MATERIALS ARE CENTRAL TO THE STORY OF HUMAN PROSPERITY
Materials have long propelled human affluence, driving rising living standards over the past (at least) 100 years, enhancing life expectancy and employment, as well as basic education levels. However, this progress has also come at a tremendous cost: the modern industrial economy is inherently linear—characterized by ‘take-make-waste’ processes in practice. (Circle Economy, Circularity gap report 2023)
The resources on our planet are finite. There is only one planet Earth, yet by 2050, the world will be consuming as if there were three. A circular economy strives to continue the human development while at the same time staying within the borders of the resources available to us on our planet. Next to the ecological benefits, retaining materials will also allow to mitigatie the risks of increased pricing as well as an increased dependency on the countries / companies that are sourcing them.
Pricing
Material scarcity and pricing are closely linked, often driven by supply and demand dynamics. When a material becomes scarce, its price typically increases due to higher demand and limited supply Structural scarcity is already affecting the pricing of certain materials, like Copper and Tin.
Copper: Due to its excellent electrical conductivity, copper is widely used in electrical wiring and electronics. It is essential for infrastructural development (wiring, plumbing), the technology sector (smartphones, computers) and the energy transition (wind turbines, solar panels and electric vehicles) Copper prices have quadrupled since the early 2000’s.
Tin: Tin is a relatively small market but is currently experiencing one of the longest-running squeezes. Demand from the electronics industry has mainly fueled the spike, where it’s used for soldering printed circuit boards (PCBs). Prices in the last 10 years have risen over 60%.
Geo-Political Dependencies
Raw materials are crucial to Europe’s economy. They form a strong industrial base, producing a broad range of goods and applications used in everyday life and modern technologies. Reliable and unhindered access to certain raw materials is a growing concern within the EU and across the globe. Finite supplies also means some EU countries are dependent on other countries for their raw materials. According to Eurostat, the EU imports about half of the raw materials it consumes. In 2021, this resulted in a trade deficit of €35.5 billion.
Recycling raw materials mitigates the risks associated with supply, such as price volatility, availability and import dependency.
CSRD
The implementation of the CSRD will require all larger companies to maintain direct insights in the material flows. Therefore, they will need to get these insides from their supply chains, effecting all partners. A next step will be to turn these insights into reduction plans.
Under the CSRD, a company (undertaking) will need to provide insights on:
- how the undertaking affects resource use, including resource efficiency, avoiding the depletion of resources and the sustainable sourcing and use of renewable resources in terms of material positive and negative actual or potential impacts;
- any actions taken, and the result of such actions, to prevent or mitigate actual or potential negative impacts arising from resource use, including its measures to help decoupling its economic growth from the use of materials, and to address risks and opportunities
Circular Strategies
The CSRD implementation will not only affect large companies but also all companies that are part of their value chain.
This will increase the demand for circular partices in these value chains.
Circular strategies that can be applied are
- Refuse: prevent the use of raw materials in the creation of goods
- Rethink: Reconsider ownership, use and maintenance of products
- Reduce: Decrease the use of raw materials
- Reuse: Secondary use of products by a second owner
- Repair: Maintain and repair products for extended use
- Refurbish: Restore and improve products for extended use
- Remanufacture: Make renewed products with the same purpose from discarded products or parts
- Re-purpose: Make new products with a different use from discarded products or parts
- Recycle: Process waste into new products or materials that can be used in new products
- Recover: process waste to recover energy
Reduction of CO2 emissions
An added benefit of reducing material use is the reduction of CO2 emissions. The production of materials like cement, steel, and aluminum is highly energy-intensive and generates substantial CO2 emissions. Adopting circular economy principles, where materials are reused and recycled within the economy, can lead to significant CO2 reductions. Estimates suggest that a circular economy could reduce global CO2 emissions by up to 39% by 2050.
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