Quick viewing(Text Mode)

Circular Economy Action Plan (CEAP) 2020 Summary for Business Implications and Next Steps Contents

Circular Economy Action Plan (CEAP) 2020 Summary for Business Implications and Next Steps Contents

Circular Economy Action Plan (CEAP) 2020 summary for business Implications and next steps Contents

Executive summary

1 The European Union Green Deal and the Circular Economy Action Plan 2020 | 4

2 The Circular Economy Action Plan 2020 | 5

3 Implications for business | 9

4 Recommendations for the business community | 15

Glossary | 16

Annex – CEAP 2020 key actions and dates | 17

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 2 Executive summary

This summary for 2. Compare how the CEAP Intended positive implications business of the European 2020 and associated of the CEAP 2020 include Commission’s Circular directives complement or legislative actions and Economy Action Plan 2020 contradict other regional supportive measures to (CEAP 2020) describes and national policies incentivize sustainable for key developments and production and consumer your business and share the implications of this participation, regulatory challenges with the most landmark publication alignment to link performance appropriate stakeholders. for businesses. By to incentives, increased R&D understanding the policy 3. Develop an action investment, levelized treatment outcomes intended by plan for imported products, and with all relevant the CEAP 2020, business fiscal measures to incentivize departments to ensure stakeholders can move circular economy initiatives. compliance with legislation forward and further shape in the future. Engage the circular economy Businesses want to take part company leadership to policy dialogue so that it is in helping shape measures prioritize this effort and supportive and effective addressed within these circular make sure they will consider for businesses. 5 policies to ensure intended these results in future positive outcomes. They decision-making. also want to ensure they are The transition to a circular 4. Engage with stakeholders economy represents a adequately prepared for future , fundamental shift in the legislation and regulations. such as industry development of business and associations, NGOs, and economic opportunities. This document, builds upon public and private sector previous WBCSD-Guidehouse forums, to initiate a dialogue reports on circular economy on how your industry There is a clear business case 6 to support the circular economy policy enablers. We present or chain can work transition as manufacturing concrete steps for businesses with the public sector to firms in the European Union (EU) to respond and act upon the establish constructive, spend 40% of total costs on legislative and regulatory progressive and materials and processing;1 and actions proposed by the CEAP enforceable measures. 2020. some estimates anticipate cost 5. Share expertise and savings of €600 billion a year Key recommendations for best practices showing and €1.8 trillion more in other businesses in this report 2,3 how your company has economic benefits. Circular include: economy opportunities in the achieved compliance with relevant policies with EU alone have the potential to 1. Coordinate with public other companies in your add 700,000 jobs. affairs colleagues to , industry and The CEAP 2020 aims to conduct an in-depth study geography. accelerate and scale up of specific directives action to support the circular (proposed and adopted) economy. New circular to determine how the economy policies will shape CEAP 2020 and its various future , elements will affect your empower consumers, and business and over what reduce waste generation, with timeline. a particular focus on high- impact sectors such as textiles, , and electronics.4

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 3 1 The European Union Green Deal and the Circular Economy Action Plan 2020 The Ultimately, the Commission Key to the CEAP 2020 is its strengthens the European seeks to achieve climate established agenda to promote Commission’s commitment neutrality by 2050 by decoupling sustainable growth, in alignment to tackling climate and economic growth from resource with the new EU Green Deal. environmental challenges use and adding to a competitive, to achieve a more resource- resource-efficient European The CEAP 2020 focuses on efficient and competitive Union (EU). sustainable product design, economy. The EU Green Deal waste, urban, rural and suburban is integral to the Commission’s Unlike previous iterations of the areas, as well as unlocking strategy to implement the United Circular Economy Action Plan support for businesses through Nations 2030 Agenda and its put forth by the EU, the CEAP cross-cutting actions that serve Goals 2020 is a cornerstone of the EU to enhance the goals of the EU (SDGs).7 Green Deal.8 Figure 1 illustrates Green Deal. the symbiotic nature of these Under its umbrella, the Circular overarching initiatives and their Together, the EU Green Deal Economy Action Plan 2020 overlap. The EU Green Deal’s and CEAP 2020 will enable an (CEAP) seeks to enhance the major themes include mobilizing agenda to achieve a cleaner EU Green Deal by providing industry, promoting resource and more competitive in businesses with a trigger to scale efficiency, creating a toxic-free collaboration with businesses, up the circular economy. environment, and preserving consumers, citizens and civil biodiversity, topics expanded society. upon in the CEAP 2020.

The Circular Economy Action Plan 2020 as part of the EU Green Deal and mutual synergies Figure 1:

ENERGY AND CLIMATE SYNERGY

Farm Supply Increasing to fork fair, climate clean, ambition healthy and for affordable environmentally friendly food 2030 and and secure energy systems 2050 CORE TENETS OF THE EU GREEN DEAL DIRECTLY RELATED TO CEAP 2020

Mobilizing Building A zero- Preserving Accelerating industry for and pollution and restoring the shift a clean and renovating in to resource ambition for circular a toxic-free ecosystems and sustainable and efficient way a economy environment biodiversity smart mobility

Make sustainable products the norm in Focus on the lifetime of products CIRCULAR ECONOMY the EU through a sectoral lens ACTION PLAN 2020 Empower consumers Ensure less waste.

