The Creative Collision of Circular Economy and Supply Chain in the Built Environment

The current supply chain of the built environment is defined by raw material
extraction and landfill disposal. Therefore, a transition from linear to
circular
practices must
start with challenging this paradigm. If we are to achieve a circular economy in
this sector, we must ask:

• Where does the supply chain begin and end in terms of material input and
  output?

• Who is responsible for upstream and downstream activities in the system of
  production?

• What accountabilities are factored into the activities of suppliers,
  producers and consumers?

Beginning with the basics

To better understand how the creative collision between a circular economy and
supply chains can drive innovation in the built environment, let’s begin with a
few basic definitions.

According to the Ellen MacArthur Foundation, a circular
economy
is based on the principles of designing out waste and pollution, keeping
products and materials in use, and regenerating natural systems. Compared to a
linear economy of “take-make-waste,” a circular economy is based on
“reduce-reuse-recover” strategies for materials in closed-loop systems. In a
linear economy, resources are taken from the ground to make products which are
used until no longer needed, at which point they are discarded — i.e., “thrown
away.” The circular economy, however, acknowledges that there is no place on
our planet called
“away”
to responsibly dispose of these products. Thus, in a circular economy, products
and services are designed with materials that are upcycled or recycled at the
end of their useful life.

According to the Center for Management Terms & Practices, supply
chain is defined as “the optimized flow of
products and services from their origin, through one’s facilities, on to
consumption and then disposal.” Key concepts in this definition are “optimized
flow,” “origin,” “consumption” and “disposal.” Is “flow” optimized in linear
paths or circular loops? Is the known origin of input materials based on
responsibly sourced, transparent ingredients? Is the producer held accountable
for end-to-end negative externalities with its products and services (i.e.,
pollution) from supplier to consumer involvement? Is the consumer left as the
responsible party for disposal or recycling at end of useful life? In a circular
economy, the relationships between all stakeholders in the supply chain of a
product’s lifecycle must be reconsidered. This higher expectation of
responsibility applies to consumer products as well as whole buildings.

Introducing circularity into built environment supply chains

Making the shift from one-way, linear supply chains toward closed-loop systems
requires innovative procurement practices based on business models and
principles of a circular economy. The creative collision of a circular economy
and supply chains in the built environment will change the ways that materials,
products and services are specified and procured by the architecture,
engineering and construction (AEC) industry.

According to a joint
report
by the Yale University Center for Ecosystems in Architecture and United
Nations’ One Planet Network Sustainable Buildings and Construction
Programme, “transitioning to a circular built environment requires the design
of multi-beneficial policies that take a whole building life-cycle and
systems-thinking approach.” What are the implications of such a whole building
life-cycle and systems-thinking approach?

• Looping supply chains into value chains — A systems-thinking approach
  based on closed-loop systems — i.e., circular flows rather than linear paths
  — will shift conventional “input-output” thinking about everything from
  virgin materials to construction and demolition waste. Such circularity will
  require transparency and accountability for extending the value of
  materials, eliminating waste and negative consequences, and regenerating
  natural ecosystems. Players who can add cyclical value beyond providing a
  point solution for a segment in a linear supply chain will gain competitive
  advantage.

• Integrating information and stakeholders in value chains — A literature
  review
  on circular practices in the built environment by Munaro, Tavares
  and Braganca (2020) revealed the need for greater integration between
  stakeholders in the construction value chain. Digital transformation in
  delivery and operation of the built environment will accelerate the
  integration of all stakeholders, engaging them earlier and extending their
  involvement beyond the design stage into use and post-use stages. Building
  Information Modeling, Integrated Project Delivery, and new
  collaboration platforms such as the Concert Digital
  Exchange© enable multiple parties to advance
  solutions with a whole building life-cycle perspective. One barrier to such
  integration is the adversarial nature of multi-party relationships in
  conventional project delivery and obstacles to transparency of information.
  Such interoperability relies upon accessing manufacturers’ product
  information based industry standard product attributes — a focus of working
  groups such as Digital Supply Chains in Built
  Environment.

• New platforms for creating and exchanging value — The creation of
  circular solutions will require new forms of creating and exchanging value.
  The foundation of accounting practices, e.g., depreciation, is that
  buildings are objects that lose value through normal use. Such precepts do
  not account for the value of natural
  capital or
  ecosystem
  services.
  This raises questions about the value of building systems and material
  assemblies throughout a whole building life cycle. What if buildings were to
  be viewed as “banks” for depositing materials for the duration of their use,
  then the materials were withdrawn for a future reuse with preservation of
  value? For example, this is the foundational concept of Buildings as
  Material Banks bringing together fifteen parties
  throughout Europe with the mission of enabling a systemic shift in the
  building sector by creating circular solutions. Another example is the
  Circular Façades Platform that
  applies a
  “facades-as-a-service”
  business model to maintaining, repairing and reusing the exterior envelope
  or “skin” of a building.

The intersection of circular practices and supply chain in the built environment
will be a ripe area for innovation as sustainability-focused companies look to
their real estate portfolios for opportunities to meet their ambitious
sustainability commitments by 2030 and beyond.