Circular Economy and Policy: Sustainability, Environmental, and Social Perspectives 3031433238, 9783031433238

Table of contents :
Preface
Contents
About the Author
List of Figures
List of Tables
List of Boxes
Chapter 1: Introduction: The Circular Economy
1.1 The Origin of Circular Economy Concept
1.1.1 Circular Economy Definition
1.1.2 The Limits to the Circularity: Criticisms
1.2 The Regenerative Circular Economy
1.2.1 The Donught Economy: Disconnection or Complementarity with the Regenerative Essence of the Circular Economy
1.3 Circular Economy Within Market Perspective
1.3.1 The Demand: Circular Economy, Sharing Consumption and Value Co-creation
1.3.2 The Supply: Business Performance in Circular Economy Framework
1.3.3 Profitability and Sustainability
1.4 Circular Economy and Bioeconomy: The Policies of Food Production and Waste Management
References
Chapter 2: The Scenario of Circular Economy
2.1 The Circular Economy Scenario
References
Chapter 3: Life Cycle Thinking and Circular Economy
3.1 The Role of Life Cycle Sustainability Approach Within Circular Economy
3.1.1 The Life Cycle Thinking
3.1.2 The Eco-design and New Materials
3.1.3 The Life Cycle Assessment
3.1.4 Circular Economy Strategies Implementation Through Life Cycle Assessment
3.1.5 Life Cycle Law: An Example from the European Union Circular Economy Package
3.2 Material Flow Analysis
3.2.1 Recycling Rates Determination
3.3 Circular Economy, Materials Efficiency, and Reutilization of Secondary Raw Materials
References
Chapter 4: Policies Targeted to Circular Economy
4.1 Circular Economy Policies According to the European Union
4.1.1 The Ecological Transition
4.2 The European Circular Economy Action Plan
4.2.1 Production
4.2.2 Consumption
4.2.3 Waste Management
4.2.4 Secondary Raw Materials
4.3 Policies for Reuse and Repair, Circular Practices and Strategies, Secondary Materials Markets
4.4 Circular Economy Policies All Over the World
4.4.1 The Dutch Green Deals Policy: Preliminary Works for EU CEAP
4.4.2 The Chinese Policy About Circular Economy
4.4.3 The Circular Economy Vision in Japan
4.4.4 The Framework Act in Resource Circulation in Republic of Korea
4.4.5 USA Economy’s Application of Circular Economy
4.4.6 The Circular Economy in India
4.4.7 Circular Economy Policies in Australia
4.4.8 EU’s Green and CE Policies Applicability to Developing and Emerging Economies
References
Chapter 5: Public Sector and Circular Economy
5.1 Circular Economy Policies and Perspective in Public Sector Organization
5.2 Public Procurement and Public Services Delivery to Drive the Circular Economy
5.2.1 Innovative Procurement: The Case of European Union
5.2.2 Green Public Procurement
5.2.3 Pre-commercial Procurement
5.3 Government Policy and Regulation for Circular Economy Finance
5.3.1 Financial Standard for Climate Change
5.3.2 Sustainability and Circularity Throughout Environmental Finance: Green Bonds and European Financial Reporting
5.4 International and Cross-Border Trade, Regulations, and Taxation
References
Chapter 6: Production and Consumption Within Circular Economy Perspective
6.1 The Circular Economy Conceiving Production and Consumption
6.2 From Linear to Circular Production
6.3 Business Models Within the Circular Economy
6.3.1 The Circular Business Models in the Reality: Some Case Studies
6.3.2 Further Case-Histories for Different Industries
6.3.2.1 The Case History #1: Fashion Sector
6.3.2.2 The Case History #2: Food Sector
6.3.2.3 The Case History #3: Energy Sector
6.3.2.4 The Case History #4: Event Organization
6.4 Eco-Innovation Investments
6.5 Different Kinds of Costs and Benefits (Returns) in the Circular Production
6.6 Circular Economy and Sustainable Consumption
References
Chapter 7: Eco-efficiency, Circularity Measurement and Assessment
7.1 From the Theory to the Practice: The Evaluation Process of Circularity and Sustainability
7.2 Ecosystems, Eco-efficiency and Resources
7.3 How to Measure Circularity and Sustainability
7.3.1 Circularity Metrics, Indicators, Assessment Framework, and Tools
7.3.2 A Selection of Current Circularity Metrics for Products, Services, and Organizations
7.4 The EU Taxonomy for a Sustainable Finance
7.5 The Role of ISO/TC 323 in the Circularity Measurement: Work in Progress
7.6 Summary, Conclusions, Policy Implications and Recommendation
References
Index

Citation preview

Sebastiano Patti

Circular Economy and Policy Sustainability, Environmental, and Social Perspectives

Circular Economy and Policy

Sebastiano Patti

Circular Economy and Policy Sustainability, Environmental, and Social Perspectives

Sebastiano Patti University of Catania Catania, Italy

ISBN 978-3-031-43323-8    ISBN 978-3-031-43324-5 (eBook) https://doi.org/10.1007/978-3-031-43324-5 © The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 This work is subject to copyright. All rights are solely and exclusively licensed by the Publisher, whether the whole or part of the material is concerned, specifically the rights of translation, reprinting, reuse of illustrations, recitation, broadcasting, reproduction on microfilms or in any other physical way, and transmission or information storage and retrieval, electronic adaptation, computer software, or by similar or dissimilar methodology now known or hereafter developed. The use of general descriptive names, registered names, trademarks, service marks, etc. in this publication does not imply, even in the absence of a specific statement, that such names are exempt from the relevant protective laws and regulations and therefore free for general use. The publisher, the authors, and the editors are safe to assume that the advice and information in this book are believed to be true and accurate at the date of publication. Neither the publisher nor the authors or the editors give a warranty, expressed or implied, with respect to the material contained herein or for any errors or omissions that may have been made. The publisher remains neutral with regard to jurisdictional claims in published maps and institutional affiliations. This Springer imprint is published by the registered company Springer Nature Switzerland AG The registered company address is: Gewerbestrasse 11, 6330 Cham, Switzerland Paper in this product is recyclable.

To Luisa, Elizabeth, Salvatore, and Marianna

Preface

The purpose of Circular Economy and Policy: Sustainability, Environmental, and Social Perspectives is to bring a description of circular economy and policy looking at the market perspective as well as to all organizations regardless of their starting point. The book may help readers to learn how circular economy model can be implemented from production sides driving competitive advantages through value chain and from consumption looking at new purchasing behaviour and habits. The manuscript tries to explain that circular economy is able to support both growth and business and stimulate to undertake a strategic path that ensures a competitive advantage. It uses economic and policy approaches highlighting the new paradigm of circular economy to explain what is happening as well as which kind of costs humans will pay in the future. The manuscript opens with the description of a series of definitions of circular economy and tries to give information about the way to make real the sentence “closing the loop”. The current work shows that circular economy requires a broad participatory process involving all the stakeholders, both public and private. Thus, it is necessary to build a systematic and coordinated participation. The book is organized into seven chapters. The first focuses on the concept of the “circular economy” from its origin by illustrating its definitions and describing its meaning on the supply and demand side. It also stresses that a circular economy should be regenerative for nature. The second chapter represents the circular economy scenario. The third chapter refers to the sustainable life cycle approach. The fourth chapter considers circular economy policies in relation to the decisions of European governments and their objectives. The fifth chapter deals with the role of the public sector in the circular economy scenario. The sixth chapter focuses on sustainable production and consumption. The seventh and final chapter refers to ecosystems and metrics to measure circularity and stresses that with the indicators currently available, no standard procedure has been developed to report the degree of circularity of enterprises.

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Preface

This book does not claim to be a comprehensive and conclusive work on the subject, which deserves further research, in-depth analysis, and experiments. It simply wants to help build training tools for students and professionals by showing key teachings, circular business models, and case studies. Catania, Italy

Sebastiano Patti

Contents

1

Introduction: The Circular Economy����������������������������������������������������    1 1.1 The Origin of Circular Economy Concept����������������������������������������    1 1.1.1 Circular Economy Definition������������������������������������������������    4 1.1.2 The Limits to the Circularity: Criticisms������������������������������   12 1.2 The Regenerative Circular Economy������������������������������������������������   13 1.2.1 The Donught Economy: Disconnection or Complementarity with the Regenerative Essence of the Circular Economy ����������������������������������������   15 1.3 Circular Economy Within Market Perspective ��������������������������������   17 1.3.1 The Demand: Circular Economy, Sharing Consumption and Value Co-creation����������������������������������������������������������   20 1.3.2 The Supply: Business Performance in Circular Economy Framework������������������������������������������������������������   21 1.3.3 Profitability and Sustainability����������������������������������������������   23 1.4 Circular Economy and Bioeconomy: The Policies of Food Production and Waste Management������������������������������������   24 References��������������������������������������������������������������������������������������������������   26

2

 The Scenario of Circular Economy��������������������������������������������������������   31 2.1 The Circular Economy Scenario������������������������������������������������������   31 References��������������������������������������������������������������������������������������������������   36

3

 Life Cycle Thinking and Circular Economy ����������������������������������������   39 3.1 The Role of Life Cycle Sustainability Approach Within Circular Economy ����������������������������������������������������������������   39 3.1.1 The Life Cycle Thinking������������������������������������������������������   40 3.1.2 The Eco-design and New Materials��������������������������������������   41 3.1.3 The Life Cycle Assessment��������������������������������������������������   43 3.1.4 Circular Economy Strategies Implementation Through Life Cycle Assessment ������������������������������������������   47 3.1.5 Life Cycle Law: An Example from the European Union Circular Economy Package����������������������������������������   49 ix

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Contents

3.2 Material Flow Analysis ��������������������������������������������������������������������   50 3.2.1 Recycling Rates Determination��������������������������������������������   51 3.3 Circular Economy, Materials Efficiency, and Reutilization of Secondary Raw Materials ������������������������������������������������������������   52 References��������������������������������������������������������������������������������������������������   54 4

 Policies Targeted to Circular Economy��������������������������������������������������   57 4.1 Circular Economy Policies According to the European Union��������   57 4.1.1 The Ecological Transition ����������������������������������������������������   64 4.2 The European Circular Economy Action Plan����������������������������������   66 4.2.1 Production ����������������������������������������������������������������������������   69 4.2.2 Consumption ������������������������������������������������������������������������   71 4.2.3 Waste Management ��������������������������������������������������������������   72 4.2.4 Secondary Raw Materials ����������������������������������������������������   74 4.3 Policies for Reuse and Repair, Circular Practices and Strategies, Secondary Materials Markets ����������������������������������������������������������   76 4.4 Circular Economy Policies All Over the World��������������������������������   79 4.4.1 The Dutch Green Deals Policy: Preliminary Works for EU CEAP������������������������������������������������������������   81 4.4.2 The Chinese Policy About Circular Economy����������������������   82 4.4.3 The Circular Economy Vision in Japan��������������������������������   83 4.4.4 The Framework Act in Resource Circulation in Republic of Korea ������������������������������������������������������������   83 4.4.5 USA Economy’s Application of Circular Economy ������������   84 4.4.6 The Circular Economy in India��������������������������������������������   85 4.4.7 Circular Economy Policies in Australia��������������������������������   86 4.4.8 EU’s Green and CE Policies Applicability to Developing and Emerging Economies������������������������������   87 References��������������������������������������������������������������������������������������������������   89

5

 Public Sector and Circular Economy����������������������������������������������������   93 5.1 Circular Economy Policies and Perspective in Public Sector Organization��������������������������������������������������������������������������������������   93 5.2 Public Procurement and Public Services Delivery to Drive the Circular Economy ��������������������������������������������������������   94 5.2.1 Innovative Procurement: The Case of European Union��������   96 5.2.2 Green Public Procurement����������������������������������������������������   98 5.2.3 Pre-commercial Procurement�����������������������������������������������  100 5.3 Government Policy and Regulation for Circular Economy Finance������������������������������������������������������������������������������  101 5.3.1 Financial Standard for Climate Change��������������������������������  103 5.3.2 Sustainability and Circularity Throughout Environmental Finance: Green Bonds and European Financial Reporting��������������������������������������������������������������  104 5.4 International and Cross-Border Trade, Regulations, and Taxation��������������������������������������������������������������������������������������  106 References��������������������������������������������������������������������������������������������������  108

Contents

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6

Production and Consumption Within Circular Economy Perspective ������������������������������������������������������������������������������  111 6.1 The Circular Economy Conceiving Production and Consumption������������������������������������������������������������������������������  111 6.2 From Linear to Circular Production��������������������������������������������������  113 6.3 Business Models Within the Circular Economy ������������������������������  115 6.3.1 The Circular Business Models in the Reality: Some Case Studies����������������������������������������������������������������  122 6.3.2 Further Case-Histories for Different Industries��������������������  126 6.4 Eco-Innovation Investments��������������������������������������������������������������  127 6.5 Different Kinds of Costs and Benefits (Returns) in the Circular Production����������������������������������������������������������������  129 6.6 Circular Economy and Sustainable Consumption����������������������������  130 References��������������������������������������������������������������������������������������������������  133

7

 Eco-efficiency, Circularity Measurement and Assessment������������������  137 7.1 From the Theory to the Practice: The Evaluation Process of Circularity and Sustainability ������������������������������������������������������  137 7.2 Ecosystems, Eco-efficiency and Resources��������������������������������������  139 7.3 How to Measure Circularity and Sustainability��������������������������������  140 7.3.1 Circularity Metrics, Indicators, Assessment Framework, and Tools����������������������������������������������������������  142 7.3.2 A Selection of Current Circularity Metrics for Products, Services, and Organizations����������������������������  148 7.4 The EU Taxonomy for a Sustainable Finance����������������������������������  154 7.5 The Role of ISO/TC 323 in the Circularity Measurement: Work in Progress������������������������������������������������������������������������������  156 7.6 Summary, Conclusions, Policy Implications and Recommendation������������������������������������������������������������������������  158 References��������������������������������������������������������������������������������������������������  159

Index������������������������������������������������������������������������������������������������������������������  163

About the Author

Sebastiano  Patti  Sebastiano Patti is a PhD in Public Economics. He teaches Environmental Economics at the University of Catania (Italy). He also worked for the national government and for national and regional public bodies. In fact, he continues to work as a consultant for public and private organizations. His research focuses on environmental assessment of production cycles. He has written several publications on the relationship between tourism development and environmental sustainability. She is part of European research groups and coordinates projects funded by European funds. He is referee for scientific journals as Sustainability, Energies, Environment, Development and Sustainability.

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List of Figures

Fig. 1.1 The butterfly circular economy diagram����������������������������������������������  7 Fig. 1.2 The doughnut of social and planetary boundaries�������������������������������� 16 Fig. 3.1 The life cycle assessment framework �������������������������������������������������� 44 Fig. 4.1 The timeline of CEAP�������������������������������������������������������������������������� 67

xv

List of Tables

Table 1.1 A selection of the main important circular economy definitions ���������������������������������������������������������������������������� 9 Table 1.2 The “Rs” strategies ���������������������������������������������������������������������������� 11 Table 3.1 The set of series standards ISO 14040 ���������������������������������������������� 48 Table 3.2 Critical raw materials (2020)�������������������������������������������������������������� 53 Table 4.1 National circular economy policies around the world������������������������ 80 Table 6.1 Original business model canvas�������������������������������������������������������� 120 Table 6.2 The circular business model canvas “Eco canvas” �������������������������� 121 Table 7.1 Table 7.2 Table 7.3 Table 7.4 Table 7.5 Table 7.6 Table 7.7 Table 7.8

The circularity indicators������������������������������������������������������������������ 145 The requirement for circularity metrics�������������������������������������������� 147 Circular economy assessment frameworks and indicators �������������� 147 CE assessment standards in China �������������������������������������������������� 148 Organizations, metrics, typology, and indicators ���������������������������� 150 The aims of ISO/TC 323������������������������������������������������������������������ 157 The Standards according to the ISO/TC 323������������������������������������ 157 The working groups of ISO/TC 323������������������������������������������������ 157

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List of Boxes

Box 1.1: European Union Strategy “Farm to Fork”���������������������������������������������� 19

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Chapter 1

Introduction: The Circular Economy

1.1 The Origin of Circular Economy Concept Presenting a historical Excursus on the circular economy could be useful to understand how this topic has evolved over time to arrive at its current definition that will be described in the next paragraph. The origin of the concept of circular economy goes back to the earliest economic theories, more precisely in 1758, when François Quesnay defined the circular flow of income, within his Tableau Economique. Graphically, the first representation of a circular flow in the economic sphere – we are not yet to the concept of circular economy  – was that of the economist Paul Samuelson (1947). His graph, in fact, configures a flow diagram based on the metaphor of the water circuit. Conceptually, the first argument on the circular economy refers to the ecological economist Kenneth E. Boulding (1966), although it is possible to find several references to the concept in different periods of time. Some signals of the concept of circular economy date back to the early 1970s, when Barry Commoner, an American biologist, wrote “The Closing Circle”. According to the American scientist, there are not waste in the biological world. The life is based on material and energy flows, through a reaction powered by solar energy as well as carbon dioxide, water and mineral salts coming from the soil and atmosphere. This thinking is connected to the concepts of “cycle”, more specifically, the biogeochemical cycle, and of product recycling. About the biogeochemical cycle, it is possible to use the example of water cycle. Since the first study of disciplines as earth science, and geology, the cycle of water represents an important topic for many students worldwide. The heat of the sun evaporates the sea water and produces clouds, which falls as rain and move into the rivers and stream back to the sea. This continuous flow determines the biogeochemical cycle and humans impact this cycle with their activity. As regard the concept of recycling, embedded in the circular economy concept since its origin, it refers to the use of waste as a resource, characterizing the

© The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Patti, Circular Economy and Policy, https://doi.org/10.1007/978-3-031-43324-5_1

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1  Introduction: The Circular Economy

industrial system where no-used outputs by a production process can be used as raw material in another procedures. The study of the origins of the concept of circular economy also concerns the different attention shown towards waste and its management. In the period between 1960 and the beginning of the 1980s, attention was focused mainly on waste management and its polluting effects. After this period, waste was more widely understood and its commercial potential was recognised (Blomsma & Brennan, 2017). From 2013 onwards the concept of circular economy has begun to emerge and the new way to assess waste as value. All these aspects characterize the study of the origins of the concept of circular economy, as well as its evolution. Nevertheless, in this analysis, the link between the circular economy and the concepts of sustainability and sustainable development must be addressed. In a circular economy, as well as in a sustainable development system, the use of resources is improved through the minimisation of natural resource extraction and the maximisation of waste prevention (Kirchherr et al., 2017). The promotion of circular economy and sustainable development are considered in political agendas worldwide. In 2020, United Nations introduced 17 sustainable development goals serving as blueprint for the future of humans. A further consideration is that the concept of circular economy is thought as a way for business to integrate sustainability/sustainable development (Murray et al., 2017; Ghisellini et al., 2016). The circular economy should struggle to restore and regenerate the environment by contributing to sustainability in the whole perspective of the system to optimize social, environmental, and economic values of materials and products (EMF, 2013, 2015a, 2015b). Before introducing, in the following paragraph, the main definitions of the circular economy concept, it should be further useful to describe the significance of “sustainability” and its link with the circular economy. This connection is not yet so clear and evident, although there have been several explanations in the last 50 years. Moreover, it does exist a difference between sustainability and sustainable development, which was opposed by different scholars. Sustainability is often thought of as a long-term goal (a more sustainable world). Sustainable development refers to the many processes and paths to achieve it. Probably, the same distinction could be used to explain the difference between circularity and circular economy, where “circularity” represents a goal to achieve, and circular economy refers to paths through which accomplish it. Circular economy as well as sustainable development are fluid concepts that continue to evolve (Velenturf & Purnell, 2021). The sustainability science depicts “sustainability” involving a plethora of disciplines, connected one to another, like physics, chemistry, biology, geology, social science, and ecology, which work together contributing to foster a such kind of paradigm, and probing interaction between social and human systems. For instance, social ecological systems permit to understand the linkage between human beings and natural systems, allowing people to recognise how to manage them into the planetary boundaries, which are the limits humans must not cross anymore. They represent nine problems affecting the Planet: climate change, loss of biodiversity, acidification of the oceans, reduction of the ozone and phosphorus layer, global use of water, change in land use, diffusion of atmospheric aerosols, pollution of

1.1  The Origin of Circular Economy Concept

3

anthropogenic chemicals. Sustainability as well as circularity may avoid that those problems become impossible to solve. Therefore, any form of development needs to take these concepts into consideration. The concept of sustainability is recognised as public policy in 1987, when it is defined in the report of the United Nations World Commission on Environment and Development, known as the Brundtland Report. The definition of “sustainability” is the answer to the problem of reconciling limited natural resource use with environmental degradation. More precisely, the Brundtland Commission defines the sustainable development as the: Development that meets the needs of the present without compromising the ability of future generations to meet their own needs. (Brundtland Report, 1987).

Since this definition of “development”, the concept of sustainability assumes two important meanings. First, it refers to the economic, social, and environmental dimensions; second, the focus is on the difference between “strong sustainability” and “weak sustainability” (Ekins et al., 2003). The difference among them regards the interpretation of the stock of natural resources (Knr). If the Knr cannot be substituted, for instance in the case of an extinct species, it must be considered as a loss and fall under the needs of strong sustainability. Otherwise, when the Knr can be covered, as in the case of fossil fuel, it is not possible to think as a loss of stock, because there are other resources, as renewable ones, that can be bequeathed to next generations and then the Knr, in such as case, can be considered in terms of weak sustainability. Both of them define the conditions for when to use and not use the natural resources. In this context, the circular economy is an industrial ecology that provides the minimization of environmental footprints maximizing efficiency, use of renewable resources, extension of lifespan products and waste designing (Diez & Neumayer, 2007). Thus, sustainable development needs to be improved through new production and consumption models. The transition from a linear to a circular economy represents the challenge to achieve full sustainability, enhancing positively impact on circular purchasing behaviour and on market competitiveness. Circular economy, hence, is established as crucial for sustainable development. Using the Stahel’s (1982) words, circular economy could be representing a “Sensible point at which to start a gradual transition towards a sustainable society”, which is able “to minimize energy flow and environmental deterioration without restricting economic growth or social and technical progress” (Stahel, 1982; p. 70).

In the Stahel’s words, there is not any configuration of circular economy definition yet. But it is useful for making evidence on issues referring to the environment, energy, natural resources, economic growth, and social progress that will become successively important to define the concept of circular economy. The connection among circular economy, sustainability, and sustainable development is that the circular economy is the key tool to enhance environmental, social, and economic sustainability. The linear model of production is not sustainable anymore and non-renewable resources availability is limited over the time. Both of them make

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difficult to define and equilibrium point between demand and supply into the global market. Furthermore lands, forest, and water started to lose their regenerative ability and many production systems are using them over their natural constraints. At this purpose, the WWF wrote a report in 2014, entitled “the Living Planet Report”, in which it shows how a sample of 10,000 key species representative of the world’s wildlife has decreased by 52% since the 1970s. It means that the economic system is not sustainable as well as the economic growth. Obviously, the economic and social development cannot be stopped, but the old economic growth model is no longer suitable for the new needs of the community and for the relationship between humans and the environment. The “business as usual” becomes more and more unsustainable since it is based on an increased use of natural resources to cope with the increase in global demand. For all these reasons, it is necessary to adopt new models able to regenerate materials and energy. Circular economy represents the system where growth is decoupled from the use of scarce resources. To conclude our observations, circular economy may contribute to sustainable development, although both of them are on diverging pathways (Velenturf & Purnel, 2021). To achieve this goal, circular economy needs to be integrated with sustainable development, but it needs an economic theory through which guide the transition towards a sustainable circular economy. According to Velenturf and Purnel (2021, p. 1453), the lack of an evidence-based theoretical framework hinders this process of integration. To make the circular economy sustainable, it is necessary to produce measurable social benefits and co-produce new values for a sustainable future by defining democratic processes that bring together local, national, and global governance.

1.1.1 Circular Economy Definition Despite the presence of many definitions, the concept of circular economy still remains not easy to be applicable. The circular economy seems to be a blurred set of ideas from different fields. It follows that the term may mean different things for different people. Some believe that it is only a theorization and that it is difficult to apply; others believe that it is quite real and concrete in producing value through the scheme reduces-reuse-recycle-remove. The circular economy includes multiple strategies that should be known and considered when discussing and investigating it. Thus, an overview of the most important definitions of the concept of EC can be useful to create a systemic vision, to make comparisons and to give, for those approaching for the first time the study of this subject, a thorough theoretical-factual basis. Hence, the concept of circular economy must be defined to make this argument more comprehensible To this end, some of the main commonly used definitions are introduced, which arise from policy makers, private foundation, and

1.1  The Origin of Circular Economy Concept

5

academic scholars. This emphasizes the importance of this model, since it is recognised at different levels of decision-making, worldwide. Among the policymakers and public institutions, European Commission defines circular economy as: a development strategy that entails economic growth without increasing consumption of resources, deeply transform production chains and consumption habits and redesign industrial systems at the system level. It relies on innovation being it technological, social, and organisational (European Commission, 2014:2).

The European Commission defines circular economy as a system “where the value of products, materials and resources is maintained for as long as possible, and the generation of waste minimized” (EU, 2015). Previously, the Commission described circular economy through different settings: business as usual, advantaging to measured progress in resource usage, transition setting that involves turning to the resource productivity growth of pre-2008 crisis, and acceleration scenario, which enhances resource efficiency based on the past experience. At this purpose, the Manifesto of European Commission for a “Resource-efficient Europe” focuses on a circular, resource-efficient and resilient economy, which can be realized through different actions as: encouraging innovation and public and private investments in resource-efficient technologies; implementing, using, and adopting smart regulation, and standards; abolishing environmental harmful subsidies; creating better market conditions; integrating resource scarcities and vulnerabilities; providing clear signals to all economic actors. The EU Commission uses modest words to introduce the transition to the circular system and it is careful to define different scenarios to explain resource productivity. The business-as-usual scenario conducts to moderate enhancements in the use of resources, as well as the transition scenario demanding to return to the productivity system previous to the crisis of 2008 (EC, 2011). This particular economic and social situation, which affected European Countries has consequences in the European decisions making process about public policies that face with unemployment, and debt crisis. The fragile economic situation pushes the Commission to recognise that circular economy would not stop economic growth and does not need an acceleration process (EC, 2019, 2020). In the academic and research environment, according to Boulding (1966), humans have to act within a “cyclical ecological system”. Hence, circular economy is based on the relationship between economic development and poor countries. It plays a key role in encouraging sustainability in the contemporary era. This new approach of sustainability is based on the concept of non-zero value for waste. It means that waste continues to produce a value in terms of its recyclability and renewability. In such meaning, materials and resources become unlimited thanks to their continued use. Its contrary is the cowboy economy that refers to the environment harm due to the removing of natural resources as well as reducing of natural capital value because of the pollution. In that meaning, circular economy is an antonym of linear one, the former recognises the non-zero value to the waste; while the latter converts natural resources into waste, throughout the production processes. Boulding thinks that the circular economy may transform the “cowboy economy”,

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in a “spaceship economy”. He uses the following words to describe this metaphor as the foundation of circular economy: Earth becomes a single spaceship, without unlimited reservoirs of anything, either for extraction or for pollution, and in which, therefore, man must find his place in a cyclical ecological system which is capable of continuous reproduction of material form. (Boulding, 1966; p. 8).

Moreover, the Boulding’s concept was further revised by many scholars: in 1981, Stahel and Ready-Mulvey used the concept of “circular economy” to define a closed-loop economy and the economy-environment interactions. They observed that it should be better to extent product-life, to recondition old products, and to use recycled materials to take advantages in terms of less costs. Stahel (1981, 2016) identified this opportunity as a “spiral-loop system”, which is able to reduce problems, energy consumption and environmental harm without negatively affecting economic, social, and technological growth. In 1990, Pearce and Turner claim the concept of circular economy as the main force that can affect sustainability development and it regards a closed system based on an interaction between economy and environment. Afterwards, Pearce and Turner (1989) use, for the first time, the term “circular economy” and define it as “an economy useful to recycle waste into resources, which are constant or increasing over time”. “This is possible through a natural ecosystem as well as technological feedback mechanism”. (Pearce & Turner, 1989; p. 35)

Pearce and Turner (1989) consider the “Earth as a system, where economy and environment are connected by a circular relationship. Everything is an input into everything else”. (Pearce & Turner, 1989; p. 41). They make a distinction between capital stocks and flows and highlight the Thermodynamics Laws. Mainly, the Second Law of thermodynamics is used to show the technical infeasibility of recycling of materials and the impossibility to recycle energy. The increasing recycling become highly expensive in terms of costs and this one should be limiting the achievement of a fully circular economy. Pearce and Turner solved the problem highlighting that there is an environmental assimilative capacity able to permit waste to be assimilated and probably it can be helpful for the production system. In 1991 Robert uses the term “cycle”, referring to the circular economy concept, to pay attention at a systemic error within processing of materials: the linear production system. He underlined the necessity to use circular processing to avoid global economy and public health weakening. However, 1990s produced little conceptual improvement about circular economy concept. Later, in 2013, this trend was inverted, when one of the main definitions of circular economy came out: that of the Ellen Macarthur Foundation (EMF), which offers an important definition of “circular economy”, a generic term for an economy designed to regenerate itself (2010). Thus, according to the Ellen MacArthur Foundation (2013), the circular economy is an industrial economy that is restorative and regenerative by intention and design. It replaces the ‘end-of-life’ concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse, and aims for the elimination of waste through the superior design of materials, products, systems, and, within this, business models (Ellen MacArthur Foundation, 2013).

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7

The Ellen MacArthur Foundation uses this definition to emphasize the key role of “regeneration” and “restoration” concepts, which make clearer the importance of adopting renewable resources and energy as well as the waste decreasing through a new way to conceive production and consumption and also improving business models through sustainable-driven circularity (EMF, 2015a, 2015b). The EMF definition remains the most important description of this new framework. When EMF edited the book Towards The Circular Economy, defined the circular economy concept by using the “butterfly circular economy diagram”. It becomes very popular from that time and shows the continuous flow of materials in a circular system. The butterfly wings represent both the technical cycle and the biological cycle. The former focuses on stock management, while the latter on renewable flow management. From the renewable flow management side, there are activities as: extraction of biochemical feedstock, anaerobic digestion, biogas production, regeneration, biochemical feedstock, and farming/collection. From the stock management side, there are activities as: share, maintain/prolong, reuse/distribute, refurbish/remanufacture, and recycle (Fig. 1.1). Looking at the butterfly diagram it is evident that the technical cycle puts into the circle products through reuse, repair, remanufacture and recycling, while the biological cycle allows the return to the Nature of nutrients from biodegradable substances. According to the MacArthur Foundation (2012), there are four principles of nature, like: waste as nutrients, resilience, renewable energy, and systemic. Waste can be transformed in nutrient for the soil, for instance, In the case of plastic or glass

Fig. 1.1  The butterfly circular economy diagram. (Source: Ellen MacArthur Foundation website, 2022)

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they can be reused as secondary raw materials; moreover, goods can be repaired extending their durability and usability. Resilience concerns species diversity. It depends on the ability to cope with and recover from impediments. The circular economy can use resources to adapt to every environment and conditions. Renewable energy represents a good way to produce a collaborative system able to provide a flow of resources. Systemic focuses on the relationship among its constituents and it permits to create opportunities in terms of economies and societies (EEA, 2016). The circular economy definition also includes concepts such as ecological footprint and waste hierarchy. Ecological footprint represents the systems biocapacity and measures the humans’ impact. In the ecosystem this footprint represents the biocapacity of a natural system and permits to assess human impacts. Ecological footprint measures the value of climate change, biodiversity degradation, and water scarcity. Waste hierarchy is another important issue, since it permits to minimize and control waste production and management. Lansink (1979) can be considered the father of waste hierarchy and he depicted a framework for regulation looking at waste prevention, re-use of products, re-use of materials, energy recovery, incineration as disposal and landfilling. His framework, known as Lansink’s Ladder, establishes six steps: reduce, re-use, recycling, energy, incineration, and landfill. This is a practice that involves different activities ordered from the most to the least preferable, as: reduce waste, reuse, recycle, energy recovery, and disposal. Reduce waste represents the major need to transit towards a circular economy system. Reduce, Reuse, Recycle, and Recovery permit to reach this goal. According to Kirchherr et al. (2017) an economic system is circular when it “is based on business models which replace the ‘end-of-life’ concept with reducing, alternatively reusing, recycling, and recovering materials in production/distribution and consumption processes” (Table 1.1). The definition of Kirchherr certainly takes on great importance among the many definitions of circular economy proposed and that are briefly described in the following table for more completeness of information. Different definitions of circular economy come from different sectors, such as academic and science, and business environment, and also take place at micro, meso and macro levels. At micro level, circular economy regards products, companies and consumer and affects economic system taking more sustainable actions and competitive activities, for instance, by fostering new business models for small and medium-sized enterprises. This level regards the principles of reduction, reuse and recycle. At meso level, circular economy concerns eco-industrial parks and produces effects as sustainable procedures of production, reduction of costs and increasing of benefits. This level relates to cross-chain and sector partnership. At macro level, circular economy involves cities regions, nations, and focuses on the national governments’ decisions, and supranational political and economic partnerships, like the European Union (Bonciu, 2014). This organization is making many efforts to complete the implementation of the circular economic system, adopting regulations to define a new legal framework able to improve the change in economic development model. Its Circular Economy Action Plan, for example, represents the best document for its importance in contributing to a transition from linear to circular economy.

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Table 1.1  A selection of the main important circular economy definitions Author Year Yuan et al. 2008 Geng et al. 2009

Liu

2012

Ma et al.

2014

Haas et al. 2015

Deloitee

2016

Hobson

2016

WBCSD

2017

Murray et al.

2017

Kirchherr et al.

2017

Korhonen et al.

2018

Definition “Circular economy is the circular (closed) flow of materials and the use of raw materials and energy through multiple phases”. “An economy based on a spiral loop, i.e., a system that minimizes matter, energy flow and environmental deterioration without limiting economic growth or social and technical advancement”. “An economy system which is characterized by principle of sustainable growth and depends less on depletion of natural resources than traditional economies through the mechanism of recycling the waste output of its system”. “Circular economy is a mode of economic development that aims to protect the environment and prevent pollution, thereby facilitating sustainable economic development”. “The circular economy is a simple, but convincing, strategy, which aims at reducing both input of virgin materials and output of wastes by closing economic and ecological loops of resource flows”. “Circular economy represents a development strategy that enables economic growth while optimising the consumption of natural resources through a profound transformation of production chains and consumption patterns, and the re-designing of industrial systems”. “The CE has been defined as an industrial system that is restorative or regenerative by intention and design. It replaces the end-of-life concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse and return to the biosphere, and aims for the elimination of waste through the superior design of materials, products, systems and business models”. “The circular economy is a new way of looking at the relationships between markets, customers and natural resources. The goal of CE is to retain as much value as possible from resources, products, parts and materials to create a system that allows for long life, optimal reuse, refurbishment, remanufacturing and recycling”. “Circular economy is an economic model wherein planning, resourcing, procurement, production and reprocessing are designed and managed, as both process and output, to maximise ecosystem functioning and human well-being”. “Circular economy describes an economic system that is based on business models which replace the ‘end-of-life’ concept with reducing, alternatively reusing, recycling and recovering materials in production/distribution and consumption processes, thus operating at the micro level (products, companies, consumers), meso level (eco-industrial parks) and macro level (city, region, nation and beyond), with the aim to accomplish sustainable development, which implies creating environmental quality, economic prosperity and social equity, to the benefit of current and future generations”. “Circular economy is a sustainable development initiative with the objective of reducing the societal production-consumption systems’ linear material and energy throughout flows by applying materials cycles, renewable and cascade-type energy flows to the linear system”. (continued)

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Table 1.1 (continued) Author Year Definition Morseletto 2020a “Circular economy can be defined as an economic model aimed at the efficient use of resources through waste minimisation, long-term value retention, reduction of primary resources, and closed loops of products, product parts, and materials within the boundaries of environmental protection and socioeconomic benefits. A CE has the potential to lead to sustainable development, while decoupling economic growth from the negative consequences of resource depletion and environmental degradation”. Source: personal selection from different papers

The plethora of definitions of the concept of circular economy could create confusion, thus it would be better to converge towards a single definition. But this is probably due to the multidisciplinary nature of this concept and the fact that its application affects different sectors of production and consumer behaviour. Second, this argument is in evolution and consequently its definition continuously implemented in the past decade. The different definitions of circular economy have been highlighted because a definition is the main way of understanding a phenomenon. Probably a common denominator in all these definitions is the effort to make better use of resources. All of them aim to change the linear “take-make-dispose” activities throughout the concept of waste minimisation and resource cycling, focusing on the connection with the sustainable development. Circular economy permits to define a system where economic, social, and environmental dimensions are integrated to achieve sustainable development goals. The efficient use of material and energy shifts towards the use of renewable energy and secondary raw materials; the necessity to eliminate environmental degradation, contributes to maximize ecosystem functioning; the urgence to reduce waste production, brings to close economic and ecological loops of resource flows. Thus, the circular economy should strive to restore and regenerate the environment by contributing to sustainability in the whole perspective of the system to optimize the social, environmental, technical, and economic values of materials and products in society. Certainly, from these definitions of circular economy, it is evident that recycling as well as reusing represent important elements which are included into multiple “R frameworks” combining activities necessary to develop the circular model. Different scholars take “R frameworks” into account as the “how-to” of circular economy and a core principle of it (Zhu et al., 2010; Reh, 2013). Basically, the main activities useful to enhance a circular economy are reduce, reuse, and recycle. Nevertheless, European Union uses a scheme of four “Rs” to indicate activities as reduce, reuse, recycle and recover; while other Countries use models with three “Rs” (reduce, reuse, and recycle) such as Japan. At this purpose, Bismar (2017) notes five circular economy principles, including waste design out, build resilience through diversity, rely on energy from renewable sources, think in system, and waste management. The last one is the major issue and focuses on the 3R, reduce, reuse, and recycle, (King et al., 2006) and 4R, reduce, reuse, recycle and recovery, models to address waste

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11

management. The “4R” model, for example, is embedded into the priority criteria for waste management in the Italian regulation system. There is someone that takes 5R into account, Rethink, Reduce, Reuse, Recycle, Recover, (Potting et al., 2017) combining in a different way the same activities relating to production and consumption. It is also possible to depict a scheme (Table 1.2) with ten “Rs” strategies (Potting et al., 2017). Despite the different definitions of circular economy presented in this paragraph, the concept has been introduced to achieve a single objective: to define and manage an economic, social and environmental system capable of achieving sustainable development goals. It is therefore clear that the concept of the circular economy integrates economic activity and environmental welfare through a sustainable path. It has been said that the circular economy is about recycling and increasing resource efficiency. It is a model suitable for promoting growth and business and increasing competitive advantages. In a digital economy scenario, for example, the circular economy is a new way of doing business without having to exploit limited natural resources. In addition, to protect the environment, the circular economy has a positive impact on the finances of states and businesses. Only the European Union would save hundreds of billions of euros by switching to the circular economy. Unfortunately, globally, the circular model is active only 9%. Italy, for example, seems to be one of the European countries with the best results in terms of circularity of the economic system (Circle Economy Network, 2022). The circular economy, therefore, can encourage innovation, reduction of expenditure, economic recovery, and employment. A study by Cambridge Econometrics, Trinomics and ICF concludes that the shift from raw material extraction to repair in the European Union would add 700,000 jobs, mostly in Central and Eastern Europe. According to some scholars – supporters of the circular economy – to achieve these results we need to further improve the legislation, while companies must adapt their production processes, using appropriate technologies. In addition, there should be greater cooperation between enterprises and public institutions to break down cultural and economic barriers that jeopardize the adoption of solutions from an economic, social, and environmental point of view. Table 1.2  The “Rs” strategies Ro – Refuse R1 – rethink R2 – reduce R3 – reuse R4 – repair R5 – refurbish R6 – remanufacture R7 – repurpose R8 – recycle R9 – recover

Make product redundant by abandoning its function Make product use more intensive (sharing products) Enhance efficiency in product manufacture Reuse by another consumer of discarded products Repair products Restore products and bring it up to date Use components of discarded products in new ones with the same function Use discarded products in new ones with different functions Process materials to have same or lower quality Incineration of materials with energy recovery

Source: Potting et al. (2017)

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1.1.2 The Limits to the Circularity: Criticisms The applicability of the circular economy model is a highly debated issue between supporters and opponents. The most critical scholars focus on two aspects considered as disadvantages: firstly, not all materials can be recycled indefinitely; secondly, in the short term, recycling implies a longer and more expensive process than replacing a product with a new one. This produces a higher immediate cost to purchase a particular product. One of the main critiques refers to the linkage between circular economy and sustainability (Pieroni et al., 2019; Reike et al., 2018). Some scholars refute the fact that environmental and economic aspects have been predominant in the debate on the circular economy as opposed to the interest shown in the social dimension. Moreover, one criticism concerns the fact that, despite the increased interest in sustainability in businesses, the exploitation of the environment and the exploitation of resources has not decreased. There are also criticisms of another aspect of the circular economy: the issue of employment. The circular economy model can affect employment changes but at high costs. For example, in a world that depends less on raw material extraction there will be fewer jobs in the mining industry. Measuring the impact is a first step in addressing the potential repercussions for those who lose their jobs as a result of the transition (Ghisellini & Ulgiati, 2019). The criticism is also directed at the issue of waste since the achievement of the zero-waste target can be surprisingly resource-intensive and could lead to actions that compromise overall sustainability. Buying products based only on what is recyclable is the wrong way to make purchasing decisions, because recycling itself requires resources. Moreover, the variety of definitions of circular economy leads scholars to make critical observations. In fact, the criticisms are expressed within the theoretical foundations of the circular economy considering the sciences as industrial ecology and ecological economics. The ambiguity of the concept is resolved through other definitions related to sustainability. It has been observed in the preceding paragraph that the circular economy, according to the thought of Murray et al. (2017), neglects the social aspects of the transition. In particular, the emphasis on the rational choice of consumption is criticized. The simple consideration that consumers need to change their behaviour is not enough to explain social phenomena and the risks of failure (Mylan et al., 2016). Other scholars question the connections between the political system and the economy and the effects that these can have on the circular economy. According to Hobson (2016), the circular economy is an example of neoliberal governance that uses product labelling and activities, such as recycling. The criticism refers to the fact that the circular economy does not challenge production and consumption patterns without stimulating the individuality of consumers and producers. In addition, strong criticism focuses on the question of perfect circularity because it is theoretically impossible. On this subject, it is generally accepted that a complete circular economy is not feasible.

