Research shows business case for circular buildings

A new report that articulates the business case of pursuing circularity in the built environment has just been published by the World Business Council for Sustainable Development and Ramboll.

Given that the construction industry is responsible for the consumption of roughly half of virgin resources globally and close to 40% of global carbon emissions and solid waste streams, embracing a circular and regenerative approach in the built environment will be key to enable a just transition to a low-carbon economy and limit biodiversity loss.

The report, The business case for circular buildings: Exploring the economic, environmental and social value, for which Ramboll was the lead author, illustrates examples from the industry, highlighting benefits such as reduced costs and emissions and increased asset valuation as part of the business case for implementing circular solutions. However, it says that established industry approaches need to evolve in order to better measure the benefits of circular solutions quantitatively.

“The discussions being held at COP26 billed as ‘humanity’s last best chance to avert climate catastrophe’ send a clear signal of the speed and scale of response needed,” said Phil Kelly, Ramboll’s director for sustainable solutions in the UK. “Building circular approaches into the construction industry can be a game changer in the impact on the planet whilst also bringing new commercial opportunities. With investors increasingly assessing the environmental, social and governance credentials of businesses and the ongoing development of new economic taxonomies, now is the time to introduce circular approaches,” Kelly said.

He also said that the construction industry was still struggling to define, generate and capture the associated value from circular approaches and that a clear learning curve was required from the industry. 

“We are witnessing the early signs of an exciting new phase for the global construction industry – by including the value of circular solutions into the financial business case of building projects, we can start to quantify the economic benefits (of reduced material use, reduced carbon emissions, increased asset valuation, etc.) and drive decision-making to embrace the true value of the circular economy”, said Roland Hunziker, director, sustainable buildings and cities at the World Business Council for Sustainable Development.

Based on a literature review, a global survey and several case studies, the report shows emerging evidence of the economic value of circular building solutions, such as: - 

  • Avoided costs from new land acquisition and landfilling costs by prioritizing existing building land use
  • Increased asset value through accounting for residual material value and reduced deconstruction and landfilling costs
  • Lease price advantage delivered through reductions in energy costs and service charges through circular building design and use of novel business models that are service-centered rather than product-centered
  • Market differential and rapid sales through enhanced branding and local community buy-in

The report also highlights significant reductions in carbon emissions and waste production for developments that prioritise circular economy approaches. It points to additional value for the local economy and communities, such as the creation of local material marketplaces and local jobs, and the preservation of cultural heritage, although these benefits remain difficult to quantify.

To further enhance in particular the economic value case of circular buildings, the report also emphasises the need for more quantitative data on financial benefits to mainstream circular economy practices in the construction sector. 

Click here to download the report, The business case for circular buildings: Exploring the economic, environmental and social value.

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