenture All rights reserved.

15 The Circular Advantage program Example companies studied 50 executive interviews 120 case studies 5 business models 5 capability shifts 10 enabling technologies Copyright 2014 Accenture All rights reserved. 15

16 In our research we found five circular economy business models Business models of the circular economy Circular Supply-Chain Recovery & Recycling Product Life-Extension Sharing Platform Product as a Service Copyright 2014 Accenture All rights reserved. Source: Circular Economy book project

17 Success stories are becoming many Circular Economy success stories Examples Impact Circular Supply-chain Sustainable biofuels and bio-based materials Project Liberty plant opened with $75m annual production value Recovery & Recycling Landfill-free manufacturing facilities $1bn in annual revenue from byproduct recycling and reuse Product Life-Extension Remanufacturing of industrial equipment $3bn turnover 1, employees, 50% lower price, 60% less CO 2 Sharing Platform Product as a Service Leisure rental of unused properties Lighting as a Service pay for lux Pay for power, not panels home energy systems $250m rev., 100% growth (2013) 13k lightings upgraded at 0 cost in WDC, $2m per year value split $6bn market capitalisation Copyright 2014 Accenture All rights reserved. Source: Circular Economy book project 1 Estimated from company data 17

21 Three types of technologies are key Circular economy enabling technologies Life & Material sciences Modular design technology 380m supporters for $50 modular handset to be released in 2015 Cloud Digital Enabling entirely new ways to access and understand product use-phase and aid customers in use efficiency Advanced recycling tech $300m refurbished equipment take back and remarketing Trace and return systems $40bn taxi company in 45 countries with zero cars Launching a share anything platform starting with cars 3D Printing Analytics Mobile Social M2M Communication Hybrid Enabling moving physical objects back and forth from value chains with digital services to drive down cost Engineering Enabling production and supply of new types of resources as well as new product designs to use them Source: Circular Economy book project Copyright 2014 Accenture All rights reserved. 21

22 Three types of technologies are key Circular economy enabling technologies Life & Material sciences Modular design technology Cloud Digital Enabling entirely new ways to access and understand product use-phase and aid customers in use efficiency 10-30% cheaper material vs. conventional when scaled Advanced recycling tech $60m revenue 2013, style genome sales, 1m shares per day Analytics Mobile Social Hybrid Enabling moving physical objects back and forth from value chains with digital services to drive down cost Processes 700t of used items every day in more than 90 countries. +1m members, 20k brands and 30% month over month growth Trace and return systems 3D Printing M2M Communication Engineering Enabling production and supply of new types of resources as well as new product designs to use them Source: Circular Economy book project Copyright 2014 Accenture All rights reserved. 22

Leading adopters experiment with 5 new business capabilities Circular economy capability shifts 2. Innovation & product development Design for many lifecycles and users 3.

23 Leading adopters experiment with 5 new business capabilities Circular economy capability shifts 2. Innovation & product development Design for many lifecycles and users 3. Sourcing and manufacturing Cascade resources 1. Strategy Engage in circular ecosystems 5. Return chains Do opportunity driven take-back Source: Circular Economy book project Copyright 2014 Accenture All rights reserved. 4. Sales & product use Excel in lifecycle customer engagement 23

24 Resource cascades' can be used to get started on identifying opportunities Service Upgrade Co-use Exchange Repurpose Reuse Extraction Material processing Production Assembly Sales Use Collection Disposal Recover Repair Resell / Remarket Refurbish Remanufacture Recycle & Upcycle Circular Supply- Chain Recovery & Recycling Product Life- Extension Sharing Platform Product as a Service Copyright 2014 Accenture All rights reserved. 24

25 Thank you! Questions?

26 Circular economy success is broad and varied: Across all circular business models, across industries, from start-ups to big business Circular economy success cases Circular Supplies Start-ups Packaging material from agricultural waste and mycelium Established companies Sustainable biofuels and bio-based materials Resource Recovery Product Life Extension Sharing Platform Product as a Service Engages people globally to collect waste for upcycling and new products Automated machine buying used electronics for repair and resell Floow2-community for the sharing of industrial equipment Leasing of Jeans and other fashion items, including free repair New carpets from old carpets through DESSO Refinity. Remanufacturing of industrial equipment Global rental of private homes for travelers to utilize unused space World leading tire company offering pay by the mile service Enablers Smart phone enabled heating optimization of homes to save energy The C2C Institute offers trainings, certifications and licensing of C2C products Source: Circular Economy book project Copyright 2014 Accenture All rights reserved. 26

Circular Advantage: 4 key values 1 silver bullet...and Minority report. Tomas Haglund Flemström Copenhagen

Circular Advantage: 4 key values 1 silver bullet...and Minority report Tomas Haglund Flemström 2014-10-30 Copenhagen Material use per capita Growth vs. resource use 1950-2009 GDP per capita 1950-2010