1.2  The Regenerative Circular Economy

13

In addition to the above limits, highlighted by the critique of the circular economy model, there are a variety of barriers, distinguishable by type, that help to limit the understanding of the model and slow the transition from linear to circular economy. These barriers are social and cultural, technological, economic and market, and regulatory. Social and cultural barriers include lack of customer enthusiasm, awareness and interest, low willingness for cooperation within supply chain, lack of knowledge on circular economy advantages (Masi et al., 2018). Technological barriers involve lack of know-how, technical skills, and data, limited attention to products’ design end-of-life, limited availability of recyclable materials (Masi et al., 2018). Economic and market barriers regard limited funding for circular economy business models, high investment costs and long payback time, lack of short-run rewards, and chip raw materials. Regulatory barriers concern lack of policies to internalise externalities, limited public procurement incentives, lack of support for funding, training and taxation policy, and poor institutional and entrepreneurial cooperation across international supply chains (Sarkar et al., 2022). All these factors are related and can negatively affect the development of the circular economy. For example, when an entrepreneur has cultural hesitations towards the circular economy he does not invest in technology and therefore does not offer products with circular design in the market. Thus, a cultural barrier produces a technological barrier, which generates another cultural barrier. All barriers derail the circular economy and slow it down (Kirchher et al., 2017; van Eijk, 2015; de Jesus & Mendoca, 2018). According to recent literature on circular economy barriers, technological barriers can be seen as the supposed fundamental barriers to the transition to a circular economy. Instead, Kirchher et al. (2017) noted that cultural barriers, both on the supply and demand side, such as “hesitant entrepreneurial culture” or “lack of consumer interest”, slow the transition to a circular economy. Barriers must be overcome separately, because they limit the implementation of the circular economy, but their interdependence makes it more difficult to find a solution mainly for cultural and regulatory ones. Probably, further efforts are needed, at the macro level, to communicate the value of circularity and the importance of the transition to a circular economy. Policymakers at the international level must break down these barriers, helping entrepreneurs to act on the market, through price signals, property rights, and decreases.

1.2 The Regenerative Circular Economy Most of the circular economy definitions refer to its regenerative power. Since the Ellen MacArthur Foundation definition of circular economy as “regenerative”, the literature on this topic quoted thousands of times this “term”. Despite this, the concept of “regeneration” is rarely defined. Therefore, to understand the meaning of

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“regenerative” it is necessary to explain the relationship between present and future reality. The term “regenerative” consists of two words: “re” and “generative”. Both come from the Latin language, and in particular, “re” means “repeat” or “remake”; while “re-generate” means “re-give birth” something. It can be used to indicate a renewal. The agricultural system, for example, is regenerative, since it uses resources through a renewal of the living system. The composting activity is a clear example, where waste promotes a regenerative process through which a nutrient material, the “compost”, comes out and returns to the agricultural production system during fertilization. The form of regeneration is an improvement over restoration and positively affects society and the environment (Morseletto, 2020b). From the literature, it is not always possible to distinguish the difference of meanings concerning the regenerative concept. Many scholars use to make a distinction between regeneration of resource and rebuilding of natural capital when they describe circular economy and use the regeneration concept. Regeneration is like doing something better than the original condition. Some scholars use the term “regenerative” to mean restoring, revitalizing, renewing and rebirth to source energy and materials (Hofstra & Huisingh, 2014). According to Brown et al. (2018), regenerative processes allow social systems and ecosystems to preserve their health and to evolve. But, thus defined, the regeneration is linked to health, which can involve many elements, which are not measurable and change over time. Sometimes regeneration is referred to restoration making less clear their difference of meaning. It is sure that the link between “regeneration” and “circular economy” has been introduces once again by Pearce and Turner (1989), when they use the affirmation “regenerated resource system”. The problem is to make some more distinctions between regeneration and other similar activities. A regenerative process is appropriate to describe the change of a material into a new useful one  (Morseletto, 2020b). Waste, for instance, can be transformed into useful materials for many products and in many industrial sectors. An example is the plastic recovered, which is used to produce raw materials for a new product, as shoes, or it can be chemically transformed to generate virgin polymers. Normally, these activities are defined as recycling, but actually they involve a regeneration process. Recycling and regeneration represent different activities, the former considers a set of procedures, chemical or mechanical, able to separate materials and recover energy, while the latter indicates the birth of new useful materials and products. The regeneration is connected to resources in terms of materials and energy. Resources need to be continuously restored and circular economy permits to achieve this goal. Looking at the production system, it can be sustainable if and only if energy and materials are continuously renewed. Thus, circular economy is a regenerative way to leave linear production and consumption models. Regeneration is typical of different sciences, such as medicine, biology, and ecology as well as in fields like education, healthcare, philosophy, and architecture. The concept of regeneration is used focusing on conservation, and allocation of natural resources to future generations. The circular paradigm involves regeneration process without making pressure on the environment.

1.2  The Regenerative Circular Economy

15

The issues of waste reduction and reuse of resources within the circular model concern leads to the consideration of economic, environmental, and social pressures. The pressure due to the climate change and market’s expectation changes need to be reduced. The circular economy as regenerative procedure may respond better to this pressure, reducing consumption and saving energies through the activation of economic, environmental, and social strategies. Therefore, the term “regenerative economy” may define a combination between business and environment, and it enhances the passage from economy to ecosystems. Moreover, regeneration fosters the renewable capacity to restart ecological systems exploited by humans. Natural systems have this capacity to recuperate from disruptions and renovate their functions. Circular economy can also be “restorative” since it aims at repairing previous harm through product design. Circular tools as innovation technology, eco-design, and life cycle assessment – that will be described more specifically in the following chapters – may contribute to project and produce goods and services requiring less material and energy and may ameliorate sustainability renovating ecological level of surrounding environment.

1.2.1 The Donught Economy: Disconnection or Complementarity with the Regenerative Essence of the Circular Economy In the previous paragraph, the topic of the circular economy was approached as regenerative by its nature. The Ellen MacArthur Foundation’s definition that a circular economy is regenerative by intention and design is useful to describe another concept that opposes the regenerative essence of the circular economy: is the concept of doughnut economy. The doughnut economy purposes a change of economic model and represents a response to eradicate global poverty within the planet’s limited natural resources boundaries. Kate Raworth, an American economist, through her research defined the concept of “doughnut economy”, focusing on a goal humans have to pursuit in the twenty-first century. She highlights that GDP cannot be the main goal for the future. The main point is to move from the GDP growth to other sustainable goals. The humans’ activity is today considered in the same way as the great forces of nature that have caused irreversible changes to our way of life. Over the past 45 years, there has been an acceleration of climate change, according to scholars, 170-fold. A team of climate change experts led by Will Steffen has defined the Anthropocene equation, through which it has been certified that human intervention causes profound changes to the Earth’s life supporting system (Gaffney & Steffen, 2017). According to Raworth, the “doughnut” is a compass to guide humanity towards a system that can satisfy the needs of every person and safeguard the environment (Raworth, 2017). The “doughnut” defines two concentric rings that safe

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space for humanity between the social foundation and the ecological ceiling. The social foundation includes essential elements, such as water, food, energy, and health; while the environmental ceiling is given by climate change, acidification of deserts, pollution, and depletion of the ozone layer. There are 12 dimensions from internationally agreed minimum social standards. Humanity can thrive between social and planetary boundaries (Fig. 1.2). Nature is never linear. Seasonality, for example, represents a non-linear relationship. The non-linearity is due to the fact that Nature changes over time, it is dynamic. For its representation could be useful the concept of “doughnut economy”, which defines a new way of thinking and an economic mentality, through which to define regenerative and distributive strategies. In this new economic mindset, therefore, the economy is embedded and depends on society and the living world, where human beings help each other in a cooperative way. The doughnut economy brings the social dimension into the economic model and suggests the existence of social boundaries, which are based on sustainable development goals. Society must remain within the boundaries of society to meet the needs of people. But Raworth argues that to create a regenerative economy, it is necessary to design a circular framework using loops to move away from the linear business and economy model (Everett, 2022). This is a complex and interdependent system, that improve through feedback loops and where it should design to create, create to regenerate, and to be agnostic about growth. Nothing grows forever. The growth cannot be considered as goal itself. This system does work if there is learning and innovation sharing, as well as openness and integrity. The new perspective is based on the transition from a self-contained market to the embedded economy. Raworth’s model differs from that described by the Ellen MacArthur Foundation in that the latter refers to resources circulating in a waste-free economy. The first concerns the balance between the social foundation and the rings of the ecological ceiling. Humans have to stay above the first boundary to thrive, without crossing the second boundary, the ecological ceiling. The donut economy recognizes societies, economies, as complex and interconnected systems in which organizations must design five layers to become regenerative and distributive, such as: purpose,

Ecological ceiling Space for Humanity Social foundation

Fig. 1.2  The doughnut of social and planetary boundaries. (Source: www.kateraworth.com)

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networks, governance, ownership, and finance (Raworth, 2017). Despite the differences between the two models, there is a connection between circular economy models and doughnut. More precisely, the circular economy model provides strategies that help people live inside the ecological ceiling ring described by the donut economic model. This model defines a way to balance human development and the well-being of nature. Although there seems to be a discontinuity between the Raworth model and the circular economy, they actually have points of contact, and both represent an alternative to the linear model. While the circular economy focuses on environment and economics, doughnut economy focuses on society and the environment. These models could be combined to create a truly holistic economic model, developing a model that aligns with all three pillars of sustainability: social, environmental, and economic. Thus, it is possible, or maybe necessary, to combine circular economy with additional concepts like doughnut economy creating an alignment with social, economic, and environmental sustainability (Everett, 2022). This combination allows to define guidelines for business and economic policies for the future development of circular economy. Furthermore, the connection among the two models may support a holistic economic, environmental, and social framework for future generations.

1.3 Circular Economy Within Market Perspective Natural systems have the ability to starts regeneration processes. Something similar may also happen within a market system. The traditional economic definition of market has its origin in the neo-classical economists’ theories. However, the term “market” refers to institutions that define a relationship between buyers and sellers. According to Begg et al. (2011), market is a process through which households’, firms’ and workers’ decisions are compatible by means of price adjustments. Prices of goods and services as well as of resources change continuously so as to guarantee that scarce resources are used to produce commodities. The problem of resource scarcity concerns the human decisions with respect to produce, exchange and use products and services. The economic problem for a society is how to solve the conflict between needs and scarcity of resources. A resource is scarce when its demand exceeds supply with a price equal to zero. The problem of scarcity of resources calls for efficiency in their use. Market and price definition permit to solve problems about “what, how and for whom to produce”, addressing the problem of scarcity and a more efficient use of resources. Thus, to focus circular economy on market perspective means to pay attention to the measurement procedures able to understand whether a production is efficient in terms of resource efficiency. In the open market, there are many agents, which play a key role as consumers, producers, and government. They need information to define their behaviour and

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take decisions. The consumer needs to collect information about products and services, producers focus on their processes and pay attention to the value added and to the resources they use, and the government defines policies and monitors producers as well as consumers. Producers as well as consumers are becoming involved in circular economy because of the environmental impact of their behaviours and decisions is increasing. Their awareness and concern may affect the market mechanism because of social costs, or negative externalities that could lead to the market failure. Social costs include private costs and additional external costs by third parties not included into production process and negative externality can be considered as one of the main categories of market failure. It may occur when an exchange between buyers and sellers affects third party who is not part of the exchange. More precisely, a market failure arises when the market does not allocate resources efficiently in a way that balances social costs and benefits. Market may form under certain conditions; without them the market can struggle to be existent. When prices do not reflect production costs, some problems occur since wealth is redistributed unfairly and prices risk to be too higher. Concentrated market power, asymmetric information, externalities, public goods provision can cause market failure. Furthermore, the interaction between demand and supply, mineral extraction, product design, and consumer recycling behaviour may affect the market functioning. Production and disposal provide negative effects on the environment as water pollution, greenhouse gas emissions, and increase social costs. Economic tools as Pigouvian taxes or cap-and-trade are used to avoid or correct that the market can be failure. This is a typical subject of environmental economics. It confirms the tightness between economic tools and environmental instruments. According to environmental economics, the market is considered for its self-­ regulating capacity. At this purpose, there has been a deep debate, at academic and institutional levels, from whom that consider circular economy based on the relationship between ecology and environment and whom that take the economic management into account relating with environmental economics. The European Commission, for instance, in one of its communications highlights “significant market failures due to externalities, information asymmetry, adaptation and coordination deficits” (European Commission, 2014). The market perspective assumes an important role for the transition process towards circular economy. At this purpose, the European Commission (2015) emphasizes the improvement of the existing circular economy, affirming that: the transition to a more circular economy, …, is an essential contribution to the European Union’s efforts to develop a sustainable, low carbon, resource efficient and competitive economy (European Commission, 2015).

All the actors involved from both market sides – producers and consumers – become the main protagonists of this transition. More specifically, from the supply-side, producers may adopt circular economy to improve their business performance and the added value using energy and materials in an efficient way; while from the demand-side, customers may change their habits using circular economy tools and activities such as value co-creation and sharing consumption.

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The adoption of circular economy strategies and behaviours brings changes to the market. Actually, in a circular economy framework, the market relationship between demand and supply will be characterised by consumption decreases because of the presence of high-quality standards. Through eco-design, goods are projected to be long-lasting, they could be repairable and parts of them recycled. Moreover, the strategy to offer products as service change the relationship between producers and consumers. Furthermore, in a circular economy system also the price does not represent the only variable customers use to make their purchasing decisions. Quality is another important variable customer needs to consider. At a low price may correspond a low quality and also such kind of quality refers to products that are not repairable and recyclable. To prevent and avoid the environmental impact of such kind of products, some public institutions are working to define appropriate strategies like European Union that adopts the Farm to fork strategy within food production system. Box 1.1: European Union Strategy “Farm to Fork” This policy accelerates the transition towards a circular and a sustainable food system introducing a set of strategies, such as: • Safeguarding sufficient, affordable food within planetary limits. • Reducing use of pesticides, fertilisers, and antimicrobials. • Boosting the amount of land devoted to organic farming. Supporting more sustainable food consumption and healthy diets. All these strategies are able to diminish environmental footprint of food systems, improve resilience against crises and continue ensuring healthy food. The food market is important worldwide and such kind of policies make changes in the market relationship between producers and customers. Furthermore, within an international globalized market, circular strategies help local farmers, who cannot compete with bigger ones using low prices.

In a market perspective, hence, production sectors, as agriculture, are committed to become circular facing challenges when sharing in the global market. All the stakeholders acting within a globalized market have to accept strategies and practices conforming to the circular economy policies. Circular economy, for instance, may help to obtain a material self-efficiency through the recycling practices instance. Different countries worldwide can exchange these materials in the global market increasing the demand for secondary raw materials. This could be representing an opportunity for those countries depending on export of virgin raw materials. A final consideration regards the concept of circular economy within the relationship between demand and supply. According to some scholars, this concept needs to be interpreted by consumers and producers for its implementation, but since it is ambiguous and not well defined, its interpretation is not easy by the stakeholders involved. Criticism also appears around the policies directed to change consumer behaviour.

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1.3.1 The Demand: Circular Economy, Sharing Consumption and Value Co-creation The definition of circular economy, coming from the Ellen MacArthur Foundation, depicts this concept focusing on two different cycles: technical and biological. The customer is at the centre of the biological process and the user at the centre of technical process. This representation gives an imagine of the market from the demand-side. The circular economy can be observed looking at this side of the market. The main point refers to the consumers’ interest towards products and services with a low environmental impact. But consumers are also interested in adopting new purchasing behaviours to avoid environmental damage. Sharing as well as collaborative consumptions represent activities involving consumers in changing their consumption behaviours and habits. Both consumption-based solutions facilitate to access markets, but there is controversy about their contribution to the sustainability goals and circularity since sharing companies, for instance, are increasing the demand of resources. The diffusion on internet improved peer-to-peer transactions defining a way for sharing resources and commodities due to the diminishing of transaction costs and the diffusion of innovation technology. In this context, the circular economy aligns demand with the shared economy. The presence of a plethora of online platforms, the increased knowledge of the information system, the improvement of consumption habits through e-commerce and information sharing through social media tools contribute to increase the demand of sharing services. Mainly for what concerns transports, restaurant, and accommodation facilities. Sharing consumption represents a part of the demand within circular economy. A change to a circular economy perspective requires changes in consumer’s habits and consumption choices. Customers, for instance, choose to share a service with other users through renting or leasing. In that way, they can save money and leave the responsibility connected to the ownership, thus, rent a car, for instance, could be meaning not only to save money, but also eliminate all the services connected such as car insurance, ownership taxation, and maintenance costs. Exchanging practices for “secondhand” products are increasing through platforms and mobile applications worldwide. Such activities positively affect the impact on the environment and permit to save money. Moreover, these consumption practices are viral due to the social media power that can be considered as place of re-commerce where the interaction is convenient for all the parties involved. The sharing economy is connected to repairability of products and this relationship positively affect consumption behaviour. Consumers can use old goods for longer, without buying a new one all the time, and they may share commodities and enhance forms of collaborative consumption and market democratisation. The circular economy may produce a further type of value, which represents a new value opportunity. It refers to the value co-creation that allows the business to be regenerative. The co-creation permits entrepreneurs and customers to create

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value interacting one to another. The process of co-creation is collaborative and produce material as well as symbolic value. Agents interact beyond the price system both from the demand-side and from the supply-side of the market. Price does not represent the variable that intermediate this relationship. The co-creation process ameliorates the consumption experience and enhances product innovation. The collaboration in consumption experience increases the value co-creation. The process of value co-creation regards three activities: cooperation, coordination, and collaboration. All of them are important to complete the transition towards a circular economy. A circular economy cannot be achieved whether individuals pursue their own interests in an independent way. It needs to use collaborative behaviours and to share needs and preferences. Thus, it is necessary to create collaborative networks, which are able to determine a value co-creation process. This process starts with the value proposition of the circular co-creation. Then, the actors to involve into the co-creation process are identified, and they exchange opinion, and thinking about the value dimensions. At this point, the customer is identified and the value for him is created. Circular economy has been seen as a solution to avoid that consumption demand goes over the Earth’s carrying capacity. This new system needs an alternative kind of collaboration for value co-creation. The value can be explained looking at the set of activities included in the value circle, as share, maintain, reuse, refurbish and recycle. The co-creation process is possible just through interactions among producers and consumers and engagement platforms. This process may concern the circular economy introducing new opportunities for consumers as well as for entrepreneurs. Hence, the circular economy co-creation involves the stakeholders who want to share a purpose, assets, and services. From the demand side, in a circular economy perspective, the environment and society must also be included among the stakeholders, as beneficiaries. From the supply side, it may include entrepreneurs, regulators, and investors.

1.3.2 The Supply: Business Performance in Circular Economy Framework Entrepreneurs represent the main actors from the supply side of the market. They are interested in improving their businesses performances, not only in terms of profits and economic benefits, but also in terms of social and environmental advantages. Economic benefits include value creation, reducing production costs, or primary raw material savings. Social benefits regard new job opportunities, improvements for local communities, and environmental benefits concern less pollution, global warming reduction, efficient waste management. The business performance in a circular economy system needs to be improved through many different tools, as the assessment of product or material circularity

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potential, re-design procedures, assess the entire lifecycle of products and materials and re-define the value chain. In this context, strategies for circular economy implementation are welcoming because they help firms to prevent resource depletion, close material, and energy loops, improve customer relationship, invest for new job opportunities, and minimize waste production. Entrepreneurs need to change their core business and to advance circular maturity following paths: (a) addressing business operations towards emissions, energy, waste, and water; (b) redesign products and services looking at their usage, and lifecycle, eliminating waste and closing products loop; (c) embedding circular principles redefining practices of work, and procedures; (d) building partnership with other organisations to exchange culture and experiences. Enterprises performance depends also on environmentally friendly strategies, products, and services. Observing the entrepreneurs’ behaviour and decisions, the main point about circular economy refers to a better management of resources through the lifecycle of production systems. There are many different reasons entrepreneurs follow to engage circular economy strategies in their business performance: some of them use green ideas to improve brand performance, others to ameliorate marketing strategies. The main point is that the environmental commitment increased during the last decade among entrepreneurs. It is crucial to protect business, ecosystems, and society. Hence, circular economy assumes an important role in reducing environmental risk and improving competitive advantage for companies. Furthermore, after the definition of sustainable development goals by United Nations, many entrepreneurs started to invest in circular economy practices worldwide. For environmental and social commitment, many entrepreneurs define reports for clients, investors and all the stakeholders into the market. Moreover, it is a fact that entrepreneurs use information about the corporate social responsibility more than before to increase their reputation. The number of sustainability reports increased along the time, since its importance is highly recognised by entrepreneurial system. The reports show the sustainable performance as a mix of economic, social, and environmental performances. Circular economy concept is cited within these reports as a system able to increase firms’ competitiveness and reputation as well as environmental performance. Environmental reporting represents a good practice to show companies’ environmental performance. Enterprises communicate environmental strategies and activities as compliance with public policy. This permits also to engage more customers and improve the trust relationship with them. Financial and environmental performances are strongly connected one to another. Activities as reduction of energy and materials, reuse of products or secondary raw materials, recycling in production and distribution systems contribute to improve financial performance, and efficiency. Producers need to work together in a circular economy system to support the transition to a more resource efficient and circular economy. The creation of a circular ecosystem at the supply side of the market is advocated. At this purpose, circular business models are useful to reduce extraction and use of natural resources

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and the generation of industrial and consumer waste. A set of circular business models are introduced into the Chap. 5, at the 5.4 paragraph.

1.3.3 Profitability and Sustainability The sustainable development is not an optional for private and public organisations, while public institutions defined stringent policies to improve strategies for economic, social, and environmental sustainability, entrepreneurs are still working to pass from a linear production model to a circular one. In this context, the relationship between profitability and sustainability assumes an important key role. To better understand this relationship, a short remind to the terms “profitability” and “sustainability” is necessary. Sustainability refers to the achievement of the needs for present generation without compromising the needs for the future one. Profitability indicates the firm’s ability to invest resources to produce more revenues than expenses. Profit is relative to the business expense. Actually, the profit is the difference between total revenues and costs. Firms more efficient realize more profit than a less efficient one. A relationship between profitability and sustainability does exist and it can be explained through the concept of corporate social responsibility (CSR). CSR represents the business model a company uses to be socially accountable to its stakeholders and for itself. Through this model, companies show to establish important goals for their business related to social impact, sustainability, and ethics. The model involves different kinds of companies, as corporations, and small and medium sized enterprises. CSR activities include environmental responsibility, human rights and ethical responsibility, philanthropic responsibility, and economic responsibility. Every company needs to define a CSR program If wants to engage clients and improve customer satisfaction. Otherwise, there has been examples where the promise to enhance projects for environmental or ethical responsibilities was violated by behaviours contrary to the statements made before. A company that uses “green communication”, for example, and at the same time employ workers in slavery condition. This is a typical example of “greenwashing”. The greenwashing is a communication or marketing strategy private and public organizations use to introduce their activities as eco-sustainable, concealing the negative impact on the environment. It could be also the obscuration of damaging information by private or public organizations. Enterprises take advantage of this strategy to appear environmentally friendly. The consequences of greenwashing activities may affect consumers’ and companies’ attitudes and behaviour, as well as environment and society. The use of the corporate environmental report reduces the possibility of greenwashing. A format for corporate environmental reporting is the “sustainability reporting”. It focuses on economic, environmental, social, and corporate governance. At this purpose, organizations as OECD or Global Reporting Initiative (GRI) are involved to define global standards for sustainability reporting. These standards are

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best practices that permit to gradually expand the financial reporting taking in consideration information about monetary issues, market position, human capital, and intangible assets, so as information about social and ecological values. A great number of companies define their sustainability reports adopting the GRI standards showing the importance of such a kind of tools. To date, not all organizations are required to draw up a sustainability report, but only those listed on the stock exchange and financial institutions. In European Union, for instance, the European Commission established the Corporate Sustainability Reporting Directive, according to which from 2024, the sustainability report will be mandatory for all types of businesses. This document shows transparently and objectively the commitments made and the results obtained in the field of Corporate Social Responsibility. It is aimed at all stakeholders, institutions, citizens, consumers, investors, and suppliers and measures corporate efficiency from economic, environmental, and social perspectives, it means the real impact of the company on the territory and on the community. Looking at investors, for instance, they need to collect data and information to support their investment decisions. Financial reports and profitability issue are no longer appropriate, since they do not consider ethic, social and environmental information. Although sustainability and profitability are based on different assumptions, the connection among them is clear. Corporate social reports and environmental reports are documents that combine profitability sustainability reports in a single format.

1.4 Circular Economy and Bioeconomy: The Policies of Food Production and Waste Management Circular economy is connected to another important issue that is bioeconomy. This topic is introduced the first time in 1997, throughout a work of R.  Martinez and J. Enriquez who based their study on a European Union Program about the development of biotechnologies. Bioeconomy collects arguments from different disciplines as biotechnology, biology, bioecology, and uses this knowledge to define and product commodities. Bioeconomy represents, hence, a production sector linked to the renewable resources and the conversion of biological resources and waste streams into food, products, and energy. To pass from linear to circular economy paradigm, bioeconomy becomes important since it can replace fossil production to sustainable one as well as to move from non-renewable resources to biological ones. Renewable sources and sustainable raw materials are used in modern production systems making more efficient the production in terms of environmental, social, and economic development. There are, for instance, examples of bioeconomy applications, such as the Brazilian law established in 2015 to enhance the use of biotechnologies in the national industry. Important sectors as agriculture and agrifood may

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improve their economic as well as environmental performances using biological systems. There is a difference between circular economy and bioeconomy: the former uses issues that regard all the way to make distances from linear production models and move towards a loop achievable throughout 3R model (reuse, recycle, repair). Bioeconomy focuses on biological resource and biotechnology. Bioeconomy may foster circular economy development, for example, through biomass production. Almost the 36% of biomass produced in European Countries is transformed into bio-based materials and energy. Different products came from this procedure, as liquid biofuels, bio-based chemicals, pharmaceutical products. Food production and waste management represent important topic areas affected by circular economy and bioeconomy. Food waste represents an important resource for the future. The European Union CEAP defines food waste as one of the priority areas, which represents a huge potential for prevention and valorisation. CEAP highlights the following four areas: • • • •

Assessment of available quantities, Review possible prevention and valorisation pathways, Technical and economic assessment of the process, Environmental benefits and burdens of the scenario compared to the alternative circular one.

The scientific literature about food loss emphasizes the current practices to reduce food waste and focuses on the valorisation policies. There is a distinction between avoidable and unavoidable food waste: the former can be prevented ex ante and the latter should be valorised ex post. It is possible to quantify the food waste to estimate the food loss and waste within European Union Countries, this procedure a log the entire life cycle of products permits to choose prevention and valorisation techniques. Data and information can be collected through national waste statistics, regional and national databases. Moreover, food waste prevention is one of the main sustainable development goals United Nations established to achieve by 2030. The 12 goal is named responsible consumption and production and establishes to reduce of 50% food waste at level of retail and consumer. There are food waste and losses before consumption that involve the supply chain, life cycle assessment can be used to prevent those losses. In other words, it is possible to achieve 12 sustainable development goal by assessing burden and avoiding economic and environmental costs. The life cycle assessment permits to measure the environmental impacts, as human toxicity, ozone depletion, climate change and so on. This also allows to define scenarios and choice the best solution in terms of specific actions like manufacturing line optimization, packaging adjustments, consumer education, improvement of inventory management. Definitely, the strong connection between circular economy and bioeconomy represents an opportunity to ensure competition for natural resources, climate change and fossil resources dependence. It is necessary to design valorisation paths involving bio-based products.

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Scientific tools as LCA can be applied to define economic, environmental, and social dimensions and to establish possible alternative. Bioeconomy is able to quantify and prevent the food waste and losses during the consumption and along the supply chain, as well as to valorise food waste. Probably, it should also be necessary to revise the term “waste” with other terms as “end of waste”, mainly when the aim is to valorise it as a new resource. People do not like “waste” since they consider it as something to get rid of. “End of waste” could be representing and alternative term much more useful to “mettre en valeur” production or consumption waste. Nevertheless, there is a lack of language homogeneity in the classification of waste, both at regional and European level, which is a barrier to the development of the circular paradigm. Some research highlight that the recycled product, for instance, is considered differently if it is addressed to the national or European market. In the first case, it is used the term “secondary raw material”, in the second one the term “waste in green list”. An end-of-life product should not be considered as waste, but rather as a potential resource. This new perspective changes completely the scenario making positive impacts on the production system, by reducing environmental, economic, and social externalities.

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King, A. M., Burgess, S. C., Ljomak, W., & McMahon, C. A. (2006). Reducing waste: Repair, recondition, remanufacture or recycle? Sustainable Development, 14(4), 257–267. Kirchherr, J., Reike, D., & Hekkert, M. (2017). Conceptualizing the circular economy: An analysis of 114 definitions. Resources, Conservation and Recycling, 127, 221–232. Korhonen, J., Nuur, C., Feldmann, A., & Birkie, S. E. (2018). Circular economy as an essentially contested concept. Journal of Cleaner Production, 175, 544–552. Lansink, A. (1979). Tweede Kamer, 1979–1980, Rijksbegroting voor het jaar 1980, Hoofdstuk XVII, 15800, n.21. Liu, J. Y. (2012). Circular economy and environmental efficiency. The case of traditional Hakka Living System. Procedia Social and Behavioral Sciences, 57, 255–260. Ma, S., Wen, Z. Z., Chen, J., & Wen Z. Z. (2014). Mode of circular economy in China’s iron and steel industry: A case study in Wu’an city. Journal of Cleaning Production, 64, 505–512. Masi, D., Kumar, V., Garza-Reyes, J. A., & Godsell, J. (2018). Towards a more circular economy: Exploring the awareness, practices, and barriers from a focal firm perspective. Production Planning and Control, 29(6), 539–550. Morseletto, P. (2020a). Targets for a circular economy. Resources, Conservation & Recycling, 153, 104553. https://doi.org/10.1016/j.resconrec.2019.104553 Morseletto, P. (2020b). Restorative and regenerative: Exploring the concepts in the circular economy. Journal of Industrial Ecology, 24(4). https://doi.org/10.1111/jiec.12987 Murray, A., Skene, K., & Haynes, K. (2017). The circular economy: An interdisciplinary exploration of the concept and application in a global context. Journal of Business Ethics, 140(3), 369–380. Mylan, J., Holmes, H., & Paddock, J. (2016). Re-introducing consumption to the ‘circular economy’: A sociotechnical analysis of domestic food provisioning. Sustainability, 8(794), 2–14. Pearce, D., & Turner, K. (1989). Economics of natural resources and the environment. Harvester Wheatsheaf. Pieroni, M. P. P., McAloone, T. C., & Pigosso, D. C. A. (2019). Business model innovation for circular economy and sustainability: A review of approaches. Journal of Cleaner Production, 215, 198–216. https://doi.org/10.1016/j.jclepro.2019.01.036 Potting, J., Hekkert, M., Worrell, E., & Hanemaaijer, A. (2017). Circular economy: Measuring innovation in the product chain. Planbureau voor de Leefomgeving. Raworth, K. (2017). Doughnut economics, seven ways to think like a 21st century economist. Chelsea Green Publishing. Reh, L. (2013). Process engineering in circular economy. Particuology, 11(2), 119–133. Reike, D., Vermeulen, W. J., & Witjes, S. (2018). The circular economy: New or refurbished as CE 3.0? – Exploring controversies in the conceptualization of the circular economy through a focus on history and resource value retention options. Resources, Conservation and Recycling, 135, 246–264. https://doi.org/10.1016/j.resconrec.2017.08.027 Samuelson, P. (1947). Foundation of Economic Analysis. Harvard Economic Studies, vol. 80. Sarkar, B., Ganguly, B., Pareek, S., & Cárdenas-Barrón L. E. (2022). A three-echelon green supply chain management for biodegradable products with three transportation modes, Computers & Industrial Engineering, 174, 108727, https://doi.org/10.1016/j.cie.2022.108727 Stahel, W.  R. (1981). Jobs for tomorrow: The potential for substituting manpower for energy. Vantage Press. Stahel, W. R. (1982). The product-life factor. Product-Life Institute. http://www.product-­life.org/ en/major-­publications/the-­product-­life-­factor Stahel, W. R. (2016). The circular economy. Nature, 531(7595), 435–438. van Eijk, F., (2015). Barriers and drivers towards a circular economy, Literature review. Acceleratio, (March), 1–138. Velenturf, A. P. M., & Purnell, P. (2021). Principles for a sustainable circular economy. Sustainable Production and Consumption, 27, 1437–1457.

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WBCSD. (2017). CEO guide to the circular economy. Available online: www.wbcsd.org/Clusters/ CircularEconomy/Resources/CEO-­Guide-­to-­the-­Circular-­Economy World Commission on Environment and Development. (1987). Brundtland report. Our common future. Yuan, Z., Bi, J., & Moriguichi, Y. (2008). The circular economy: A new development strategy in China. Journal of Industrial Ecology, 10, 4–8. Zhu, Q., Geng, Y., & Lai, K. (2010). Circular economy practices among Chinese manufacturers varying in environmental-oriented supply chain cooperation and the performance implications. Journal of Environmental Management, 91(6), 1324–1331.

Chapter 2

The Scenario of Circular Economy

2.1 The Circular Economy Scenario For a long time, the circular economy has been considered as a new way to conceive waste and its management. Effectively, the circular economy model helps humans to change the value of waste and take it into account as a resource. Outputs conceptualised as waste, now are intended as a resource to create value by redesigning products (Guldmann & Huulgaard, 2020) and extending product life (Merli et al., 2018). Circular economy scenario involves different policies and strategies that foster sustainability goals. Perhaps, the aim to reach a zero-waste world is not realistic, but the result to produce a significant waste reduction is possible and needs to be implemented in public policies, in business models, in consumption behaviour and human habits. Actually, what is needed is not only better waste management, but above all the adoption of useful tools to reduce energy, waste, and the exploitation of natural resources. According to the United Nations world population will increase by 2050 ranging 9.2 billion. The resources necessary for the global demand are limited in nature; thus, it would be important to provide alternative solutions or reduce the demand for more resource-intensive commodities. At the moment, humans are consuming the 75% of natural resources, mainly not renewable ones, and the Earth’s carrying capacity is overloaded. In addition, global carbon emissions from fossil fuel significantly increased since 1990s. Such kind of emissions warms the planet causing climate change that unsettles the weather system and origins intense weather events, and water scarcity. The changes in water cycle make it more complicated to use safe drinking water, mainly for people leaving in extreme poverty conditions. The World Health Organization affirmed that over 2 billion people live in countries where water is scarce and not safe. 368 million of people take water from unprotected wells and springs, while only 5.8 billion people use safely drinking water services. Therefore, reducing carbon emissions, tackling resources © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Patti, Circular Economy and Policy, https://doi.org/10.1007/978-3-031-43324-5_2

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depletion and environmental pollution, boosting waste management, and decreasing waste generation represent the main activities people need to implement worldwide. At this purpose, national governments establish policies and strategies to solve these problems and find in circular economy framework different opportunities to enhance sustainability. The transition towards circular economy takes place in an environment able to facilitate the diffusion of innovations and relationship among different stakeholders (de Jesus & Mendonça, 2018). Institutions, both public and private, play a significant role in shaping the transition to the circular economy (North, 1990). Different institutional environment, such as market, enterprises, community, public bodies, international organizations are involved in the circular economy scenario aiming to implement regulatory frameworks, laws, taxation, and market regulation. Political institution’s, at international level, establish deadlines to face the increasing global demand for goods such as food, water, and energy. European Union, for instance, shows that economic development can link industrial policies and environment preservation. In this respect, EU defined an Action Plan for the circular economy, which aims to support “a carbon-neutral, resource-efficient, and competitive economy (EU Circular Economy Action Plan, 2015; p. 2). Still the EU with its Green Deal was formulating circular consumption and production policies to encourage businesses and industry to shift from linear economy to sustainable circular economy (EC, 2020). Circular production and consumption shall involve sharing, re-use, repair and recycling of existing materials and products for as long as possible. It is for these reasons that, as already noted, the circular economy is not only a waste management policy but is a way to recover raw materials without exploiting those that are scarce on Planet Earth. To this end, production and consumption systems must be profoundly innovative and must simultaneously respect the economic, environmental, and social perspectives, through which the path from linear to circular action is taken (Bonciu, 2014). To enhance this change, different policies worldwide focus on strategies able to boost the transition to the circular economy. Along this path there are two viewing angles: supply and demand that involve, respectively, producers and consumers. Both act in a globalized market, where price cannot be the only variable to consider when making a purchasing choice. Climate crisis, resource scarcity and social issues negatively affect the market relationship and the business scenario. Production and consumption systems, hence, need to be changed rejecting the take-make-waste approach and extending as long as possible the use of products. The circular economy transition changes the market at global level. From the production side, circular strategies implement higher quality goods characterized to be long-lasting and easy to repair. Entrepreneurs are modifying the way of thinking, working, and innovating, for example, for the future, they are going to deliver many commodities to the demand as a service and not as items to be owned. From the consumption side, customers are more conscious about environmental harm and accept the challenge to change their purchasing behaviours (Rejeb et al., 2022). The circular economy gives them – and us – a chance to transform this challenge into an opportunity of making economic, environmental, and social values for business and

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society. Therefore, it is essential to consider the global market perspective since circular economy policies will define the future of demand and supply, where price is not the unique factor affecting customer’s choice. A transformation is taking place and it affects the entire planet both in terms of digital technology and in terms of environmental sustainability. The evolution towards the digital age and the need for greater sustainability will allow development to be decoupled from the consumption of non-renewable resources subject to scarcity and exposed to uncontrollable price variations. In such a context, circular economy represents a concrete solution entrepreneurs and consumers can adopt to generate value in the medium to long term. Thanks to technology, it will be possible to implement circular economy processes, tracing the production chains, making markets more transparent, efficient, and innovative. The global economy enhances complex challenges all over the world. A great variety of benefits as well as costs increase in terms of economic, social, and environmental ones. Consumers, entrepreneurs, and governments face those in various ways. Someone adopts pollution rights system, someone else introduces new taxes. The simplest strategy seems to be “to pay a fee”. Nevertheless, global warming increases as well as CO2 emissions, and Greenhouse gas emissions. Therefore, many people, around the world, understand that is necessary to intervene with other strategies. One of these is the circular production and consumption, in other words the circular economy, which is a competitive environmental strategy (Bastein et al., 2013). Thus, the transition from linear way of doing business to circular one represents a possible solution. Also, if producer and consumers are not ready to invert the route, it needs to change behaviours and habits. Looking at global production and consumption, there is the necessity to foster a sustainable system able to align both of them. The trade of goods and services harms the environment if it is based on the linear production and consumption system. People, independently from their role in society, economy, and family, need to intervene to face up irreversible consequences on the Nature. Even because the current linear economy model is reaching its physical limit and it is becoming increasingly necessary to develop alternatives to the disposal phase. A further argument that serves to explain the importance of the circular economy and is part of its scenario regards the losses of biodiversity because of the exploitation of natural resources and the environment. Linear production system, pollution, and waste support these losses. Extraction and transformation of natural resources increases the biodiversity loss harming different species of animals. According to the United Nation of Environment Programme, every year, an average of 423 million hectares of forest are deliberately destroyed through fires set in different areas worldwide (UN, 2022). In Indonesia, for instance, over 10 thousand square miles of forest are burned. Fires generate black carbon and pollutants that increases the melting of glaciers, cause landslides and large-scale algal blooms in the oceans. Smoke and particulate matter from wildfires produce severe damage as well as massive biodiversity loss, endangering over 4400 terrestrial and freshwater species (UN, 2022). In this global context, it is necessary to intervene changing production models and systems, lowering natural resources exploitation, reducing consistently

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waste, enhancing regenerative nature, and transforming production and consumption of food to significantly reduce biodiversity loss. Actually, circular economy denotes a set of instruments to deal with climate, pollution, and biodiversity problems. It may reduce nature degradation, limit climate change, and avoid biodiversity losses by decreasing demand for virgin raw materials, contributing to reduce pressure on ecosystems and enhancing climate adaptation. Another important issue that must be considered when dealing with circular economy and that, in some way, affects its scenario, is the contrast between growth and circular economy. The debate, started years ago, is still heated. In the last 30  years, the economic theory (mainstream) has emphasized the key-role of the endogenous growth. In such paradigm, the production function was the main tool to enhance economic growth (Bauwens, 2021). Otherwise, only few economists described economic growth as a mixture of economic, social, and environmental issues. Now, it is necessary and not procrastinate to change growth model, considering all the three dimensions: environmental, social, and economic. People, over the world, have begun to wonder what environmental, economic, and social fates humanity will have in the future. The answer is not simple. But to offer it, a timely education and training work is required. Books and paper must describe every alternative model to explain the economic, social, and environmental growth (Van den Bergh, & Kallis, 2012). The transition to the circular economy system involves few important issues. First, it needs to adopt a long-run perspective. The short time policies as well as economic decisions are not efficient and efficacy (Kirchherr et al., 2023). Second, technology progress pushes ahead growth limits. It is not true that technology progress is always positive and able to solve humans’ problems. It is important, thus, to understand which kind of impact technology progress produces on natural resources. Third, natural resources are scarce and a signal to understand scarcity is the market price. When price increases it means that a commodity is becoming scarce. According to the European Commission (2020), the concept of “circular economy” itself responds to the necessity of a sustainable growth, although there is no single definition of this phenomenon, the circular economy has recently acquired considerable importance and it is growing in interest since it represents a powerful tool to decouple growth for use of scarce resources. In the linear economy, the concept of growth is defined as an increasing in the Gross Domestic Product (GDP), which represents the value of final goods and services. Economic growth, hence, is related to the exploitation of natural resources and associated with accumulation of waste. Economic growth and linear economy affected the economy system since the neoclassical thinking of Robert Solow, who recognised log-run economic growth to the technology innovation. The linear production system is not possible because of natural resources are limited. Jeremy Rifkin (2015) pointed out a new world view, where linear model does not represent a unique model of development. Human existence and nature focused on circular movement, as seasonal cyclicity. The linear model can also be considered as the linear material flows, where raw materials are extracted, refined into usable materials, which are used to make products, consumable, and disposable at the end of their life. Thus, in the linear model, the natural resources are exploited without worrying

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about their effective long-term availability, and waste and end-of-life products are considered useless material. On the other hand, in the circular economy, waste in consumption and production is reduced, end-of-life products are recycled, and process waste is reused as secondary-raw materials for new production cycles. Therefore, to avoid natural resources depletion and environmental degradation, a green GDP was defined as a possible measure. The common criticism of GDP is that it does not measure environmental depletion and degradation. On the contrary, the green GDP considers the environment and its relationship with economic system. It was introduced, in 1993, by the United Nations through the “Handbook of National Accounting: Integrated Environmental and Economic Accounting”. The green GDP represents an environmentally adjusted gross domestic product and permits to give a monetary valuation of natural resources. Through the green GDP it is possible to take away the costs of natural resources depletion and environmental harm from the gross domestic product. Within circular economy framework, on the contrary, economic growth is not so indispensable. Thus, in a such context, circular economy represents the way to make economic growth much more sustainable. Then, in this context, the meaning of economic circular must be defined in depth, given that there are many definitions of it and all stakeholders do not equally consider it. In the following chapter, different definitions of the concept of the circular economy are presented in order to create a useful system for those who approach for the first time the study of this theme. Here, we have a brief analysis of its main characteristics. The circular economy has been discussed for long time and different opinions came up towards its utility and importance. It has become popular in academic, nongovernmental and policy circles since the relationship between ecological institutes and governments. The transition from linear to circular economy represents one of the main goals of sustainable environmental policy at global level. Despite the pressure coming from climate change and global warming, many Countries around the world did not achieve the aims. Circular economy is based on three principles: eliminating pollution and waste, circulating materials and products, and regenerating nature (Ellen Macarthur Foundation, 2012). Goods that are at the end of their lifespan can be used as resources for other products. In this way, the loops in industrial ecosystem can be closed. The expression “closing the loop” defines the opportunity to replace products through reusing, recycling, and repairing. The transition from making-using-disposing to a circular production and consumption model represents an important goal humans need to achieve within few years. Thus, circular economy is restorative and regenerative to nature since it is considered as one of the main tools to support nature and environment by aims to gradually decouple growth from the consumption of finite resources (Ellen Macarthur Foundation, 2015). The circular economy is still not very mature, although it is capturing the attention of politicians, scholars, and entrepreneurs. At the moment, it represents one of the main approaches to achieve sustainable development goals. However, there are many prejudices and scepticisms that hinder the diffusion of the paradigm. Therefore, on the supply side, further economic and political plans are necessary to

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provide incentives and support investments for Small and Medium sized enterprises; while, on the demand side, information programs and training initiatives will be welcome. Furthermore, the development of regenerative industrial systems may improve the slowdown, and reduction of materials and energy in the life cycle of resources. There is also evidence that circular economy assessment indicators need to be improved. Many entrepreneurs ask for standards indicators to measure their circular business models. Circular economy represents, for entrepreneurs, an opportunity to make themselves more competitive. Pollution, for instance, is a form of economic waste and involves the unnecessary and inefficient use of resources. According to Porter & van der Linde (1995), emissions are a sign of inefficiency and lead an organization to perform activities that do not generate value, such as waste disposal. In a business perspective, profit maximization and waste reduction are based on common principles, such as: efficient use of inputs, replacement of materials, minimization of unnecessary activities. Circular economy policy and regulation trigger eco-innovation in companies that more than offset the costs they have to bear to comply with that policy. The reasons for this compensation can be summarised as follows: reduction of investments’ uncertainty, pressure that motivates innovation, resource efficiency, and information gathering. The increased competitiveness of companies investing in eco-innovation is evident in two aspects: “process eco-­innovation” and product “eco-innovation”. In the former, the innovative enterprise defines products with higher added value and that justify a higher price, and, in the latter, the competitors’ costs are lower. At an entrepreneurial level, the application of circular economy models, allows to obtain a series of advantages such as the improvement of production processes and the reduction of costs. In addition, industrial relations improve, and new market opportunities arise. Circular companies are also able to position their products in the market through more effective communication. In this regard, the European Union policies have led companies to equip themselves with new tools to participate in green public procurement. GPP is, in fact, a clear example of EU policy on the circular economy. In Italy, for example, the application of GPP has led to the definition of minimum environmental criteria (MEC) that public administrations must meet in the development of public tenders. These constitute a leverage for the application of circular economy principles. Obviously, the circular economy cannot be the panacea for environmental problems. The relationship between humans and the environment must be reviewed and circular development models can help to restore the balance between production and consumption needs and the protection of nature and the environment.

