Circulor Economy – How to Shift "Value Creation" through "Sustainability"-Peter Lacy

Circular Advantage
Innovative Business Models and Technologies to
Create Value in a World without Limits to Growth
3rd Nov 2014
CSR Leadership World 2014

Copyright © 2014 Accenture All rights reserved. 2
Agenda
Content
• About Accenture
• Background
• Circular Advantage & the 5 business models
• Key questions

Accenture is the world’s largest consulting,
technology and services firm and partner of High
Performance Companies
Revenue US$ 30 bn in FY2014
Clients 91 of the Fortune Global
100
and > 75% of the Fortune
Global 500
Employees 305,000 worldwide
Listed Since July 2001 at the
NYSE
Offices 200 in 56 countries
Alliances With more than 150
companies
Quality Control DIN EN ISO 9001:2000
Accenture Company Profile
Accenture is a Consulting & Services company, covering
Strategy, Digital, Technology and Operations across
industries
Facts and Figures Industry & functional Expertise
Communications,
Media &
Technology
Financial
Services
Health &
Public
Service Products Resources
Accenture Strategy
Accenture Digital
Accenture Technology
Accenture Operations
Source: Accenture

We have operated in Greater China
for over 25 years.
Our offices are located in Beijing,
Shanghai, Dalian, Guangzhou,
Chengdu, Shenzhen, Hong Kong
and Taipei
We have a team of more than 10,000
people, among which 90% are
Chinese. This outstanding local
talent pool, with ongoing exposure to
first-class training and best practices
around the world, continues to bring
to our clients extensive global
experience and local know-how.
Our Footprint in Greater China
Beijing
Shanghai
Taipei
Hong Kong
Dalian
Guangzhou
Chengdu
Shenzhen
Accenture Company Profile

Accenture lives by its core values and is committed to being a long-term partner of choice for
businesses and governments on their sustainable growth journeys
50%
80%
FORTUNE’s Global 100 clients.
91
3/4
More than three-quarters
of the FORTUNE’s Global
500 clients.
SOEs account
for 80% of our
top 100
clients.
More than a half of
the client base
consists of long
term partners.
40
40 out of 95
Chinese
companies on
FORTUNE’s
Global 500 are
our clients.
Accenture brings in industry and functional expertise having
delivered on various global projects for clients across public and
private sector in over 120 countries

Accenture Sustainability Services
Our Sustainability Team
• Helps clients move from sustainability strategy
to execution, delivering tangible business benefits
• >100 sustainability practitioners globally
• Broad and deep industrial expertise
• Functional knowledge
• Strong Accenture internal network
Our Alliances
• Extensive collaborations with global
business leaders and NGOs
• Cooperative arrangements with renowned
international organizations
• Strategic alliances with leading companies
and research institutions
Our Thought Leadership
• “Architects of a Better World“ (UNGC-Accenture
CEO Study on Sustainability 2013)
• “Engaging Tomorrow’s Consumer (WEF)
• “Carbon Capital” (Barclays )
• “Seven Climate Change Lessons
from the Cities of Europe“ (CDP)
We help clients drive innovation and profitable growth while
striving for a positive economic, environmental, and social
impact
Our Clients
Source: Accenture

Agenda
Content
• About Accenture
• Background
• Key questions

Today’s presentation in a slide: To grow in a world of finite
resources companies need to adopt circular business models and
value chains
1 Accenture and World Economic Forum (2012) “More with less”
Circular Economy
Circular Supplies
Product Life
Extension
Sharing Platforms
Product as a
Service
Resource Recovery
Circular value chain
Value Proposition:
Capture $2tr+ sustainable growth
opportunity by using the CEI platform to
transform and align strategy,
sustainability & operations
Rising resource prices
and volatility
Growth and resource
availability dilemma
Post-material consumer
preferences
Critical consumption
footprint
Drivers
Enablers
Reverse supply chains and
repurposing operations
Digital technology, platforms
and traceability systems
Policy incentives for
resource efficiency
Goal:
Decouple growth from resource use and
externalities by ‘closed loop’ value
chains with multi-lifecycle product and
material use within & across industries

CEOs in Asia and China are more keen to employ circular economy models in their
businesses than their global counterparts
Source: UN Global Compact-Accenture CEO Study 2013 9
Accenture – UNGC CEO study shows that CEOs are committed
to leading the world in developing a circular economy
To what extent do you agree: Over the next five years, my company will employ circular economy business
models (e.g. Product life extension, sharing economy, )
55%
5% 35%Global
46% 9%
30%
Strongly Agree
81% 86%5%
Asia
China
Agree

Log plot of Resource use and Economic development (2010, 166 countries)1
In today’s economy growth and prosperity is tightly linked to
natural resource use and competition for supplies is growing
2 OECD Development Centre, Working Paper No. 285, The Emerging Middle Class in Developing Countries
Resourceuse
Economic development
1
10
100
10,000 100,000100 1,000
Tons/
Cap
GDP/Cap
Colombia
China Brazil
Bangladesh
Australia
Germany
Chile
Sweden
Niger India
1 SERI and Dittrich, M. (2014). Global Material Flow Database, World Bank (2014) GDP per capita in current US$ (outliers Mongolia & Bahamas removed)
2.5 billion additional consumers
expected to join the middle class by
2030 (+100% vs. 2013)

