Examining the relation between the CO2 Performance Ladder and circular economy

Introduction

CO2 emissions  play an important rolein climate change. Reducing carbon emissions is therefore essential to achieve climate goals. Parallel to the reduction of carbon emissions is the circular economy as an upcoming development that contributes to the fight against climate change. A circular economy is briefly described as the elimination of waste in the supply chain by means of prolonging product life cycles, reusing materials and diminishing the use of raw materials by replacing it with sustainable or reusable alternatives. The Foundation for Climate Friendly Procurement and Business (SKAO), owner of the CO2 Performance Ladder, regularly receives questions from its stakeholders concerning the relation between the CO2 management system and circularity. Moreover, organisations certified on the CO2 Performance Ladder make use of circular solutions to reduce their CO2 emissions and adhere to the requirements of the management system, particularly for requirements 4D/5D of the CO2 Performance Ladder. These solutions range from reusing asphalt to producing packaging materials from tomato waste streams, to stimulating organisations to do chain analyses, which lays a foundation for circular thinking.

Earlier research conducted by SKAO and the Technical University of Delft on climate neutral infrastructure points out that circular solutions play an important part in reducing emissions of asphalt, concrete and steel. This is no surprise, because carbon reduction contributes to accelerating the circular economy. However, SKAO wonders whether businesses also hold this notion on the CO2 Performance Ladder and circular economy. How does the CO2 Performance Ladder stimulate the circular economy and how can SKAO optimize circularity through the Ladder?

This was the starting point of the scientific research that a master student of the University of Utrecht has conducted for SKAO as a master thesis. The research consisted of a literature study and interviews with 19 organisations. The organisations are either certified on the CO2 Performance Ladder or make use of the Ladder as a procurement instrument. The interviewed organisations are operational in the sectors of infrastructure, waste management or engineering and are working towards CO2 reduction as well as circularity.

Results

The research results of the literature study and interviews are to be summarized in three subjects, namely:

1. Maturity of CO2 management versuscircularity as a relatively new development

Both the literature study as well as interviews show that organisations find CO2 management to be more mature in comparison to circularity. Carbon emissions are measurable and businesses have been working on CO2 management for several years by being certified on the CO2 Performance Ladder. Circularity on the other hand contains several theoretical principles and organisations find it challenging to translate these principles to practice. The interviewees of this study concluded in terms of CO2 management, that ‘easy’ measures to cut back carbon emissions, such as purchasing green electricity, have already been applied. In order to stimulate further carbon reduction, businesses must take more challenging steps such as changing the behaviors of their employees or investing in sustainable technology. Examples  are business travel measures or investing in electric vehicles. The interviewees found CO2 management important, but were even more enthusiastic about circular economy. The organisations view circular economy as a new and popular development  which they would like to be a part of. There were however, a few challenges in implementing circularity, such as flexible product design for future generations.

2. Similarities and differences between CO2 management and circularity

The interviewees perceive CO2 management and circularity as two different subjects, in which circularity is perceived to be more related to projects while CO2 management is linked to organizational management. In most cases, there are different people and departments working separately on carbon reduction and circularity. A similarity between CO2 management and circular economy is that in both the use of renewable energy and fuels in businesses are of the essence. Business chains contain embedded carbon emissions, therefore attention for measures to reduce these embedded emissions is necessary to achieve climate goals. A difference between CO2 management and circularity according to the interviewees, is that circular measures can result to an increase incarbon emissions in a short term period and reduce carbon emissions in the long term. For example, recycling products leads to more carbon emissions during the process of recycling, but it prevents emissions in the long run. When the focus is on carbon management, recycling can be perceived as disadvantageous. This goes for both ways, because focusing on circular economy can also be disadvantageous for CO2. For example, when large distances are to be travelled to implement the circular solution or when waste materials with a high CO2 impact are being used. Another subject is the measurement of CO2 and circularity. The interviewed organisations measure and manage their CO2 emissions quantitatively, whereas the measuring method for circularity differs greatly between businesses. There were as much organisations that make use of life cycle assessments (LCA) as a tool to measure circularity as organisations that do not measure circularity at all. Challenges for measuring circularity are representative data collection and conflicts between circular indicators, among other things. Organisations mostly engage in storytelling on circular activities to generate awareness and found it unnecessary to measure these activities by means of a quantitative method. However, the interviewed organisations agreed that they would like to be able to monitor both circularity as well as CO2 management in a coherent way.