References Bastein, A. G. T. M., Roelofs, E., Rietveld, E., & Hoogendoorn, A. (2013). Opportunities for a circular economy in The Netherlands (pp. 1–13). TNO.

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Bauwens, T. (2021). Are the circular economy and economic growth compatible? A case for post-growth circularity. Resource Conservation and Recycling, 175, 105852. https://doi. org/10.1016/J.RESCONREC.2021.105852 Bonciu, F. (2014). The European economy: From a linear to a circular economy. Romanian Journal of European Affairs, 14(4), 78–91. de Jesus, A., & Mendonça, S. (2018). Lost in transition? Drivers and barriers in the eco-innovation road to the circular economy. Ecological Economics, 145, 75–89. EC. (2020). A new circular economy plan for a cleaner and more competitive Europe; European Commission: Brussels, Belgium, https://eur-­lex.europa.eu/legal-­content/EN/TXT/?qi d=1583933814386&uri=COM:2020:98:FIN Ellen Macarthur Foundation. (2012). Towards the circular economy: Economic and business rationale for an accelerated transition. Ellen MacArthur Foundation. Ellen Macarthur Foundation. (2015). Delivering the circular economy. A toolkit for policymakers (pp. 1–177). Ellen MacArthur Foundation. Guldmann, E., & Huulgaard, R. (2020). Barriers to circular business model innovation: A multiple-­ case study. Journal of Cleaning Production, 243. Kirchherr, J., Yang, N.-H.  N., Schulze-Spüntrup, F., Heerink, M.  J., & Hartley, K. (2023). Conceptualizing the circular economy (revisited): An analysis of 221 definitions, resources. Conservation and Recycling, 194, 107001. https://doi.org/10.1016/j.resconrec.2023.107001 Merli, R., Preziosi, M., & Acampora, A. (2018). How do scholars approach the circular economy? A systematic literature review. Journal of Cleaning Production, 178, 703–722. North, D.  C. (1990). Institutions, institutional change and economic performance. Cambridge University Press. Porter, M. E., & van der Linde, C. (1995). Towards a new conception of the environment competitiveness relationship. The Journal of economic perspective, 9:4, 97–118. Rejeb, A., Rejeb, K., & Keogh, J. G. (2022). The circular economy and marketing: A literature review. Etikonomi, 21(1), 153–176. https://doi.org/10.15408/etk.v21i1.22216 Rifkin, J. (2015). The zero marginal cost society: The internet of things, the collaborative commons, and the eclipse of capitalism. St. Martin’s Griffin. United Nations, Annual Report. 2022, 6 February 2023, www.unep.org. Van den Bergh, J. C., & Kallis, G. (2012). Growth, a-growth or degrowth to stay within planetary boundaries? Journal of Economic Issues, 46(4), 909–920.

Chapter 3

Life Cycle Thinking and Circular Economy

3.1 The Role of Life Cycle Sustainability Approach Within Circular Economy Circular economy represents a new framework for achieving sustainability’s goals. This new economy perspective combines environmental sustainability as well as economic growth. In this context, circularity regards production processes and products lifecycle. Thus, the implementation of circular designs denotes a path to follow. Sometimes, the concept of “circularity” risks to be more ambiguous and too much theoretical. Therefore, it needs to improve the relationship between circular practices and actions. It should be better, first, to understand what the scope of circular economy strategy is. Circular economy has to be evaluated and therefore, it needs to involve indicators and methods to assess circularity levels within the transition from linear to circular economy system. To reach sustainability goals, it needs more circular practices toward address a wasteless economy. Consequently, circular economy can be connected to the life cycle sustainability approach (LCSA), which represents a theoretical framework that looks at the sustainable development concept (Morsy et al., 2020). LCSA framework is established by United Nations in their “UN Environment Programme” and combines different frameworks such as Environmental Life Cycle Assessment (ELCA), Life Cycle Costing (LCC), and Social Life Cycle Assessment (SLCA). ELCA and LCC are used to assess product and organizations, and SLCA can be used at sectoral as well as organizational levels (Larsena et al., 2022; UNEP-SETAC, 2009). The United Nations LCSA refers to the first definition of life cycle sustainability approach coming out from the work of Kloepffer and Renner (2007), which describes LCSA as the aggregation of life cycle assessment (LCA), life cycle costing (LCC), and social life cycle assessment (SLCA). It means that LCSA involve economic, environmental, and social elements using a life cycle approach. © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Patti, Circular Economy and Policy, https://doi.org/10.1007/978-3-031-43324-5_3

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Another definition refers to LCSA as a link to “life cycle sustainability questions to knowledge needed for addressing them, identifying available knowledge and related models, knowledge gaps and defining research programs to fill these gaps” (Guinée et al., 2001). According to the last definition, LCSA integrates different models based on a multidisciplinary approach involving all three sustainable dimensions, looking at product and sector levels, and also including technological, physical, behavioural, and economic relations. LCSA plays a key role in assessing the scenario on how to feed people in a sustainable way. It defines a framework where approaches are developed, and tools are used to measure sustainability for the future. Hence, within a circular economy perspective, the life cycle of a product must be considered as sustainable procedure. In other words, from raw material extraction to disposable waste the entire cycle of life needs to be specified in a sustainable way. Consequently, LCSA is useful to identify circular economy strategies able to improve environmental performance of production as well as consumption. This approach permits also to assess economic and social effects linked to a decision process in a holistic perspective. LCSA fosters robust circular economy strategies encompassing resources and impact categories to lead to better decision-making for sustainable development. Thus, the life cycle sustainability approach contributes to resolve technical problems and challenges to implement life cycle procedures into circular economy strategies.

3.1.1 The Life Cycle Thinking Life cycle thinking (LCT) is a theoretical way to think about production locus and procedures based on the possibility to pass from raw materials extraction to disposable. It may concern the three sustainability dimensions: economic, social, and environmental since it measures the impacts of process, and product through the whole life cycle. Life cycle thinking is a pivotal as well as systemic concept able to support sustainable transition. It provides support for integrating sustainability into policy-­ making process and refers to the needs of assessing burdens through a holistic perspective from cradle to cradle of production. Life cycle thinking can avoid the burdens shifting, for example reducing the climate change or domestic impacts. To achieve sustainable development goals (SDGs), it should be possible to use life cycle thinking, adopting sustainable patterns of production and consumption. Actually, LCT focuses on materials and energy involved in production, packaging, distribution, use, recycling, reuse, and recovery. In European Union, for instance, many environmental policies are based on the life cycle thinking, which is embedded in legislation included into the Circular Economy Package. Another application regards the Integrated Product Policy (IPP),

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which refers to the life cycle-based policies and recognises life cycle thinking as a fundamental component for the sustainable development. A such kind of thinking permits to control decoupling economic growth in the Sustainable Use of Natural Resources strategy as well as in the Recycling of Waste strategy (Zang et al., 2015). Therefore, there are many legal acts based on life cycle thinking within the European policies’ system, which represent the base for European Institutions to make real a theoretical concept. Ecolabel regulation and Eco-design directives use life cycle thinking to improve environmental performance and to reduce impacts.

3.1.2 The Eco-design and New Materials The life cycle thinking becomes more powerful and real when it involves procedures and new materials. A life cycle sustainable approach permits to re-define products and services following environmental protection needs, thanks to the innovation technology that can ameliorate materials and product design. The product design refers to the procedure of imagining, creating, and replicating a product or a service able to satisfy customers’ preferences and needs. Eco-design is a tool that permits to define and produce products with less environmental impact, allowing a comparison between economic indicators and environmental needs. It permits to define different comparable solutions and choose one of them knowing economic and environmental impacts. In this way, it is possible to adopt a sustainable solution contributing to the circular model. Hence, through an eco-design project, it is possible to integrate environmental aspects into the product definition process looking at all stages of product definition and development procedure. At the end of this process, entrepreneurs can provide products or services with a lowest environmental impact a long their entire life cycle. Therefore, eco-design allows to make and distribute products minimizing environmental impacts as well as maximizing business through a circular system. Hence, it is possible to reduce the impacts of production and consumption investing on innovative design solutions, just considering the life cycle of a product or service. Pollution minimisation and lifetime represent the most important elements of an eco-design project. For this reason, this must be considered as an approach more than a label for products and services. Eco-design has represented a strategy only for big companies because of they have important financial and technical resources. The legislation such as the European Directive 2009/125/EC and the Regulation 2011/305 changed the eco-­ design role and introduced the possibility to use it for small and medium-sized enterprises. Furthermore, the European Commission, in 2014, adopting regulation on the environmental carbon footprint for products and on green public procurement established the possibility to use eco-design as a tool for environmental improvement and part of the life cycle approach.

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Eco-design is based on European Standard EN 15634, established in 2014, which considers life cycle thinking and allows comparison between different solutions. An eco-design analysis is useful to collect information on economics and environmental impacts, resources consumption, and materials outflows, including waste. It permits to select sustainable materials that reduce environmental impacts, to make possible products life cycle extension, and to re-use waste material for other productions. This tool has a variety of applications in different production sectors from agri-­ food system to informatics. The value chain depends on eco-design and lifecycle approach, and it makes possible to pass from linear production system to the circular one. But an eco-design project needs to be enhanced by new materials research and application. An example could be the production of a particular kind of silk from the orange biomass, used within fashion industry. All the information and data gathered for an eco-design analysis are similar to them collected for an environmental product declaration (EPD). This instrument makes easy the comparison among different solutions for similar products. Moreover, the collection of information useful for the environmental dimension assessment is simplified because of there exist many EPD platforms through which products are registered in different countries. These platforms are members of the European association of EPD registration program operator “EcoPlatform”. The eco-design takes two material flows into consideration: input and output materials. The former concerns raw materials selected for new products or for restoring old ones; the latter refers to the separated materials as waste and so it considers reusability, recycling, and repairability. Furthermore, the use of eco-design may facilitate products repairability. During the eco-design phase, any producer can choice materials and shaping to make easier the procedures of repairability. At this purpose, the European Commission defines the “right to repair” to reduce waste when products are discarded instead of being repaired and reused. The EU Eco-design Directive 2009/125/EC establishes the framework for goods repairability looking at product design requirements and spare parts availability (paragraph 3.1.4). More specifically, according to the Directive, producers have to pay more attention, when design their products, to different aspect as: durability, reusability, upgradability, repairability and recyclability. A good eco-­ design process at the beginning of the production procedure permits to improve the ease of disassembly, access to spare parts and repair-related information. Eco-design for sustainable products represents a way to bring environmental benefits, like innovation cycles which permit to work for recyclability and durability of products. Material efficiency facilitates activity for testing, measurement, and verification. At this purpose, the Eco-design Coordination Group (EcoCG) was established, within standard organizations as CEN and CENELEC. CEN is the European Committee for Standardization and supports standardization activities to a plethora of fields, as: air and space, chemicals, construction, consumer products, defence and security, energy, environment, food, health, and safety. CENELEC is the European Committee for Electrotechnical Standardization and supports standardization activities for different sectors as: electromagnetic

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compatibility, accumulators, primary cells, primary batteries, insulated wire and cable, electrical equipment, electronic, electromechanical supplies, electrotechnical supplies, electric motors, lighting equipment and lamps, low voltage installation material, electric vehicles railways, smart grid, photovoltaic systems. EcoCG coordinates standardisation practices according to the Eco-design Directive. Hence, eco-design is part of the environmental management system (EMS) and it is helpful to make decisions towards sustainable development as well as society. To achieve powerful results, an eco-design project needs to the life cycle assessment (LCA). The use of LCA presents many advantages because it permits to realise eco-­ design process many times, to measure it through software packages and calculation methods. Therefore, there is an essential linkage between LCA and eco-design able to support decision-making process and to assess environmental characteristics of new products.

3.1.3 The Life Cycle Assessment The transition towards circular economy system needs to enhance standardized frameworks since they may avoid the heterogeneity of strategies and approaches. The standardization involves a set of guidelines and principles that allow circularity evaluation in homogeneous way. In a such context, the life cycle assessment (LCA) represents a methodology useful to recognise promising circular economy strategies able to improve environmental performance of production and consumption system through the eco-efficiency topic. In the beginning, the LCA was defined to assess the product lifecycle from the raw materials selection to the product disposal, in other words “from cradle to grave”. Later, the LCA’s aim changed moving towards “from cradle to cradle”. This expression refers to the maximum reuse of resources, according to which waste should be eliminated. It promotes a continuous cycle of life and is connected to the law of the Conservation of mass: “nothing is lost, nothing is created, everything is transformed”. LCA is a science-based technique suited to evaluate sustainability impacts belong the life cycle of a product or process  (Kloepffer, 2003). This analysis is based on the life cycle sustainability approach (LCSA), and provides support to decision-makers, to assess impacts trade-off on environmental impact indicators. Usually, such kind of indicators refer to water, energy, climate change and raw materials. LCA represents a standardized method useful for quantifying all the impacts, avoiding burden shifting from life cycle phase to another. Actually, it defines the best pathway to improve circularity within production and consumption systems. Therefore, it is a valid support to circular economy strategies and permits to quantify material and energy flows analysing the entire life cycle of a product (Kovacic & Zoller, 2016). Moreover, LCA enables to define the life cycle boundaries within which it is possible to identify and measure all the impacts. It permits to assess

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decision making processes considering the environmental, social, and economic effects (Rodríguez & Ciroth, 2013; Gabi, 2022). At this purpose, LCA is widely used to assess the environmental dimension of circularity and to evaluate circular economy activities, and environmental profile of new products. In that sense, LCA focuses on the circularity of a resource as well as circular economy strategies making them more robust and efficient, and contributing to resolve challenges to implement circular economy system (Garfi et al., 2017). Hence, LCA measures the effectiveness an enterprise has during the transition from the linear to the circular economy. The circular economy transition led to structural changes affecting the global production system. LCA, thus, can prevent circular economy strategies addressing them towards efficient solutions. About that, LCA can be combined with Life cycle cost (LCC) to assess environmental benefits as well as economic ones, when a circular economy strategy is applied. It is clear that a circular economy needs to be nurtured through a life cycle assessment process (Giorgi et al., 2019). LCA allows the assessment of metrics for circular economy, recognising limitations and promoting planning of circular economy implementation. LCA uses many environmental impact indicators to evaluate climate change, water, energy, and raw materials use. This technological process involves different steps standardized in the ISO 14040 series. They define a methodology for assessment of potential environmental impacts from the raw materials extraction analysis to the product’s end of life (Fig. 3.1). Fig. 3.1  The life cycle assessment framework. (Source: personal elaboration on ISO 14040) Goal definition

Inventory analysis

Impact assessment

Interpretation

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According to the International Organization for Standardization (ISO), LCA, first, works through the definition of goals and the functional unit. This is an important step since it allows to define a common basis to compare different impacts through the same function. Functional unit components enhance the results of the analysis. The second step regards the inventory analysis, during which all the environmental inputs and outputs are considered and connected with a product. This phase is known as life cycle inventory (LCI), in which environmental inputs could be, for example, raw materials and energy used, while environmental outputs can be the emissions of pollutants and waste. The third step refers to the life cycle impact assessment (LCIA), where conclusions about business decision are made. During this phase, an environmental impacts classification of all processes analysed is established, after that the analyst describes some themes referring to the impacts in terms of, for example, climate change, global warming, or biodiversity harm. The fourth step concerns the interpretation of data and information collected during the assessment. In this phase, it is extremely important to corroborate and validate all the conclusions, by using several checks to test data and techniques used to achieve final results. Before concluding this paragraph, a further remark should be made to show the advantages of using LCA, precisely to benefit from concrete examples. It might be useful to define what are the key challenges for conducting an LCA process. In particular, a company can benefit from LCA in different sectors or business units. For example, in the area of product/service management, an undertaking participating in public procurement must disclose environmental information about its products in order to participate in the tender. is the case of companies that provide asphalt for the construction of public roads, the use of LCA allows you to provide the environmental footprint of the product at the race. Another example is the R&D phase of an enterprise, where LCA is useful to optimize existing products or to define new low-emission products. LCA allows you to compare different materials and understand how they can affect the environmental impact of the final product. Another example concerns the management of a company’s distribution channel, where choosing the right supplier is often a difficult decision, as important as defining the selling price. In this business sector the Environmental Impact could be very wide and an LCA study can provide useful information. So, even for the marketing and sales business unit, the use of LCA allows you to understand how business products are sustainable and how to communicate this to your customers. A life cycle assessment provides data and information that helps you understand your competitive advantage over your competitors and what opportunities your company can use to become more sustainable. A useful case for understanding how an LCA study can work can be that of an imaginary enterprise that produces clothing for men. A pair of trousers, for example, is a relatively simple product. However, you need to consider a number of aspects in order to have a proper life cycle assessment. A special software is used to calculate the footprint left by the production of the product in question, namely the pants. This activity aims to achieve two objectives: the first is to create a more sustainable pants reducing emissions during the life cycle, the second is to produce

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efficient rationalization processes. At this point, the Life Cycle Inventory Analysis (LCI) examines the environmental inputs and outputs of the product. During this phase, LCA data is collected and stored in dedicated folders. The goal is to quantify environmental inputs and outputs, in other words measure the flow into and out of the system. These inputs and outputs are raw materials, energy, water, emissions into air, land, or water. The life cycle inventory phase usually requires work and time in an LCA study. This is because analysis can be complex as production processes and supply chains are actually complex. The LCI allows the definition of impact categories, which must be based on the objectives set. These allow the measurement of impact. For example, the analysis may refer to measuring the impact of trousers on climate change in CO2 equivalent. The impact categories could be as follows: human toxicity, global warming potential (carbon footprint), ecotoxicity, eutrophication. In the example, measuring the carbon footprint released from the production of pants, could be the goal. Usually, the impact in terms of global warming is related to the use of electricity, the cotton fiber used, water, burnt natural gas. For example, it might emerge that almost half of the carbon footprint of pants comes from the electricity used to produce them. At this point, conclusions can be drawn from the LCA analysis. The results must be contextualised to give a well-defined overall picture. Therefore, consultation usually follows the ISO standards that define life cycle assessment. In the pants example, 50 percent CO2 equivalent comes from electricity used in production, therefore the decision to be taken is to reduce the amount of electricity needed for the production of pants or use an alternative energy source, such as solar energy from photovoltaic plant. Another aspect could be the type of cotton or wool used to produce the pants. The LCA analysis software offers the possibility to analyse different materials and colours. Ultimately, the company faces a series of information that allow it to improve its environmental performance by choosing both from the design stage of the pants, type of fabric, colour, energy to be used and other aspects that contribute to limiting its carbon footprint in the production process. LCA is a very specific analysis that provides the basis for the study of sustainability within any company. This makes it possible to make more appropriate and sustainable decisions, since it only happens on aspects that have actually been measured. Nevertheless, there are some critical points that can limit the life cycle analysis. First, LCA could be useful to obtain results in a short term, while circular economy asks for long term benefits. LCA permits to assess quantifiable metrics such as carbon or GHG emissions, ignoring impacts much difficult to evaluate like plastic in the environment. Moreover, LCA depends on data considered within measurement systems. Thus, data reliability and availability may affect the assessment and can change results and conclusions. It means that to use an LCA, it is necessary to define the target a circular economy want to achieve and combine this tool with others. Likewise, the LCA analysts need to highlight areas of improvement, focusing on the resource intensive phase in a product’s life cycle or with high level of pollution. In a such case, the LCA is useful to define well options to address environmental impacts. LCA enables a comparison of similar solutions and help to decide that one

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less polluting, for instance, it permits to make a comparison among different materials looking at carbon emissions. To make more efficient and efficacy a life cycle analysis it should be better to have a clear view of how resources and materials come into the production system. However, LCA remains the most used method to evaluate circularity level within production system due to the fact that it represents a holistic approach. It permits to gauge the critical aspects of a circular economy policy and so favourites further improvements.

3.1.4 Circular Economy Strategies Implementation Through Life Cycle Assessment Even though circular economy is widely recognised as a solution for economic, environmental, and social sustainability, still today there are not so many standards and guidelines companies may use to implement circular economy in their models. The life cycle assessment may provide a functional framework to exceed this limit. The Life Cycle Sustainable Assessment (LCSA) may be implementing circular economy through material efficiency and reutilization of secondary raw materials (Haupt & Zschokke, 2017;  Kloepffer, 2008;  Peña et  al., 2021). The strategies of circular economy may occur for different steps of production and refer to different materials used. LCSA may be used to assess environmental impacts of materials, products, and processes in combination with other methods, tools, and indicators (Helander et al., 2019). For example, it is possible to combine frameworks as LCSA and Cradle to Cradle. Cradle to Cradle refers to a design framework that refers to a set of principles able to reduce the organization’s negative impacts, providing strategies for a positive footprint on the planet. It defines a certification program that assets products for safety to environmental and human health, design for recyclability, and responsible manufacturing procedures (Niero & Kalbar, 2019). According to Niero and Hauschild (2017), LCSA and Cradle to Cradle can be combined to reach a material loop for packaging beverages. In the context of packaging, the impacts of raw materials and the energy used are important. A lot of goods become more desirable thanks to packaging. Food and beverages, for instance, use different kinds of packaging. The LCA drives environmentally food and beverages packaging strategies (Pauer et al., 2019). This one represents an implementation of circular economy solutions. Usually, packaging represents an example of linear model, since it is taken, making, using, and throwing away. Reusable packaging has lower environmental impacts also if it can be having high costs with respect to the single-use package. An important step forward in this direction was taken by the British Standard 8001:2017, known as “Framework for implementing the principles of the circular economy in organization”, which define a framework to assist organizations to enhance a road map. It is a voluntary guidance standard comparable to ISO 14040. It is developed taking circular procedures into account for companies’ business (ISO

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Table 3.1  The set of series standards ISO 14040

Denomination ISO 14041 ISO 14042 ISO 14043

Method Aim definition and inventory Life cycle impact assessment Life cycle interpretation

Source: ISO 14040 series

14040:2006). This standard is linked to the LCSA framework and through it implements circular economy (Guinée & Lindeijer, 2002, 2001). One more important standard able to implement circular economy strategies through LCA refers to the already mentioned set of standards titled “ISO 14040”, which regards the environmental management system. ISO 14040 considers LCA to make a critical review of the entire life cycle comparing different strategies and choosing the most advantageous solutions to implement a company policy based on environmental sustainability (ISO 14040:2006; 14044:2006). The ISO series standards define quantitative assessment methods for evaluating environmental impacts of a product in its entire life cycle (Table 3.1). All those frameworks permit to define the priorities towards sustainability, looking at energy efficiency, resource managing, sustainable supply chain management, biodiversity preservation, and corporate social responsibility improvement. Circular economy implementation procedures also regard the relationship between circular indicators and LCA. Material circularity indicators (MCI) offers indication about quantity of materials used and are able to assess the level of linear and restorative flows at micro-level. The relationship between LCA and circular indicators is not always clear and the application of them can produce different conclusions. Some recent research show that LCA evaluation and circularity assessment do not reach the same results. According to Lonca et al. (2018), MCI of a product, for instance, can be ameliorated through recycled materials, but they do not enhance impacts on ecosystems. There are different cases history useful to demonstrate these aspects, such as tire industry, food packaging system, beer packaging, and washing machine. All the examples show that it needs to combine LCA tools and circularity indicators to measure circularity and environmental sustainability (Rigamonti & Mancini, 2021). An integration among them is necessary to achieve different alternatives and combining them into a single indicator. Probably, it should be better to define multi-­ criteria approaches to support tools for implementation of circular economy strategies. Therefore, LCA-based procedures can offer a reliable methodology to assess sustainability through the circular economy model (Roberts et al., 2020). Another important strategy implementing LCA refers to the environmental management systems (EMS), which include standard ISO 14001 and EMAS. EMSs are an important sustainable consumption and production tools, which are carried out by the complexity due to the relationship between entrepreneurial organizations and the environment. EMS are useful to a set of stakeholders to improve environmental performance. EMS may provide a firm with decision-making procedures and offers

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a tool for cleaner production integration through technologies able to maximize benefits and reduce pollution. EMS as well as cleaner production represent the top level of sustainable development tools. Therefore, it is considered by academic and practitioners as useful instruments to boost circularity improving the possibility to reach the sustainable development goals.

3.1.5 Life Cycle Law: An Example from the European Union Circular Economy Package The circular economy based on life cycle thinking needs laws focusing on the interactions among raw materials, products, and waste. Thus, it is necessary to define laws relating to life cycle thinking to be considered in a coherent whole. The main point is to discover how to transform the theoretically concept of “life cycle” into legal requirements framework. It is clear that environmental legislation needs to be based on Life Cycle Assessment, it means that Institutions at international level have to develop policy options for integrating LCA into legislation. Actually, there are some standards where LCA is incorporated such as ISOs as well as policy initiatives as the Product Environmental Footprint model assessed by European Union in 2013. Another example comes from the works of World Steel Association that proposed to consider LCA into legislation. The Automotive CO2 legislation is useful to understand the necessity for considering Life Cycle perspective (Lemann, 2016). An important contribution comes from EU legislation, which covers a number of targets on energy use and waste reduction. The European Union’s member states have produced laws on waste disposal for a long time, but in 2015, the European Commission defined the Circular Economy Package (CEP), through which it established a set of actions covering the entire life cycle. The Circular Economy package is a programme covering production and consumption systems and waste management. It is based on the concept of life cycle that is strengthened through legal requirements. CEP can encourage “cycle closure” within the product life cycle. It defines the meaning of “waste” to establish a waste hierarchy by emphasizing the quantity and quality of the recycling process. It is known that the circular economy involves changes in production and consumption systems, so the package is important to provide a basis for improving the legislative capacity to promote circular economy. Therefore, CEP requires strategies and life cycle laws, such as eco-design regulations, that affect the entire life cycle of products and services. They must be able to improve the ecological transition and the radical changes towards an effective circular economy. In light of this, environmental legislation entails many requirements, such as workers’ rights, specific measures on energy use, greenhouse gas emissions, environmental impacts, life cycle assessment. The concept of life cycle is also integrated by the European Commission when it defined measures that included Extended Producer Responsibility (ERP). ERP states that manufacturers must pay for treatments at the end of products life. It means that production costs increase, and producers transfer them at the price.

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Therefore, the minimum requirements for ERP have been revised and payments for the treatment of goods will be calculated on the costs for the treatment of the end-­ of-­life product. In the paragraph on eco-design, mention was made of Directive 2009/125/EC, which I report here because it has a key role in improving the efficiency and environmental performance of products. In particular, the European Commission highlights the elements of the circular economy in the design requirements of products and services, and to this end, it shall establish a framework for defining eco-design requirements for specific product groups in order to improve their circularity, energy performance, and environmental sustainability aspects. Energy-related products and services can help promote material efficiency, such as the production of secondary materials. All these requirements are life cycle based and may involve life cycle assessment processes to improve efficiency, environmental performance, and circularity of products. In addition, information on products and their carbon and environmental footprints should be provided. This is possible thanks to the Digital Product Passport (DPP), which provides information on the environmental sustainability of products. The DPP contains information on repairability and recycling, as well as on the transparency of the environmental impact of the product life cycle. The consumer can use all this information to facilitate his purchase decision. The circular economy policies of European Union represent an important experience in addressing strategies towards circular paradigm and life cycle assessment development. Nevertheless, they line up with the eco-modern vision of the future according to which the absolute faith on technology and economic growth encourages a fragile form of circularity in tackling the current environmental emergencies. It is also clear that this context is dominated by political and economic agents such as corporations or business groups, which may not be interested to achieve a revolutionary system change. Otherwise, a such kind of situation does not permit to circular strategies to find strong sustainable and democratic solutions to manage the transition towards circular economy system.

3.2 Material Flow Analysis The first form of material flow analysis dates to input-output mathematics of Leontief (1930), which permitted to assess direct and indirect relationship in a material flow system. This relationship is made of material and energy flows, which affect the economic and monetary flows as well. The issue concerns the environmental problems associated with industrial development and economy operates within a system by physical limitations. Economy can be representing a cycle from raw materials extraction to their transformation in commodities and, after the consumption, to generation of waste flows that can be recyclable or not.

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Therefore, the material flow analysis (MFA) represents a way to quantify flows and stocks of materials and check the use of raw materials, but also economic transfers as monetary flows. This is a procedure carried out in 2019 and an appropriate method to perform environmental assessment of productions. The material flow analysis categorizes different input-output approaches, like material and energy flows approach, environmental issues in industry, not economic and not sector based approach. All these approaches represent an input-output analysis. Hence, MFA investigates technical procedures of socio-economic system and dependency in a system made of boundaries. According to the first law of thermodynamic, input have to be equal to the output and must include every stock changes. Looking at the entire system MFA can be functional or geographical. Within MFA inflow equals outflow, this is the law of conservation of mass, which is applied to human systems. According to Wolman (1965, p. 179) the requirements of a urban system represent materials and commodities necessary to sustain citizens at home as well as work. The cycle of life in a such case is closed when waste of daily life has been removed with a minimum of hazard. MFA offers advantages as flexibility, mass balancing, and define a basis for impact assessment. On the contrary, it is not applicable easily since the difficult to collect data, because of they are not available. Moreover, MFA produces some disadvantages as one-dimensional, and monetary flow are not embodied. Material flow analysis is used to assess material efficiency, but it is not able to provide sufficient information, mainly when it is used alone. Therefore, it is necessary to combine different methods as MFA and LCA, for instance, to enhance a sustainability assessment. A combination of MFA and LCA permits to achieve efficient information when a complex system is assessed, as industrial sector or Countries. According to Laner and Rechberger (2016; p. 316) MFA, in a such case, represents a tool able to assess environmental impact as well as a basis for a life cycle impact assessment. MFA permits to improve consistency, robustness and transparency of data and it can be used in combination with data collected through the LCA.

3.2.1 Recycling Rates Determination The recycling rate is the percentage of waste recycled and it is useful to improve environmental quality. Any recycling activity permits to reuse waste products as metal, paper, plastic, and glass, for instance, determining a value of waste any time it is recovered and transformed in new raw materials. The question is how to determine the recycling rate? Recycling rate (RR) is the amount of municipal solid waste recycled and composted (MSWrc) divided by the total amount of MSW recycled, composted, landfilled, and incinerated (MSWrcli). The amount of recycled material depends on the recycling rate. In other words, the RR is a part of the total amount of waste produced and specifically the portion of recycled and composted waste,

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without the landfilled and incinerated ones. The RR shows the degree of circular economy, and it increases when waste is transformed into resources that can be reused in a production activity. Hence, the recycling rate is the fraction of the stock of waste recovered.

3.3 Circular Economy, Materials Efficiency, and Reutilization of Secondary Raw Materials The transition from take-make-waste linear production and consumption to the circular economy is based on the necessity to minimize resources and material over time. Materials efficiency represents one of the main problems to solve in a such kind of transition process. In the next few decades materials demand will growth because of increasing of alternative energies consumption. Material efficiency refers to the decreasing of material needed to produce a product or a service and represents an important goal in terms of environmental and economic sustainability. Material efficiency involves different activities such as remanufacturing, modular manufacturing, reparability, reuse of components, product’s design, or redesigning manufacture procedures, saving raw materials, energy, and water (Sonderegger et al., 2020). Materials efficiency, thus, is essential to the low carbon transition. But not so many solutions are currently defined by public institutions. In the European scenario, for instance, the European Commission stated that the past was characterised by the exploitation of resources, and public policies do not deal with competing demand of minerals, and water. Therefore, it is necessary a reaction to deal with estimated resource limits to maintain prosperity in the future. At this purpose, a possible solution could be the use of a taxation system focused on sustainability’s principles. A sustainable taxation on non-renewable resources should be a powerful lever. A such kind of tax system will promote low-carbon and material efficiency solutions moving towards a circular economy. This lever could be encouraging reduction and re-use of materials, decoupling economic growth from resource depletion. In this context, also the market of secondary raw materials becomes important both to foster circular economy transition and benefit environmental and economic systems. There are different barriers to the development of such a kind of market. Entrepreneurs need to face different challenges because of secondary raw materials are expensive, many products are not designed with high quality waste recycling standards, since they are defined and produced without looking at their end of life; waste recycling procedures are not scalable, and legislative frameworks do not outline any incentive for using recycled materials (Ghisellini et al., 2017). Secondary raw materials represent a category through which it is possible to monitor progress towards a circular economy. Currently, European Commission is working to depict a framework for such a kind of materials establishing

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requirements to define this category and distinguish it from waste or by-products categories. The Commission established the following indicators in order to capture elements of circular economy: • Contribution of recycled materials to raw materials demand. • Trade of recyclable raw materials between the EU member States and with the rest of the world. The secondary raw materials are extremely important to close the loop and to complete the transition towards a circular economy system. Furthermore, their use includes different advantages such as security of supply, material and energy reduction, the reduction of climate change impacts and manufacturing costs. The European Commission is working to implements different actions like developing quality standards, analysing policy options to connect chemicals, products, and waste legislation, taking measures to enhance waste shipment across European Countries, and developing the EU raw materials information system. All these actions characterise the European Union strategy for secondary raw materials focusing on jobs, growth, and investment. Moreover, the EU commission has begun in 2011 to propose a classification of the critical raw materials defining a list through which the associate raw materials to a meaningful risk of supplying are indicated. This list has grown over the last twelve years and currently 34 materials are listed. Raw materials are crucial for the ecological transition and worldwide economy, mainly like cobalt and lithium, both of them used to produce batteries. The first list was published in 2011 and the last one in 2020 (Table 3.2). Recently, the Commission revised the methodology for establishing the list of critical raw materials, by integrating areas as manufacturing applications, trade, substitutions, and recycling. The European Commission, through the Critical Raw Materials Act, aims to ensure increased domestic production of important raw materials within the EU. Member States must step up their efforts to extract essential raw materials from waste streams.