Commodity price & GDP index 1975-2013
Due to intensified demand, in 2000 the era of cheap and
plentiful resources with stable falling prices came to an end
0
50
100
150
200
2004200220001998199619941992199019881986198419821980197819761975 20132012201020082006
Index (2010=100)
GDP indexPrecious Metals
Commodity indexMetals & Minerals
Fertilizers
Raw Materials
Food
Energy
World Bank (2014), Accenture analysis
1975-2000
For every 1% growth in GDP
commodity price index fell 0.5%
2000-2013
For every 1% growth in GDP
commodity price index rose 1,9%

Years left for selected major commodities
Growth in cost of extracting different resources will impact
business more than physical supply limitations...
Data: Mudd (2010), Resources Policy, Volume 35, Issue 2, June 2010, Pages 98–115
60
70
88
45
132
38
174
37
90
47
40
115
20
91
96 39Bauxite 135
Zinc 58
Iron ore 160
97Oil
265Black Coal
Copper
84
Nickel
Lead
247
135
Sub-economic reservesReserves
Years left of...
Rising energy & economic
cost of extraction

...but the likely strongest driver of disruption will be
commodity price driven technological innovation
Source: Boliden, Future Exploration Network
Example disruption: Urban mining
Enabled by technologies like M2M sensors to automatically
identify and sort waste streams, RFID tags and resource
passports to track and trace product use and connected
reverse vending machines to link up consumers

Inefficiency in global value chains – the Circular Economy opportunity
The room for improvement is huge with 60-90% of material
value currently lost and in scope for circular recovery
Sources for cost data: Accenture analysis based on Steel Benchmarker, WRAP,
Yarns and Fibres, Skogsstyrelsen, Let’s recycle
1 600
50
600
1 500
460
5
240
150
Textiles (Polyester)
Plastic (PET)
-90%
-60%
-69%
-91%
Wood
Steel
Scrap (material in waste stream)Virgin (new material)
Virgin and scrap material value ($ per ton)
60-90% of
embedded
resource value is
lost in global value
chains today
...
to be recovered
by leveraging
Circular Economy
business principles

Resource supply / demand imbalance and value potential 2015-2050
1990-USD
By 2030 the Circular Economy can unlock $4tn value
opportunity from decoupling growth and resource use
28
18
12
3
1
0
0
5
10
15
20
25
30
35
40
45
2050204520402035
8
2030
4
2025
$ trillion
20202015
Rising costs for material, energy, land, water
Volatility in commodity markets
Economic and social risks of runaway commodity prices
Key Q: What can be done and what solutions are scalable?
Optimistic
Expected
Pessemistic scenario
Source: Accenture analysis
2030 Circular
Economy value
opportunity

Agenda
Content
• About Accenture
• Background
• Key questions

Linear vs. circular value chains
Copyright © 2014 Accenture All rights reserved.
At core of the solution lies the move from linear to circular
value chains to protect and recover resource value
Resell
Take back
Re-process
ReuseRemanufacture
Repurpose
Circular Value LoopLinear Value
Chain
…to circular
Take
Make
Waste
From linear…
Closed & open loopsLow return & recycling
Zero waste & value recaptureWaste & externalities
Selling performanceSelling volume
Manage resources in marketsManage resources in production
Growth decoupled from resource useGrowth tied to resource use

In our research we found five circular economy business
models that have proven ‘resource light’ growth is possible
Business models of the circular economy
Copyright © 2014 Accenture All rights reserved.
Circular Supplies: Provide
renewable energy, bio based- or fully
recyclable input material to replace
single-lifecycle inputs
Resource Recovery: Recover
useful resources / energy out of
disposed products or by-products
Product Life Extension: Extend
working lifecycle of products and
components by repairing, upgrading
and reselling
Sharing Platforms: Enable
increased utilisation rate of products by
making possible shared use / access /
ownership
Product as a Service: Offer
product access and retain ownership to
internalise benefits of circular resource
productivity
Source: Circular Economy book project

Success stories are many and spread across innovative
disrupters and established industry leaders
Circular economy success cases
19
Circular
Supplies
Resource
recovery
Product as
a Service
Product Life
Extension
Sharing
Platforms
Enablers
Remanufacturing of
industrial equipment
Floow2-community for
the sharing of industrial
equipment
Engages people globally
to collect waste for
up-cycling and new
products
Leasing of Jeans and
other fashion items,
including free repair
World leading tire
company offering “pay
by the mile” service
Automated machine
buying used electronics
for repair and resell
Packaging material from
agricultural waste and
mycelium
Sustainable biofuels and
bio-based materials
Start-ups Established companies
New carpets from old
carpets through DESSO
Refinity®.
Global rental of private
homes for travelers to
utilize unused space
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 projectCopyright © 2014 Accenture All rights reserved.

Five major shifts in business capabilities are critical to
deliver circular economy business models successfully
Circular economy capability shifts
20Copyright © 2014 Accenture All rights reserved.
Source: Circular Economy book project
2. Innovation &
product development
From designing for
single use to designing
for many life cycles
and users
4. Sales & product use
From never seeing your
product again to customer
and asset life cycle
management
3. Sourcing and
manufacturing
From homogenous supply
chain to heterogeneous
resource flow innovation
and cascading
5. Return chains
From compliance to
opportunity driven
take-back
1. Strategy
From focus only on
core business to
manage complex
& collaborative
networks

Agenda
Content
• About Accenture
• Background
• Key questions

Discussion questions
Three discussion themes for every organisation
What is going to be the most important
change-driver for your organisation and in
what segments / markets?
1
What are the most relevant circular economy
business models for your organisation and are
there any risks of disruption?
2
How far progressed is your organisation at
securing technology leadership to decouple
growth from resource use?
3

Circulor Economy – How to Shift "Value Creation" through "Sustainability"-Peter Lacy

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