3. The CO2 Performance Ladder as stimulus for a circular economy

There is no standard to measure circularity. In literature, most studies refer to CO2 impact as an indicator to measure the impact of circularity. The interviewees were divided on whether CO2 can be seen as an indicator for circularity. On the one hand, it is a solid and simple way to measure the impact of circularity and on the other hand, it is only one of the aspects of the circular economy and does not include other aspects. Focusing on renewable energy and fuel is essential for a circular economy and this can be monitored by means of CO2 impact. On the question of whether the CO2 Performance Ladder stimulates the circular economy, the interviewees did not notice a strong relation. However, the following aspects of the Ladder are seen as stimuli for the circular economy:

• All themes of the Ladder (insight, reduction, transparency and participation) and most of all the participation theme. The interviewees found that these themes contributed to the circular economy, because they stimulate collaboration within and between sectors and business chains.
• Levels 4 and 5 of the CO2 Performance Ladder, because the higher levels of the CO2 management system contain explicit requirements to collaborate with business chains. These requirements are not obligatory for the levels 1 till 3 of the Ladder.
  
  

Many interviewees perceive the relation between the CO2 Performance Ladder and circularity as indirect. The interviewed organisations found that the CO2 Performance Ladder does not hinder the acceleration towards the circular economy. The CO2 Performance Ladder ensures that sustainability remains a continuous priority within organisations and they perveived that it contributes to general improvement of their day to day work. Therefore, interviewees found that the Ladder makes it easier to act upon circularity as part of the general corporate policies on sustainability.

Recommendations to stimulate the circular economy through the CO2 Performance Ladder

Based on this scientific research, these are the recommendations for the CO2 Performance Ladder to stimulate the circular economy:

1. The interviewees have the tendency to view different sustainability topics as separate topics. This is not desirable, because CO2 management and circularity frequently go hand in hand. Choices for renewable energy and fuel are essential for both subjects, which is why SKAO can explicitly communicate the overlap and similarities of both CO2 management and circularity. This can motivate organisations to tackle the challenges of CO2 reduction by means of circular solutions and vice versa.
2. The CO2 Performance Ladder can play a greater part in the promotion of the circular economy. At this moment, the CO2 Performance Ladder is perceived as aiming solely on carbon emissions reduction, but the Ladder could influence issues that stand in the way of accelerating the circular economy. For example, the Ladder requires organisations to collaborate, be transparent and to collect and share representative data. This could benefit the circular economy.
3. The themes on which the CO2 Performance Ladder is built (insight, reduction, transparency and participation) can spark action in the supply chain, which is important for a circular economy to thrive. The Handbook of the CO2 Performance Ladder can shed more light on circularity. This can also be done through the communication activities of the SKAO. The Ladder can thus further advance the implementation and maturity of circularity.
   
   

What will SKAO do to act upon the research results?

The above text summarizes the most important results of the study. The text below describes what SKAO will do to act upon the research results.

1. Once in every three years, SKAO develops its Ambitions and Priorities, which consist of themes that govern all activities of the foundation and what the foundation will be focusing on in the upcoming years. The Ambitions and Priorities 2019 – 2021 have been ascertained by the Board of SKAO and are momentarily being processed. One of these Ambitions and Priorities concerns more focus and attention for circularity. SKAO will thus focus on the overlap and similarities between CO2 management and circularity, and not on other aspects of circularity.
2. SKAO aims to translate the first two recommendations from the study to practice. The foundation will share more insight in how circularity and CO2 management strengthen one another in certain areas of business and streams of materials. Furthermore, SKAO will promote the influence of the CO2 Performance Ladder on circularity. In short, SKAO strives to motivate organisations to work towards both a low carbon and circular economy.
3. SKAO is momentarily working on updating Handbook 3.0 to a version 3.1, as decided by the Central College of Experts of the foundation. This update will highlight ways in which the CO2 Performance Ladder can accelerate circularity. For example, by means of explicitly promoting and mentioning circular measures to reduce CO2. By including circular measures in the Handbook, SKAO acts upon the third recommendation of this study.
   
   

For more information on the CO2 Performance Ladder and the circular economy or to share news and practices in which your organisation showcases both CO2 reduction as well as circularity, please contact us at: [email protected]

Gillian Phair has conducted the research for SKAO and as a result of her work for SKAO, she is now working for Leafteasers. The research report ‘Analysing the stimulation of the circular economy from the CO2 Performance Ladder’ can be downloaded here.