Table 3.2  Critical raw materials (2020)

Antimony Baryte Beryllium Bismuth Borate Cobalt Coking coal Fluorspar Gallium Germanium

Hafnium Heavy rare earth elements Light rare earth elements Indium Magnesium Natural graphite Natural rubber Niobium Platinum group metals Phosphate rock

Phosphorus Scandium Silicon metal Tantalum Tungsten Vanadium Bauxitea Lithiuma Titaniuma Strontiuma

Source: EU Commission, 2020 a The new raw materials as compared to 2017 are in bold

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Chapter 4

Policies Targeted to Circular Economy

4.1 Circular Economy Policies According to the European Union The European Union is a supranational organization in which 27 member states cede authority and sovereignty to external institutions working to make decisions on economic and political issues. Since from the beginning, European Union tried to develop policies and concepts useful to define environmental legislation, although it was established only at member state level. During the 90s, environmental protection concerns increased, and European institutions introduced different legislative measures able both to limit the emissions from production and consumption systems and to reduce materials to landfill as well as energy consumption. One of the main European policies regards environmental and sustainability goals. At this purpose, European Union produces a lot of laws and rules during the last two decades. About circular economy, European Countries define concepts as waste prevention as well as reduction. The Dutch Parliament, for instance, established the waste hierarchy policy at the end of 1970s. Recently, circular economy becomes prominent for all the European Union institutions. The European policies on circular economy focus on a production and consumption model that involves sharing, lending, reusing, repairing, refurbishing, and recycling existing materials for as long as possible. The main goal is reducing the waste to a minimum level. More than 2.5 billion tonnes of waste are produced every year in the European Union Countries. To face up this problem European Union Institutions is updating its waste management legislation to boost the transition to a circular economy. At this purpose, from the beginning of 2020 to the end of 2021, the European Commission, which represents the executive arm, presents, under the European Green deal, the action plan for a new circular economy, including proposals on waste reduction, sustainable products design, empowering citizens. The waste reduction can be solved through different strategies. The Commission works to extend the life cycle of © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Patti, Circular Economy and Policy, https://doi.org/10.1007/978-3-031-43324-5_4

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products, helping to reduce waste to a minimum. In 2022, the Commission, publishing the first package of measures referring to the circular economy, includes scaling up sustainable products, empowering consumers for the green transition, revising the construction products regulation and a strategy on sustainable textiles. Later, the Commission proposes to improve the design of packaging, providing it with clear labelling and encouraging re-use and recycling. The proposal also includes a transition towards bio-based, biodegradable, and compostable plastics. The European Parliament also calls for the adoption of particular measures like, for example, the practices against the planned obsolescence of products. In 2021, the EU Parliament votes for the new Circular Economy Action Plan, calling for additional measures to achieve a zero-carbon, environmentally sustainable, and fully circular economy by 2050. This policy includes recycling rules and binding 2030 targets on materials use and carbon footprint. The first policies on circularity date back to 2010, when the European Commission adopts the strategy for “smart, sustainable, and inclusive growth” (EC, 2010) to face financial crisis erupted in USA in 2008 and arrived in Europe in 2010. The three priorities refer to the growth, which must be “smart” or rather achievable through the development of a knowledge-based economy: “sustainable” through a promotion of resource efficient, greener, and more competitive economy, and “inclusive” viable through high-employment economy and delivering economic, social, and territorial cohesion. All of them define a social market economy for European Countries in the long run. In 2011, the Commission well-defines a flagship initiative on resource efficiency and establishes a roadmap for resource efficient Europe. This represents the first step to enhance subsequently a set of policy measures best known as “circular economy package”. In the meantime, others European institutions as European Environment Agency and the Directorate General for the Environment suggest focusing circular economy on the relationship between environment and ecology more than on environmental economics principles. The period from 2010 to 2015 is characterised by the debate above the choice between an acceleration of economic growth and environmental concerns. This distinction characterises the different public policies established by the Barroso’s Commission, and Juncker’s Commission. The latter defines a policy much more ambitious than the former. The EU has focused on legislation against environmental impacts for decades. It has introduced legislation on waste reduction which lays down certain directives, which define the minimum requirements subsequently transposed into the laws of the EU Member States. Waste legislation began in 1975 with the Waste Directive 1975/442/EEC and was subsequently amended in 2008 to the Waste Framework Directive 2008/98/EC. In this act, many important thematic areas are defined, such as prevention, treatment, recycling, recovery, and reuse. Successively, another important law was established the Landfill Directive 1999/31/EC that defined technical requirements for waste and landfill sites. In 2014, the European Commission chaired by Josè Barroso defines its communication Towards a circular economy: a zero-waste programme for Europe, through which it proposes a circular economy package. The Commission’s legislative

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proposal is based on waste and focuses on the importance of a circular economy to support sustainable growth, “moving towards a more circular economy is essential to deliver resource efficiency agenda” (European Commission, 2014). The communication and the legislative proposal are defined into a Roadmap to a resource efficient Europe and into the Europe 2020 Strategy. On the contrary, in 2015, the Commission chaired by Jean-Claude Juncker revokes the legislative proposal on waste for a “more ambitious proposal covering the whole of the circular economy”. (European Commission, 2015). The new policy looks at circular economy as project able to deliver economic growth and environmental preservation. The necessity is to recover from the economic and financial crisis that began in 2008 and the circular economy concept seems to assume the key role to make significantly change starting from waste management to arrive to define a broad set of visions and definition of circularity. Thus, the first legislative proposal of circular economy concerning the European Commission Waste Directive is established in 2015. That is the first step towards a circular economy system. It is clear that circular economy cannot be focused only on waste, but needs to involve many other components, such as production sectors and consumption behaviour, national legislations, and it has to determine opportunities for economic growth connected with environmental and social sustainability. The European Commission defines a new vision for the European Countries focusing on economic growth and leaving the target setting. This vision is well described in the communication entitled Closing the loop: An EU action plan for the circular economy. The Juncker’s Commission emphasizes the role of economic growth towards a “more circular economy” and highlights the necessity “to minimize waste and to maintain materials and resource value as essential elements to develop a sustainable, low carbon, resource efficient and competitive economy” (European Commission, 2015). The Action Plan amends the law on waste and landfills and establishes also new policies about eco-design, cleaner manufacturing, product labelling for durability, pricing, consumer protection rules, innovative consumption, waste management proposals. Few European Countries, as Germany and Finland founded strategies for circular economy, introducing resource taxes. The main point is to discover how to transform the theoretically concept of “life cycle” into legal requirements framework. European Union Member State produced laws on waste disposal for long time, but in 2015, European Commission defined the Circular Economy Package (CEP), through which established a set of actions, concerning the whole cycle of life. In April 2018, the European Parliament adopts the Circular Economy Package (CEP) including four Directives on circular economy that can be summarized as follow: 1. EU Directive 2018/849 amending the Directives (2000/53/EC) on end-of-life vehicles, (2006/66/EC) on batteries, accumulators, waste batteries and accumulators, and (2012/19/EU) on waste electrical and electronic equipment, 2. EU Directive 2018/850 amending the Directive 1999/31/EC on landfill of waste,

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3. EU Directive 2018/851 amending the Directive 2008/98/EC on waste, 4. EU Directive 2018/852 amending the Directive (94/62/EC) on packaging and packaging waste. All these directives amend the old ones in order to ameliorate the waste management within European Countries. The main point is to implement the strategy of “waste hierarchy” as it has been established in the Waste Framework Directive. This hierarchy defines an order according to which waste production and management strategies make waste disposal as the last one. The hierarchy order is defined as prevention, preparing for re-use, recycling, recovery, and disposal. Looking at the single directive, it is possible to advance some considerations. The EU Directive 2018/849, for instance, defines the framework within which European Member States act to redefine all the measures to apply the waste hierarchy for recovering and reusing end-of-life vehicles, waste batteries, accumulators, and electrical equipment. All the Member States need to implement Directive’s goals in their legal national systems. The EU Directive 2018/850 establishes to reduce waste disposal in landfilling since to ensure advantages for humans and nature and also assessing waste as a resource economically significant. The waste hierarchy needs to be aligned with this goal. The European Member States have time till 2030 to intervene for change their waste collection and management systems. Furthermore, they have to diminish the amount of municipal waste disposed in landfills to 10% of the total amount of waste. The EU Directive 2018/851 revises the old Directive on waste requiring European Member States to ameliorate waste management systems as well as to enhance the use of resources and to consider waste as a resource. To make these improvements all the Member State need to use new business models and review the consumption behaviours. Moreover, the European Commission sets up three levels of weight for waste achievable by different periods of time, more specifically: 55% of waste by 2025, 66% by 2030, and 65% by 2035. The EU Directive 2018/852, which amends the old Directive 94/62/EC on packaging and packaging waste, targets to increase packaging waste recycling. All the Member States of the European Union must define and implement measures to prevent packaging waste, minimizing their environmental impacts, and to encourage increasing in the reusable packaging sharing. They also have to achieve the targets by 2025. According to the European Institution, it should be possible to save six hundred billion of euros per year, to create 140 thousand workplaces and 617 million of tons of CO2 will decrease by 2035, adopting the Circular Economy Package. European institutions are working hardly to define rules and enhance environmental protection policies. In this context, circular economy is not just a policy for waste management, but also a way to recover raw material and energy activating an innovative transformation of the production system. The CEP provides an Action Plan describing proposals that address two main goals: to minimise waste and to improve the efficiency and environmental

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performance of energy-related products by promoting eco-design. At this purpose, European Commission highlighted the need to re-define the “waste directives” in order to achieve a common target for recycling 65% of municipal waste and 75% of packaging waste by 2030. Moreover, a binding landfill target to reduce landfill to maximum of 10% of municipal waste by 2030; the promotion of re-use and economic incentives for producers to put “greener” products on the market. In 2022, there was an update of the Circular Economy Package, with which the European Commission published the Circular Economy Package II, with the aim of providing consumers with reusable packaging options and eliminating unnecessary packaging, providing clear labels to support proper recycling. With this package of initiatives, the Commission intends to shed light on compostable and biodegradable plastics, explaining more clearly the type of applications that these plastics can have to be truly environmentally beneficial, as well as clarifying how these materials are designed, disposed of, and recycled (European Commission, 2022). In addition, in March 2023, the European Commission adopted two proposals one for a Directive on green claims and one on common rules promoting the right to repair commodities (EC, 2023). Few months later, the EC revised the circular economy monitoring framework focusing on the following five thematic areas: production and consumption, waste management, secondary raw materials, competitiveness and innovation, global sustainability, and resilience. The new monitoring framework take a new dimension of global sustainability and reliance into consideration as well as it includes new indicators, such as material footprint, resource productivity, consumption footprint, greenhouse gas emissions. Another important set of policies is adopted through the European Grean Deal (EGD) presented by European Commission as new strategy for growth in 2019. The Green Deal is the EU’s plan towards green growth and green jobs and describes important steps towards sustainable development introducing circular economy framework. The European context changes since 2019 showing that growth-based economic systems are not sustainable anymore and social as well as environmental issues become much more important and need to be nourished one to another. Actually, the European Grean Deal comes as a growth strategy, which “aims to transform the EU into a fair and prosperous society with a competitive economy” (European Commission, 2020). It uses topics and tools focusing on economic efficiency and social justice, but it also aims to become the first climate-neutral continent worldwide by 2050. The European Commission, chaired by Ursula von der Leyen, considers the European Green Deal as the founding act, since it affirms the importance of environmental question and the urgent need to solve the ecological crisis. The main EGD goal is the net carbon neutral European Union by 2050, but also to increase gross domestic product (GDP). To emphasize the importance of the EGD, the European Commission considers the “Action Plan” for circular economy as one of the main building blocks of the European Green Deal. At this purpose, the Commission set up eight areas through which the EGD intends to achieve those goals:

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1. Increasing EU climate ambition for 2030 and 2050 2. Supply a clean, affordable and secure energy system 3. Mobilise industry for circular economy 4. Build and renovate an energy and resource efficient system 5. A zero-pollution ambition for toxic-free environment 6. Preserve and restore ecosystems and biodiversity 7. Farm to fork: healthy and environmentally friendly food system 8. Accelerate the shift to sustainable and smart mobility. About the first area, the Commission establishes to revise all energy and climate legislation at EU level and fixes 2030 target within the Climate Law. In the second area, the European Commission establishes that the transition towards renewable energy brings advantages to customers and decarbonisation process will take place at the lowest possible cost. The third area, concerning the mobilising industry of circular economy, refers to the plans the European Commission intends to enhance for high-energy intensive industries, to fight against greenwashing and regulation on packaging and waste generation. In this area, the Action Plan is founded as one of the main goals outlining to decuple economic growth from resource. The fourth area regards the resource efficiency for which the Commission intends to double the buildings’ innovation rate by 2030 through incentives and funding schemes. The fifth area, which concerns the zero-pollution ambition for a toxic-free environment, emphasizes the role of the Commission that intends to publish an action plan on zero pollution for air, water and soil, the aim being the restoration of natural functions of ground and water surface. The sixth area refers to the preservation and restoring of ecosystems and biodiversity, the Commission after the definition of a Biodiversity strategy, plans to design a forest as well as a maritime area strategy. The seventh area focuses on the Farm to Fork strategy for which the Commission defines a set of strategies, action plans and directives by the end of 2023. All these measures intend to ensure sustainable production, and food security. The eighth and last one area concerns the accelerating process towards sustainable and smart mobility, the Commission establishes a strategy based on three pillars make more sustainable all transport modes, make sustainable transport alternatives available in a multi-modal system, and mis-en-place” the right incentives to drive the transition. Therefore, the European Green Deal, through the definition of a set of strategies, aims, and targets, establishes a framework to improve the green transition. It is clear that the success of this European environmental policy depends on the ability to integrate and implement strategies and regulation within the above specified areas. This regulatory framework highlights the importance of assessing companies’ strategies towards circularity. At this purpose, the Commission establishes the Industrial Strategy for Europe (COM 102, 2020) focusing on organizations advancing towards green transformation as well as circularity.

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All the last European policies highlight the necessity to foster material, resources, and waste assessment to decrease environmental pollution. For European Union, waste management is much more prominent and urgent than other issues and for this reason European Commission defined rules and laws concerning this topic. At this purpose, the Commission is currently working to revise the main legislation, implementing the “2018 waste package” and amending the Packaging and Packaging waste Directive, Batteries Regulation, Industrial Emission Directive, and Eco-­ design for Sustainable Products Regulation. That is very clear within the European circular economy action plan, which includes rules for products durability, repairability as well as recyclability. For instance, European Union introduces a mandatory product labelling for durability, just to permit to buy more durable products. Another important topic for European circular economy policy is the eco-design for which European Union has got a well-­ defined eco-design system. European institutions intend to foster innovative consumption, as collaborative consumption, since it may reduce materials and resources and permit to replace goods with services. The more recent circular policies introduce different novelties in terms of raising of the municipal waste recycling target, landfill limit of 10%, obligation to separate collection of organic, textile and hazardous household waste, measure against food waste. All of them represent the priorities of the European Union. All the European circular economy policies need to be checked, for this reason indicators are defined and used. Many targets are also fitted at Member States level and European Commission establishes penalties for non-compliance. For example, European Member States have to achieve the 65% of urban solid waste and the 75% of packaging waste should be recycled by 2030; furthermore, Member States cannot more than 10% of urban solid waste to landfill. All the European Countries are preparing national policies for waste management and the efficient and sustainable use of resources. For instance, Finland (SITRA, 2016), Holland (2016), and Scotland (2016) define ambitious goals of reuse, recycling, and development of renewable sources of energy and biological materials. Italy adopts in 2017 a strategic plan towards a circular economy model, where it is clear the necessity to change the Italian economic system, through a reform of the bureaucratic, tax and justice systems. This paragraph has focused on European circular policy strategies, in particular on the work carried out to define the action plan, which will be addressed in paragraph 4.2. It should be noted that there are also other circular policy strategies, such as circular taxation, the development of circular indicators, EU taxonomy for sustainable activities, circular procurement, and the list of critical raw materials. Some of these will be dealt with in Chap. 6, precisely to give greater emphasis to these strategies, with the exception of the list of dangerous substances, which has already been described in Chap. 3. For completeness of analysis, in this section, the European circular policy strategy is presented in the Action Plan (Sect. 4.2).

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4.1.1 The Ecological Transition The Globalization process enhances economic, ethic-social, and environmental challenges. The overexploitation of resources to cover production and consumption needs as well as climate change heighten the environmental crisis. The urgency to intervene is strengthened and governments as well as citizens have to define policies and behaviour to preserve the ecosystem. Human activities need to be more resilient and, therefore, it is necessary to foster sustainable models. The main idea is “Close the loop”, and all the stakeholders have to adopt the “economy of spaceship” versus that of “cowboy”. In a such context, circular economy represents the best way to leave the linear use of resources and energy and start the “ecological transition”. The ecological transition represents a way to change production, consumption, and work patterns to solve problems as climate change, reduction of biodiversity, and natural disasters. Hence, ecological transition arises the path to deal with this crisis. Climate change may influence economic, environmental, and social systems. Actually, climate change affects production and finance creating negative impacts on productivity, producing effects randomly and in the log-run perspective. The transition is extremely important to deal with climate change task. COVID-19 pandemic disease affected the whole economy and social systems, showing the weakness of national healthcare systems, for instance. This disaster in connected with climate change problem and shows how our organizations are not immunized against such a kind of shocks. A process of transition, hence, concerns the societal system, which comes from a multiplicity of changes on different scales, where co-evolution and reinforcement are very important. Ecological transition is multi-sector and refers to the primary as well as secondary sectors. It regards agri-food, industrial transition, and waste production and management. The goal is to revitalize the productive system looking at environmental respect and preservation. To achieve this goal, decarbonization of the economy is extremely important. The take-make-dispose paradigm is not intended as sustainable anymore, since it is based on a massive consumption of resources and materials and produces waste at the end of products life. New business strategies have to be enhanced combining circular economy practices to create environmental and social values and improve energy and resource efficiency. The transformation requires more interaction between nature and society and more implementation of the transition. It represents the most important point in European Union Member States Agenda. Sustainable production models, and consumption behaviours need to be implemented with circular economy principles and strategies. The European Union efforts to make an Action Plan for Circular Economy go in this direction: accelerate the transition towards a circular economy system. However, the ecological transition cannot be described without highlighting another aspect considered to be of great importance for the EU circular strategy,

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namely the digital transition. Many strategies focus, in fact, on the combination of ecological and digital revolution that is the dual green and digital transition. Such a combination can strengthen each other. Technology can be used to develop circular economy models at some important stages, for example, blockchain technology can be used to help track materials, improve goods maintenance, and waste recycling. It is also true, however, that the two transitions can hinder each other. Digitization uses electricity, very often with a high concentration of resources. This can have undesirable consequences. It follows that to obtain the maximum result from the double transition requires a proactive and integrative management. The transition to the digital economy will be mainly managed by private companies because of their economic potential. In order to benefit from greening and limit the harmful effects of this, the state, public organizations, and citizens must make every effort to make the twin transition fair and inclusive. In this regard, the 2022 Strategic Foresight Report, through which the European Commission communicates to the European Parliament and the Council the twinning of green and digital transitions in the new geopolitical context, identifies 10 key areas of action for good twinning between green and digital transition, which are summarised below: 1. Strengthen resilience and open strategic autonomy in critical sectors for twin transitions (for instance, through the work of the EU Critical Technologies Observatory). 2. Strengthen green and digital diplomacy, pushing the EU’s regulatory and standardisation power, promoting EU values and partnerships. 3. Offer essential raw materials and raw materials, through a long-term systemic approach to avoid a new dependency trap. 4. Strengthen economic and social cohesion by protecting the welfare state with regional development strategies and major investments. 5. Adapt education and training systems to a rapidly changing technological and socio-economic reality and support labour mobility in all sectors. 6. Mobilise further future-proof investments in new technologies and infrastructure – and in particular in R&I and in the synergies between human capital and technology -with key transnational projects to pool Community, national and private resources. 7. Develop monitoring frameworks to measure well-being beyond GDP and assess the enabling effects of digitisation and its global carbon, energy and environmental footprint. 8. Ensure a future-proof regulatory framework for the single market, conducive to sustainable business and consumption models, for example by continuously reducing administrative burdens, updating State aid policy, or applying artificial intelligence to support decision-making and citizen engagement. 9. Strengthen a global approach to the definition of standards and benefit from the EU’s first competitive advantage in sustainability, focusing on the principle of reduction, repair, re-use and recycling. 10. Strengthen cybersecurity and data sharing framework to unlock the potential of twinning technologies.

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The interaction between green and digital transitions is crucial to the success of the twinning of green and digital transitions; it is therefore necessary to fully understand the various future megatrends and unforeseen events. Maximizing this interaction is necessary to address the tensions between the two transitions. This requires a dynamic approach to anticipating change and adapting policy strategies. By 2050, the twinning of the green and digital transition should produce a new, regenerative, and climate-neutral economy, reducing pollution, restoring biodiversity and natural capital. This ambitious programme could lead the European Union to position itself as a model of competitive sustainability and strengthen its resilience and open strategic autonomy. This is also a contribution that could benefit all communities and territories, both inside and outside Europe. That is why the whole strategy of the European Union’s circular economy can be seen as a model that states, outside the Community context, such as, for example, developing and emerging ones, may consider establishing their own ecological and digital transition plans.

4.2 The European Circular Economy Action Plan Section 4.1 of this chapter refers to the EU Circular Economy Action Plan as one of the EU’s environmental policies. Here, the CEAP is described more fully as a strategic tool to increase the involvement of EU Member States in achieving the 2030 Agenda targets. The recent European framework for circular economy is shaped through the New Circular Economy Action Plan (COM 98, 2020) as the central axis of the European Green Deal (COM 640, 2019). European Commission, in 2015, adopts the first report known as “Close the Circle: An Action Plan of the European Union for Circular Economy”. This document focuses on transition towards circular production, consumption and waste management and defines priorities like food waste, plastic, critical raw materials, biomass and bioproducts. The report highlights the need for developing globally circular economy and increasing “policy coherence in internal and external EU action in this field will be reinforcing and essential for the implementation of global commitments taken by Union and by EU Member States, notably the U.N. 2030 Agenda for Sustainable Development and the G7 Alliance on Resource Efficiency” (European Commission, 2015; p. 3). European Commission uses this sentence to emphasize the link between circular economy and sustainable development goals (SDGs) defined into United Nations 2030 Agenda. Circular economy seems to be an instrument useful to achieve sustainable development goals. In 2019, the Commission approves the European Green Deal and in 2020 launches the latest new version of the Circular Economy Action Plan (CEAP) to foster the transition from linear to circular economy. From 2021 to 2022, the Commission executes several proposals to update the legislation on sustainable

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2015 First edition of Circular Economy Action Plan 2019 European Green Deal March 2020 Latest new edition of Circular Economy Action Plan December 2020 Propostal for a new regulation on sustainable batteries February 2021 Global Alliance on Circular Economy and Resource Effiency (GACERE) Ocrober 2021 Porpostal to update rules on persistent organic pollution in waste November 2021 Porpostal for new rules on waste shipments March 2022 Package of measures in CiEAP April 2022 Propostal for revised EU measures for pollution in large industrial insallastion

Fig. 4.1  The timeline of CEAP

batteries, on waste, and on waste shipment and measures to address pollution from large industrial installations. Later, in March 2022, the Commission approves the package of measures in the CEAP (Fig. 4.1). The 2022 represents an important year for several initiatives under the action plan, as: the legislative proposal about green claims, the requirements on packaging and packaging waste, the policy framework on bio-based, biodegradable, and compostable plastics and the reduction of the microplastic pollutant impact on the environment. The Plan is connected to the European Green Deal, which represents the new agenda for sustainable growth, and launches strategies for climate-neutral, resource-­ efficient, and competitive economy. Throughout the Plan, the European Union intends to reduce its consumption footprint as well as circular material use rate. European institutions want to define a regenerative growth model. The new Action Plan establishes an agenda involving economic actors, consumers, citizens, and civil society to achieve a cleaner and more competitive Europe. All the initiatives concern the life cycle of products: from their design to the waste

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production and management; and all the resources come from European Union economy. Moreover, also in the last version, European Commission confirms the importance to implement 2030 Sustainable Development Goals. More specifically, the European Commission implements 35 actions to establish a sustainable product policy framework able to make sustainable products, services, and business models, and to enhance waste policy. The sustainable product policy framework is useful to design sustainable products, to empower consumers and public buyers, to promote circularity in production processes. The key product value chain framework enhances circularity in sectors as electronics and ICT, batteries and vehicles, packaging, plastics, textiles, construction and buildings, food, water, and nutrients. The waste policy framework concerns the supports to waste prevention and circularity, since the amount of waste within European Countries is not decreasing; the supports to the circularity in toxic-free environment, enhancing towards a progressive substitution of hazardous substances to protect citizens as well as environment; the creation of a well-functioning of secondary raw materials market, which represent a good solution for production system in terms of safety, performance and costs; the best way to address waste exports from European Countries to abroad, avoiding to export tonnes of waste to non-European Union areas, causing damages in terms of environmental and health impacts within the final destinations, and incurring high costs. Additionally, the CEAP defines some crosscutting actions able to achieve climate neutrality, to get economics right, to foster the transition through research, innovation, and digitalisation. The crosscutting actions may cover the necessity to use circularity as a prerequisite for climate neutrality, since the necessity to reduce emissions increased in few years and also because it needs to achieve climate goals by 2030. Moreover, some actions regard the possibility to get economics right financing sustainable production and consumption; a lot of research programs as, for instance, Horizon, LIFE, are used to improve innovation and support circularity on production system. The safe by design approach represents a way to enhance circular business models and new production that uses recycling technologies. In this framework, an important role is assumed by intellectual property rights that need to be upgraded looking at green transition and circular economy. Definitely, the CEAP introduces over 150 measures able to show that policymakers addressed critical challenges about circularity. The main goal is not only the recycle process, but also further important steps as design, reuse, durability, and reparability. Eco-design represents one of the main tips to follow to join circular economy goal. Producers must pay more attention when define their products, selecting sustainable inputs, which at the end of life can be removed and converted for secondary production process or destroyed without any damages for the environment. Furthermore, products must be repairable a long their cycle of life. It means also that products need to be less complex to permit durability and reparability.

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At this purpose, European Commission establishes the sustainable product policy legislative framework as well as defines Eco-design Directive to make eco-­ design applicable to a wide range of products. The initiative establishes important principles and different aspects, such as: durability, reusability, upgradability, and reparability. Furthermore, it enhances the recycled content in products and enables remanufacturing and high-quality recycling. Additionally, it pushes to reduce carbon footprint and restricts single-use and premature obsolescence. The last one represented a tool used by entrepreneurs to make hard to repair products and substitute single components. Premature and planned obsolescence has to be avoided and limited throughout specific legislations within European Member States. The CEAP introduces different measures to valuate, and control circular economy, through homogeneous methods for evaluating circularity. Furthermore, minimum requirements for sustainable labels are considered important to monito circular economy. The main issue regards initiatives along the entire life cycle of products and focuses on products design, circularity production processes, sustainable consumption, and waste prevention. At this purpose, the CEAP introduction emphasizes the necessity to accelerate the transition towards a circular model of growth that “gives back to the planet more than it takes” (European Commission, 2020; p. 2).

4.2.1 Production The European Union Circular Economy Action Plan (EU CEAP) considers production as an important Sustainable Development Goal. More precisely, the Goal 12, which ensures sustainable production pattern. According to the EU CEAP, the production needs to be inverted towards more sustainable patterns. To close the loop, new integrated solutions are necessary. They take eco-design, raw materials selection, bio-based packaging, waste management and secondary raw materials exploitation into account. Also, the European Union Green Deal defines disruptive technologies solutions as key components for a sustainable growth path. In a such context, research and innovation represent the main point on which invest for the future. Product design, for instance, is important to facilitate the transition of production system to the circular economy. Eco-design represents a way to define new sustainable products, characterised by new materials reusable, easily removable and replaceable. Eco-design framework is the main strategic policy to make products improving durability, reusability, upgradability, and reparability. This could be reducing chemicals and ameliorate energy efficiency. European Commission intends to stop linear pattern to take-make-use-dispose and establish incentives to make producers commodities more circular. After that, the current production procedures need to be changed focusing on life cycle assessment, through which it is much easier to control energy and resources dispersion. It

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is possible to follow along the entire cycle of life every kind of product, from “cradle to cradle”. Furthermore, the use of secondary raw materials permits to make efficient resource management and reduce emission and waste, which can be re-used for new productions and so exchanged between different industries, through industrial symbiosis, for instance, “by developing an industry-led reporting and certification system and enabling the implementation of industrial symbiosis” (European Commission, 2020; p. 6). Furthermore, there is the necessity to use digital technologies for tracking products and services. The CEAP promotes the use of a such kind of innovation technology able to trace and map every kind of resources used during the production process. It is also emphasized the role of green technology that permits to register the EU environmental technology verification scheme as an EU certification mark. What CEAP establishes for production towards a circular economy is also implemented throughout other important policies and instruments as Eco-design Directive, Ecolabel, Green Public Procurement, and Industrial Emissions Directive, which regulate energy efficiency and circularity of products, and reduction of impact. The Circular Economy Action Plan also provides a set of actions able to solve climate emergency. At this purpose, European Commission establishes sectorial actions in value chains to permit circular products market development. More precisely, there are seven sectors, as: 1. Electronics and ICT. 2. Batteries and vehicles. 3. Packaging. 4. Plastics. 5. Textiles. 6. Construction and buildings. 7. Food, water, and nutrients. Electronic represents the main source of waste within the European Union and less than 40% of it is recycled. About this problem, the CEAP focuses on the Circular Electronics Initiative promoting a lifetime of products much longer than now. Through the CEAP, European Commission emphasizes the necessity of designing and building electronic devices looking at their durability, reparability, upgradability, reuse, and recycling. At this purpose, the Commission established the “Eco-­ design and Energy Labelling Working Plan 2022–2024”, which will replace the Eco-design Directive defining a larger range of products. The Eco-design Working Plan concerns the energy-related products (ErPs) and established their priorities. Product groups of energy-related products are regulated through 50 measures, which are applied to a huge quantity of products placed into the market each year. According to the last estimation on eco-design and energy labelling, there has been a reduction of 7% of European primary energy demand. Batteries and vehicles were object of a specific legislative proposal by European Commission, the “Batteries Directive”. The proposal permits to define guidance for consumers and recovery of materials. It is also important since it establishes rules on recycled content to ameliorate collection and recycling rates of all batteries.

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Packaging is another important sector for circular economy since it regards every kind of products. The Commission intends to ensure that all packages on European Union market will be reusable as well as recyclable by 2030. The main focus is on packaging and waste reduction, designing reusable packaging through restrictions on use of certain materials as polymers. Furthermore, it should be also possible separate packaging waste at source and about food packaging, it will be necessary to define rules able to safe recycling into food contact materials. Plastics represents another important sector where the European Commission intends to activate strategies and rules to avoid plastic consumption, mainly for what concerns packaging, construction materials and vehicles. Also, the presence of microplastics needs to be addressed according to the European Commission that intends to restrict added microplastics and develop labelling, certification, and regulation. The Commission intends also to enhance the use of biodegradable and compostable plastics, and bioplastics, since the use of bio-based feedstock positively affects environment, reducing the presence of fossil resources. Textiles characterize another sector where water, primary raw materials are used. The Commission defines a Strategy for Textiles to strength competitiveness and innovation, to enhance textile reuse, recycling, and repair. It should be also provided incentives to products-as-service, circular materials, and production, using international cooperation and co-creation. Construction and buildings are also important to foster circular economy action plan, and the European Commission defined a “Strategy for a Sustainable Built Environment” to improve material efficiency and climate impacts. Life cycle buildings represents the main way to address sustainable performance of buildings. At this purpose, the Commission promotes the use of digital logbooks for buildings and integration of life cycle assessment in public procurement. Furthermore, it is necessary to revise material recovery targets set in EU legislation about the construction and demolition waste as well as reduce soil sealing, increasing circular use of excavated soils. Food, water, and nutrients are also of interest for European Commission that defined a target on food waste reduction, useful to substitute single-use packaging by reusable products in food sector. At this purpose, the Integrated Nutrient Management Plan becomes the main important document Commission intends to develop for more sustainable nutrients and for that it wants to review some directives on wastewater treatment and sewage sludge.

4.2.2 Consumption The Circular Economy Action also refers to the sustainable modalities of consumption since the actual lifestyle cannot be ensured for the future. Consumption behaviour needs to be changed and it does not mean that humans have to reduce their consumption, but that they hate to re-arrange habits and motivations beyond their consumption behaviour. For instance, if people start to use

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low-­energy devices, they will save a huge quantity of money without negative externality for the environment. Energy related to food, for example, amounts to 30% of total energy, and represents the 22% of greenhouses gases emissions (GHG). Whenever humans reduce consumption would mean less harms for the environment. According to Kirchherr et al. (2017), circular economy could be representing a solution for the increasing demand of sources, which are necessary to produce commodities and to maintain the current consumption worldwide. The current generation is affected by consumption behaviour based on end-of-­ life, planned obsolescence, marketing strategies as “pay one and buy two” and so on. A sustainable consumption needs to be focused on reusing, recycling, and recovering procedures. It means that there will be a relationship between production and consumption useful to put into the market commodities that can be repaired, easy to recover. Consumption needs to be addressed towards products characterized by renewable biological resources. At this purpose, circular economy can be reinforced through bioeconomy that pushes towards the use of renewable sources, and non-fossil raw materials. Through circular bioeconomy, the products may become more resource-efficient and sustainable. Sustainable models of consumption as well as production are important within European Union agenda, directly involved in sustainable development goals as “12”. The European Commission emphasizes the sustainable bioeconomy for Europe, throughout a communication to the European Parliament and other European institutions, where it is highlighted the connection among bioeconomy, circularity, and sustainability.

4.2.3 Waste Management The part of CEAP focused on waste is titled as “less waste, more value”. This title means that waste must be considered as a resource useful to start new production procedures. This sentence represents a vision, but also a target European people need to achieve. This regards many ways to make waste prevention possible, from the producer responsibility scheme to the incentives provision for sharing information and good practices in waste recycling. The main target is to reduce significantly waste at local level. The European Commission intends to reduce municipal waste amount by 2030. Hence, it needs to arrange high-level exchanges on circular economy and waste involving all the stakeholders located in the European Union. More specifically, The European Union Action Plan established tools to involve citizens to adopt the principle of “less waste, more value” in their style of life. From the production side, entrepreneurs may use eco-design to select raw material able to be easily converted into secondary raw materials for other process or easily to manage as waste. They can also use LCA to check in every production step the level of circularity achieved, implementing circular practices if necessary.

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From the consumption side, citizens need to improve their information and training about waste production and management. At this purpose, the European Commission established the important tools as the European Green Capital and the European Green Leaf Awards. The Commission intends to recognise European citizens efforts to make their cities much more liveable and sustainable. The European citizens through these projects make experiences of how to produce less waste and more value and take part of a network, − the European Green Capital network – through which they can share best practices. These awards permit to understand the importance of achieving less waste and more value as an important target and encourage European citizens to change their consumption habits and purchasing behaviours. All those actions need to be regulated through a specific legislation. The European Union legislation has to enhance waste prevention and promote cleaner waste streams, and high-quality recycling. Waste prevention represents an important step for European Union as well as for many Countries around the world. To manage waste, it necessary to reduce resource depletion as well as waste generation. Circular economy allows to turn waste into valuable and reusable resources. Furthermore, the increasing waste production characterizes a linear-based business model where waste is made of raw materials after extraction, transformation, and consumption and returned into the environment. Decoupling waste generation from growth means to change production and value chain. To foster sustainable production policy, it needs to improve legislation according to the new frontiers as circular economy and bioeconomy. An important step within EU legislation process concerns the Directive 2008/98/ CE on waste management. The Directive introduces a legal framework for the treatment of waste within European Union Countries. This framework intends to protect the environment as well as human health and highlights the importance of waste management procedures, the recycling and reuse of waste, and ameliorating the use of resources. The Directive establishes the “waste hierarchy” and also confirms the “polluter pays” principle, which indicates that waste management costs are sustained by the initial producer. According to the Rio Declaration (1992), the “polluter pays” principle refers to the practice that those who produce pollution should bear the management costs to prevent harm to humans and to the environment. Additionally, the Directive introduces some others important novelties as: the concept of extended producer responsibility (EPR), the distinction between waste and waste by-products. The ERP involves a set of measures taken by EU Member States to ensure that product manufacturers bear financial and organizational responsibility for managing waste during a product’s life cycle. The waste by-­ products are chemicals and released into the environment by combustion or through chemical processes, as dioxins for instance. The new European Union legislation process is started, and it concerns different issues as end-of-life, packaging, and particular commodities as batteries, vehicles and so on. Moreover, it is going to consider waste prevention, and high-quality recycling. At this purpose, the revision of the old Directive 2008/98/EC aims to

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implement extended producer responsibility schemes and to foster good practices in waste recycling. The new Directive 2018/851 CE modifies the previous one defining measures for circular economy. It establishes minimum operating requirements for extended producer responsibility, which include the responsibility to contribute to waste prevention and the possibility of reusing and recycling products. Furthermore, the new Directive reinforce the rules on waste prevention, establishing that European Union Member States must adopt the following measures: • support sustainable production and consumption patterns, • encourage the design, production and use of products that are efficient, durable, repairable, reusable, and upgradeable resources, • focus on products containing essential raw materials to prevent these materials from becoming waste, • Encourage the availability of spare parts, instruction manuals, and technical information allowing products repair and reuse without compromising quality and safety, • reduce food waste generation by 50%, as a contribution to the United Nations Sustainable Development Goal, • promote the reduction of dangerous substances in materials and products, • stop to marine litter production. Moreover, the Directive 2018/851 defines new goals about the waste. The EU Member States, by 2025, must separate collection of textile materials and hazardous waste produced by households, and ensure that organic waste is collected separately or recycled at source, though compost for instance, by the end of 2023. The directive also defines examples of incentives to implement the waste hierarchy, such as landfill and incineration charges and pay-as-you-go schemes.

4.2.4 Secondary Raw Materials The Circular Economy Action Plan takes the topic of secondary raw materials into account. This kind of materials refer to the production of waste or materials deriving from a recovery process and can be reintroduced into the economic system as new raw materials. The recovery process regards the “material recovery”, a process that includes activities as recycling and preparing waste for re-use. Secondary raw materials (SRM) represent a resource useful to close material loops, reducing inputs, fostering the recycle of products, and contributing to enhance resource efficiency. A such category of raw material needs a closed-loop supply chain, where the relationship is inverted from consumer to recycler and redistributor towards manufacturer. The use of secondary raw materials represents an important challenge about performance, availability, and costs. Since they are less expensive and available than primary raw materials. The opportunity regards the fact that waste should be turned

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into valuable resources. It is possible, for instance, to enhance refurbishment as well as recycling activities. Likewise, it is also desirable to intervene before a resource becomes waste at all, for example through the eco-design process or using easy to disassemble components. A technology product, for instance, at the end of its lifecycle may become a resource of usable components for refurbished products. SRM may come from different sectors, as agrifood, for instance, and employed in chemical, pharmaceutical, and nutraceutical sectors. There are two groups of SRM: non-metallic and metals materials. The former includes plastics, wood, paper, glass, natural and synthetic rubber, and polyamide plastics. The latter includes aluminium, iron, steel, lead, and copper. All those materials can be used to make semi-finished products, or used to make packaging, cloths, automotive and other productions. Wastepaper, for example, is employed to make many different kinds of products. Secondary raw materials should be a key component of the European Union circular economy policy. The old Waste Framework Directive 2008/98/CE does not include secondary raw materials as a relevant category such as waste, by-products, end-of-waste. More specifically, the Waste Framework Directive defines “waste” as all the “substances or objects which the holder discards or intends or is required to discard”, (Art. 3, WFD 2008/98/CE), “by-products” as all the substances coming from a production procedure for which the primary target is not the production, and it can be used directly without processing anymore (Art. 5, WFD 2008/98/CE), and “end-­of-­waste” as “certain specific waste cease to be such when they are subjected to an operation recovery, including recycling, and meet specific criteria” (Art. 6, WRD 2008/98/CE). Therefore, it seems to be uncertainty within European Union Waste Framework Directive about the definition of “secondary raw materials”. Actually, they do not have a clear key role in the legal waste framework and regulatory system of EU yet. It is sufficient to observe that this framework missed the term “secondary raw materials”. Despite the Directive establishes the necessity to prevent and reduce the production of waste to complete the transition towards circular economy, the use of secondary raw materials faces limits such as the absence of quality standards, the not extension to the producer’s responsibility, and the difficulties to trade secondary raw materials across the EU market. Furthermore, the European legislation does not define a clear set of requirements for secondary raw materials, contributing to generate confusion with the “end-of-­ waste” status. Thus, there is the necessity to define a category of “secondary raw materials” and distinguish it from “by-products” and “end-of waste” ones. There is also a gap of policies as well as legislation among the European Union Member States. Although the Community directives push towards legislative uniformity, the European states regulate the waste categories in different ways. In Italy, for example, the national legislation referring to the category “by-product”, allows for the exclusion of all materials pertaining to the by-product from the scope of application of the waste legislation.

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The end-of-waste process specifies the criteria by which a certain type of waste ceases to be considered as such and obtains the status of product (Legislative Decree 152/06). Some EU Member States as Belgium, France, and Netherland adopted the Green Deal North Sea Resources Roundabout, to enhance secondary raw materials use, sharing knowledge and experiences among them. Otherwise, the European Commission highlights the necessity to clarify secondary raw material requirements for a specific category, and to cover the lack of policies at European and National levels about the interpretation of waste. The Commission is currently working on the revision of the Waste Framework Directive and previously produced documents and information to revise the legislation about secondary raw materials. At this purpose, the new EU Circular Economy Action Plan highlights those problems undertaking some actions as developing quality standards for secondary raw materials, mainly for plastics, addressing relationship problems between chemicals, products, and waste legislation, taking measures to facilitate waste shipment across EU Countries, and developing an EU raw materials information system. The EU CEAP intends to emphasize the role of secondary raw materials preventing a discrepancy between their supply and demand and guarantee the expansion of the recycling sector. At this purpose, the action plan considers assessing the aim to develop a wide end-of waste criterion for waste stream, to improve standardisation at national and community levels, to make limitation of the use of substances of very concern in products, and to establish a market observatory for secondary materials.

4.3 Policies for Reuse and Repair, Circular Practices and Strategies, Secondary Materials Markets The transition from linear to circular economy is subject to constraints as take-­ make-­use-dispose approach that affects the contemporary production and consumption model. A real circular economy model needs to be based on regenerative and restorative perspective. It needs to redefine products and waste out reducing negative impacts. Policies for remanufacturing, reparability, and reusing have to be adopted at production level. Furthermore, new business models need to be defined to foster circularity in production, consumption, and supply chain. One of the main issues about circular development model regards the policy on reuse and repair. European Commission (2011) focused on the reuse of household bulky waste, mainly about Waste Electronic and Electrical Equipment (WEEE). The production of massive waste represents a motivation for enhancing reuse and repair. The meaning of “reuse” is not easy, since it regards a plethora of different sources, which makes it difficult to define. Furthermore, reuse has environmental as well as social and ethical dimensions. Environmentally, reuse concerns resource extraction and manufacturing that represent energy-intensive procedures, increasing carbon emissions and climate

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change. About social and ethical dimension, reuse includes charities and social enterprises, involving a variety of actors, which work to resale, to produce compliance scheme, and residual waste. Moreover, there are responsible customers who offer their items reusable by new consumers. Hence, this represents an opportunity to a life extension for unwanted products, which would otherwise end up in landfill. Reuse and repair are also new perspective for bulky waste stream management. A true ecological transition towards a circular economy is possible only by investing in the repair of products, primarily high-consumption technological products, such as mobile phones, laptops, household appliances and any other type of electronic device. Repair allows to increase the life cycle of a product and to reduce the quantity of discarded items and transferred to disposal centres or landfills. According to the Waste and Resource Programme (WRAP, 2011a, b) discarded items potentially reused may increase from 20% to 70%. The repairability of items depends also on regulations and laws, which have to re-define production procedures and limitation to reuse. For instance, planned obsolescence needs to be avoided, since it does not permit reparability and customers are forced to purchase new products when they arrive to their end of life. Planned obsolescence is a practice of designing products to break down in the short-term. It has been used to push customers to purchase continuously new products. This strategy whether satisfy profit maximization needs, does not is environmentally sustainable. Planned obsolescence characterizes most of the electronic device as well as the difficulty of disassembling the components of a product. Hence, new rules are needed to encourage producers to review these characteristics of their products and make them more easily repairable to lengthen their life cycle and usability. Within European context, the first institution working against planned obsolescence was the European Economic and Social Committee that was striving to enhance longer product lifetimes and promoting restriction on planned obsolescence. Now, the European Commission is working to define a new Directive against the planned obsolescence, after the European Parliament, through a resolution in April 2022, asked Commission to intervene at this purpose. There are also circular practices and strategies that play an important role in the circular economy system and have been characterising the European Union frameworks. The circular economy practices include ex-ante and ex-post activities, the former regard mainly the eco-design, and industrial symbiosis as well as the selection of sustainable raw materials, which can be easily disassembled and substituted. The latter concern reduction, reuse, repair, and refurbishing. Circular practices are useful for reducing waste production and enhancing reuse, with the consequent goal of improving landfill management in the short term. Eco-design represents a sustainable practice to redesign products and raw materials. It is possible to choose among new different materials coming, from example, by agriculture sector as the biomass, which can be used as raw material for producing cloths. At this purpose, there are research and studies able to suggest solutions

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about new materials that may increase production performance with less waste at the end of their cycle of life. Otherwise, it is also possible to connect different sectors one to another through, for instance, agriculture sector becomes important for manufacture sector, and both can exchange experiences, and know-how with less costs in R&D. Another circular strategy concerns the industrial symbiosis. It assumes an important role towards circular economy goal since it is an application of circularity in an industrial system. In other words, waste and surplus materials coming from a production system can be redirected to alternative industrial processes. In such a way, raw materials are born. Industrial symbiosis represents the use of resources as production waste, residues, energy, from one sector to another one. This procedure permits to keep resources and materials in use for longer. Industrial symbiosis permits to achieve the ecological transition and the CEAP represents the main document through which sustainability and resource efficiency contribute to reduce greenhouse-gas-emissions with less negative environmental impacts. Circular strategies depend on legal system. Laws are necessary to enhance circular business models and waste minimization. For example, planned obsolescence, which represents a typical practice of a linear production model, should be avoided, defining laws at national level. The planned obsolescence is a production policy of designing commodities to limit their lifespan and require their replacement. It is mainly used in the market of consumer electronics. There is a lack of control over planned obsolescence as well as on electronic waste because of the absence of strong policies. Some European Countries are working to limit planned obsolescence within technological production system. The European Union Circular Economy Action Plan encourages sustainable products improvement so product design must not avoid the reuse. An example comes from the Restriction of Hazardous Substances Directive (RoHS), through which the use of toxic substances is eliminated. Similar legislations need to be established to enhance policies, practices, and strategies of sustainability. The scarcity of resources is an important issue in economy, and the importance of this topic increased during pandemic disease. Resource scarcity is also characterizing the linear development model. Circular business models should be solving the problem of scarcity since they permit to enhance sustainable production as well as consumption systems. Waste can be considered as a value because of it can be turned up into a valuable resource just using recycling and repair. Renewable and reusable products, and material loops can foster circularity and solve the scarcity of resources. Material loop uses resources coming from other production and puts them into new production streams. Thus, a material loop needs a closed-loop distribution system, constituted by consumer, re-distributor or recycler and manufacturer. This circle is opposite to the linear model of production where at the beginning of the production chain there is the manufacturer, followed by consumer who produce waste.

