Why there is no better time than now to implement recycling services in your business

The construction industry accounts for 50% of all extracted materials annually worldwide, making it the largest global consumer of resources and raw materials, generating between 45-65% of the waste deposited in landfills. The path to turning the construction sector sustainable is clear – circular economy is an essential part of the solution.

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Emerging market regulations are creating significant opportunities for businesses to integrate recycling into their business. Embracing recycling not only offers the potential for a competitive edge but also helps companies navigate legislative changes, enhance their employer branding, and expand their market presence, ultimately leading to increased profit margins. When there are no alternatives for adopting measures such as re-use, remanufacturing or repair to prevent waste generation, recycling is a key component.

Building on our experiencing from supporting companies in the construction industry to incorporate recycling into their business model, we explain in this series of three articles why and how companies can make recycling a successful part of their business.

In this article, we explain why companies within the construction sector should introduce recycling into their business, looking at four key market drivers.

The EU Taxonomy and CSRD is driving change in the industry

The EU Taxonomy was implemented as part of the European Green Deal initiative and provides a common langue for when an economic activity (i.e. service, operations or use of material) is to be considered sustainable. The overall objective is to guide and direct investments towards environmentally friendly sustainable activities.

The transition to a circular economy is one of the six environmental objectives included in the EU Taxonomy. To accelerate the goal of transition to a circular economy, it outlines that emphasis need to be placed on certain sectors – with the construction and real estate sector gaining specific attention.

It specifically implies circular measures need to be adopted when performing the five economic activities as outlined below:

construction of new buildings
renovation of existing buildings
demolition and wrecking of buildings and other structures
maintenance of roads and motorways
use of concrete in civil engineering

The technical screening criteria which determine under which conditions an economic activity qualifies as contributing substantially to the transition to a circular economy, emphasize the importance of adopting efficient waste handling measures. For example, when construction a new building at least 90% of the building needs to be prepared for reuse or recycling. When renovation an existing building, at least 70% needs to be prepared for reuse or recycling. Moreover, when carrying out demolition and wrecking, at least 90% of the non-hazardous demolition waste generated needs to be prepared for reuse or recycling.

Another key EU regulation that is expected to drive the transition of the construction sector towards more circular solutions is the Corporate Sustainability Reporting Directive (CSRD). With the adoption of the regulation, reporting on sustainability performance becomes mandatory for more than 50,000 EU-based companies over the coming 5 years.

The European Sustainability Reporting Standards (ESRS) outlines the disclosures requirements that business needs to provide when reporting under the CSRD. Circular Economy now gains specific attention, as ‘Resource Use and Circular Economy’ make up one of the five environmental standards included in the ESRS.

The reporting requirements under this standard includes disclosing information about how material impacts, risks and opportunities are identified, managed and measured. If considered material, disclosure requirements include providing thorough information about the company’s waste handling activities by specifying recovery operation types such as preparation for reuse and recycling.

Arial view of Copenhagen with red roofs and iconic historic buildings

Circular offerings enable commercial growth as the market demand for sustainable solutions increase

There is an ever-growing demand for sustainable buildings both from governments, companies, and institutional investors, promoting green certifications for buildings e.g., LEED or BEAM. Suppliers offering recycling as part of their service enable green building certificates and thereby claim a competitive advantage against those who remain unable to offer this service.

Contractors who have set goals to reduce their carbon emissions favor suppliers who can offer sustainable solutions. For example, four of the largest contractors in Sweden have set a target to become carbon neutral by 2045, thereby favoring suppliers when sourcing products and services with sustainable services and solutions.

Landfilling has traditionally been the easiest and least costly option when handling waste, but the landscape is changing as the price for landfilling and incinerating recyclable construction waste is increasing. Looking across various regions in Germany and the Nordics, the cost for landfilling has become higher than the costs associated with recycling. The tables have turned.

There is an opportunity to impact waste criteria

Criteria for waste differ across countries and regions, adding additional complexity in administration and limiting routes for the transportation of waste. Early adoption of circular economy principles can place companies at the forefront of future regulations and requirements. Early adoption of circular business models and principles enables companies to evoke influence on said-future regulations and legal frameworks focused on transportation and waste management. In tandem with an increased focus on recycling, the window of opportunity grows to impact waste criteria.

Implementing strategies and purposefully utilizing resources to create a business model where recycling is profitable has positive impacts on both profit margins and market shares. Efficient and effective recycling services attracts market segments willing to pay extra for a green service. The main challenge is tackling the transformation to a new business model all the while maintaining existing services and an active client portfolio.

To successfully transform your business model, Ramboll provides several key insights for how to design and set up a robust path and future roadmap to transition smoothly into this new economy. Explore how Ramboll takes lead on the design and mobilization process of a successful recycling business model and service in the construction industry here.

VIew of Pier in San Francisco with people fishing

How we can support you

We provide integrated solutions and guidance to our clients, enabling them to navigate an often-times complex circular transition. The transition to a circular economy requires technical and commercial insight across multiple sectors. At Ramboll Management Consulting, our circular proposition draws upon 18,000 technical experts and colleagues from seven global divisions in over 35 countries to drive circular innovation - through and across value chains.

Our multi-sector expertise provides us with the necessary vision and skillset to guide our clients on a successful transition to a circular economy - from strategy to integration, from business planning to business model innovation.

💻 Thu, Oct 19, 2023 10:00 AM - 11:00 AM CEST
Sign up to our expert-led webinar: How to design and implement a profitable recycling service, with an opportunity to learn from ROCKWOOL Group, the world #1 sustainable construction company according to Corporate Knights Global 100 sustainability index in 2022. https://lnkd.in/ddMkWPeF

Get in touch with our experts

Peter Önnby
Global Co-lead Industry and Manufacturing
+46 76 767 10 82