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The Circular Economy Action Plan also focuses on the necessity to establish a market for secondary raw materials where demand and supply can meet one to another. At this purpose, the European Commission defines a set of issues as: end-­ of-­waste criteria for waste stream, standardisation, restriction on the use of substances of high concern, and establish a market observatory for key secondary raw materials. Secondary raw materials market is not defined yet. It does not exist in terms of exchange between demand and supply. As we already saw, the waste framework directive established by European Commission does not define a category of secondary raw materials. One of the main problems concerns the definition of standardized criteria to identify a well-functioning secondary raw material market. Markets of secondary raw materials exist for different materials, as paper, metal, plastic, biomaterial and so on. Each market presents different operational characteristics and degree of closure of material cycle. Therefore, some markets positively contribute to the circular economy, while others not. Furthermore, secondary raw material markets are affected by asymmetric information to the operators in new markets, heterogeneity of traded materials, externalities linked to primary and secondary market, and policy pressure to achieve circular economy target.

4.4 Circular Economy Policies All Over the World Circular economy policy is gaining interest also outside the European Union, in different Countries around the world. The action on circular economy is grown globally addressing topics such as waste collection and management, climate change, and resource depletion. Circularity is becoming part of national programs or regulation actions. Many countries pay particular attention on their circular activities and define policies as well as strategical plans to accelerate the transition from linear to the circular economy. However, there is not homogeneity, at the moment, among different countries around the world, also if, at government level, many actions are starting to implement circular strategies in their national plans and legislation. In China, for instance, circular economy has implemented in different policies at national level, so as in Republic of Korea. USA and Japan upgraded circular economy initiatives to propose regenerative economy by design. Many different Countries worldwide establishes national Circular Economy Policies. Table  4.1. shows at a glance the number of policies by country with a focus on circularity. The UK has six policies followed by Japan with four and Mexico with three policies. The following sub-paragraphs briefly examine circular economy policies for a number of countries that are considered to play an important role in the overall management of the transition to the circular economy. The countries considered are China, Japan, the Republic of Korea, India, the USA, and Australia.

80 Table 4.1  National circular economy policies around the world

4  Policies Targeted to Circular Economy State USA Mexico Costa Rica Colombia Guyana Ecuador Peru Chile Uruguay Sweden Finland Poland Slovenia UK France Spain Portugal Italy EU 27 Tunisia Algeria Egypt Nigeria Gabon Rwanda Madagascar Kenya Mongolia China Taiwan Laos Cambodia Japan Malaysia Singapore Indonesia New Zealand

Number of policies 2 3 2 1 1 2 1 1 1 2 2 1 1 6 2 1 1 3 1 1 1 1 1 1 1 1 1 1 1 1 1 1 4 1 1 1 1

Source: Elaboration on circulareconomy.org data, 2022

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4.4.1 The Dutch Green Deals Policy: Preliminary Works for EU CEAP Green deals policies are useful to complete transition towards circular development model. The case of Netherlands is important within European Union context, since it represents a best practice. Dutch circular policy has its foundation in 1972 already, with Lansink’s ladder. Later, in 2011, the Dutch national government defines its “Green Deals” to ameliorate communication between entrepreneurs and customers, and to improve the sustainability. Later still, in 2016, the experience of the green growth policy is used to define the National Program Circular Economy, though which the goal to achieve a circular economy is set by 2050. The policy establishes a set of strategies and practices to support sustainable entrepreneurship as well as to diminish carbon and greenhouse gas emissions. The Duct Government identified some key sectors, like construction, to focus its attention on critical industries. The Green deal represents a tool for critical industries, which are responsible of 75% of CO2 emissions in Netherland. The aim of Duch Green Deal is to invest in innovation by creating a technological leadership within the main industrial sectors. One of the main points concerns the opportunity to help small and medium sized enterprises and consumers to promote transition towards circular economy. The Green Deal requires different actions national government needs to take, like: • • • • • • •

provide more clarity on Circular economy and waste separation initiatives, create awareness on European level, change regulation and policies, create industry agreements, change procurement requirements at national and local levels, support circular cities, share information about available national and European funds.

The Dutch Green Deal agreement provides positive effects in terms of transparency on circular economy as well as waste separation procedures. Moreover, the circular economy agreements spread awareness of CE issues. Hence, it is clear the need to change regulation to foster and manage innovation toward circular economy transition. Another important topic about Green Deal agreement concerns the change of procurement requirements and sharing information on available European funding. Dutch policy is partly influenced by EU policies as a Member State of the European Union. Indeed, the Netherlands contributes to the development of Community legislation as it is closely involved in developments within the Union, such as economic reforms and the accession of new Member States. However, the Dutch government believes that the EU should confine itself to areas where it adds value, such as security, climate, and the environment. Issues such as pensions, taxes, culture, education, and health care should be the responsibility of the Member States. The Dutch Government considers that Community legislation in these areas is not necessary.

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4.4.2 The Chinese Policy About Circular Economy Asian Countries show a huge potential to the circular economy, since they represent the main global hubs for manufacturing industry. The big expansion negatively affected the relationship between humans and environment. Therefore, circular economy model represents a best way to ameliorate this connection creating new value enhancing the transition from linear to circular economy. China represents a strong precedent since the early 2000s using a top-down strategy to improve circular economy paradigm. One of the main tools established by Chinese government refers to the “Project Lead Circular Economy”. The first step made up the Chinese government is known as “Circular economy promotion Law of the People’s Republic of China”. It was issued in 2008 and refers to the reduction, reuse, and recycling activities. Chinese circular economy framework concerns three principles and two purposes. The principles can be summarized as follow: • Eliminate waste and pollution, • Circulate products and materials at highest value, • Regenerate nature. The circular economy purposes regard the scarcity of resources that need to be solved through energy efficiency improvement and through the reduction of resource and energy consumption; secondly, the necessity to reduce pollution and greenhouse gases emissions. Chinese governments promote circular economy at all levels: entrepreneurial, regional, and social ones. Enterprises have to reduce consumption of materials and energy and improve resource utilisation efficiency. At regional level, eco-industrial parks need to be established through symbiosis relationships and industrial metabolism. At the local level, for example, it should be remembered the policy of the Shenzhen government started in 2019, which led to the definition of the Standards for Construction Waste Discharge Quota, which states that depending on the type of project as new construction, renovation or demolition, there is a specific quota for construction waste allowed for out-of-site disposal (Bao & Lu, 2020). For demolition works with most recyclable waste, a maximum of 10% of construction waste is allowed for out-of-site disposal. The Shenzhen government has also implemented many incentive policies to support its recycling industry (Ma et al., 2020). At social level, waste recycling and reuse of industrial waste represent the most important policy to enhance waste materials recycling. Chinese government launched pilot projects, which involve industrial parks and different cities and provinces to foster diffusely circular economy models. Circular economy activities are implemented at individual firm level, industrial park level, and cities and provinces level. The Circular economy promotion Law, for instance, went into effect in 2009, where the central government launched a set of demonstration projects as symbiosis activities like Guitang Group.

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The more recent document established about circular economy strategies is the “Development Strategy and Recent Action Plan for the circular economy”, which represents the first national action plan through which Chinese government wants to implement expansion of Circular economy strategies in more industrial sectors and geographic areas. In few years, some goals have been achieved, for example, clean energy consumption rates due to the strategies defined into the Action Plan increased from 13 to almost 18%.

4.4.3 The Circular Economy Vision in Japan An important policy of environmental sustainability located in Northeast Asia refers to the Japanese government decisions for transitioning towards a circular economy. The central government of Japan adopts the first act about circular economy, when it defines the “Waste management Act”. This is the opportunity to approve different recycling acts able to implement 3R model: reduce, reuse, and recycle. In 2021, Japanese government launches the first Circular Economy Finance Disclosure Guidance. This program enhances financial resources for circular economy and connects to other sustainable strategies such as the plastic resource circulation, defined to reduce packaging, collect old plastics, and enhance bioplastics usage. Actually, the Japanese Ministry of Environment establishes seven pillars for integrating sustainability within three dimensions: environment, economy, and society. The transition to the circular economy comes through another important act, the Circular Economy Vision (CEV), which is able to improve Japanese industry’s competitiveness by using circular economy paradigm. CEV permits to foster digital technologies linked to the SDGs goals established by United Nations Agenda 2030.1 Japanese Circular Economy Vision is based on three pillars, which can be resumed as follows: • transition towards more circular business models, • appropriate evaluation from market and society, • early establishment of resilient resource circulation system.

4.4.4 The Framework Act in Resource Circulation in Republic of Korea Another important example of circular economy action plan within Asian Area regards the Republic of Korea. The first act was the Framework Act on Resource Circulation (FARC). South Korea makes some more efforts in comparison with Japan to define a transition policy towards circular economy paradigm. FARC  Ministry of Environment of Japan, 2018 and 2021; Ministry of Economy, Trade and Industry, 2021)

1

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represents the main law to address resource, energy and encourage recycling. The main point is the definition of a sustainable waste management system. FARC considers the Recycle Resource Recognition Program (RRRP) and the Resource Circulation Performance Management Policy (RCPMP).2 The RRRP establishes that recyclable resources are all the materials created or used to recycle trash. Thus, waste law regulates waste also after its recycling procedure. A resource may be considered recyclable when it does not affect human health or the environment and when it has an economic value for transaction and fulfils all the recyclability standards established by FARC. The RCPMP aims to minimize waste pushing businesses to ameliorate their activities by defining resource circulation targets and promoting economic incentives for sustainable goals.3 The Republic of Korea also establishes the Plan for Resource Circulation that covers a period between 2018 and 2027. It is connected to the FARC defining strategies to minimize waste production and improving resource circulation. Making a comparison on the green growth strategies between Japan and the Republic of Korea, it is evident that both tend to define a “virtuous cycle of economy and environment” according to their Laws. However, Japanese government uses many organizations and 14 action plans, while the Republic of Korea does not. Even thought, citizens’ knowledge about ecological transition is not so widespread in South Korea, the term “circular economy” is well known more than in Japan.4 Japanese national environmental policy aims to foster ecological transition from a linear to a circular production and consumption system.

4.4.5 USA Economy’s Application of Circular Economy United States of America is the largest economy contributing most to global waste and emissions, its ecological footprint is 122% greater than the natural shortage (Wackernagel & Beyers, 2019) and it is rated as the second highest nation behind China in the world. USA struggles with reducing carbon emissions, using renewable energy sources and through a decarbonized economy. On the circular economy front, the United States is still working to define a policy system for the transition to the circular economy. For example, with regard to the problem of food waste, US policy has not kept up adequately. Globally, in fact, the United States is the third largest generator of wasted food, behind China and India, with a production of over 60 million tons per year (U.S. EPA, 2020). The value of this wasted food accounts for 2% of the US gross domestic product, and its landfill

 Ministry of Environment of South Korea, 2018  Korea Environment Corporation, 2017. See also Korea Environment Institute, 2016 and 4  Google trends, 2021 2 3

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leads to 170 million MT CO2-eq annually which is equivalent to the emissions of 42 coal-eq-fired power plants (U.S. EPA, 2022). The United States has an ambitious national goal of halving total food waste by 2030. However, there is a lack of federal regulations that align directly with this goal, relying instead on voluntary standards and initiatives led by business, community, and non-profit. A US climate action Plan started with 33 states: 32 states released plans and 1 is updating its plan. Those plans shall mainly take into account the reduction of greenhouse gas emissions but may also contain other social and economic strategies and goals. An important role in the US circular economy policy management is certainly played by the US Environmental Protection Agency, EPA, whose mission is to protect the environment and human health. To achieve this goal, EPA makes different actions such as having clean air, land and water, reduce environmental risks based on the best available scientific information; ensure that federal laws protecting human health and the environment are administered and enforced fairly, effectively and as Congress intended, guarantee that contaminated lands and toxic sites are cleaned up by potentially responsible parties and revitalized; and Chemicals in the marketplace are reviewed for safety. In November 2021, the Environmental Protection Agency published the National Recycling Strategy regarding the circular economy, which is focused on enhancing and advancing the national municipal solid waste and recycling system. At this purpose, it defines strategic targets and stakeholder-led actions. The National Strategy is currently under development recognizing the need to implement a circular economy approach for all. However, it is arranged to increase the recycling rate to 50% by 2030 through five strategic goals to make more resilient and cost-effective the recycling system. More specifically, the National Strategy aims to improve markets for recycling commodities, increase collection, reduce contamination in the recycled materials stream, enhance policies to support recycling, and standardize evaluation indicators and increase data collection (US-EPA, 2023).

4.4.6 The Circular Economy in India India also is a large country, economy and rapidly developing in terms of production, consumption, material use, waste, emissions, and trade. Almost 55 million tonnes of municipal solid waste per year are produced in India and just 75% of them gets collected. The forecast for waste production concerns 165 million tonnes by 2031 (IBEF, 2023). In view of this, the India’s government is preparing a policy framework to promote the circular economy. The circular economy policy is based on a multi-approach that takes regulatory measures, financial incentives, awareness campaigns and capacity building into account. The main strategies are the National Resource Efficiency Policy (NREP), the Swachh Bharat Mission, (SBM), the Ata Innovation Mission (AIM), and Financial Incentives (FI).

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The NREP was launched in 2019 to promote sustainable production and consumption models, to improve resource efficiency and reduce the environmental impact of economic activities. Moreover, the policy encourages the adoption of circular business models such as PaaS and sharing. To improve the NREP’s action, the extended producer responsibility (ERP) has been introduced. This regulatory framework makes producers more responsible for post-consumption waste and so pushes entrepreneurs to adopt sustainable product design procedures, eco-design and recycling raw materials. The SBM policy, established in 2014, aims to encourage hygiene and waste management through practices such as composting, waste segregation and recycling with the aim of making India a zero-waste country. The AIM policy, launched in 2016, intends to boost innovation as well as entrepreneurship, through the adoption of circular business models and sustainable technologies. The IF policy covers financial incentives that support the efficient use of resources. it is closely linked to the AIM policy, because only companies that use circular business models and new sustainable technologies can have access to financial incentives, such as subsidies, and tax benefits.

4.4.7 Circular Economy Policies in Australia The circular economy theme on green growth reached Australia late in response to a series of crises (Levitzke, 2020). The Australian National Government defined its waste action plan in 2019, providing a framework for the recovery of waste and resources. The basic principles set out in the Plan outline how to make the transition to a circular economy. Furthermore, a Ministerial Advisory Group was established to guide the transition by 2030. In Australia, the current enthusiasm for the integration of a technocentric circular economy is the result of external and internal factors that well reflect the transition framework of the circular economy. In the absence of a federal ambition, the details of a future circular economy have been left to individual states and other organisations. In this context, for example, South Australia, in 2017, published, on its own initiative, a consultation report that focuses on the circular economy and the integration of EC into the state strategy for the period 2018–2023, focusing on new packaging, on waste and recycling. Queensland defined a waste management and resource recovery policy based on the circular economy, and then stated the importance of defining a genuine circular economy policy based on the European Union model. Other States, including Western Australia, have issued consultations on EC and waste (Government of Western Australia, 2020). The federal and state policy and recent funding initiatives emerged as CE accelerators in Australia. In addition to the actors such as the federal and state government, there are other non-­ governmental organizations in Australia that play an important role in promoting circular economy actions, such as: Circular Economy Victoria (CEV), Loop Circular

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Economy, and Regen Melbourne, acting as facilitators of change in networking with government, business, and civil society to implement circular change. At the moment there are several environmental policy instruments that help define the Transition Strategy to the circular economy, such as, for example, the National Clean Air Agreement 2021–23 work plan detailing the rolling schedule of activities to meet air quality priorities. Another important legislative framework refers to the National Environment Protection Measure (NEPM), which has defined agreed national targets for the protection or management of particular aspects of the environment. This legislative tool provides the framework for establishment of the National Pollutant Inventory (NPI) to facilitate the provision of information and data emitted to the air, land, and water. Australia certainly has the ambition to become circular in the global context and looks at Europe’s circular economy policies with great interest. With regard to issues of a sustainable society, where there is funded cooperation between EU countries and the implementation of circular standards, Australia still has to make significant progress. The relationship between value and supply chain with the main regional partners, in particular China, would be transformed if the technical circularity were implemented (Garnaut, 2021). This change could also allow better management of sustainable products and supply chains, two elements considered fundamental for circular economic strategies.

4.4.8 EU’s Green and CE Policies Applicability to Developing and Emerging Economies In the previous paragraphs we have seen how circular economy policies have been defined in different countries of the world. The circular economy theme is also high on the political agenda throughout Europe, as well as in other developed countries (World Economic Forum, 2021). Certainly, the challenges faced by these economies are very different from those of emerging economies, which need high economic growth, given that they have a large population, a huge amount of waste and are exploiting increasingly depleted resources. The initiatives that developed economies have taken cannot simply be used as a model to be extended to emerging economies. The transition from a linear to a circular economy is not an easy task for most states and private organizations operating there. However, the increased awareness of the effects of the linear model pushes towards the use of CE models. The need to extend the life cycle of products that consumers use through circular practices and to prevent waste of resources plays an important role in the transition to a circular economy. Ecological balance and protection are the objectives of Community practices. The concepts of energy waste, the use of renewable energy and the efficient use of resources lead to the reduction of waste and, therefore, to the economic efficiency of EU countries.

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Emerging economies have begun to take the necessary steps to achieve a circular economy, but they need to invest a lot and better inform businesses and organizations of the long-term benefit. In this, being able to show significant results, such as those that come from the experience of developed countries, such as the European Union, can be an advantage for emerging and developing economies. Good practices for both public and private organisations that have adopted EC principles and have become more resource efficient using new technologies, saving costs, and creating new markets will guide the EC in emerging economies such as Mainland Southeast Asia and African countries, for instance. Some considerations need to be made with regard to different groups of emerging economies: on the one hand, there are, for example, the Baltic countries, such as Latvia, Lithuania and Estonia which have affirmed their commitment to the transition to the circular economy and which benefit from the policies of the European Union. In Latvia, for example, the responsibility for developing and implementing a circular economy policy is shared by several agencies. The Latvian strategy for sustainable development to 2030 considers nature as the capital of the future a priority. Targeted government strategies and plans to disseminate closed-loop principles are at a very early stage of development. Instead, as regards Lithuania, in 2016, the Ministry of the Environment of Lithuania affirmed its commitment to EU circular economy measures and is now emerging its legal framework for the closed economy. In Estonia, the national waste management plan for 2014–2020, adopted by the Ministry of the Environment in 2013, described a gradual transition to circular economy and laid down waste hierarchy principles. The national document fully complies with the European Commissions’ circular economy plan adopted in 2015. On the other hand, there are emerging economies such as those of the BRIC countries, Brazil, Russia, India, and China. The description of circular economy strategies for China and India was made in the previous paragraphs, here, it is intended only to remember that the European Union, China, and India were pioneers in the definition of the strategies of circular economy. In Europe, 2011 is the starting point of the circular economy; while in China the law on the promotion of the circular economy was introduced in 2009 and thereafter, in 2013, a series of strategies was developed to support the implementation of the circular economy, in 2016 the Extended Producer Responsibility was introduced. Similarly, various laws have been passed in India based on resource conservation and environmental protection. In 2014, with the Swachh Bharat mission and in 2016, six 5R-based waste management and circular economy laws were introduced. As regards the possible extension of the European experience in Brazil and Russia, it is necessary, first of all, to make a brief examination of the situation in these two different countries. In Brazil, the issue of the circular economy has been addressed through experimental programmes involving European countries, such as Portugal. Indeed, the Action Plan for the Portuguese Circular Economy is considered the main promoter, shared through promotion activities, discussion with society, workshops, and meetings, based on an ancient historical and cultural link between Portugal and Brazil. The Plan includes cross-cutting national actions related to ministerial activities, sectoral agendas – mainly in resource-intensive and

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export-intensive sectors; and local agendas, to be adapted to the socio-economic specificities of each region (Portuguese Republic, Ministry of Environment, 2017). About Russia, waste management represented since 1996 the main problem to solve and after 2004 it became the new approach to the transition towards a circular economy. Between 2000 and 2014, a package of amendments to the law “FZ-89 on production and consumption waste” was developed. The law introduced the concepts of processing and processing for recycling and creating infrastructure for this. In 2016, the licensing of any activity related to waste collection and treatment was introduced, as was the concept of extended producer responsibility (EPR), that is, companies that produce packaged goods should engage independently in processing or should pay an environmental tax to the state budget. In 2019, the key point of the reform, the transition to a new urban solid waste management system, came into force. Here too, the European Union’s experience can be extended to Russia, which plans to develop a large number of reference documents and publications on the best available techniques. In Russia, these documents form an integral part of the national system of normalization. They consist of sectoral technical groups of the National BAT Office operating under the Federal Technical Agency.

References Bao, Z., & Lu, W. (2020). Developing efficient circularity for construction and demolition waste management in fast emerging economies: lessons learned from Shenzhen, China. Science of the Total Environment, 724, 138264. Corrado, S., Ardente, F., Sala, S., et al. (2017). Modelling of food loss within life cycle assessment: from current practice towards a systematization. Journal of Cleaner Production, 140(2), 847–859. Energy Information Administration. (2020). South Korea is one of the world’s largest nuclear power producers. https://www.eia.gov/todayinenergy/detail.php?id=44916. Energy Information Administration. (2018). Overview of Korea. https://www.eia.gov/beta/international/analysis.php?iso=KOR. Ellen McArthur Foundation. (2013a). Towards a CE  – Economic and Business Rationale for an Accelerated Transition. The Ellen MacArthur Foundation. h t t p s : / / w w w. e l l e n m a c a r t h u r f o u n d a t i o n . o rg / a s s e t s / d ow n l o a d s / p u b l i c a t i o n s / Ellen-­MacArthur-­Foundation-­Towards-­the-­Circular-­Economy-­vol.1.pdf. Ellen McArthur Foundation. 2013b. Towards the circular economy, Vol. 2: Opportunities for the consumer goods sector. https://www.ellenmacarthurfoundation.org/publications/ towards-­the-­circular-­economy-­vol-­2-­opportunities-­for-­the-­consumer-­goods-­sector. Ellen McArthur Foundation. (2014). Towards the circular economy, Vol. 3: Accelerating the scale-up across global supply chains. https://www.ellenmacarthurfoundation.org/publications/ towards-­the-­circular-­economy-­vol-­3-­accelerating-­the-­scale-­up-­across-­global-­supply-­chains. European Commission. Communication from The Commission, Ecodesign and Energy Labelling working Plan 2022–2024, (2022, C 182/01. European Commission. Communication from The Commission to The European Parliament, The European Council, The Council, The European Economic and Social Committee and The Committee of The Regions, A New Industrial Strategy for Europe COM 102 final, Brussels, 10.3.2020.

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European Commission. Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Sustainable Europe investment plan, European Green Deal investment plan, COM (2020) 21 final, Brussels, 14.1.2020. European Commission. Communication from the Commission to The European Parliament, The Council, The European Economic and Social Committee and The Committee of The Regions, Europe’s moment: Repair and Prepare for the Next Generation, COM (2020) 456 final, Brussels, 27.5.2020. European Commission. Communication from The Commission to The European Parliament, The Council, The European Economic and Social Committee and The Committee of The Regions. A New Circular Economy Action Plan for a cleaner and more competitive Europe, COM (2020), 98 final, Brussels, 11.3.2020. European Commission. Communication from The Commission to The European Parliament, The European Council, The Council, The European Economic and Social Committee and The Committee of The Regions, The European Green Deal, COM (2019), 640 Final, Brussels, 11.12.2019. European Commission. A European strategy for plastics in a circular economy, 2018. https:// eur-­lex.europa.eu/resource.html?uri=cellar:2df5d1d2-­fac7-­11e7-­b8f5-­01aa75ed71a1.0023.02/ DOC_1&format=PDF European Commission (2018). A sustainable Bioeconomy for Europe: Strengthening the connection between economy, society, and the environment. https://eur-­lex.europa.eu/legal-­content/ EN/TXT/PDF/?uri=CELEX:52018DC0673&from=EN European Commission. Communication from The Commission to The European Parliament, The Council, The European Economic and Social Committee and The Committee of The Regions, Next steps for a sustainable European future: European action for sustainability. COM (2016), 739 final, Strasbourg, 22.11.2016. https://eur-­lex.europa.eu/legal-­content/EN/TXT/PDF/?uri= CELEX:52016DC0739&from=EN European Commission. Communication from The Commission to The European Parliament, The Council, The European Economic and Social Committee and The Committee of The Regions, Closing the loop  – An EU action plan for the Circular Economy, COM (2015) 614 final, Brussels, 2.12.2015. European Environment Agency. The European environment  – state and outlook 2020: executive summary, Luxembourg, Publications Office of the European Union. https://bit. ly/3oGogrkEuropean Parliament 2018 Circular Economy Package. European Environment Agency. Unequal exposure and unequal impacts: social vulnerability to air pollution, noise and extreme temperatures in Europe, Report 22/2018, Luxembourg, Publications Office of the European Union. European Parliament. European Parliament resolution of 23 July 2020 on the conclusions of the extraordinary, European Council meeting of 17–21 July 2020, Document P9_TA(2020)0206. https://www.europarl.europa.eu/doceo/document/TA-­9-­2020-­0206_EN.pd. European Parliament and of the Council, Directives (EU) 2018/849, amending Directives 2000/53/ EC on end-of-life vehicles, 2006/66/EC on batteries and accumulators and waste batteries and accumulators, and 2012/19/EU on waste electrical and electronic equipment, 30.5.2018. European Parliament and of the Council, Directive (EU) 2018/850, amending Directive 1999/31/ EC on the landfill of waste, 30.5.2018. European Parliament and of the Council Directive (EU) 2018/851, amending Directive 2008/98/ EC on waste, 30.5.2018. European Parliament and of the Council Directive (EU) 2018/852, amending Directive 94/62/EC on packaging and packaging waste, 30.5.2018. European Parliament and of the Council, Waste Framework Directive, WFD 2008/98/CE on waste and repealing certain Directives, 19.11.2008. European Parliament and of the Council, Directive 2009/125, establishing a framework for the setting of ecodesign requirements for energy-related products, 21.10.2009.

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European Union Business in Japan. 2020. CE in Japan. Eurostat Monitoring Framework. 2019. http://ec.europa.eu/eurostat/web/circular-­economy/ indicators/monitoring-­framework Garnaut, R. (2021). Reset: Restoring Australia after the Pandemic Recession. Blackincbooks. Google (Google Trends). (2021). Comparison of the “circular economy” term between Japan and South Korea for the period of three years starting from 24/10/2018. https:// trends.google.com/trends/explore?date=2018-­1 0-­2 4%202021-­1 0-­2 3,2018-­1 0-­2 4%20 2021-­10-­23&geo=JP,KR&q=circular%20economy,circular%20economy. Government of Western Australia. (2020). Closing the Loop  – Waste Reforms for a Circular Economy (Consultation Paper); Government of Western Australia: Perth, Australia. Global Green Growth Institute. (2015). Korea’s green growth experience: Process, outcomes and lessons learned. https://www.greengrowthknowledge.org/sites/default/files/downloads/ resource/Koreas-­Green-­Growth-­Experience_GGGI.pdf. Kirchherr, J., Reike, D., & Hekkert, M. (2017). Conceptualizing the circular economy: An analysis of 114 definitions. Resources, Conservation and Recycling, 127, 221–232. Korea Environment Corporation. (2021). CEO movements. https://www.keco.or.kr/en/about/ move/communityid/137/list.do. Levitzke, P. S. M. V. (2020). The Development of a Circular Economy in Australia. In S. K. Khosh (Ed.), Circular economy: Global perspective (pp. 25–42). Springer. Ma, M., Tam, V. W., Le, K. N., & Li, W. (2020). Challenges in current construction and demolition waste recycling: A China study. Waste Management, 118, 610–625. Ministry of Economy, Trade and Industry. (2021). Japan’s Roadmap to “Beyond-Zero”Carbon. https://www.meti.go.jp/english/policy/energy_environment/global_warming/roadmap/. OECD. (2021). Municipal waste, generation and treatment. % Recycling. https://stats.oecd.org/ Index.aspx?DataSetCode=MUNW Rodriguez-Anton, J.  M., Rubio-Andrada, L., Celemín-Pedroche, M.  S., et  al. (2019). Analysis of the relations between circular economy and sustainable development goals. International Journal of Sustainable Development & World Ecology, 26(8), 708–720. https://doi.org/10.108 0/13504509.2019.1666754 United Nations Environment Programme. (2005). Eco-towns in Japan, implications and lessons for developing countries and cities. https://wedocs.unep.org/bitstream/handle/20.500.11822/8481/ Eco_Towns_in_Japan.pdf?sequence=3&%3BisAllowed=. United Nations Framework Convention on Climate Change. (2020). 2050 Carbon Neutral Strategy of The Republic of Korea. Towards a Sustainable and Green Society. https://unfccc.int/sites/ default/files/resource/LTS1_RKorea.pdf. United Nations Framework Convention on Climate Change (UNFCCC). 2008. Korea’s Third National Communication under the United Nations Framework Convention on Climate Change, Low Carbon, Green Growth. http://webbook.me.go.kr/DLi-­File/091/018/009/5509482.pdf. Wackernagel, M. & Beyers, B. (2019). Footprint in Architecture and City Planning: BedZED, Masdar City, and Peter Seidel. Ecological Footprint Management our biocapacity Budg, p. 288. World Economic Forum. (2021). Japan launches circular economy collaboration with world economic forum. https://www.weforum.org/press/2021/03/ japan-­launches-­circular-­economy-­collaboration-­with-­world-­economic-­forum/ WRAP. (2011a). Synthesis of food waste compositional data 2010. http://www.wrap.org.uk/sites/ files/wrap/Synthesis%20of%20Food%20Waste%20Compositional%20Data%202010%20 FINAL.pdf. WRAP. (2011b). Consumer insight: Date labels and storage guidance. http://www.wrap.org.uk/ sites/files/wrap/Technical_report_dates.pdf. www.epa.gov www.weforum.org

Chapter 5

Public Sector and Circular Economy

5.1 Circular Economy Policies and Perspective in Public Sector Organization The foundations of Circular economy were addressed through government initiatives such as recycling programs to close materials loop. At the macro level of public initiatives there are different regulatory systems and policies. in the European context, for example, the policies of governments stem from the action plan of the European Union. In the past Germany as well as Japan represented the best cases that have pushed legislation towards waste reduction and recycling (Kirchherr et al., 2017). China, until 2015, adopted the circular economy as national law, applying it in a large-scale industrial ecology system. The concept of circular economy characterizes Chinese national public policies by emphasizing the role of public actors within regulatory frameworks towards circular transition. Over the past 8 years, the circular economy has become the main guideline in many countries’ national policies. This is because the circular economy represents and embodies ecological modernization able to reduce the conflict between economy and environment through technical innovation (Geissdoerfer et al., 2017) and, as already described in Chap. 5, through new business models. A circular economy system must include public sector perspectives. Such perspectives focus on methods such as LCA, input-output analysis or MFA, to define circularity policies and strategies. For example, LCA is used to assess the context as a public procurement. In some cases, circular solutions are preferable to measure environmental effects rather than circularity indicators. There is a system of public sector organisations, characterised by elements of circular economy, principles, and assessments, but also by public procurement, operational processes and activities and social and employee activities. All these elements help to promote the transition from the linear to the circular system. Thus, the performance of the circular economy of the public sector organization can be assessed through resources, processes, © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Patti, Circular Economy and Policy, https://doi.org/10.1007/978-3-031-43324-5_5

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and operations. A circular economy scoreboard needs to be continuously implemented and improved to measure the impact of the circular economy on sustainable development. Circular economy strategies must be integrated into public sector organisations. In such an interconnected system a holistic perspective can be provided involving public procurement, internal processes, the provision of public services, liaison with other public actors, evaluation and communication. All these elements are able to implement the circular economy process at the organizational level in the organization of the public sector.

5.2 Public Procurement and Public Services Delivery to Drive the Circular Economy A public contract is a procurement procedure managed by public authorities, through which the public operator purchases products, services and works from private undertakings. In the European Union, for example, European directives on public procurement have been issued since 2014, defining the tools available to public purchasers to achieve sustainability targets by 2030. The purchasing power of public procurement enables the purchase of goods that promote innovation and improve employment and social conditions by encouraging the development of products and technologies with a lower environmental impact. This context needs further action to improve public procurement practices, which must consider the provision of services rather than the purchase of products, committing themselves with manufacturers to defining solutions to circularity. Probably, the main objective could be to encourage entrepreneurs to improve efficiency as well as customers to reduce the use of products. Some cases may be useful to clarify this. For example, the Bremen Senate for the Construction and Transport Environment, in 2013, defined solutions to reduce carbon emissions related to travel. They used the local car-sharing service through an online booking system. Another important example is the Scottish sourcing experience which, in 2016, defined circular actions through a life cycle mapping system to identify areas where there were environmental and socio-economic risks and opportunities. The final score was the definition of a tender containing technical elements on the product life cycle, energy efficiency, sustainable packaging, end-of-life management. In addition, the procurement concerned restructuring, re-use, and repair actions. Another important case of integration of circular economy principles into public procurement concerns the Responsible Purchasing Promotion Scheme of Nantes. This defines 11 Action Sheets for public procurement and considers the principles of the circular economy to support strategic pathways and operational goals. Another case on the integration of circular economy principles into public procurement concerns the European waste hierarchy (EWH). EWH focuses on the already observed 4R model: reduce, reuse, recycle, recover. Below, we show some

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useful examples to understand how it is possible to integrate into public procurement circular economy aspects such as reduce consumption, reuse products, recycle and recover materials and energy. About the concept of “reduction”, an example comes from the East Ayrshire Council, Scotland, which is responsible for 44 primary and nine secondary schools, offering 1.3 m. school meals per year. A contract was established to supply food and beverage to 30 schools in 3 years, reducing reliance on processed food and ensure good nutritional standards. The contract was divided into nine lots to ensure fresh and organic food. The total value of all lots was 480,000 euros per annum, with 90% of fresh food and 30% of organic food. As regards “reuse”, an example is provided by the working clothing industry in Denmark. In 2013, the municipality of Herning awarded a contract for the purchase of uniforms for technical works and determined that the uniforms should be reused and repaired. As a result, suppliers extended the life of uniforms while saving costs and reducing carbon emissions. As for “recycling”, one example refers to the City of Berlin, where, in 2013, a project for the construction of a building in the University of Humbolt was based on the supply of recycled concrete for reuse for construction work. The results in terms of sustainability were 66% energy reduction for production, as well as 7% of carbon emissions. Finally, an example from Finland can be used for the “recovery” activity, where, in 2014, the City of Vaasa awarded a public contract for the purchase of 12 buses using biogas recovered from organic waste. The public tender strengthened a circular circuit for the production of local waste, supported infrastructure capable of producing biogas and replaced a huge amount of diesel per year. These examples should serve to show that circular public procurement gives public administrations the opportunity to play a role in improving the transition from the linear production model to the circular economy, and also increase competition leading to lower market prices. Looking at some data on the potential impact and importance of public spending, it can be noted that each country in OECD spends 15–20% on green public procurement. OECD data show that local public authorities employ 55% of procurement expenditure in OECD countries, with peaks reaching 80% in Spain, Belgium, and Italy (OECD, 2018). In Europe, for example, Member States spend an average of 14% of GDP on buying goods and services (EC, 2022). In the examples introduced previously, the direct impact of GPP is rather limited both because the public purchaser comprises only a small part of the total question and because the public expenditure is distributed among many units. Probably, in these areas, GPP can be more significant whenever local governments coordinate their actions. Local or regional cooperation, in fact, helps local authorities to implement innovative and accountable public procurement, overcoming resource constraints and improving competences in innovative and circular procurement. A local cooperation centre shall represent a network of public partners coordinating actions in the field of public procurement. In this type of organization, the public entities associated - contracting authorities - join forces, temporarily or continuously, and overcome the barriers that would be insurmountable for individual municipalities. An example of good practice that focuses on coordinated action on

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GPP is the network created in 2003 through a specific action in the Action Plan of the Province of Turin (Italy), Agenda21, for the promotion of sustainable consumption and production. Since 2017, all public administration in Italy are required to consider minimum environmental criteria in their procurement procedures. Through circular public procurement, the purchase of goods and services can close the material and energy loops within the supply chain while minimising waste generation and environmental impacts. A circular public procurement helps to close the material and energy circuits, minimizing the environmental, social, and economic impact and reducing the production of waste through the life cycle of products. The selection criteria through which contracts are awarded can be used to encourage sustainable consumption patterns, favouring operators offering “green” products and services. This also has the effect of stimulating innovation, research, and investment in these areas. In other words, public procurement thus enables sustainable solutions to be adopted, encouraging innovation, green solutions and economic and social business strategies that are useful for improving the circular economy. In particular, there is a link between innovative, green, and pre-­commercial procurements that will be described in the following paragraphs where these three aspects will be further developed. Innovative procurements (IP) are procedures provided for by national legislations that revolutionize the modalities and object of public administration purchases. They include pre-commercial procurements (P-CP), which are procedures for purchasing research and development services, enabling public administrations to test new solutions to solve complex problems which cannot be satisfactorily solved in the market. The green public procurements (GPP), which belongs to the Sustainable Public Procurement (SPP) represents a process in which public authorities seek to procure goods with a reduced environmental impact in their life cycle compared to other goods. These procedures are somehow linked to each other because they refer to the environmental, innovation and research dimensions as tools to achieve environmental, social and governance sustainability.

5.2.1 Innovative Procurement: The Case of European Union European Union is making many efforts to foster innovation in public procurement management, improving integration of circularity principles in green public procurements. Consequently, European public bodies started to use them leading in their procurements and funding. Public procurement has been regulated at European Union level since it is considered an instrumental medium of the EU common market. The European Commission (EC) emphasizes the role of the public procurement within Europe 2020 strategy because of it is able to foster sustainable development within European Union Countries. The Procurement Directive 2014/24/EU recognises contracting authorities can contribute to preserve and promote environmentally sustainable development,

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obtaining the best value for money throughout their contracts. Hence, in this framework, strategic procurements permit to obtain sustainable goals. Moreover, the innovation procurement as well as research and development procurement represent the engine for innovation. At this purpose, EC is promoting the public procurement of innovation encouraging buyers seeking to purchase innovative commodities and services. According to the European Commission, innovation procurement concerns any kind of procurement characterized by the following elements: • Buying the process of innovation with outcomes. • Buying outcomes of innovation. This kind of innovations may enhance the stakeholders’ performance through incremental disruptive and transformative innovation. The incremental innovation refers to bring better performance and added value fitting traditional setting, the disruptive innovation regards the old system but creates different actors, flows, and values, the transformative innovation concerns more comprehensive transformation, looking at needs for structural reforms. Particularly, the Commission focuses on a set of activities able to foster innovation, as: a guidance on innovation procurement and webinars to ameliorate procurement professionals’ goals on strategic topics. The guidance on innovation procurement defines how procurement can be ameliorating economic recovery after Covid-19 pandemic disease. It defines aspects of innovation able to improve green and digital transformation of the European economy. Innovation procurement addresses the spending of taxpayers’ money well so as the added value in terms of quality, cost-efficiency, environmental and social impact, and new business opportunities for the entrepreneurs. Critical phenomenon as the pandemic disease, during the period from 2019 to 2021, open the door to new rules, such as the proposition of legislation and guidance by European Commission on green public purchasing. First of all, the necessity to enforce mandatory green criteria is emphasized. Legal rules play an important role for assessing procurements effectiveness. Legislation has an impact on economic activities and enhances the consumers and producers’ behaviours. Furthermore, it is necessary to consider that a public procurement acts in a market-based system because of any procurement depends on competition and on the award of the contracts ability. Within European Union context, public procurement produces innovative goals, such as economic integration, involving a plethora of public contracting authorities and institutions, and including national, regional, and local bodies across EU Member States. Furthermore, European Commission legislation is harmonized with the Member States legislations. This practice stimulates cross-border trade, reduces transaction costs, fosters entrepreneurial competition, and guarantees accountability. European Union establishes a public procurement as an innovative tool of socially inclusive economy (EC, 2015). An example of innovation procurement is represented by the e-procurement, which digitalizes the use of public procurement enhancing the firms’ participation to a tender procedure and permits to the public

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sector being in charge of procedure management. The e-procurement permits to make more transparent, effective, and market-oriented the public spending (Bobowski & Gola, 2014). The EU Directives enhance the use of electronic devices and instruments in order to make simple pre-award as well as post-award stages within public procurements processes. The EU e-procurement transition uses a mix of Directives, legislative instruments and platforms as the Directive 2014/24/EU on Classical Sector, the Directive 2014/55/EU on E-Invoicing; tools as e-Certis, and the European Single Procurement Document (ESPD); and open-source platforms. More specifically, the Directive 2014/24/EU on Classical Sector establishes rules on the procurement procedures by State, regional or local authorities and bodies governed by public law with respect to contracts for pecuniary interest concluded among economic operators and contracting authorities and regarding the execution of works, supply of products and services provision (2014/24/EU, art. 2). The Directive 2014/55/EU refers to the electronic invoices that has been issued, transmitted, and received in a structured electronic format (2014/55/EU, art. 2), The Directive also establishes the definition of a European standards on electronic invoicing (2014/55/EU, art. 3). e-Certis is an online service able to help organizations to understand evidence useful to fulfil a specific requirement for public procurement in a European Country. European Single Procurement Document represents a single self-declaration form used in public procurement process. It is able to demonstrate that companies can participate in a procurement procedure. Furthermore, there are also a number of Committees and groups like the European Multi-stakeholders Forum on Electronic Invoicing (EMSFEI), and the European Committee for Standardization (CEN). The former was helping stakeholders to find a way for a broad-scale implementation of e-invoicing at national level, the latter provides a platform for European standards for products, materials, and processes. It is evident that European Union public procurement defines a massive market for innovative products. The European Commission encourages innovative commodities demand promoting innovation as well as enhancing economic recovery. Hence, innovation procurement regards innovative solutions not yet available on the market, through which public government administrations may have an effect on the markets, for instance, creating new markets or nurturing innovative products, services and works, and increasing public service quality.

5.2.2 Green Public Procurement The concept of green public procurement focuses on integrating environmental methodologies for public production procurement. The transition to the circular economy needs to be addressed through environmental policy tools and drivers. Moreover, European Union needs to harmonize criteria and methodologies to encourage entrepreneurs to invest in greener solutions.

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At this purpose, the European Union establishes the “Green Public Procurement” (EU GPP), a voluntary program known as the European Commission Public procurement for a better environment, (COM, 2008/400). The EC communication considers GPP able to change the consumption as well as the production patterns towards goods, services, and works with a reduced environmental impact (COM, 2008/400; p.  4). Through this communication, the Commission provides a guide about the environmental impact reduction, due to the public sector consumption. The guide also takes innovation in environmental products and services into consideration. There are also other two important European documents that describe the role of green public procurement in reducing environmental impacts: the Green Book of Integrated Products Policy (EC, 2001) and the Sixth Environment Action Programme (EP, 2002). Probably, the most important communication regards the European Communication 274/2001 that emphasizes the opportunities for public authorities to implement environmental issues in their procurement processes and it contributes to adopt green purchasing practices. Successively, the European Parliament and Council intervene defining the Directive 2004/18/EC, which coordinates procedures for public works, public supply, and public service contracts modifying the public procurement legal structure. The use of GPP may influence the market supply asking for goods and services provided through specific environmental criteria, which improve public services purchases and delivery. Basically, GPP represents a demand-oriented criterion able to achieve desirable environmental outputs and promote goods and services by using public procurement (Boykin, 2022). GPP, as an element of sustainability, contributes to minimize environmental impact of public purchases  (Halonen, 2021). It is a strategy to integrate circular economy principles and it is recognized as an important and significant public instrument to drive circular economy transition. Thus, green, or sustainable public procurement can be defined as an environmental policy method able to generate advantages to the organizations, society, and economy, reducing harms to the environment. At this purpose, it is necessary that public administrations work together to define best practices and to ameliorate their technical skills, legal and economic aspects, in order to improve green tenders. National governments, thus, need to focus on modalities to enhance awareness within public administrations adopting strategies for green public procurements (Cheng et al., 2018). European Union endorsed GPP to address environmental, economic, and social issues. Furthermore, GPP is used to integrate green product policy with eco-­ labelling, producer responsibility, and life cycle thinking. This approach is very useful to manage constraints affecting greener policies. Financial barriers, for instance, represent the main limitation to the green procurement, since environmental-friendly commodities are more expensive. Some limitation to the adoption of GPP depends also on the size of public organization. Small-sized public administrations, for example, cannot be arranging departments specialized in the GPP management and implementation.

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The public service delivery throughout a GPP has to be driven towards circular economy framework. The effectiveness of a GPP policy depends on different issues, such as cost-effectiveness, energy, and emissions reductions, increasing in green products consumption, financial constraints, and economic crisis. Hence, the impact of GPP policy is based on the purchasing power of public authorities, which have to be resource efficient. The EU Green Deal, which defines the EU’s new growth strategy, suggests amending green public procurement from voluntary to mandatory regulation. The GPP effectiveness depends on procurement regulations.

5.2.3 Pre-commercial Procurement The European Commission focuses on the importance of public procurement to strength innovation of the Union improving quality of public services and highlights the opportunities for pre-commercial procurement. Pre-commercial procurement (PCP) represents an approach to define research and development services. It is a tool to support public procurers to foster innovative solutions. It was officially defined in 2006 by the European Commission and it is based on the idea to strengthen innovation and ameliorate efficiency and quality of public sector. Actually, the pre-commercial procurement aims to eliminate the gap between knowledge and market. This gap can be overwhelmed through a public demand (Delina et al., 2021). Hence, public authorities may influence innovation adoption as buyer and user or stimulating private demand. Public procurement can regard the entire production procedure and the whole lifecycle of innovation. When public procurement is used to enhance products not yet existing on the market and for which it is necessary to support their Research and development (R&D), thus, there is a pre-commercial procurement. R&D covers activities like design, prototyping and test series. R&D procurement deal with public requires that do not find solutions in the market relationship and for which innovations are necessary. The European Commission is working to define the development of innovative solutions for societal challenges; to provide customer references of innovation; to enhance access of new innovative players to the public procurement market; to produce optimum conditions for take-up of research and development scores; to reduce market fragmentation, and cost for producers; and create high qualified works in the European R&D sector. The European Commission considers PCP as a demand driving engine for innovation, due to the fact that innovation may implement new products or processes. It is possible to distinguish different types of pre-commercial procurements, as undertaken by public actors for its needs, or for another public user, or for a set of private customers, when there exists a public advantage, or where the R&D sourcing agent or procurer is a private one.

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It is also clear that pre-commercial procurements can produce uncertainty as well as risks, which are shared between providers and developers. Moreover, the competition is able to ensure the best solution in comparison with the market one. Risks and uncertainty during the R&D steps do not oblige public buyer to purchase products; otherwise, the pre-commercial procurement is considered as a public procurement of innovation that does not generate an output, but it permits to support the R&D phase. A lot of Member States of the European Union defined pre-commercial procurement frameworks to foster innovation procurement schemes. Many of them preferred to low the barriers to the PCP, without making legal frameworks. The pre-commercial procurement also regards the intellectual property rights issue, which have different solutions among the European Union Member States.

5.3 Government Policy and Regulation for Circular Economy Finance The financial sector should play a key role in supporting sustainable growth and the circular economy. The transition to a more circular economy entails risks and opportunities for financial institutions, although environmental degradation has a significant impact on the financial system. Many national banks around the world and the European Central Bank have identified climate-related risks as the main risk factor in the risk map for international banking systems (ECB, 2022). There is a link between sustainable finance and the circular economy. Sustainable financing is essential for the transition to a circular economy even if investments in sustainable activities are far below the level needed. The relationship between finance and the circular economy is based on the financial sustainability of businesses to generate positive effects on the environment and society (Gonçalves et al., 2022). Investment in circular economy practices should produce value and increase market competitiveness. Therefore, circular economy practices must be supported through financial and organizational dimensions. One of the main problems with sustainable finance is the existence of a set of acceptable standards around the world. In particular for climate change risks, financial standards are an objective that entrepreneurs must achieve in order to improve their sustainable investments. The regulation on corporate environmental, social and governance (ESG) risks, both financial and non-­ financial, is still ongoing. At European Union level, reporting is at an advanced stage, especially compared to other major jurisdictions (Flower, 2004). The following sections deal with issues related to sustainable finance and circularity, since the former can contribute to the improvement of the latter. The circular economy needs to be enhanced through public subsidies, and economic incentives as well as public policies, regulation, and legislation. Hence, the role of the governments is extremely important to prevent irregularities and practices harmful for the environment (Droege et al., 2021). This means that there is the

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need to define taxes, and to subsidy ecological-friendly products. Countries, all over the world, are working to define targets to avoid climate change and environmental degradation. To achieve UN’s 2030 Agenda goals, it needs to increase finance flows and address them towards decrease in greenhouse gas and carbon emissions. A promising tool to redirect the flow of capital, helping to define a common classification system for activities and projects that achieve climate, social and sustainable objectives is the green financial taxonomy. In this regard, several countries including China, Bangladesh and South Africa have developed green finance taxonomies, while others are preparing to develop their own, including the UK and the European Union. At EU level, an important step regards the regulation process through which it has been defined the European Strategy on Sustainable Finance. In 2018, the European Commission establishes the Regulation 2020/852 “on the establishment of a framework to facilitate sustainable investment”, also known as taxonomy regulation. The sustainable finance is one of the objectives of the European Green Deal and plays a key role in directing private financing towards climate-neutral, environmentally sustainable, and fair economy. In this regard, the Commission defines a policy agenda on sustainable finance, realising the sustainable finance strategi in 2021. This represents a support for financing the transition towards circular and sustainable economy. Actually, the strategy involves different areas such as transition finance, inclusiveness, resilience, and global ambition. To improve the finance strategy a taxonomy regulation is defined, establishing four environmentally sustainable conditions an economy activity needs to achieve. The conditions can be summarized as follows: • support to the environmental objectives defined in the Taxonomy Regulation, • not significantly affect any other environmental objectives specified in the Taxonomy Regulation, • be performed in compliance with minimum social guarantees in accordance with the Taxonomy Regulation, • correspond to technical screening criteria established by the Commission in accordance with the Taxonomy Regulation. The legislation at EU and national levels may improve sustainable productions, enhancing recyclability, extending products lifespan, for example introducing effective legislation against the planned obsolescence, and making incentives for the productions characterized by reusability and reparability. At this purpose, the European Commission establishes a group of experts to setup an EU strategy on sustainable finance, known as High-Level Experts Group (HLEG) on Sustainable Finance. At the end of 2018, the HLEG defines some recommendations for a financial system able to support sustainable investments and also to define a connection between finance and sustainability. In different Member States of European Union, governments establish policies to support innovation and eco-design. For example, Netherland defines a policy of subsidies for product design and innovation; Austria founds subsidies for waste and pollution reduction; Belgium regulates packaging recycling system throughout public subsidies. In Germany, the national government

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establishes an effective legislation through which circular economy practices are regulated, as the Closed Substance Cycle Law and the Waste Management Act.

5.3.1 Financial Standard for Climate Change Climate change denotes a risk for the worldwide economic system, mainly for its high uncertainty. Thus, it represents an important topic on international policy agendas. To mitigate climate change, a market is defined, where standards units of greenhouse gas and carbon emissions can be created and exchanged. Moreover, the carbon accounting shows that this process of assessing climate change is complex, and uncertain process. In a such context, climate finance becomes important, and it needs to pay more attention to the climate-related risks so as to financial stability (Sun et al., 2022). Probably, it should be better to address concerns redefining climate green models. Moreover, global warming is affecting further and new financial risks. Hence, there is the necessity to adopt new policy and strategies to foster a significant transformation. Financial institutions consider climate change as their risk assessment and define stress tests. The European Commission defines the high-level expert groups on sustainable finance to achieve this goal. The credit risk for financial institutions increases because of global warming and change in temperature. This provides economic shocks for private investments and makes evident the financial instability within a climate transition risk scenario. Companies producing fossil fuel suffer financially negatively affecting the business value as bank loans and bond assets. Because of the climate change represents a new financial system risk for investments firms as well as for shareholders, many banks start to describe scenarios useful to determine how climate changing affects economic sector. The main solution to set up climate-related financial risks is to consider climate change risk into macroeconomic financial models. At this purpose, an important step regards worldwide agreement among G10 Members as the Basle Committee, the International Association of Insurance Supervisors and IOSCO. All of them are able to define financial standards to improve financial sector through the use of market access channels. The International Sustainability Standards Board (ISSB) defines a model of sustainability for the investors in estimating company value. The model proposes two standards: climate-related disclosures and general sustainability-related financial information. The former relates to requirements for entity to disclose greenhouse gas emissions, industry-based materials, and requirements for entity to disclose financed and facilitated emissions. The latter suggests general conditions for an organization to reveal sustainability-related financial information about its significant sustainability-related risks and opportunities.

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Both of them constitute a complete global standard of sustainability-related information created to gather the information needs of investors in evaluating enterprise value. ISSB updates the standards in January 2023 redeliberating some proposals about both of the proposed standards. Also, the International Accounting Standards Board (IASB) enhances a set of high quality and globally accepted reporting standards according to well defined principles. IASB is an independent group of experts able to define accounting standards. The IASB’s standards are used in many countries worldwide and are able to fit financial accounting to the international standards that underpin the international economic activity. The criteria for the composition of IASB standards are set up by the International Financial Reporting Standards foundation (IFRS foundation).

5.3.2 Sustainability and Circularity Throughout Environmental Finance: Green Bonds and European Financial Reporting The previous paragraphs describe the link between sustainable finance and circularity. The link between finance and sustainability is also known as environmental finance, which represents an interdisciplinary research dimension with financial implications of environmental change for companies, and the need to transition to a circular economy (Linnenluecke et al., 2016a, b). Climate change and environmental harm need to be solved involving economic, environmental, and social dimensions. Environmental finance, thus, permits to bring together understandings coming from different disciplines as economics, and finance. Climate change generates risks for entrepreneurial assets, production activity could be affected by the climate change effects. The use of non-renewable resource and energy depends on companies’ decisions and those can face restrictions on the extraction of fossil resources. It is clear that a shift towards alternative energy source and renewable ones represents an opportunity for people and their system of life. In this context, the “green bond” represents a financial tool focused on green use of proceeds as well as the environmental impact  (Tuhkanen & Vulturius, 2022). Green bonds are linked to projects that have a positive impact on the environment, such as energy efficiency, the production of energy from clean sources, and the sustainable use of land. The issuance of these bonds, and consequently the money they raise, is related to projects with a positive impact in a number of macro-areas such as circular economy, sustainability, energy transition, production from renewable sources, sustainable use of resources, conservation of biodiversity, just to name a few macro-areas. Thus, the bond makes it possible to finance various types of projects with characteristics of environmental sustainability and circularity. The green bond was introduced in 2007 and today is considered as the best tool of sustainable finance. Initially, the green bonds came from supranational financial institutions, such as the World Bank or the European Investment Bank, then bonds

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issued by individual companies, municipalities and state agencies arrived on the market. Green bonds have become a market of around €1.5 trillion, and Europe has long been the main driving force in the green bond market. It is well understood, therefore, that the European Union plays a key role in the green bond market, since a large amount of global emissions affect EU institutions and businesses. Furthermore, green bonds use the euro currency as much as possible, so that the 49% of green bonds in the market are defined in euros. The 22% of the green bonds regard the national governments. Corporate green bonds are distributed by companies for which environmental resources characterize their activities as the energy industry. The European Commission has recently emphasized the potential and functioning of the Green Bond market, presenting a package of measures entitled “Clean energy for all Europeans”, according to which a contribution to the EU’s strategy of carbon neutrality by 2050 will be made. Moreover, further financial resources will be needed per year to achieve the targets identified for 2030 on climate and energy for which the new financing and investment mechanisms, as green bond, could play an essential role. Additionally, thanks to the Parisian Cop21 and by the climate agreements, the use of green bonds increased. This is due both to the entry into the green bond market by large companies from emerging countries, especially China, and on the other to the growing attention of supranational institutions to the issue of environmental sustainability. The main development Banks, such as the World Bank, renew their commitment to sustainability continuously by launching new Green Bond issuance plans. The International Capital Market Association established the guidelines for certifying a specific bond as “green”, defining four principles: 1. whoever issues a security must clearly identify the destination of the proceeds. 2. It has to follow some special procedures in evaluating and selecting projects, which must fall into a list of categories. 3. The issuer of the bond must guarantee maximum transparency in communicating the management of the proceeds. 4. Reports must be made available to keep investors updated on the progress of the funded projects. Likewise, there are further financial tools as social bonds, and sustainable bonds. The social bonds represent a debenture loan aimed at supporting initiatives of high social interest and make it possible to combine, in investment choices, individual economic objectives with values ​​of general interest. The sustainable bonds make it possible to offer investors the opportunity to combine their financial objectives with those of social and environmental sustainability. All this to support sustainable projects in the beneficiary member countries. These projects are aimed at poverty reduction and the development of various sectors such as, for example, education, health, and agriculture. Environmental finance also considers the financial reporting. It is an instrument able to describe enterprises’ financial statements. There is a long tradition within European History about accountancy and double entry book-keeping, at the same time, the profession of accountant started in Western Europe. In European Union,

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the State defines the rules through which entrepreneurs may fulfil their financial reports. Hence, there are different sets of laws, for different European countries, that defines and regulates entrepreneurial financial reporting. France, Spain, Portugal, and Greece, for instance, have their national accounting plan that help to sets out the rules governing the form as well as the content of the entrepreneurial financial reporting. In other European countries, as Italy, Germany, Austria, Switzerland, and Belgium the financial law define in different manner the national accounting issue. In Italy, for instance, there is not a national accounting plan, and the entrepreneurs use accounting plans based on those defined by professional accountants’ associations. Something similar happens in Germany, where industrial associations define accounting plans for enterprises. The same situation characterizes European Countries as Switzerland and Austria, and in Belgium a chart of accounts is established by the national law on all entrepreneurs. Since there are different laws within European Countries, the European Union tried to harmonise enterprises’ accounts. This is evident in a common market creation among the States Members of the EU.  There are different reasons for an integration of legislative systems, mainly political and economic reasons. The former refers to the necessity to foster an integration of economies; the latter concerns the need to promote living standards of European citizens by make sure commodities provision in an efficient way. Enterprises’ accounts are so important to ensure that market works properly. The efficiently use of the capital is determinant to ensure market efficiency, but the difference in regulation systems does not permit to make it efficient. The European Union was founded to avoid vulnerability of the shareholders. The EU institutions protect state members interests enhancing equality among them in the European Community and safeguarding the common market. Within EU, each member state ensures a competitive advantage for internal entrepreneurs.

5.4 International and Cross-Border Trade, Regulations, and Taxation After the COVID-19 pandemic, exposure to shock is considered much more than before. Crises affecting the global political, economic, and social system have also affected the volatility of distribution chains and have increased interest in investing in circular economy strategies to reduce social, environmental and economic impacts. At the international level, global resource efficiency in production and consumption is an important goal to be achieved by 2030. Furthermore, UNEA Resolution 5.2 underlined this objective, recognising the importance of multi-­ stakeholder relations on this issue. Over 520 policies have been established at national and regional level to enable the circular economy model. In this context, the link between the circular economy and trade has been becoming an important objective for international organizations so much so that they have begun to work to define circular trade. Circular trade is a way to understand international trade transactions and contribute to the global circular economy. Circular trade flows enable

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economies of scale to make circular activities, such as re-use, regeneration, repair, and recycling, more profitable. It is also true that circular trade flows can involve risks such as, for example, exposure to supply chain shocks under certain circumstances, additional costs for the management of household waste and the potential erosion of domestic industry (OECD, 2018). The circular economy and trade are linked. International trade must also be considered in terms of circularity, which leads to the closure and restriction of material circuits. The need to close the material circuits, therefore, pushes organizations to follow, also in international trade, the value chain through policies such as trade in materials and waste for the recovery and recycling of energy, trade in secondary raw materials, second-hand trade in goods and trade in goods for restructuring and regeneration (OECD, 2018; p. 5). The transition to the circular economy may positively affect the international trade flows, contributing to make changes in production and consumption patterns. Actually, a transition to the circular economy may help to decrease exports of waste and materials, as well as the import demand of primary materials. Moreover, the new opportunities for international trade will come up as waste management, remanufacturing, reuse. To enable a transition to the circular economy, governments around the world need to establish internal policies to adopt standards for recycled materials and product recyclability, as well as for repairability, extended producer responsibility, the requirements for eco-design and for product information on their chemical and material composition, and the phasing out of hazardous materials from production. One example is the recycling tax on motor vehicles, which offers domestic manufacturers better conditions than their foreign counterparts (World Trade Organisation, 2013). Governments and international organisations are using different tools to improve the transition to the circular economy in international and cross-border trade. For example, the WTO has established an agreement on trade-related aspects of intellectual property rights (TRIPs), which is the most comprehensive multilateral agreement and has promoted global trade in creativity. Regulation and taxation are also additional solutions to improve international trade towards a circular economy system. Certainly, taxation has been used more for sustainability, this is the case, for example, of green taxation, which focused on pollution, resource use and carbon emissions, but which, in reality, has been applied to energy and transport in the form of excise duties (ECESP, 2021). There is also the principle of compensation of polluters, introduced in 1972 by the OECD and part of a set of principles to guide sustainable development and formally known as the Rio Declaration (1992). According to this principle “the polluter must bear the costs of pollution prevention and control measures” (OECD, 1972). However, the principle is not applied everywhere in the same way, in the European Union, for example, it has not actually been applied. Here, other tools have been put in place to make the tax policy of the circular economy effective. In the context of the EU, in fact, the European Green Deal (EGD) has affirmed the role of taxation in the process of transition to the circular economy and more sustainable growth, underlining the inadequacy of the current tax system. The EGD focuses on two initiatives: the Energy Taxation Directive and

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the Carbon Border Adjustment Mechanism. Both represent a way of using taxation to improve the alignment of the tax system with the circular economy model. Definitely, European countries still have to work to define a new tax system that leaves the current tax structure of the linear economy to move to a circular taxation that can change consumption and production behaviour.

References Bobowski, S., & Gola, J. (2014). E-procurement in the European Union. Asia-Pacific Journal of EU Studies, 17(1), 23–35. Boykin, E. A. (2022). Public procurement and European Union integration: A systematic review. Journal of European Integration. https://doi.org/10.1080/07036337.2022.2112035 Cheng, W., Appolloni, A., D’Amato, A., et al. (2018). Green public procurement, missing concepts and future trends – A critical review. Journal of Cleaner Production, 176, 770–784. https://doi. org/10.1016/j.jclepro.2017.12.027 Delina, R., Gróf, M., & Dráb, R. (2021). Understanding the determinants and specifics of pre-­ commercial procurement. Journal of Theoretical and Applied Electronic Commerce Research, 16(2), 80–100. https://doi.org/10.4067/S0718-­18762021000200106 Droege, H., Raggi, A., & Ramos, T.  B. (2021). Co-development of a framework for circular economy assessment in organisations: Learnings from the public sector. Corporate Social Responsibility and Environmental Management, 28, 1715–1729. https://doi.org/10.1002/ csr.2140 European Commission. (2008). Communication from the commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Public procurement for a better environment, COM (2008) 400, final, Brussels, 16.7.2008. European Commission. (2020). Farm to fork strategy action plan. https://ec.europa.eu/ European Commission. (2021). Commission notice Guidance on Innovation Procurement, C(2021), 4320 final, Brussels, 18.6.2021. European Commission. (2021–2027). What’s next? The InvestEU Programme. https://ec.europa.eu. European Parliament and the Council, Regulation on the establishment of a framework to facilitate sustainable investment, and amending Regulation (EU) 2019/2088, Official Journal of the European Union, L 198/13, 18.06.2020. European Parliament and the Council, Directive 2008/98/EC on waste and repealing certain Directives, Official Journal of the European Union, L312/3, 19.11.2008. European Parliament and the Council, Decision 1600/2002/EC, laying down the Sixth Environment Action Programme, Official Journal of the European Union, L 242/1, 22.07.2002. European Parliament and the Council, Directive 2014/55/EU on electronic invoicing in the public procurement, Official Journal of the European Union, L133/1, 16.04.2014. European Parliament and the Council, Directive 2014/24/EU on public procurement and repealing Directive 2004/18/EC, Official Journal of the European Union, L 94/65, 26.02.2014. Flower, J. (2004). European financial reporting. Adapting to a changing world. Palgrave Macmillan. Geissdoerfer, M., Savaget, P., Bocken, N. M. P., & Hultink, E. J. (2017). The circular economy – A new sustainability paradigm? Journal of Cleaner Production, 143, 757–768. https://doi. org/10.1016/j.jclepro.2016.12.048 Gonçalves, B.  S. M., Carvalho, F.  L., & Fiorini, P.  C. (2022). Circular economy and financial aspects: A systematic review of the literature. Sustainability, 14(5), 3023. https://doi. org/10.3390/su14053023

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Halonen, K.  M. (2021). Is public procurement fit for reaching sustainability goals? A law and economics approach to green public procurement. Maastricht Journal of European and Comparative Law, 28(4), 535–555. https://doi.org/10.1177/1023263X211016756 Kirchherr, J., Reike, D., & Hekkert, M. (2017). Conceptualizing the circular economy: An analysis of 114 definitions. Resources, Conservation and Recycling, 127(04), 221–232. https://doi. org/10.1016/j.resconrec.2017.09.005 Linnenluecke, M. K., Chen, X. Y., Ling, X., Smith, T., & Zhu, Y. S. (2016a). Emerging trends in Asia Pacific finance research: A review of recent influential publications and a research agenda. Pacific Basin Financial Journal, 36, 66–76. Linnenluecke, M.  K., Smith, T., & McKnight, B. (2016b). Environmental finance: A research agenda for interdisciplinary finance research. Economic Modelling, 59, 124–130. https://doi. org/10.1016/j.econmod.2016.07.010 OECD. (2018). International trade and the transition to a circular economy, policy highlights, RE CIRCLE project. Sun, L., Fang, S., Iqbal, S., et  al. (2022). Financial stability role on climate risks, and climate change mitigation: Implications for green economic recovery. Environmental Science and Pollution Research, 29, 33063–33074. https://doi.org/10.1007/s11356-­021-­17439-­w Tuhkanen, H., & Vulturius, G. (2022). Are green bonds funding the transition? Investigating the link between companies’ climate targets and green debt financing. Journal of Sustainable Finance & Investment, 12(4), 1194–1216.

Chapter 6

Production and Consumption Within Circular Economy Perspective

6.1 The Circular Economy Conceiving Production and Consumption The linear economy system becomes problematic, because of a rising demand and consumption rates. Linear production model characterizes our style of life since the industrial revolution. It is based on extraction and depletion of natural resources, non-renewable, and affected climate change, biodiversity degradation, and ecosystem depletion. This mode of production is also based on consumption and produces a huge amount of waste and generates waste management problems polluting the environment. Contemporary production system is strictly connected to consumption behaviour, which is affected by continuous need to satisfy individual preferences. The 61% of non-renewable resources are used to produce products with a short lifespan. More of these products are disposable, and thus, they are purchased just for single use. Such a kind of consumption behaviour negatively affects the environment, because of produces a plethora of waste, increases social costs, and needs to invest a lot of financial resources. The solution should be the transition to a circular economy model, which is made of sustainable production and consumption. Thus, it needs non-linear production and consumption systems like the circular one. Circular economy represents a new business model, which defines new production activities, strategies, and new raw materials, looking at regenerative solution, involving companies within production and distribution channels as well as consumers (Marrucci et al., 2019). Circular production as well as consumption are decoupling economic growth from resource use, but they need to define a systematic approach to achieve sustainable goals. Therefore, circular production and consumption use a set of instruments able to support circularity for achieving sustainable development goals.

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Such a kind of tools involve environmental management systems, eco-design, green public procurement, environmental technology verification, energy label, and ecolabel. Most of them are described along the chapters of this book, but the last three deserve, a brief explanation here. The reason is that energy label as well as ecolabel represent the interfaces between economic agents acting from production and consumption sides. Energy label is a European Union label used as key driver for assisting customers in choosing energy efficient products. It uses a range from A that means most efficient to G, which is least efficient in terms of energy used. The energy label refers also to producer since it encourages them to adopt new technologies to make more energy efficient their productions. Ecolabel is a mark placed on the package helping customers to acquire information about production process and product’s characteristics. Through the ecolabel, clients may identify if a product meets the environmental performance criteria. Usually, ecolabel is managed by government agencies and non-profit environmental organizations. Environmental technology verification (ETV) is an EU platform built to help environmental technologies validate their green certifications and achieve market attractiveness. ETV measures the performance of green solutions and technologies assisting developers to acquire credibility into the market. Energy label and environmental technology verification probably need a further implementation with circularity framework since they do not connect directly with circular economy. This probably shows that policies able to lead organisations in the production as well as in the consumption systems are necessary. Thus, circular production and consumption tools need to be connected one to another systematically  (Tseng et  al., 2020). It should be providing an improvement of circular strategies towards sustainability. The circular economy framework is defined as a set of strategies, policies, and tools useful to improve material and energy efficiency and reduce waste in production and consumption. A loop system encourages producer and consumers to produce less waste, enhancing recycled waste as sustainable resources. In a such way, the relationship between manufactures (production) and customers (consumption) contributes to define a regenerative system able to minimize resource input, waste, carbon emissions and energy. In the first chapter the circular economy is highlighted under the market perspective, looking at production and consumption as two parts of the same whole. In this chapter, both perspectives are widely considered to make more evident the necessity to change business models and purchasing behaviours. From the production perspective, it is important to highlight the role of resources and materials that must be chosen to maximise reuse and recycle goals. The supply chain activities must be integrated involving resources for recyclability. From the consumption perspective, a circular economy model permits to avoid an excessive consumption of non-recyclable products. Planned obsolescence connected to marketing strategies and advertising have prompted consumers to buy short-cycle products (Longmuss & Poppe, 2017). The producers’ intention to use

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planned obsolescence is to define commodities with a short lifetime and to persuade customers to purchase new products more quickly (Malinauskaite & Erdem, 2021). An example is given by electronic devices, whenever they break down it is preferable to replace them with new devices rather than repair them. Circular consumption model fosters towards replace, repair and reuse. Planned obsolescence is not considered at all, because it is in contradiction with the concept of circularity due to its promotion of a culture of wastefulness.

6.2 From Linear to Circular Production Production is the set of activities an entrepreneur arranges to design and produce commodities to satisfy consumers’ preferences. Within linear production model, products are made, used, and distributed for the purchasing and disposed after use. There is not continuity between production and consumption within linear production model. Hence, the linear economic system has been characterized by material extraction, mainly fossil fuels, and mineral, as well as by product discard at the end of lifecycle. The linear production system operates through the following steps: extraction of minerals, massive production, distribution, consumption, waste generation and landfills. In such a system, products are disposable or short-live and when they finish their function end up as waste in landfills. The transition from linear to the circular economy cannot be completed directly, it should be necessary to preview an intermediate phase. This one is represented by the recycling economy, which is defined as take-make-reuse-recycle-waste. Through this economy it is possible to pass to the circular one, which is made of minimal take-make-use-recycle-reuse-repairs-return-minimal waste. Thus, on the opposite of linear production system there is the circular production model, which establishes a continuum between production and consumption perspectives. The circularity starts when entrepreneurs design their products or services and end when secondary raw materials are used in other production process. There is a loop that reduces resource use, enhances reuse of products, and recycles raw materials. Value creation fosters the value preservation. This new production and consumption approach can be analysed through one of the thermodynamic principles. Thermodynamic is a branch of the physics that focuses on the relationship between energy and environmental systems. The first thermodynamic principal can be used to explain circular economy model. It states that energy can be converted from one form to another, but it can neither be created nor destroyed. Similarly, the circular economy model permits to convert materials and energy, without the need to destroy production as well as consumption waste. Therefore, the main difference between linear and circular economy regards the value creation as well as its maintaining. In the linear economy, value is created through production and selling as many products as possible. Thus, market represents the unique system through which production and consumption are connected one to another.

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The manufacturing industry is living a transformation due to the fact that new technologies revise production models based on localisation, customization, on demand products. All these models refer to the concept of re-distributed production or re-distributed manufacturing. They concern all the systems and strategies producing a change of economics and production organisation. For example, Industry 4.0 technology that reduces supply chain costs, enhances sustainable growth, provides customizable goods and services, much more satisfying customers’ preferences. Circular economy, hence, may enhance economic, social, and environmental advantages through modelling business goals related to sustainable economic growth. A company’s production activity can be ameliorated implementing business models with circular economy solutions. A circular business model represents a set of strategies able to recover a value from the product. The circular strategy concerns the reuse of product or breaking it down into raw materials for other use. Product can be reused extending materials or energy values into the manufacturing procedures. The circular business model may create tangible as well as intangible values. The higher the value of the product, the more the potential to create a business model around it increases. Thus, it is necessary a shift to a new business model, where materials circulate in a closed-ended loop system. This new model should be fine to reduce waste production and resource depletion. The first example of non-linear business model is the industrial symbiosis, which collects technics able to arrange industrial activities towards energy, water reusing and recycling, minimizing environmental impact and enhancing competition. Hence, the new business model can reduce and reuse materials during production procedures as well as recycle and recover them within distribution and consumption activities. Probably, it needs to be working at three levels: micro, meso and macro. At micro level, it is necessary to activate new models that affect production, entrepreneurs’ behaviour, and customers. At meso-level, means to work emphasizing eco-industrial parks and at macro level it needs to intervene within cities, regions, and nations. Looking at circular economy system, a business model can be characterized for its sustainability, circularity, and innovation. The circular and sustainable business models involve value proposition, creation, delivery, and capture. Therefore, a such kind of model contributes simultaneously to enhance economic, environmental, and social sustainability. Moreover, a circular business model permits to close material loops and to keep resources in use for long time. Circularity could be representing an evolution of sustainability because it defines a path along which sustainability takes shape in various and specific ways. A circular businesses model integrates circularity principles into the innovation process, for example, the product-service system, which provides leasing and shares services decoupling service provision from ownership. This system fosters investments in reuse of products and materials. Circular economy and new business models are going to change production as well as demand systems. This represents a new paradigm where the relationship

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between producers and customers as well as the linkage between products and materials become essential within a circular loop system.

6.3 Business Models Within the Circular Economy Generally, a business model can be defined as a strategic plan to make profit. It concerns a set of products or services a company decides to sell to a specific target and involves investment costs and revenue management. Hence, a business model describes creation, delivering, and value proposition for customers. Basically, it is made of buildings blocks representing all the attributes a firm needs to get to perform its business. All the attributes define a plethora of different functions, which can be material or immaterial, features, and actions. Thus, a business model sets solutions up for entrepreneurship and management complexity. A sustainable business model is based on value proposition, value creation and delivery and value capture (Afuah, 2014). All of them refer to the business activities, aims and procedures. More specifically, the value proposition refers to the customer target and the offer, the value creation regards resources, activities and distribution channels, and value capture involves cost and revenue structures. Through this model, it is possible to achieve simultaneously economic value and environmental as well as social sustainability. Circular economy asks for new business models able to reduce waste and environmental pollution. The circular businesses models connect sustainability and entrepreneurship, so it is possible to get environmental entrepreneurship and sustainable entrepreneurship. The former concerns the production of economic and environmental value, while the latter focuses on sustainability across a triple dimension, which is economic, environmental, and social ones. Environmental and sustainable entrepreneurship define new business models able to manage opportunities coming from market inefficiencies (Lacy et al., 2020). Hence, there is a comparison between sustainable and circular business models, but there is an evident difference among them. A circular business model defines a way to address negative consequences of business procedure leading to excessive waste production and resource depletion; while a sustainable business model, as already saw, faces on economic, environmental, and social values, and does not suggest any path for accomplishing them (Caprita et al., 2019). An important element to define a circular business model concerns the level of innovation, which ca be found at different stage along the value chain  (Chiarot et al., 2022). It is possible to make a distinction among different value chain innovations for circularity, as upstream, downstream, and full business. Downstream regards the adoption of circular innovation referring to the revenue model and customer interfaces. Upstream refers to companies that implement circular innovation internally and focus on connection with suppliers. Full business concerns firms that adopt either upstream or downstream innovations.

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A circular business model includes circular economy standards to shape a business type, aiming to fully closing materials loop and keeping resources in use for as long as possible. At this purpose, a circular business model involves different strategies, which can be summarized in the following strategical scheme: maintain product ownership, the extension of product life, and the design for recycling(Curtis, 2021). The maintain product ownership represents a strategy for circular business model adopted by enterprises that offer multiple products with embedded values. An example regards the companies’ producing printers and cartridges. The producer retains the product’s ownership and rents it rather than sells it to the customer. This kind of business model permits to customize products, to improve customer care and loyalty, to reduce costs and to attract more clients. This strategy is connected to a new concept of product linked to the concept of “servitisation”. According to Baines et al. (2007) servitisation refers to the consumers’ payment for using an asset, rather than its purchase. It reduces all the risks as well as costs related to the ownership. Products and services become part of the same bundle, changing the same nature of products by nurturing competitiveness, going up the value chain and providing knowledge intensive goods and services. The extension of product life is another strategy on which a circular business model can be based on. Firms use this approach to extend products lifespan as a tool to increase competitiveness improving products quality and brand loyalty. Many examples come from manufacture equipment and household appliances industry. The design for recycling focuses on the possibility of redesign products maximizing materials’ recoverability for use in new products. This is an important strategical approach companies may use to improve recycling and move towards a circular economy. Many examples come from the textile industry, where important brands started to use plastic waste to produce textile fibres. Therefore, circular economy designs a new perspective within business system and the literature on this topic is increasing since the interest towards this issue grew during the last decade. There are different classifications of circular business models coming from different organizations. Forum for the Future (2016) describes five models of circular economy, IMSA (2015) shows 19 business models as “circular”, starting from van Renswoude’s (2015) studies and focusing on short and long loops, and pure cycle. WRAP designs a map of innovative business models, but all does not enable to define an entire business model. Accenture (2014) depicts five business models for circular economy on the base of previous studies by Lacy et al. (2015). Lewandosky (2016) refers to regeneration, sharing and loping. Achterberg et al. (2016) uses the value chain perspective and talk about circular design, optimal use, and value recovery. A plethora of circular business models are defined, but all of them refer to the strategical scheme described above. All these strategies can be combined one to another to define specific circular business models (Henry, 2020). According to Lacy et al. (2015), there exist five circular business models, where this combination may occur:

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• • • • •

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The creation of a circular supply chain (circular inputs) Extension of Product Use and Life Cycle Sharing platform and activities Product as a Service (the all-in logic) Resource Recovery and recycle model

The circular supply chain model refers to circular inputs and aims to the replacement of the linear production factors with biodegradable or recyclable ones. The circular supply chain enables the use of natural sources not subject to continuous erosion (Krausmann et al., 2018; Sarkar et al., 2022), such as the heat of the sun and the movement of water. The extension of product use and life cycle represents another circular business model. It concerns mainly technological products for which planned obsolescence reduces their lifespan forcing consumers to discard them to buy new ones. The extension of life cycle is connected to the reparability and reusability. Another business model particularly popular recently is the Sharing Platform and activity. It is based on the presence of platforms through which a commodity is shared among community’s members. The shared use of an asset is consistent with the principles of the circular economy, as it enhances the use of an asset by a plurality of individuals that occasionally use the product. The all-inclusive logic represents another circular business model, which is based on the concept of “Product as a Service”. Product as a Service refers to a product sold and managed as a service. It refers to the “functionality economy” combining products and services with their repairability and replacement. A customer does not own the product but uses it paying a fee. Ownership remains at the producer who is responsible for producing good quality products. The advantages of this model are different and include customer relationship and care, loyalty to the service, and stability and revenue predictability. This is an extension of a wide range of services as maintenance, extension of guarantees, in some cases, even replacement of the purchased good. The all-in circular business model is characterized by the relationship between producer and consumer, wherein the former addresses a consumer willing to pay for a more complete product and the latter is reassured by a sales formula that frees him from duties. The model of Resource recovery and recycle is based on the ability to re-use waste in further production processes. In this model the concept of waste to be disposed of does not exist and this paradigm represents the core issue of this circular business model. The waste is a new value to take into consideration. This approach focuses on the meaning of environment as resource to use as well as to protect. Also, the European Union circular economy policy foresees similar business models to enhance a new regenerative economy, such as: • • • • •

Product as a Service (PaaS). Sustainable and innovative materials. Property sharing (e.g., sharing economy). Product regeneration. Longer life span of a product.

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Therefore, following the literature on this topic  (Laner & Rechberger, 2016; Asdrubali et al., 2015), it is possible to make a distinction looking at different characteristics, such as circular supply, resource recovery, product life extension, sharing, product service system. All of them allow to define a variety of circular business models of which a brief description is presented below. Circular supply business model regards the replacement of tradition production with renewable materials. It represents a type of resource recovery model and where there is not waste. Resource recovery models relate to production of secondary raw materials from waste. They present some different configurations, as downcycling, upcycling, and industrial symbiosis. Downcycling model consist of the conversion of waste in secondary raw materials, which have an inferior quality and can be used as inputs in limited productions procedures. On the contrary, upcycling model refers to the transformation of waste in secondary raw materials, which have high value uses. Industrial symbiosis is a circular business model that requires particular attention since it represents an important production model. It refers to the use of production inputs coming from another production process. It is characterized by different elements, as geographical position, the interaction among entrepreneurs, cost of transporting from a company to another. Geographical proximity is extremely important to permit symbiosis among companies. They must be in the same industrial area if they want, for example, to optimize a waste flow. For this reason, eco-industrial parks represent functional way to foster industrial symbiotic solutions, actors located together can facilitate their exchanges. The interaction among different companies represents another important element to improve industrial symbiotic approach. Different entrepreneurs interact defining and using rules, analysing life cycle products, and designing process for eco-industrial parks. Interaction permits also to build specific industrial symbiosis networks, through which exchange information, experiences, and knowledge. Cost of transporting is also important since it affects the symbiotic activities among entrepreneurs within the network. Industrial symbiosis is connected to circular economy since it maintains a value-added for products. This is possible using products as input to other productions. A good symbiotic activity depends on the proximity of industrial actors and for this reason become functional the eco-industrial park, where businesses collaborate to optimize waste flows, reduce environmental pollution, sharing resources and infrastructures. Profit life extension business model refers to the opportunity to extend the life of a product. It involves different variants, such as classing long life, direct reuse, maintenance and repair, remanufacturing, and refurbishment. Classing long life model regards the design of products and high quality of production standards and materials used. Direct reuse model concerns the possibility to redistribute second hands products to new owners. Maintenance and repair model refers to the possibility to make minor repair to a product and replace it in the market. Remanufacturing and refurbishment model involves both the restoration of used and degraded products and their aesthetic improvement to resale to new clients or old ones. Sharing models regard the use of under-utilised consumer assets through online platforms that simplify transaction between owners and clients. The concept of

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“sharing” as a business model is complex and not easy to define. However, it is possible to describe a framework of sharing economy business models, which can create and deliver value on revenue streams, as commission paid for transaction or fee paid monthly as service user. Revenue streams include sponsorship, donations, usage rates, buy-out, credits, revenue sharing, digital currency, and so on. The car-­ sharing service is a typical example, where a price discrimination among different platforms defines product’s attributes. The circular business model includes two types of combinations: co-ownership and co-assess. Co-ownership regards the lending of physical commodities; Airbnb represents a popular example. Co-assess refers to the co-participation in an activity that would have taken place anyway. The carpooling is an application of this model, which makes available seats that risk to remain empty during a travel. Product service system models make a combination of physical products and service component and define three options: product/service-oriented, user-­ oriented, and result-oriented models. Product/service-oriented model refers to conventional production system including further after-sales service in its value proposition. User-oriented model regards the product access by consumers, which pay for temporary access to a service o product, while the ownership remains to the service provider. Result-oriented model focuses on outcomes provided by goods and services, and the relationship between providers and customers concerns a specific outcome without considering the mean through which that one is accomplished. Entrepreneurs who decide to use such kinds of business models facilitate the management of different types of waste, as resources, capacity, lifestyle, and embedded value. All of them contribute to enhance different goals as consumer engagement, design of new products, reverse logistic, ecosystems, and disruptive technologies. The last ones become really important to close the loop and assume digital, biological, and physical perspectives. They improve circular business models enhancing innovation, information transparency, resource, and energy efficiency. Definitely, taking into consideration the observations of Lewandowski (2016, 2018), circular business models propose value from recovered and reused products and from an offer of integrated services to the product. Moreover, they concern the use of environmentally friendly resources deriving from waste and need relationships with consumers aimed at achieving greater information on the circular economy. At this purpose, channels that facilitate contact between circular businesses and consumers are important. Circular business models also pay more attention to consumer health and environmental impact. This type of model requires that there be a cultural change, for which the collaboration among circular companies operating in different sectors is essential. Before to conclude this paragraph, some further considerations about the representation of a business model are necessary. Usually, to describe their business model, entrepreneurs utilize a practical tool for depicting different steps and understanding the value proposition along the business. This tool is known as “business model canvas”. It is not possible to define a business model without talking about the “canvas”.

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Essentially, it was established the first time by Osterwalder and Pigneur (2010) to show how a firm creates and delivers its value proposition. It was defined as a tool able to “describe the rational of how an organization creates delivers, and captures value” (Osterwalder & Pigneur, 2010; p. 14). The original canvas is arranged in nine buildings blocks focusing on different business issues: “key partners”, “key activities”, “key resources”, “value proposition”, “customer relationship”, “customer segments”, “channels”, “cost structure”, and “revenue streams” (Table 6.1). The “canvas” makes a classification of business processes and activities through nine blocks interconnected one to another. At this purpose, some scholars redefine the canvas as “eco”. The “eco-canvas” is an instrument able to describe a circular value proposition from sustainable and circular perspectives. The canvas permits to show a circular business model, which is used to help companies to be more sustainable, integrating circular economy strategies into different steps of the business. According to Daou et al. (2020), the building blocks within the eco-canvas can be updated in the following twelve ones: “circular value chain”, “need and challenge”, “unique circular value proposition”, “stakeholders’ relationship”, “customer segments”, “key resources”, “communication and sale”, “cost structure” and “revenue streams”, “environmental foresight and impact”, “social foresight, and impact” (Table 6.2). The information entered in the 12 blocks return the business model focusing on environmental, social, and economic perspectives. More precisely, the model permits to line up profit with purposes such as environmental and social aspects. The eco-canvas offers the possibility to make an integration of foresights at different levels of the business surrounding context and time parameters. This business model eco-canvas describes values for environmental and social agents through the description of economic and legal, environmental, and societal challenges, for the present as well as the future. All those information contribute to define a map of all the key driving forces able to change the organization, to determine positive impacts and to assess eco-innovation enhancing company’s competitiveness. Hence, circular business models allow to deliver value proposition, creation and capture as well as offer social and environmental sustainability. The value proposition, which is generally one of the main issues in the canvas, becomes into the eco-­ canvas a set of necessary elements, such as lower cost of products or reduced lifetime costs, level of performance, accessibility as convenience of on-demand availability, sustainability, and co-value. Moreover, this value creation model allows

Table 6.1  Original business model canvas Key activities Key partners Key resources Structure cost

Value proposition Revenue streams

Source: Osterwalder and Pigneur (2010)

Customer relationship Channels

Customer segment

Source: Dau et al. (2019)

Reduction of waste Reduction of energy used Increase of secondary raw material exchange Communication and Sales Re-sale Return channel Secondary material market

Long-term service Single sale

Stakeholders relationship

Structure cost Revenue streams Financial incentives Product sale revenue Labour Service sale revenue Materials Bundled product-service sale revenue Financing cost Waste disposal Waste as value Circular business Model and innovation Focused on production: Re-make, re-condition, circular sharing, co-product sharing Focused on consumption: Accessibility, product and service performance

Specialised production procedure

Co-value

Access Sustainability

Lowe costs Performance

Need/problem/ Unique value challenge proposition Product design Revers logistics Service provision

Circular material supplier Third party provision Partner providing technology Key resources Asset management platform

Environmental foresight and Circular value impact chain

Table 6.2  The circular business model canvas “Eco canvas” Foresight and social impact

Gender parity

Increase of workplaces Vertical clients Best job conditions New clients

Customer segment

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a company to sell the product at a competitive price compared to that normally applied. Through the circular economy business canvas, it is possible to define the relationship between production and consumption phases. This connection is extremely important to ensure a sustainable and circular passage from the producer to the customer and vice versa. From the production-side, four steps are depictable and regard a set of activities as remaking, refurbishment, use of recycled and renewable materials, and secondary raw materials distribution. All these activities are necessary since they permit to establish manufacturing steps that act on an end-of-life product to return it like new. Moreover, during production stage, an entrepreneur may improve aesthetic design of its products and re-condition them. After that, the entrepreneur arranges sourcing recycled that can be returned to other technical cycles. Hence, residual outputs from one process may become inputs for other processes. From the consumption-side, it is important to establish how products are purchased and consumed by customers. It regards the clients’ accessibility to the products and their functionality, so as the level of guaranteed performance, an example refers to the product as service system. All these phases are necessary to foster a circular business model. Moreover, their comprehension allows to evaluate how products are managed at their end-of-life, improving resource recovery for other production processes or value chains. In a circular business model, the previous activities, both from production and from consumption sides lead to the end-of-life phase, where actions take place to manage products at their end-of-life, recovering materials useful for other production processes and avoiding landfilling discard. Therefore, a circular business model, through the eco-canvas, can be clearly depicted enhancing circularity impacts and value, and producing a circular economy outcome. Entrepreneurs who want to transform or start their business as sustainable and circular may use this tool to describe their business model. The eco-canvas permits to understand how entrepreneurs can act to fully close material loop and keep resources as long as possible in use. This approach is useful for start uppers since it permits to take a holistic approach without any risks of undervaluing investments in production process. Probably, it can be helpful to describe a circular start-up to design innovative enterprises working on circular economy.

6.3.1 The Circular Business Models in the Reality: Some Case Studies To clarify the applicability of circular business models, described in the previous paragraph, few particular cases of circular processes will be described in the following lines. They can be useful to make the importance of these models more understandable.

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Following the experience of Covid-19, companies were forced to diversify their business model and look for several sustainable alternatives to remain competitive. Suddenly, the model “product as a service” (PaaS) becomes important for companies, with it the customer no longer buys the product, but pays for its use or for its functionality. PaaS is a complete cloud deployment and development environment, the all-in logic. As for the business model PaaS, an important case study is the cloud platform built by Microsoft under the name of Azure. It is a cloud platform that includes more than 200 cloud products and services. The Microsoft PaaS model provides a framework for developers to build or customize cloud-based applications. It allows developers to create applications using built-in software components. Through the cloud PaaS platform, organizations can analyse data and perform data mining operations, identifying in-depth information and models, and predicting results to improve predictions, product design decisions, return on investment and other business decisions. Through Azure, Microsoft offers a service more in line with the economics of functionality being a combination of products and services. The service also includes features such as repair or replacement. Products are offered in subscription systems with associated services. Customers therefore do not own the product but subscribe to it and pay a recurring fee, they pay for what they use and use only what they need, since the customers’ pricing model is based on usage meters. Thus, the service purchasing models are based on consumption (pay as you go and grow), subscription (value for a commitment), and volume licensing (coordinated purchasing). Because ownership is not transferred to the customer, there is great potential for the circular economy, as the company is responsible for producing a better product. Another case study refers to the second business model discussed in the previous paragraph, that of sustainable and innovative materials and that also concerns the creation of a circular supply chain. An example comes from the building construction industry, which has the main challenge of reducing its impact on the environment and the growing demand for housing (Coppola et al., 2019). More specifically, an important contribution comes from the use of corrugated cardboard, an environmentally friendly material, low density, which despite being light has high specific properties, such as acoustic and thermal insulation. Corrugated cardboard layers typically used in packaging sector can be optimized to be ready for sustainable constructions’ industry (Asdrubali et  al., 2015). More specifically, an interesting case study is offered by Area ltd, an Italian company that builds corrugated board for the construction of houses. Everything comes from a thesis and turns into a cutting-edge project, Archicart. This project is based on a new conception of the idea of durability of architecture. In a rapidly changing world, a building is not durable if massive and unchangeable, but if it can transform and adapt. The company uses corrugated board for its lightness and ease of processing and because it is able to withstand structural loads. The solidity was given by exploiting the strength of the folds of the cardboard and by the tubular supporting structure enclosed in an additional layer of confinement. The self-supporting panel and its connection systems have been patented, with PACOTEC patent. These panels are used to build solid walls and entire buildings. The development of these projects and the use of

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sustainable and innovative materials encourages the increase of circular supply chains that refer to a production model that is restorative by nature. In essence, this means that when products or goods reach their end of life, are taken over by a manufacturer and fully reused as material input for new production. Materials used during production, which do not end up in the product, can be collected and reused. Another circular business model concerns the sharing of activities, services, and products, also known as the sharing economy, which will be addressed more broadly in paragraph 5.8 of this chapter. Here is a description of a case study related to the circular business model that underlies the sharing economy. According to Wosskow (2014), the industries focus on three areas where the sharing economy is in increasing consolidation, namely, personal, and commercial space, transport of car clubs and ride sharing, time and skills. The bike-sharing platforms are the most popular and developed industry in sharing economy after car sharing platforms. The case study refers to the first public bicycle project in Hangzhou, Cina. Started in 2008 with only 61 stations and 2800 bikes quickly depopulated until it reached unimaginable numbers for the same Paris, where was born the most popular initiative of bike sharing in Europe: the Vélib. It is serving 280,000 passengers daily. The Hangzhou urban public bicycle sharing system strength is to offer a combination of good quality and low costs. The bike system is based on the concept of circular economy using the product lifetime extension business model, which can affect key value drivers such as increasing resource efficiency, extending lifespan, and closing the loop (Sun, 2021; p.  2). The use of bicycles is free for the first hour of use. Moreover, the company raises significant private funds through the sale of advertising space on the kiosks of the bicycle docking station. There are more than 51,500 bicycles and 2050 stations where you can leave or take a two-wheeled vehicle. Each station is located no more than 300 m from the others and in suburban areas 800 m. It uses 250,000 people per day. Hangzhou has the largest bike-sharing program in the world that does not require government funding beyond initial capital. One of the main problems for the city of Hangzhou is the traffic congestion, therefore, the local municipality gave strong policy supports to reduce public travel costs financing private companies on the basis of their service quality. The Hangzhou Municipality has focused on the priority of public transport as a strategy of urban traffic development involving four ministries, proposing the system of urban public transport services five in one, which also includes the public bicycle system. During this project, the city of Hangzhou has achieved some important results such as the promotion of energy saving and the reduction of emissions, the improvement of the urban degree also through the construction of low-carbon cities and the improvement of the quality of life for citizens. The Hangzhou urban public bicycle sharing system became a model by peers and has a broad influence on other cities not only in China. The city of Taiyuan used the Hangzhou model to build its urban public bicycle sharing system and now it rent more than 500,00 bicycle daily.1

 http://www.guangzhouaward.org/815/content_2191.html

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The third example refers to the resource recovery and recycle model. It focuses on the production of a textile fiber from red oranges, an artificial textile fiber of natural origin, the first in the world to be extracted from oranges production waste. Since the beginning, the company “Orange Fiber” worked to create circular fabrics from citrus fruits waste from Italy to improve environmentally friendly future of textile industry. The compound, called “pastazzo”, that is what remains after the production of citrus juice, constitutes a biomass that can be transformed into raw material to be used in the production process of textile fiber. Through appropriate production processes and through a transparent supply chain, this material is transformed into yarn and product for brands and designers who take care of sustainability. The technology process permits to obtain cellulose from citrus pulp and to transform it in TENCEL Limited Edition per Orange Fiber. The fiber is similar to silk and is currently used by the brands for luxurious clothing collections. 700,000 tons of citrus by-products are thrown away every year, this represents an opportunity for the company to transform the citrus waste in textile fiber. The company intends to make the fiber as similar to silk as possible. Furthermore, the material is made from 100% natural cellulose. This characteristic, combined with the natural dyes and the fiber extraction process that uses only ecological chemicals, will permit to enter among the ecological companies. Orange Fiber registered the trademark identifying product containing its yarns and fabrics. The Company has also a partnership with Lenzing Group, an Austrian company that develop fibers for industry, brands, and retailer, in sector like fashion, beauty care, cleaning and hygiene. The Orange Fiber brand is the guarantee of transparency that identifies company’s production chain and made in Italy products. The last one circular business model described in the previous paragraph concerns the product life extension and longer life span of a product. “Extending product life” is a concept widened as one of the multiple solutions to make an economy as circular as possible. Basically, the concept describes how long a commodity can be used, with the ultimate goal of maximizing the “use” rate and durability of a given product. An example of a such kind of model comes from the USA company Caterpillar Inc., which is the world’s leading manufacturer of construction and mining equipment, diesel and hard frame natural gas engines, industrial gas turbines and diesel electric locomotives. The company was involved in the UN project “Product Lifetime Extension” in its sector of solar turbines and progress rail services remanufacturing (UN, 2015). The area involved 110 facilities, 51 in USA and 59  in other countries. The business strategy to extent product lifespan concerns remanufacturing. This activity consists of returning a used commodity to at least its original conditions and performance and it has to be guaranteed as equivalent to a newly manufactured product (European Remanufacturing Network). Caterpillar’s regeneration represents an exchange model. When a component needs to be replaced, customers work with their authorized retailer to exchange their non-­ functional item and replace it with a regenerated one. The old product is sent back to Caterpillar for regeneration. The regenerated product typically costs less than half of a new one but guarantees the same usability and performance. The USA company sells its products around the world by using 180 dealers, it also collaborates with the Remanufacturing Industries Council in order to inform stakeholders

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on this initiative. The only barriers to this business model regard some developing countries, which have been resistant to adopt remanufactured products, mainly in comparison to developed countries. Probably, it happens because of customers from developing countries perceive remanufacturing commodities as old used products.

6.3.2 Further Case-Histories for Different Industries Finally, there are other case histories that involve small and medium sized enterprises located in different countries worldwide. Circular business models’ application is multifaced and multi-sectorial. For the suck of completeness, in the following lines some enterprises are going to be described looking at circular business models and production sectors such as manufacturing, fashion, food, energy and events organization. 6.3.2.1 The Case History #1: Fashion Sector This case history regards the fashion industry and focuses on product and process circularity levels, assessing environmental, social, and economic impacts along the entire value chain. One of the main problems of fashion sector, mainly the luxury one, regard the provision of materials and the fragmentation of provision and distribution chains. Moreover, there are not sufficient and well-arranged technologies for product recovering when they arrive at their end-of-life. The case history involves a company that produces high quality cloths as well as all the stakeholders having connection with the firm, from raw material providers to the distributors. Different kind of impacts are measured, looking at energy, logistic and transport, packaging, and waste management. At the end of the analysis, the company achieved several dashboards through which analyse and check all the areas involved with the aim to control specific indicators. The company organised the collection of old cloths asking its customers to bring old clothes back to the store in exchange for a discount on the new ones. The campaign worked really well, and the old clothes were destroyed and recovered as secondary raw materials fibres, to use in new production process making new regenerated cloths. Furthermore, the company involved its designer to be sure of creating a garment that is truly recyclable at the end of its life, and also strengthen collaboration with suppliers and with the supply chain. These were the most important results achieved which allowed for the creation of a circular business model. 6.3.2.2 The Case History #2: Food Sector The case history #2 refers to the food industry and regards a new management model for boxes in polyethylene terephthalate, generally used for food. The activity involves all the stakeholders, producers, distributors, consumers, and a multiutility

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company. The latter had been asked to return boxes at the end of consumption activity. In return, clients received a cash reward or a discount on their next purchase. The waste has been collected, recycled by the multiutility company, and reused as secondary raw materials. The activity focuses on the following goals: give a contribute to the European targets about plastic recycling, involve all the stakeholders along the value chain, and share strategies and results. After this experience, some advantages are achieved in terms of environmental and social impacts, due to the reduction of carbon emissions and waste and also new workplaces were defined. This action also produces advantages also in terms of economic benefits, due to the involvement of different actors acting along the production and distribution chain (Lotfian et al., 2023). 6.3.2.3 The Case History #3: Energy Sector This case history regards the recovery of phosphorus from discard water. The activity focused on the material recovery from water coming through industrial food system. The phosphorus recovered is used as fertilising within agriculture activities, as, for instance, vineyards cultivation. The activity of phosphorus’s separation and recovery allowed to close the loop. The material recovered was used within the same agriculture activity. The main advantage refers to the economic benefit the entrepreneur gained, reducing the costs of purchasing phosphorus as a fertilising. 6.3.2.4 The Case History #4: Event Organization This case history refers to the events organization sector and focuses on the waste collection, separation, and recycling within a regional context. The activity accounts all the materials as inputs and outputs occurring during the organization of a marathon. The aim is the optimization of plastic waste management produced during the event through a circular economy practice. The circular practice permitted to account for all incoming and outgoing material during the marathon, to intercept material suppliers, to collect, separate, weigh, and send the material for recovery to the multiutility company involved. Four different types of plastic products/materials were carried out at appropriately equipped collection points. The plastic waste management model permits to achieve the following goals: increase efficiency in waste collection, reduce the fraction of waste sent to landfill, and enhance the waste recovery activity. During all the activity, the Life Cyle Assessment analysis has been used.

6.4 Eco-Innovation Investments The continuous expansion of production and consumption activities worldwide negatively affects the challenge towards a sustainable development. The consequently growth of CO2 emissions and the significant emphasis on carbon neutrality

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emphasizes the importance of eco-innovations and green investments, since they are essential to prevent as well as reduce environmental pollution. In a such context, eco-innovation represents a cost-effective approach able to reduce CO2 emissions and also permits to foster environmental, social, and economic sustainability. Furthermore, it is helpful to increase the use of renewable and clean energy, enhancing environmental quality. Normally, such a kind of innovation focuses on the use of clean energy and permits to decrease carbon emissions. Eco-­ innovation has a key role in the reduction of non-renewable energies consumption and so in the carbon emissions. That means there is a connection between eco-­ innovation and CO2 emissions. Eco-innovation can be considered as a way to improve the environmental performance. According to Rennings (2000) an eco-innovation produces a reduction of environmental problems and ecologically required sustainability goals. Eco-­ innovations are cyclically necessary to regenerate production and consumption models as well as to promote the transition towards the circular economy. Therefore, it is necessary to invest in the eco-innovation system. This kind of investment represents a further step within the circular economy framework. Investments permit to improve technology for green production and sustainable environment, since eco-innovation represents an engine for economic growth. Eco-innovation issue is linked to green investment. Green investments deal with environmental, climate and carbon investments. For example, climate financing alleviates climate change allowing low carbon environment. Financial sector looks at green investments for contributing to make a sustainable environment. Therefore, green financial investments address towards green topics and use green financial tools as express loans, climate credit cards, green bonds and so on. More specifically, express loan is a credit for business released by banks or other recognised lenders. A climate credit card represents an automation of the tracking process of climate impact linked to purchasing decisions, which eliminates “opt-in” process for carbon reduction. Generally, the opt-in refers to a form of consent a web user gives authorizing third-party to contact him to give information. The climate credit card works when, for example, a user can check the carbon emissions caused by air travel and then opt for a train. This green financial tool mobilizes capital flows toward emissions reduction activities. The green bonds represent a long-term green instrument of financial investment, useful to finance eco-friendly programs and projects as clean transports, solar energy plans. The investment in eco-innovation is based on green finance and permits to foster new sustainable policies within important economic and social fields, as renewable energy source usage. The United Nations Agenda 2030 takes eco-investment into consideration to achieve development sustainable goals. At this purpose, there are some different SDGs that foster green financial investment, like 11th, 12th, and 7th goals. The 11th goal regards eco-investments for green spaces within sustainable cities and communities, the 12th is about climate resilience and low-carbon transition, and the 7th concerns energy infrastructure and clean energy.

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Eco-investment can be oriented towards waste management. Waste production and management represent the main problem to solve to improve circular economy system. Usually, waste is a source of pollution and the necessity to solve this problem call for empower eco-investment in waste management to produce new and greener technologies. Furthermore, this kind of investment may improve revenues and create new employment opportunities. The electronics industry represents a good example, where waste flow is increasing as a result of technological progress leading an increase in quantity of electronic equipment. At the moment, many countries are not able to deal with waste problem, mainly electronic waste, because there is a lack of efficiency in their waste management systems. Eco-innovation investments may be representing the possible solution able to enhance waste collection, recycling, and use. The combination of eco-innovations and green investments allows to achieve environmental and social goals enhancing sustainable development. Countries worldwide should increase fiscal spending to boost green investment in innovation and use public expenditure to finance green credit.

6.5 Different Kinds of Costs and Benefits (Returns) in the Circular Production Before to unveil the different kinds of costs and benefits within circular production system, a short description of costs and benefits is necessary. Costs represent the measure of what must be committed to obtain the availability or ownership of a good or the provision of a service. About the production, costs can be distinguished in total, marginal, average, for investment or management, direct and indirect, long-run and short-run. About benefits, it needs to distinguish among revenues, earnings, and returns. Revenues could be defined as the sum of money that is obtained from a sale, resale, service, and economic operation. In economic sense, a revenue represents the total monetary value of the cash inflows. Earnings are also used to describe a financial performance, since they refer to the business profitability. Therefore, earnings are the profit an entrepreneur has earned over a period of time. The term “return” seems to be like the earning, because of it is the profit a company makes as a result of its investment. An example of return is the ROI, return on investment. Since the end of 90s, environmental legislation and regulation has been seen as a limit for entrepreneurial economic performance; on the contrary, it should be representing a way to push entrepreneurs to invest in circular and sustainable innovation to ameliorate their production system, to obtain business profitability and improve their performance. According to Porter and van der Linde (1995), environmental legislation can be an incentive for the entrepreneurial performance. Environmental policies such as circular ones may positively affect costs distribution and economic efficiency.

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Looking at the circular production, costs and benefits assume important meanings to be considered. Production costs involve not only economic dimension, but also environmental and social ones. It is the same for production benefits. The balance of costs and benefits within circular production model depends on the value generated by entrepreneurs towards consumers. It concerns environmental, social, and economic perspectives. All of them are present when an entrepreneur bears costs to use green design, for instance, or eco-friendly material selection and other tools to support decision making for sustainable design. Production costs increase when an entrepreneur decides to adopt circular economy strategies to innovate its production system. Some studies show that different typologies of circular economy innovation positively affect high-performance firms on revenues, while production costs increase (Antonioli et al., 2022). Public funding, for example, can support innovation and facilitate the adoption of circular economy strategies, mainly for small and medium sized enterprises, avoiding that production costs increase a lot. The economic returns about circular production concern the access to new markets, the costs reduction because of increased resource efficiency, the use of innovation, and the demand of green technologies. Economic returns, and so company’s profitability, depend on the introduction of green tools and activities within the production process. Improving, for example, energy efficiency can produce positive effects on financial performance, reducing environmental externalities as air and water pollution. Hence, green activities involved in circular production, as green supply chain management, enhance financial returns avoiding pollution and fostering environmental, social, and economic benefits. Furthermore, the use of circular economy practices shows the attention of entrepreneurs for corporate social responsibility as well as sustainability. In such a context, eco-innovation strategies as well as service innovation and organizational setup foster the transition towards circular economy. Eco-innovation affects in “an asymmetric way short-term measures of profitability and long-term performance” (Barbieri et al., 2016; p. 609).

6.6 Circular Economy and Sustainable Consumption The circular economy perspective can be fixed not only through the production but also out of the consumption. The regenerative economic model focuses on the use of raw materials able to produce sustainable commodities. On the other side, consumption represents the opposite face through which it is possible to foster the paradigm of circularity. In the linear economy model, the consumption produces waste, on the contrary, within circular economy pattern consumption does note generate waste since it can be considered as new raw materials useful to start a new cycle of production.

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Massive consumption is typical of linear production system, with the consequence of determining a depletion of minerals, a huge amount of energy, and waste of products. While, within circular economy, products can be reused, repaired, and when destroyed, become the basis of secondary raw material production. Nevertheless, there is not homogenous consensus when the topic of circular economy refers to the consumption. In this regard, some criticisms have been described in the previous chapters. There are scholars that do not retain circular economy as a way able to provide significant changing in behaviours and habits. Otherwise, the challenge of circular economy involves all the actors operating at different levels and asks for changing the logic moving from the logic of choice to the logic of care. Care requires a cultural change and involves more responsibility in using methodologies and theories. Probably, it should be necessary to combine collective experiments, involving consumers and producers, with policy actions. Another important pattern referring to the relationship between circular economy and sustainable consumption is represented by the sharing economy. Sharing economy and circular economy seem to play a role in the sustainability framework. Both of them refer to the concept of strong sustainability since they preserve natural resources rather than substitute them. Otherwise, this linkage among them has been criticised since it went away from the sustainability paradigm. The sharing economy represents a temporary access granted by the provider of the good via digital platforms and includes different kind of services, activities, and inexplicable boundaries. It is possible to describe it as an economic and technological phenomenon characterised by information technology and consumer awareness, so as social sharing. Actually, it is a model based on exchange, sharing practices and knowledge and represents an alternative for consumers since it is a peer-to-peer based activity of obtaining or sharing the access to commodities through community-­ based online services. The activities of sharing economy refer to the goods recirculation, durable assets utilization, services exchange and productive assets sharing. Therefore, a such kind of activities enable the use of durable commodities involving economic, environmental, and social motivations. Sharing activities are generally lower in costs, than market alternatives, are described as procedures to reduce carbon footprint, and increase social connection. Hence, sharing economy is linked to sustainability as well as to circular economy. Circular and sharing economies regard a set of activities as sharing, reuse, and sustainable consumption. In particular, sharing consumption concerns activities of obtaining and sharing access to goods and services managed through online platforms. These are characterized by the method to exchange, which can involve sharing, purchasing, renting, swapping, and borrowing activities. Recent attention has been focused on consumption practices as sharing, collaborative consumption, access-based consumption, consumer participation. All of them represent different kinds of sharing and are developing quickly as a result of the increasing of sharing economy. According to some scholars, there is a relationship between sharing consumption of goods and services and attitude towards circular economy. Circular economy and sharing consumption have in common elements such as sustainable development

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and environmental protection, maximize the efficient use of resources by recycling and pursue the same goals: to reduce the carbon footprint, minimize emissions and waste. Sharing consumption can be combined with other phenomena as product-service systems, and circular economy. Sharing, renting, or pooling resources are used to provide services without any ownership. This permits to manage costs and avoid overcrowding problems, without damages to the environment in terms of pollution and degradation. Sharing increases the use of products and extends product lifespans. Moreover, this model ameliorates resource efficiency through a leverage of under-utilised assets. This form of consumption has a sustainable consumer perspective, and it is growing significantly, since people understood the risks to damage the environment. Sharing consumption is considered as a form of circular consumption behaviour since it avoids resource depletion and a massive goods consumption, furthermore it could not need any payment. Often, it is used as synonym of collaborative consumption, also if the latter differs from the former just because of the payment. According to Fusco Girard and Nocca (2017, p.  68), the relationship among the two terms is based on the ability “to drive the circular economy contributing to make” goods and services consumption sustainable. In addition, new patterns of shared consumption highlight the absence of ownership. in the sharing economy, the goods used in the provision of the service, for example in the sharing of cars, are not the property of the user. The ownership of the shared good could be individual, determining the polarization of ownership, the accumulation of resources and the risk of increasing inequalities (Slee, 2015), or a corporate asset like a fleet of shared cars or bicycles (Richardosn, 2015). The activity to share relates to the concept of reciprocity, which is a calculated non-market exchange of commodities among humans. It is based on elements as household, reciprocity, redistribution, and market exchange. Household co-own commodities, reciprocity happens in personal networks, redistribution involves institutions managing assets, and market exchange regards market agents who rent out underutilized commodities to strangers. But it is also built on trust, reputation, enjoyment, social and economic benefits, sustainability, and environmental protection. All of them are motivations underling the consumption behaviour. Consumers’ attitudes towards sustainability and environmental protection issues positively affect the intention to share a good or service. The environmental protection determines positive attitudes towards sharing consumption as well as towards circular economy. The social and economic collapse in 2018 produced an increase of the form of consumption, making more people price sensitive and it is expected to grow to cope with global warming. This type of consumption refers to commodities as transportation, accommodation, food, and shopping. The combination of sharing consumption and circular economy defines a new business model able to involve communities and citizens, who bring economic and social advantages. A new creative model represents a strategy for a long-run development. Those who use the sharing consumption through disruptive technology contribute to the expansion of the market, involving people to save money sharing goods and

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services. People should be stimulated to share consumption opportunities since it permits to avoid environmental harm and limit global warming. Sharing consumption is a social, environmental, and economic model and it could be able to co-create value. The economic value basically is defined as revenue coming from customers’ demand and it is used to make decisions. But the value determination cannot consider just economic perspective, it needs to account social and environmental dimensions as well. According to Michel Porter (2011), there are three types of value: captured, missed, and destroyed. The value captured is an advantage for the stakeholders; while the value missed represents a situation in which the actors do not capitalize existing assets. The value destroyed refers to negative business results and regards the environmental harm and the social impact. Sharing economy is criticised from many scholars since it has not a social perspective. There are different social biases as education, age, and income. Criticism also concerns economic self-interest as well as predatory and exploitative problems. But what is more debated refers to the rhetoric of low-carbon, participatory, and socially connected. Labour exploitation, for instance, perverse eco-impacts, and inequality in access adds some further weakness in the sharing economy activities. Moreover, the lack of regulation and taxation increase the negative opinion of whom do not believe in this form of consumption and production. The debate is actually opened, and scholars are trying to illuminate the “dark side of the innovations” (Schor, 2014; p. 11). Despite the criticism, the sharing economy seems to be a new business model, which affect both production system and consumption behaviour distributing value more equally, diminishing carbon footprints and getting people together in an innovative path.

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Chapter 7

Eco-efficiency, Circularity Measurement and Assessment

7.1 From the Theory to the Practice: The Evaluation Process of Circularity and Sustainability There is not homogeneity of consensus about the definition of circular economy; thus, it is difficult to define practically circular strategies. Circularity needs to be measured, then, circular metrics cannot be assessed. Ecosystems must be evaluated in terms of eco-efficiency and sustainable use of resources and any kind of process, either of production or of consumption, needs to be measured in any step. The circularity does work really if consumers are considered as interested party through which mitigate environmental harm. It is also necessary to involve producers within a holistic framework to enhance positive impacts of circularity. In production system, the evaluation is necessary since it permits to understand circularity as well as sustainability in every kind of procedure. In order to promote circular economy production models, an evaluation process may be arranged in three stages: pre-assessment, ongoing assessment, and post assessment (Terra dos Santos et al., 2022). The pre-assessment refers to the activities able to evaluate resource availability for production design and for returning materials to the cycle. During this phase, work teams may list and choose materials able to achieve sustainable goals and circularity, such as renewable materials and energy, for instance. Furthermore, the team can use particular methods to design or redesign products and services, like eco-design and Life Cycle Assessment. There are instruments, like “CircularTool” usable through the platform of “European Circular Economy Stakeholder”, which help companies to measure circularity of their products. Such a kind of method supports product designers during the phase of layout evaluating the choice of sustainable materials. This tool is based on the EU circular economy action plan and the Eco-design Directive. This phase is extremely important because the work team may define materials efficiency looking © The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Patti, Circular Economy and Policy, https://doi.org/10.1007/978-3-031-43324-5_7

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at their durability, reparability, and reusability. Durability represents the main characteristics of the products in this phase, because of the circularity is evaluated in terms of maintaining the first life use of products. It permits to close resource loops without refurbishment and remanufacture that require additional resources. The second phase, ongoing assessment, refers to the real production process. It regards the possibility to control products and services to check potential improvements in terms of materials, energy, and design able to extend the lifespan or ameliorating reparability and reusability. This procedure allows leading to environmental life cycle benefits within impact categories depending on production phase. The ongoing assessment make available the definition of strategies for enhancing material efficiency requirements. During this evaluation, work team check requirements on product design, and on information provision. The method of LCA is a useful tool to perform this phase. The third phase, post assessment, concerns the evaluation at the end of production process. It involves the check of the reparability requirements, and collection of information to provide users and repairers, established in the previous phase. During this evaluation, work team check requirements on the provision of services, such as extension of commercial warranty, and replacement parts. All the information collected during the third phase are important to make changes for ameliorating the production process and improve evaluation procedure of circularity and sustainability. During this phase, work team also collect customers’ evaluations through customer care systems, fidelity tools, and after sales assistance. The measurement of circularity is important for organizations to obtain advantages determining circular strategies and promoting proactive business practices. Entrepreneurs use to communicate their circular economy improvements to attract customers and involve investors. Furthermore, circular economy evaluation help enterprises to get universal certification to demonstrate their level of circularity and also invest in sustainable business practices. About consumption, it is not easy to define similar procedures to assess circularity as well as sustainability. Probably, the continuous relationship between entrepreneurs and customers may be useful to define an evaluation process. Customer care, after sales assistance, for instance, could be representing tools able to make this evaluation on the consumption side. Circular economy relates to sustainable development in what concerns preservation, inequality, and poverty. Particularly, circular economy defines overlapping generations aims, while sustainable development outlines tools useful to sustainable objectives. Thus, circularity as well as sustainability can be evaluated throughout the metrics and indicators that will be described in the following paragraphs. First, it is important to describe the meaning of ecosystem and eco-efficiency and how resources can be exploited without any hazard for the environment. The depletion of natural resources is a consequence of the linear production model, where products are discarded as waste at the end of their life. This model needs to be continuously provided by materials and energy and negatively affects ecosystems. Alternatively, the use of circular economy model permits to reduce the dependence on non-renewable resources. Moreover, there is the need for entrepreneurial system

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to go ahead producing goods and services able to satisfy customers preferences, to produce job opportunities and to cover social, economic, and environmental dimensions. This chapter will focus mainly on measurements tools looking at production side, rather than consumption.

7.2 Ecosystems, Eco-efficiency and Resources According to the National Geographic Society, an “ecosystem” is an area where plants, animals and microorganisms coexist with abiotic environment, “and work together to form a bubble of life” (NGS, 2022). There are four types of ecosystems: forest, grassland, tundra, desert, freshwater, and marine ecosystems. An ecosystem can be sustainable if it uses energy available within the system, through the sunlight, or the food sources for organisms and plants. Moreover, the ecosystems clean water, air, and soil, regulating the climate as well as providing food for humans, raw materials, and resources to sustain the economic systems. Nevertheless, the massive exploitation of natural resources and environmental capital as consequence of human activities produce negative effects on the ecosystems. The massive land-use affected biodiversity and natural habitat, causing many problems as, for instance, climate change, acidification of seas, habitat losses, and eutrophication. For these reasons, it needs to be more accurate in assessing the economic impact production sectors can give to the ecosystems, and their negative effects. In this context, the concept of “ecological efficiency”, or eco-efficiency, becomes important since it contributes to define environmental strategies as the dematerialization, which is a reduction in material and energy used for the production activities (Commission of European Communities, 2001). According to Welford (1998) and Schmidheiny (1992) eco-efficiency represents an increasing productivity while employing a small number of resources. Eco-­ efficiency is a performance indicator of the relationship between humans and environment. It also means the material and energy flow management that can be seen as eco-effectiveness. The eco-efficiency contributes itself to measure goals with an enhancement producing strategic business advantages. Eco-efficiency is a measure of environmental use acting through indicators as ratios of welfare and environmental indicators (ex. GDP/use of nature). There is a strong linkage between eco-efficiency and resources, mainly with resource productivity since the economic activity need to use material resources and energy to meet human needs. Therefore, in such a case, the concept of eco-­efficiency may be used as strategy to allow equitable access to resource and use of the environment. According to the European Environmental Agency (EEA, 2009) eco-efficiency needs to be checked at macro-level to assess sustainability. EEA, in previous works, considers the opportunity to define a ratio of welfare and environmental indicators

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to measure the use of natural resources. Furthermore, eco-efficiency can be considered as a conceptual framework able to interconnect social and economic sustainability analyses distinguishing between relative and absolute eco-efficiency. Another important issue focused on by EEA refers to the role of business stakeholders in reaching eco-efficiency performances. Among the stakeholders a key role is played by governments that can be fix specifical eco-efficiency targets. Public authorities and national governments may influence technological developments and stimulate structural change to encourage production as well as consumption optimisation. Looking at the production system, eco-efficiency means adopting techniques that permit to use fewer natural resources and reduce waste generation. Observing the consumption system, eco-efficiency helps to dematerialise the total consumption of products. Consumers need to be informed about environmental harm deriving from natural resources exploitation, climate change and all the other environmental concern. Particular programs about energy and water efficiency use, or on waste production connected to massive consumption of disposable products have to be show to customers (O’Rourke & Ringer, 2016). Thus, eco-efficiency is not just an economic concept, but also relates to environmental issue and, addressing production and consumption processes, contributes to ameliorate sustainability and circularity. The evaluation of natural environment is becoming more and more required because of it needs to assess alternative use of natural resources. Therefore, the need to collect information on ecological systems increased since it helps humans to measure environmental impacts of their behaviour. Otherwise, data and information are frequently incomplete or lacking and this gap negatively affects environmental decision-making process. That means an increase in uncertainty and risk. For this reason, becomes important to define and use systematic a way to foster analysis and enhance prediction about environmental effects. An example could the use of ecological models or flow diagrams as well as a definition of circularity metrics and eco-efficiency indicators.

7.3 How to Measure Circularity and Sustainability The transition to a circular economy pushes companies to change their business models, defining strategies and involving new skills. On the other side, public institutions, as national governments, have to define policies to shape the transition. To assess circularity, one of the main problems is how to measure it? At this purpose, circular economy strategies can be assessed throughout the current circularity indicators and metrics. The problem is that there are many different metrics and indicators, and it needs to create a standard for assessing circular economy as a whole. It is also true that measuring circularity involve many variables hard to assess as, for example, comparability among products, intensity of use, durability, the amount of people using products.

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Many organizations are working to define circular indicators: Ellen MacArthur Foundation defines “Circulitics”, World Business Council for Sustainable Development develops “Circular transition indicator”, other organizations act to define circular indicators (WBCSD, 2022). The International Standard Organization (ISO), for instance, is at work to connect different indicators in a unique system (ISO, 2021). There is great excitement globally for the construction of frameworks that include indicators of circularity for thematic areas. The literature focuses on three systemic levels concerning circular indicators implementation at macro-level, meso-level, and micro-level. Moreover, it makes a distinction among indicators grouped into economic performance, sustainable development, material flow analysis, environment, societal behaviour, organizational behaviour. However, circular economy measurement does not involve the circular economy complexity mainly in certain production sectors, also for the assessment of circular economy based on waste input-output analysis there are a systemic lack. Therefore, indicators and measurement need to encompass all the levels through which circular economy does work. A useful approach to measure circularity as well as sustainability refers to the “Life Cycle Thinking” (LCT) approach, which represents the ability to watch a product or a service over cycle of design, production, distribution, consumption, and disposal. Environmental impact is assessed using LCT approach, which represents the theoretically framework (Michalos et al., 2019). In a practically way, the circularity metrics can be represented by the Life Cycle assessment, which is a tool able to measure impacts during the entire life cycle of a product (Corona et al., 2019). LCA is one of the main current circularity metrics adopted all around the world, implemented by other tools as eco-design. The field of circular economy measurement could be difficult to understand due to the plethora of definitions and terms, such as “metric”, “indicator”, “index”, and “framework”. Therefore, it is necessary to make a distinction among them. A metric represents a method used to evaluate the change over time across a number of dimensions. It is a quantifiable measure able to evaluate, compare and assess a performance. An indicator is a tool for measuring phenomena that cannot be observed directly and represents the single value the circularity can assume for production and consumption. It permits to assess a specific trend or performance and evaluates environmental impacts. Hence, an indicator is an important element of a metric, it refers to a single value and it is used to measure a performance., a metric combines a set of indicators. Furthermore, metrics adopt tools able to make easier their application without making human errors. Tools can be online platforms containing metrics and indicators as “Circulytics” or “GRI”, for example. The indicator not to be confused with the term “index”, which is a datum defined through the ratio between two quantities and it refers to the degree of circularity within a system. To complete this description, an explanation of the term framework is needed (Elia et al., 2017). A “framework” is a set of tools applicable to analyse environmental, economic, and social impacts to measure circular economy. It sets out a long-term vision of

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circular economy identifying priorities and initiatives. In the circular economy system, a framework refers to people, policies, and places (3Ps) providing conceptual issues to enhance circular economy model at regional and local levels. The description of the circularity indicators frameworks cannot be complete without observing the strengths and weaknesses of them, therefore, before concluding this paragraph, a brief description covers these aspects. The application of those indicators brings benefits for all the stakeholders involved. The main strength of the indicators is that they provide information relevant to decision-making (Gallopín, 1996). Indicators allow comparisons to be made (Waas et al., 2014). For example, an indicator for food waste could use the target as an external benchmark (Maynard et al., 2020; Medeiros et al., 2017). Considering the EC strategy, most indicators measure the conservation of materials, and with respect to the scope of measurement, the indicators mainly examine a partial or complete LCT approach. Some indicators have the benefit of measuring more than a strategy of technological cycles, e.g. the material circularity indicator that measures the properties of a product, such as components, materials and potential waste generation  (Valenti et al., 2018). Anyway, some problems still exist considerable in terms of weaknesses, such as the lack of indicators for businesses. Moreover, the assessment of circular economy is based on cleaner production and green consumption, which does not represent a full circular approach (Geng et al., 2012). Some circular economy indicators do not encompass the all-possible end-of-life alternatives for closing a loop (Zhou et al., 2013;  Moraga et  al., 2019). For instance, the quantitative Evaluation of Circular Economy Based on Waste Input-Output Analysis is mainly focused on waste production and recovery and lacks systemic consideration. Another example of weaknesses is the system of indicators to assess the circular economy in steel companies, which focuses mainly on resource efficiency through recycling and takes other end-­ of-­life scenarios into account (Ardente & Mathieux, 2014; Di Maio & Rem, 2015; Di Maio et al., 2017).

7.3.1 Circularity Metrics, Indicators, Assessment Framework, and Tools Circular economy is applied to environmental, economics, and social systems, but basically it concerns the provision of products and services as well as the organisational structure. The techniques used to produce commodities are characterized by procedures and activities that affect the environment. The first question to answer is what does circular production mean? This sentence usually refers to kind of procedures able to save energy and materials. Entrepreneurs need to adopt different and new production strategies as, for instance, eco-design, R-strategies to produce less waste as well as to manage them in efficiency way, industrial symbiosis, and new business models.

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Products and services are the final output of a mix of technical procedures, raw materials, energy. Circular metrics have to be defined and used to measure efficiency and evaluate the level of reusability, recyclability, repairability. The metric application permits to understand how circular economy can be applied in the production processes and focuses on the closing of material loops. This gives us also information about environmental, social, and economic sustainability performance. An organization needs to use a set of metrics to make the transition from linear to circular business model. Each metric can enclose one or more than one indicators, methods, and tools. Metrics can assume different forms, collecting indicators and tools that can be standardized or contributing to define certification procedures. Metrics may concern a process or a performance. Process metrics are used to give information about the transition process and use indicators based on human behaviour, culture, and operational activities. Process indicators range from simple to complex ones, either to share sustainable products or to provide alternatives to make green products that meet the customer needs, or awareness among employees. Performance metrics are focused on production phases and material and energy flows in company’s value chain. They give indications about where intervention is necessary. The indicators connected with performance metrics regard, for instance, the production of waste into each phase of value chain, the sharing of renewable energies, the sharing of secondary raw materials, or the recycling rate. Metrics may also concern the needs of change business model. Companies have to define goals and progress in terms of circularity. Headline indicators are useful to measure how much time and how many resource a company needs to achieve the final goal. A such kind of include the percentage of circularity in terms of resources used per unit of revenue produced, or the sharing of scarce resources. Circular metrics are becoming more important and represent a wide set of options for organizations that want to measure their state of circularity. To define a circularity metrics, it needs to set-up requirements able to measure improvement in circular economy. The requirements regard the reliability, validity, and utility of the metric. The reliability of a metric is about the degree of measurement and what is the improvement in circular economy really. The metrics validity concerns the consistency as well as the strength of a metric, while the utility refers to the metrics flexibility and implementation. Therefore, a circularity metric needs to be flexible, reliable, and transparent. The characteristic of validity is important to assess circularity metrics for circular economy and sustainable development. Moreover, circularity metrics assesses the reduction of resources use and so the reduction of carbon emissions and greenhouse gas emissions in the beginning of cycle of production; while they permit to manage and control the reduction of material waste during the production procedure. Furthermore, there are techniques that increase products durability, and their reparability entrepreneurs need to adopt and improve in their production systems. At the end of each production cycle, circularity metrics can be applied to assess circular economy goals.

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Specifically, there are some important circularity metrics applicable to products and services as the material circularity indicator or circular economy toolkit. Each indicator corresponds to sustainable requirements, which permit to assess the products, services, and organisational circularity. A resume of circularity metrics used by entrepreneurs can be introduced. At this purpose, it is possible to distinguish among resource productivity, percentage of renewed materials, percentage of product recyclability, percentage of water consumed, percentage of water discharged, percentage of renewable energy sources, estimated environmental saving of rentals, product reparability, warrant, enhancement towards goals. Most of them are calculated in terms of percentage since depend on the ratio of different variables. A synthetic description may be useful to understand the value of these metrics. Resource productivity indicates how firms allocate natural materials. It is a ratio between total sales expressed in euros and mass of virgin material inflow. The percentage of renewed materials accounts for the percentage of renewed materials for production process. It is the ratio between the mass of renewed raw materials and the mass of total raw materials. The result is multiplied by hundred to find the percentage value. The percentage of product recyclability refers to the employment of biodegradable recyclable materials into the process of manufacturing. The percentage of water consumed concerns the use of treated wastewater. It is the ratio between the quantity of treated wastewater and the quantity of total water consumption, the results is divided by a hundred. The percentage of water discharged refers to the exchange between clear water used and discharged. It is the ratio between quantity of circular water discharge and the quantity of total water consumed, in percentage value. The percentage of renewable energy sources refers to the energy coming from alternative source such as wind or sun. It is the ratio between the annual renewable energy consumed and the total energy used, the result is divided by a hundred. The estimated environmental saving of rentals refers to the possibility a company has to decrease operating costs as well as to decrease environmental effects, through the use of carbon footprint formula, for instance. The product reparability regards the possibility to repair products extending their usage. Companies can use eco-design and raw materials to improve products reparability, disassembly, and availability of spare parts. The warrant refers to the period of time a product is guaranteed. The enhancement towards goals regards the entrepreneurial policies focused on specific circularity goals. In the textile industry, companies use secondary raw materials as recycled cotton, to make their cloths. Customers can witness the performance comparing different products. According to Potting et al. (2017) there could be ten strategical activities to foster circular economy, like refuse, rethink, reduce, reuse, repair, refurbish, remanufacture, repurpose, recycle, and recover. Moreover, R-frameworks can be much easier, containing just three indicators like in the 3R waste management model (reduce, reuse, recycle).

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Thus, there are a lot of indicators throughout assessing the circularity performance and resource efficiency. According to the EASAC (European Academies’ Science Advisory Council) a list of three hundred indicators does exist, through which measure circular economy improvements (EASAC, 2016). Other studies emphasized the role of more than 60 indicators for environmental, economic, and social performance within waste management and recovery system. Possibly, the plethora of metrics and indicators about circular economy is because of the different definition of circularity as well as actors involved into the circular economy procedures. Other circular economy strategies may concern new business models and thus regard the production system, for example, activity for redundancy or multifunctionality. An important patter focuses on new products as: sharing and pooling. Therefore, to better understand the meaning of current circularity metrics and indicators it is necessary to use a unique definition of circular economy. Probably, the best definition, in certain sense, is what proposed by Kirchherr et al. (2017; p. 229) that defines circular economy as an economic system able to replace end-oflife issue with processes of reducing, reusing, recycling, and recovering materials both for production and for consumption systems. This concept of circularity within economic, social, and environmental frameworks affects the current circularity metrics and emphasizes the importance of specifical requirements as validity, transparency, and reliability. Indicators of circularity are necessary to measure the degree of circularity of a system. They range from 0 to 1. Looking at the literature, it is possible to elicit some of the main important circularity indicators for different object of analysis as production or sectors, as well as organizations or global economy. The circularity indices are the following: new product level, material circularity indicator, circular economy indicator prototype, circular economy value, and circularity index from the product perspective, while global circularity metric and cumulative service index from the global economy perspective (Table 7.1). The new product level indicator, according to Linder et al. (2017; p. 551) refers to the fraction of product coming from a used product. The circular economy indicator prototype is an index that is calculated because of a set of 15 matters as product design, manufacturing, product end-of-life. The circular economic value is based on the material circularity indicator, and it shows the system circularity by accounting the reduction in use of virgin materials, of waste, and the increasing of renewable resources and energies. Circularity index focuses on material circulation and considers the ratio between energy for material recovering and energy for Table 7.1  The circularity indicators Production

New product level Circular economy prototype Circular economic value Circularity index

Global circularity metrics Cumulative service index

Global economy

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primary production. Global circularity metric, according to De Witt et al. (2018; p. 22), refers to the assessment of sharing cycled materials as percentage of total inputs used into the global economy. Cumulative service index concerns the mono dimensional circularity, and it is useful to cover the resource efficiency goal. The necessity to define indicators able to measure circular economy improvement pushed many researchers to set-up specific tools in different ways. Many of them are not capable to promote circular economy, for instance, those concerning resource recovering from waste. All of the research focuses on five characteristics promoted by European Environmental Agency (EEA) or by British Standard Institute (BSI) standards as: restore, regenerate, maintain financial and non-financial value, and utility. On the base of these standards some indicators were defined as: resource efficiency, climate, energy, and sufficiency. Particularly, EEA indicators are defined to support environmental policy making and may be classified as: descriptive, performance, efficiency, policy effectiveness, and total welfare. They can also be arranged in different sectors and refer to the following sets of indicators: • • • • • • • • • • • •

air pollution emission (APE), climate state and impact (CLIM), energy (ENER), land and soil (LSI), marine (MAR), sustainable consumption and production (SCP), streamlining European biodiversity (SEBI), Transport and environment reporting mechanism (TERM), Water (WAT), Water resource efficiency (WREI), Waste (WST), Industrial pollution (INDP).

The difficult to promote circular economy is probably since there is not a unique definition of strategy about circular economy. The term “reduce”, for instance, may concern both the production and the consumption. About “waste”, the policy of reducing could refer to raw materials and waste production, or to waste produced throughout the activity of consumption. In a such scenario, there could be different strategies or R-frameworks to increase circularity. The R-frameworks represent models to improve circular economy looking at production and consumption phases in a connected way. Throughout the revision of the main literature, it is possible to distinguish between measurement indices and assessment tools about circularity metrics (Table 7.2). The former is able to evaluate how circular a system is. The latter is useful to measure how circular strategies affect circular economy system. Measurement indices contribute to define the attribute of circular economy through a numerical scale assignment, while the assessment tools refer to the environmental impact as well as economic one. In this case, it is possible to distinguish between circular economy assessment indicators and circular economy assessment

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7.3  How to Measure Circularity and Sustainability Table 7.2  The requirement for circularity metrics Increasing

Increasing of renewable resources Increasing of recycled resources Maximization of products’ utility Maximization of products’ durability Creation of value addedd Creation of new jobs Increasing of social wellbeing

Reduction of resources Reduction of emissions Reduction of waste Reduction of material loss

Reduction

Table 7.3  Circular economy assessment frameworks and indicators Production framework Input-output analysis Material flow Analysis Life cycle assessment

Indicators Resource potential indicator Value-based resource efficiency Sustainable circular index Degree of circularity Eco-efficient value ratio Eco-efficiency index Circular performance indicator Global resource indicator

MFA

LCA

framework. The first ones use single scores, and the second ones provide multiple assessment indicators. To define the circularity assessment frameworks, it is necessary to use methodologies of analysis, as input-output, material flow analysis, and life cycle assessment (Table 7.3). The input-output analysis (IOA) refers to the measurement of the economic interdependence among different sectors. It is also used to describe environmental and social impacts connected to industrial activities. Material flow analysis (MFA) concerns the state of each material flow within a system as well as each its changes. It calculates the mass balance over time. Material flows are assessed looking at their mass, through which it is possible to collect information on the material used and its amount. Life Cycle Assessment (LCA) focuses on the impacts along the entire cycle of life of a product. There are many kinds of impacts a LCA can measure, concerning minerals, water and land, fossil fuels, as well as ecosystems and human health. Furthermore, MFA and LCA represent the basis on which circular economy indicators are built. Particularly, MFA establishes different indicators as resource potential indicator, value-based resource efficiency, sustainable circular index, and degree of circularity; while LCA defines the following four indicators (Adibi et al., 2017): eco-efficient value ratio, eco-efficiency index, circular performance indicator and global resource indicator (Table 7.3). Within the set of MFA indicators, the resource potential indicator evaluates the intrinsic value of material reuse. It accounts for technological tools able for the recycling. The value-based resource efficiency is an indicator useful for

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Table 7.4  CE assessment standards in China Production framework Input-output analysis Process-based method Hybrid method

Indicators Combination of data and relevant emissions Monetary values conversion into environmental impacts Integration of different approaches (TH-IOH-IH)

calculating the percentage of value of resource incorporated into products or services. The sustainable circular index represents a composite indicator to show the circularity degree of a firm (Azevedo et al., 2017). For what concerns LCA indicators, the eco-efficient value ratio is the ratio of environmental burden to the value added of the product. It refers to the monetization to define an indicator able to collect economic and environmental principles. The eco-efficiency index is the sum of the value added and the life cycle score. It is also a monetization that considers the preferences of stakeholders. Moreover, the global resource indicator concerns the impact assessment of resources used in LCA procedure. The recyclability depends on the resources recycling rate and the dispersion rate. The circular performance indicator represents the ratio of the environmental advantage deriving from waste treatment. Advantages depend on the quality of materials and relate to the reduction of natural resources. It is also interesting to briefly mention the evaluation methods used in China (Table 7.4). Of course, much depends on the areas you want to consider, for example in the construction industry, to evaluate the emissions of buildings, three methods are used: the process-based method, input-output analysis (IO) and the hybrid method, all key approaches considered for the assessment of emissions (Abanda et al., 2013). The process-based method for the assessment of emissions shall analyse the objective of research in the sub-process and combine activity data with relevant emission factors (Onat et al., 2014). The IO method converts monetary values into environmental impacts based on IO economic tables and physical flows (Guo et al., 2012). Hybrid methods refer to potential alternatives, for instance, Suh and Huppes (2005) propose hybrid methods for product LCA in hybrid (TH), IO-based (IOH) and integrated hybrid (IH) approaches, while Dixit et al. (2012) integrated labour and capital inputs into an IOH model and studied the embedded energy of materials accordingly.

7.3.2 A Selection of Current Circularity Metrics for Products, Services, and Organizations Private and public organizations can enhance their performance through the sustainable three lines bottom: social, economic, and environmental. There exist tools able to define indicators useful to measure the three dimensions of sustainability. However, it is necessary to make a distinction between the circular economy and sustainability indicators. The circular economy metrics and indicators concern model of circular business established and managed by different organizations, as

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Ellen MacArthur Foundation, Global Sustainability Standard Board, World Business Council on Sustainable Development, Boston Consulting Group, Circle Economy, Ecopreneur.eu. These organizations arranged circular metrics and indicators like Circulytics, Material Circularity Indicator (MCI), Global Reporting Initiative (GRI), Circular Transition indicators (CTI); Circle Assessment (CA), Circularity Gap Metric (CGM), and Circle City Scan Tool (CCST); Circelligence, and Circularity Check (Table 7.5). Circulytics, MCI, CA, CCST and Circularity Check represent a qualitative circularity self-assessment. GRI as well as CTI define a quantitative self-assessment approach and guidance to evaluate circularity for the whole enterprise. Circulytics and MCI are defined by Ellen MacArthur Foundation, they are complementary also if the former concerns company-level, while the latter the product-level. More specifically, Circulytics evaluates a company’s entire circularity performance, not just products and material flows. It represents some help for decision-­ making process, highlighting strengths, providing transparency, and opening up new opportunities for brand value. It was launched in 2020 and focuses on performance and process indicators. Its goals concern the possibility to raise awareness, set a baseline and identify new opportunities. These metric accounts indicators as strategy and planning, people and skills, system, innovation, and external engagement (Table 6.3). The indicator provides an overview of circular economy performance. Material Circularity Indicator (MCI) is a tool for assessing European companies’ product design, material procurement, and business model performance within a circular economy context. It focuses on headline and process indicators. This indicator is an extension “to which linear flow minimised and restorative flow maximised for its component materials. It expresses how long it is used in comparison to other similar product” (Ellen MacArthur Foundation, 2022; p. 9). MCI measures the material flows circularity for selected products as well as for the entire company and supports decision making process. The material circular indicator takes into consideration the following variables about products: the production process, the phase of products use, final end of the life cycle, and recycling efficiency. Moreover, it can also consider risk indicators as material price variation, material scarcity, and material toxicity, and impact indicators, like energy consumption, and CO2 emissions. The circularity performance is evaluated at the product level through a spreadsheet tool to combine multi-materials. The GRI was launched by the Global Sustainability Standard Board the first time in 2020, but it is updated continuously. It focuses on performance indicators and aims to monitor and report upon progress for sustainability (Haupt et al., 2016). The report highlights economic, social, and environmental impacts. More specifically, the last GRI update concerns the waste reporting “306”, which contains circular economy standards. These ones ask enterprises to report on waste production along the value chain and how it is managed. Sustainability reports are as tools a company can use for assessing the transition towards circular economy. They help to measure and monitor circularity goals and communicate results to all the stakeholders involved.

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Table 7.5  Organizations, metrics, typology, and indicators Organization Ellen MacArthur Foundation

Metric Circulytics

Typology Performance indicator

Process indicator

Global sustainability standard board

Material circularity indicator

Process indicator

Global reporting initiative

Performance indicator

Headline indicator

Process indicator

Headline indicators

World business council on sustainable development

Circular transition indicators

Circle economy

Circle assessment Performance indicator Process indicator

Performance indicator

Circle City scan tool

Performance indicator

Circularity gap

Headline indicator

Themes for indicators Strategy and planning, Innovation, process and infrastructure People and skills Operations and systems External engagement Products and materials Services Plant, property, and equipment assets Water Energy Finance Production process Use of product Final phase of cycle of life Recycling efficiency Waste production (GRI 306-1) Waste impact (GRI 306-2) List of waste produced (GRI 306-3) Waste diverted from disposal (GRI 306-4) Waste directed to disposal (GRI 306-5) Material, water and energy flows Resource efficiency and efficacy The value added by circular business Operational and organizational aspects Recycling scheme Emissions Value added and material flows % of circular materials into a value chain (continued)

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Table 7.5 (continued) Organization Boston consulting group

Metric Circelligence

Ecopreneur.Eu

Circularity check

Typology Performance indicator process indicator Process indicator

Themes for indicators Production process and data across supply chain Product-based and service-based Design, procurement, manufacturing

Source: Personal elaboration from organizations’ web-sites (2022

Circular Transition Indicator (CTI) metric was launched in 2020 by the World Business Council on Sustainable Development and focuses on headline and performance indicators. It is a self-assessment metric able to help entrepreneurs to understand where they need to close the loops ameliorating materials flows and generating value. This metric aims to identify opportunities and raise awareness, using critical materials and circular material productivity. It provides answers to optimize the use of resources improving circular material flows and business performance. The CTI approach has a multidimensional perspective of an enterprise’s circular performance, since it considers renewable energy, water, and business value. CTI provides a set of indicators as “close the loop”, where is calculated the percentage of material, water, and renewable energy; “optimize the loop” where the percentage of critical material, recovery type actual lifetime, and onsite water circulation are measured; “value the loop”, where circular material, productivity, and CTI revenue are evaluated, and the final step concerns the “impact of the loop” evaluated in terms of greenhouses gas emissions impact. CA, CCST and CGM were defined by Circle Economy. Particularly, Circle Assessment was made in 2017. It focuses on performance and process indicators and aims to raise awareness. It represents a very useful circular metric since it was defined to offer a simple tool to measure circularity levels within a company. CA is a self-assessment arranged through online tools able to check operation and organizational characteristics of the circular economy. It uses recycling schemes to run new business models. Circle City Scan Tool (CCST) was founded to help city and region stakeholder to develop action plans for the transition to the circular economy. It represents an open access environment useful for supporting actors on how make possible a circular system within their cities. The online offers four features: the first one regards the possibility to measure the circular economy performance, identifying areas of opportunities. Second, the exploration of the global projects to elicit ideas for the plan; third, the definition of an online and real-world collaboration among city stakeholders, and fourth, the implementation of local circular economy initiatives. The CCST metric works through the following steps: data collection, focus on analysis, opportunities of circularity through case studies, creation of an action plan and a final report useful to communicate all the strategies to improve the local circular economy system.

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Circularity Gap Metric (CGM) was launched in 2019 and focuses on headline indicator. It aims to raise awareness and set a baseline for circular economy. It regards a unique metric which refers to the percentage of circular material sharing in a single value chain. The gap of circularity is the invers of the circularity within a value chain. This gap regards the share of materials still wasted without circling into the value chain. The metric is useful to control any progress made by organizations when they move to the circular business model. Circelligence is launched by the Boston Consulting Group in 2020. It focuses on performance and process indicators and aims to create awareness, identify new opportunities assessing their potential. This represents a proprietary metric and tool able to measure the organization’s circular performance. It also focuses on quantitative and qualitative information and process indicators along the value chain. This is an automated self-assessment tool, which allows companies to monitor their future progress. Circularity Check (CC) is launched by Ecopreneur.eu, the European Sustainable Business Federation. It is a free, online scan tool through which it is possible to evaluate circularity scores for specific products and services. The score is a percentage of product circularity, and the check determines also scores on design, manufacturing, delivery, procurement, use, recovery, and sustainability. This metric uses a set of self-evaluation tools made of a questionnaire with 60 questions able to assess products and services circularity (Table 7.5). Very often circular metrics are confused with sustainability metrics. Sustainability represents a goal organization need to achieve through the transition towards circular business model. Circular economy, thus, is the tool to achieve that goal. It means that, during the transition towards a circular economy, entrepreneurs and governments have to use circular metrics and indicators to evaluate their performance, but they also need to use sustainability metrics and indicators to assess the impact of the transition. The LCA and reporting on SDGs represent the main important standardized methodologies to combine circularity with sustainability. Sustainability as well as circularity can be measured through metrics and indicators. According to Pearce and Atkinson (1993), an economy must save enough to compensate man-made and natural capital depreciation. In other words, an economy is sustainable when it saves more than natural capital and man-made capital depreciates. A sustainable indicator could be provided through the relationship among savings rate, depreciation of man-made capital, and depreciation of natural capital. The sustainability indicator must be greater than or equal to “0”. An organization needs to define a sustainability-oriented policy. The Global Reporting Initiative (GRI) establish principles able to define such kind of policy, for example focusing on the materiality. It is the key concept that determines which material topics are important enough to make reporting essential. It is used to select relevant information to users. Information is relevant when they influence stakeholders’ decision-making processes. The concept of “materiality” involves two different meanings: financial one and impact one. Financial materiality refers to the information about economic value creation for the investors’ advantages. Otherwise, Impact materiality concerns relevant information on economy, environmental and

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social impacts of a company for all the stakeholders involved. Double materiality is made of both of them and represent the relevant for of materiality for financial sustainability reporting. Sustainability can be measured also through the Key Performance indicators (KPIs), which permit to evaluate the entire process in terms of performance. The performance indicators represent a powerful and immediate tool for reducing the complexity level such as “sustainability” in numerical terms or descriptive measures able to guide the decision-making process (Rincon-Moreno et al., 2021). KPIs are simplified, and communicable information, which fulfil measurement, management and communication requirements imposed by the sustainability strategy. As already saw in the previous paragraph, the Global Sustainability Standard Board as well as the World Business Council on Sustainable Development work to define both circularity metrics and sustainability metrics and indicators. Life Cycle Assessment represent another methodology to define metrics and indicators able to measure sustainability as well as circularity. However, since the aspects related to sustainability are highly dependent on the business model, company’s location, and the supply chain in which it operates, it is necessary to evaluate specific sets for each case. A short list of the main sustainability indicators may help to better understand their meaning and ability to measure sustainable goals (Hoque, 2021). The Global Sustainability Standard Board established the GRI standards, which represent the main important guidelines for sustainability reporting. They focus on different areas as economy, environment, human rights, work and workplace, product, and society. GRIs involve almost 70 indicators within a framework recognised at international level. The World Business Council on Sustainable Development introduced the Ecoefficiency methodology. It represents another important framework with metrics and indicators. The ecoefficiency concept is due to a relationship between value produced and impact generated. Ecoefficiency does not concern just an efficient use of resources, but it regards the way to achieve strategical goals. However, the ecoefficiency method refers only to the economic and environmental dimensions, without considering the social one. Even though the latest dimension was recently introduced, it remains limited currently. Through the concept of eco-efficiency companies are able to identify key problems and implement them corrective actions. The application of this methodology has some limitations since a few indicators are to be compiled compulsorily to the detriment of the cross-­ industry and cross-company comparability. Not least, in the methodology only process indicators are effectively applicable. The International Organization for Standardization arranges different methodologies in different fields, as for example, the ISO 14000 family, which regards the practical tools to manage organizational’ environmental responsibilities. Within this family of standards there is the ISO 14301:2013, which represents an important method to evaluate companies’ sustainability. The ISO 14301 concerns environmental management, and environmental performance evaluation. It defines process as well as performance indicators able to design and manage environmental performance assessment. All the organization can use it to measure their impact on the

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environment. The aim is to push environment-oriented companies to change its strategy to reduce negative effects generated by their activity. Although the application of ISO 14031 is residual with respect to the methodology of GRI, it provides good guidance on identifying and selecting indicators for assessment and improvement company performance with respect to sustainability.

7.4 The EU Taxonomy for a Sustainable Finance The meaning of sustainable finance regards the fact that it needs to consider environmental, social and governance (ESG) dimensions when making financial investments. The environmental dimension refers to the climate change mitigation and adaptation; while the social one focuses on a set of issues as inequality, labour relationships, inclusiveness, investment in human resources and communities, and human rights. The government dimension regards public and private organisations and is extremely important to guarantee social and environmental inclusion within decision-making processes. The sustainable finance plays a key role in determining policy’s aims according to the European Green Deal so as European Union commitments on climate change and sustainability. The way is to address private financial investments towards a climate-neutral and resilient economy to integrate public money. The European Commission clarified sustainable activities through the EU taxonomy classification system and established, in 2020, the Taxonomy Regulation, through which set out conditions any economic activity needs to achieve as environmentally sustainable (Dusík & Bond, 2022). The EU taxonomy represents a classification system through which it is possible to define a list of environmentally sustainable activities. It is useful to determine sustainable investments for the European Green Deal. The European Green Deal represents a tool to transform European Union into a resource-efficient economy without greenhouse gases emissions by 2050, with efficiency use of energy and a good quality of life for all people. The EU taxonomy concerns firms, private investors, and policymakers and help to ensure any kind of investors from greenwashing. The taxonomy for a sustainable finance represents a set of tools useful to support financial investments with sustainable development goals (SDGs)  (Wang et  al., 2022). It includes different methods as environmental, economic, and social ones able to enhance verification as well as certification procedures. The EU taxonomy specifies the meaning of the green investments in accordance with sustainable finance and policy established by OECD in 2020. The Finance Ministers and the Governors of Central Banks recognized, in 2021, the reinstallation of the Sustainable Finance Working Group that produced the G20 a sustainable finance roadmap. According to SFWG (2021; p. 7), it is possible to define a plethora of voluntary principles about green taxonomy as: Principle 1, which ensures material positive contributions to the sustainable goals and outcomes.

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Principle 2, which avoids negative contribution to the sustainable goals. Principle 3, which ensures dynamism in adjustments by reflecting changes in policies, technologies, and transition. Principle 4, which indicates transparency and good governance. Principle 5, which enhances science-based issues for environmental goals. Principle 6, which focuses on transition issues. The recent taxonomy of European sustainable finance is characterised by the fact that credit institutions must inform investors and depositors about how they allocate their funds for sustainability and for the purpose of substantial investments in different environmental sectors sustainability and the EC. The EU taxonomy of sustainable finance represents an important issue at international level, since the international finance community focuses on its evolution to define common criteria able to assess an economic activity as sustainable at environmental, economic, and social level. In order to improve environmentally sustainable activities a taxonomy regulation system was established by setting put a list of six objectives, as: (1) climate change mitigation, (2) climate change adaptation, (3) sustainable use of water as well as marine resources, (4) circular economy transition, (5) prevention and control of pollution, (6) biodiversity restoration and ecosystem protection. Through the six aforementioned sustainability objectives, it is possible to depict the technical screening criteria to determine an economic activity as sustainable. The criteria can be resumed in the following issues: “contributing to the at least one of the environmental sustainability aims, doing not any damages to the environmental aims, satisfying the minimum social safeguards, and fulfilling the European Commission technical screening criteria, by using Delegated Acts”.1 Thus, the technical screening criteria refer to the performance level an economic activity achieves to qualify as contributing to the above climate objectives and as well as it has no significative negative impact on the environment. Technical screening criteria, hence, specify the minimum requirements an economic activity needs to qualify as sustainable.2 The EU Taxonomy Climate Delegated Act intends to strengthen sustainable investments. It helps to foster a “greener, fairer, and more sustainable Europe, and support the implementation of Sustainable Development Goals” (European Commission, 2021; 188 final). The first delegated act for climate change mitigation and adaptation was established in 2021. It defines an economic activity as environmentally dangerous when it produces significant GHG emissions. More specifically, the articles 1 and 2 of the Regulation establish the conditions under which an economic activity contributes to climate change mitigation and adaptation as well as it causes no significant harm to the environmental objectives defined within the EU Regulation 2020/852. The articles from 10 to 15 of the EU Taxonomy focus on the  A delegated act represents a non-legislative tool European Commission adopts to amend non-­ essential elements of a legislation or to supplement a legislation. 2  Official Journal of the European Union, Regulations, non-legislative acts, Commission delegated regulation (EU) 2021/2139, L.442, (4); 9.12.2021, pag. 2 1

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aforementioned criteria. The article 17 establishes that an economic activity is not sustainable when it limits other environmental objectives. There are other taxonomies of sustainable investments besides that of the European Union. Some jurisdictions as Japan, India, and South Africa developed their taxonomies taking inspiration from the EU taxonomy. For instance, the UNDP finance taxonomy, which concerns the SDGs. The UNDP finance taxonomy incorporates the China’s Green Bond Catalogue and indicators to guarantee the alignment with Sustainable Development Goals. The alignment regards national development policies and strategies, best practices at international level for social development, provision of social advantages in SDGs sectors, target groups of SDGs. To guarantee the alignment with SGDs any projects potentially harmful to these goals has to be avoided. For example, it needs to avoid projects with high risk to doing harm to the sustainable goals, based on the do-no-significant-harm exclusion criteria of EU Taxonomy. The UNDP as well as EU taxonomy can be adapted to more markets allowing investors to decrease transaction expenditure by ensuring the achievement of sustainable development goals through a framework of indicators (Azapagic, 2004).

7.5 The Role of ISO/TC 323 in the Circularity Measurement: Work in Progress The need to enhance a circular economy requires the definition of an international standard by which to measure circularity. The standardization enables the trade of products and services as well as the abolition of trade obstacles. The International Organization for Standardization (ISO) represents a non-­ governmental institution that collects a plethora of National Standards Boards, supported by a Central Secretariat. It works to define and use international standards. Actually, the ISO developed more than 24 thousand standards at international level regarding manufacturing and technological innovation. The ISO involve 802 Committees as well as Subcommittees, they represent all the stakeholders and intend to manage the international standards. Among them there is the international standard for circular economy. It is known as ISO/TC 323 and standardizes the organization contribution to the sustainable development goals. The ISO/TC 323 refers to guidance, supporting tools, and requirement able to implement activities in all organizations. It fosters the participation of ISO.  The Technical Committee (TC) is made of 85 members, with 71 participants and 14 observers. They are responsible for six ISO standards. The standards of ISO/TC 323 focus on the UN 17 sustainable development goals (Table 7.6), achievable throughout specific actions (Table 7.7), which involve six working groups (Table 7.8).

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Table 7.6  The aims of ISO/TC 323 The development of impactful standards able to support organizations to adopt circular economy through a time-efficiency process The promotion of an alternative and collaborative economic model able to facilitate the transition from a linear to a circular economy The promotion of an effective participation from countries all around the world The maximization of the contribution to sustainable development The development of high-quality standards for all the stakeholders involved Source: Personal elaboration from ISO/TC 323 Table 7.7  The Standards according to the ISO/TC 323 Promote understanding of circular economy Support organizations integrate circular economy principles and strategies in their activities Define tools to assess circularity performance Encourage dialogue, communication, and collaboration amongst different actors worldwide Show benefits and actions that interest potential stakeholders Plan guidelines for the creation of an enabling environment for collaboration among sectors and value chains Produce commodities accessible to more consumers by using circular-based business models Share experiences and feedback Provide easy to use documents to implement circular economy and avoid a proliferation of standards Source: Personal elaboration from ISO/TC 323 Table 7.8  The working groups of ISO/TC 323

Chairman’s advisory group (ISO/TC 323/ CAG) Terminology, principles, framework, and management system standard (ISO/ TC 323/W.G.1) Practical approaches to develop and implement circular economy (ISO/TC 323/W.G.2) Measuring and assessing circularity (ISO/TC 323/W.G.3) Circular economy in practice: Experience feedback (ISO/TC 323/W.G.4) Product circularity data sheet (ISO/TC 323/W.G.5) Source: Personal elaboration from ISO/TC 323

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The working groups define patterns to develop the circular economy standards, as the ISO 59010:2023. It is known as Circular Economy Guidelines on Business Models and Value Networks. It is able to enhance circular economy throughout frameworks, guidance, and tools, which may improve and maximize the sustainable development. At this purpose, the KTH Royal Institute of Technology in Stockholm works to implement the ISO/TC 323 documents to make sure the transition to the circular economy system by focusing on new business models and value networks. There is also the ISO/DIS 59020 about the circular economy – measuring and assessing circularity. The standard is currently being worked on by the ISO/TC 323 technical Committee. The document defines a framework to assess circularity and contribute to the sustainable growth. The framework accounts for economic, social, and environmental impacts and it is applicable to multilevel structures ranging from regional as well as organizational levels. It offers a guide concerning the assessment of circularity performance adopting indicators and methods. The standardized procedure purposed helps organizations to collect data and information to enhance circular practices for resource minimization contributing to produce circular resources’ flows. The standardization process of circular economy is necessary to develop frameworks and tools able to implement circularity in all the organizations maximizing sustainable development goals. A technical standard defines “how to do things well” guaranteeing reliable quality and safety performance for materials, products, processes, services, people, and organisations. Particularly, circular standards are necessary to implement environmental, economic, and social sustainability. Certainly, the ISO is among the most advanced and structured standardization system. It started focusing primarily on quality management standards. It is also the most widely used at international level. Since the circular economy is viewed as a tool to minimize raw resources depletion a set of standards, internationally recognizable, are necessary. Entrusting the task of setting out how to transition towards circular economy to the most important and internationally accredited organization is the right step to take. The technical committee on the circular economy involves 89 countries’ members that want to act in a synergic way to draft circularity standards shared as much as possible. The ISO standards for circularity will provide a strong impetus to the transition towards the circular economy system. All the countries and organizations worldwide need to improve their action to boost the three dimensions of the sustainability making a world eco-friendlier.

7.6 Summary, Conclusions, Policy Implications and Recommendation The importance of the circular economy has increased over the last decade mainly due to the unsustainability of production, consumption and disposal of world resources, the primary causes of the threefold threat of pollution, climate change and biodiversity loss. Moreover, geopolitical tension has increased and the

References

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likelihood of further shocks and disruptions in the global supply chain aggravates such a situation. Through the circular economy, the decoupling of resource use and environmental impact can be achieved by fostering equitable economic and human prosperity. The transition to an inclusive circular economy thus becomes essential for human needs. It is therefore necessary to improve the production system and consumption behaviour, to reduce poverty and to improve well-being throughout the world. In this book, several topics related to the circular economy were addressed. In part, a market approach has been used, which is a fundamental concept in economic theory, highlighting the elements of demand/consumption and supply/production. In addition, current policies on circular economy have been analysed, both in Europe and in other countries around the world. Particular attention has been paid to the policies of the European Union, as they are considered to represent a single body of actions within a comprehensive framework of strategies. In addition, circularity measuring instruments used in the global business system have been introduced. The text does not claim to cover the entire subject area, but it can represent a good theoretical and, in some way, practical basis for those who begin to study the topic of the circular economy. Some examples, cited in the text, such as case studies for the application of circular strategies in enterprises can help to understand how it is possible, in practice, to switch from linear business models to circular ones. It is clear that the circular economy cannot be limited to reducing, re-using, and recycling activities and procedures. It is, in fact, necessary to obtain the eco-­effectiveness, beyond that the eco-efficiency, developing new goods without the limits of the planned obsolescence and to push the customers to change their behaviour of purchase and consumption. Today’s reality has completely changed from that described by Boulding and other scholars in the second half of the 1960s. This means that the risks of damage to the environment are greater and more urgent. Human activity in relation to the availability of natural resources and environmental and social sustainability must be better controlled. All the actors involved must play their part, from government authorities to individual citizens. This is certainly one of the reasons why entrepreneurs are moving to adapt their business models to the circular economy. The future relationship between man and the environment will depend on the affirmation of the circular economy and the ability to adopt processes of innovation and creative destruction associated with new industrial engineering processes and new consumer products.

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Index

A Assessment framework, 44, 142–148 C Case studies, viii, 122–126, 151, 159 Circular business model, viii, 22, 23, 36, 68, 78, 83, 86, 114–126, 143, 151, 152 Circular consumption, 32, 113, 132 Circular economy, 1, 31, 39, 57, 93, 111, 137 Circular economy action plan (CEAP), 8, 25, 32, 58, 63, 66–76, 78, 79, 81, 83, 137 Circular economy finance, 83, 101–106 Circular economy scenario, vii, 31–36 Circular economy transition, 32, 44, 52, 81, 99, 155 Circularity assessment, 48, 147 Circularity indicators, 140, 142, 145 Circularity metrics, 140–153 Circular practices and strategies, 76–79 Circular production, 32, 33, 35, 66, 84, 111–115, 129–130, 142 Circulytics, 141, 149, 150 Climate change, 2, 8, 15, 16, 25, 31, 34, 35, 40, 43–46, 53, 64, 76–77, 79, 101–104, 111, 128, 139, 140, 154, 155, 158 Climate-related disclosures, 103 Closing the circle, 1 D Design for recycling, 116 Downstream, 115

E Eco-canvas, 120, 122 Eco-design, 15, 19, 41–43, 49, 50, 59, 61, 63, 68–70, 72, 75, 77, 86, 102, 107, 112, 137, 141, 142, 144 Eco-efficiency, 43, 137–159 Eco-innovation investments, 127–129 Ecological transition, 49, 53, 64–66, 77, 78, 84 Environmental, 2, 32, 39, 57, 93, 112, 137 Environmental and sustainability goals, 57 Environmental degradation, 3, 10, 35, 101, 102 Environmental legislation, 49, 57, 129 Environmental life cycle assessment (ELCA), 39 EU taxonomy, 63, 154–156 European financial reporting, 104–106 European Green Deal (EGD), 57, 61, 62, 66, 67, 102, 107, 154 European Union circular economy package, 49–50 European Union policy, 36 F Financial standard for climate change, 103–104 Full business, 115 G General sustainability-related financial information, 103 Global economy, 6, 33, 145, 146

© The Editor(s) (if applicable) and The Author(s), under exclusive license to Springer Nature Switzerland AG 2023 S. Patti, Circular Economy and Policy, https://doi.org/10.1007/978-3-031-43324-5

163

164 Global Reporting Initiative (GRI), 23, 24, 141, 149, 150, 152, 153 Green bonds, 104–106, 128, 155 Green public procurement (GPP), 36, 41, 70, 95, 96, 98–100, 112 I Innovative procurement (IP), 96 Integrated Product Policy (IPP), 40 International and cross-border trade, 106–108 International policies for circular economy, 156 ISO/TC 323, 156–158 L Life cycle assessment (LCA), 15, 25, 26, 39, 43–51, 69, 71, 72, 93, 137, 138, 141, 147, 148, 152, 153 Life cycle costing (LCC), 39, 44 Life cycle law, 49–50 Life cycle sustainability approach (LCSA), 39–50 Life cycle thinking (LCT), 39–53, 99, 141, 142 Limited natural resources, 3, 11, 15 Losses of biodiversity, 33 M Market regulation, 32 Material circularity indicator (MCI), 48, 142, 144, 145, 149, 150 Material flow analysis (MFA), 50–52, 93, 141, 147 Metrics, vii, 44, 46, 137, 138, 140, 141, 143–145, 148–153

Index Product life extension, 118, 125 Product ownership, 116 Public sector, vii, 93–108 Public service delivery, 100 R Regenerative power, 13 Regulations, 5, 8, 11, 36, 41, 49, 58, 62, 63, 71, 77, 79, 81, 85, 100–108, 129, 133, 154, 155 Regulatory frameworks, 32, 62, 65, 86, 93 Resource potential indicator, 147 S Secondary raw materials (SRM), 8, 10, 19, 22, 26, 35, 47, 52–54, 61, 68–70, 72, 74–76, 79, 107, 113, 118, 121, 122, 126, 127, 131, 143, 144 Servitisation, 116 Sharing consumption, 18, 20–21, 131–133 Social and economic sustainability, 128, 140, 143 Social ecological systems, 2 Social life cycle assessment (SLCA), 39 Strong sustainability, 3, 131 Sustainability, 2, 31, 39, 59, 94, 112, 137 Sustainable circular index, 147, 148 Sustainable consumption behaviour, 130–133 Sustainable development goals (SDGs), 2, 10, 11, 16, 22, 25, 35, 40, 49, 66, 68, 69, 72, 74, 83, 111, 128, 152, 154–156, 158 Sustainable production, vii, 62, 64, 68, 69, 73, 74, 78, 86, 102, 111 Sustainable transition, 40 T Taxation, 13, 20, 32, 52, 63, 106–108, 133

N New materials, 41–43, 69, 78 U Upstream, 115 P Policies for reuse and repair, 76–79 Pre-commercial procurement (PCP), 96, 100–101 Production and consumption, vii, 3, 7, 11, 12, 14, 32–36, 40, 41, 43, 49, 52, 57, 61, 64, 68, 72, 74, 76, 84, 86, 89, 106, 107, 111–133, 140, 141, 146 Product lifecycle, 43

V Value-based resource efficiency, 147 Value of waste, 31, 51 W Waste Framework Directive, 58, 60, 75, 76, 79

Index Waste management, 2, 10, 11, 21, 24–26, 31, 32, 49, 57, 59–61, 63, 66, 69, 72–74, 83, 84, 86, 88, 89, 103, 107, 111, 126, 127, 129, 144, 145 Waste minimization, 78

165 Weak sustainability, 3 Z Zero-waste, 12, 31, 58, 86