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 4 2 The Circular Economy Action Plan 2020

The CEAP 2020 is a landmark For example: The Commission acknowledges framework borne out of a series the directive’s limitations as a of previous versions between • A sustainable product voluntary approach and its non- 2015 and 2019. Topics covered framework that will promote standardized methodology. focus on production processes, product information It identifies the Ecodesign waste and priority transparency. The Directive as an established areas like plastics and critical raw Commission plans new framework for the setting of materials. Furthermore, during legislative action regarding ecodesign requirements for the public consultation process, “right to repair”, green public energy-using products and the Commission received the procurement, and an all- recognizes it for its successful majority of responses (60%) from inclusive recyclable and regulation of energy efficiency. businesses, which influenced durable criteria. the development of a monitoring To expand the ecodesign framework and deepened work • A new small and medium- framework, the Commission will on the EU Strategy for Plastics. sized enterprise (SME) be adopting and implementing This formed the basis for new strategy9 under the CEAP a new Ecodesign and Energy actions proposed in its refreshed 2020 that will focus on Labelling Working Plan 2020- form, the Circular Economy collaboration fostering 2024 for individual product Action Plan 2020. partnerships among groups. This plan will include a SMEs through training, Product Environmental Footprint The four core themes of the advice from the Enterprise (PEF) approach, which the Circular Economy Action Plan Europe Network (EEN), and Commission has designated as 2020 are: knowledge transfer via a key existing policy undergoing the European Resource consultation under the CEAP 1. Make sustainable products Efficiency Knowledge 2020. The PEF pushes for the norm in the EU Centre. product-level transparency 2. Empower consumers for circular and sustainable 3. Focus on the lifetime of • Harmonizing methodologies manufacturing to avoid products through a sectoral and data collection to greenwashing and inconsistent lens better capture information labeling.13 4. Ensure less waste. on microplastics or waste collection systems. The Ecodesign Directive aims to The CEAP 2020 is a call to action setup mandatory requirements 2.1 Make sustainable products to create sustainable products, for sustainable services for the norm in the EU with specific chapters focused the batteries and vehicles, on enabling sustainable product construction, services and water policy actions and product value The CEAP 2020 plans to harness using a product environmental chain actions and encouraging and expand several initiatives footprint14 approach. less waste and more customer- with the current Ecodesign centric actions. To emphasize Directive10 as its backbone. action and accountability, The the CEAP 2020 covers seeks to improve the directive, pivotal legislation with target starting with the EU Ecolabel implementation dates regulation11 and the Green Public (see annex). Procurement (GPP) criteria.12

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 5 2.2 Empower consumers 2.3 Circularity in sectors: Transparency and the right production processes and the information downstream value chain Consumer participation plays to consumers will facilitate a big role in creating cost- demand for more circular saving opportunities within the products. In order to achieve The CEAP 2020 also calls for the circular economy. The European this, the Commission will make system-wide transformation of Commission combines mandatory requirements to within target regulatory support with target substantiate environmental sectors to unlock economic setting to support consumer claims using PEF methods, will value and create important empowerment, with a strong harmonize methods under the synergies. The action plan builds focus on consumer needs. Sustainable Product Framework on important strategies and Legislative action will emphasize with the EU Ecolabel, and directives, including the Industrial transparency and availability of will systematize durability, Strategy,16 the SME Strategy,17 repair services, and set minimum recyclability and recycled and the Industrial Emissions requirements for content (to ensure consistency) Directive.18 Creating synergies labels. in the EU Ecolabel Criteria. among these strategies means sharpening the goals and A new “Right to Repair” initiative Lastly, the Commission will objectives of each framework to will improve access to and propose sectoral legislation achieve climate neutrality and the availability of sustainable for minimum mandatory Green competitiveness, updating green products specifically Public Procurement (GPP) technologies, and targeting targeting the information and criteria and targets related to circular, bio-based solutions. communication technology product , , re- (ICT) sector and the electronics manufacturing and end-of-life. To synergize EU industry industry. This initiative expands By 2021, the Commission plans strategies to fit the needs of upon current sales of goods to phase in compulsory reporting the circular economy, the CEAP and contract regulations to help to monitor the uptake of GPP 2020 identifies seven high- consumers make more informed without creating an unjustified impact sectors: choices and receive services administrative burden for public that consequently improve the buyers. (See the annex for more 1. Electronics and ICT lifetime of their belongings.15 information on dates.) Training 2. Batteries and vehicles Consumers receive trustworthy and dissemination of good 3. Packaging and relevant information on practices and encouraging 4. Plastics products at the point of sale, public buyers to take part in 5. Textiles including on their lifespan and on a Public Buyers for Climate 6. Construction and buildings the availability of repair services, and Environment initiative will 7. Food and water. spare parts and repair manuals. facilitate exchanges among buyers committed to GPP We summarize the important implementation. legislative actions outlined in the CEAP 2020 impacting these seven industrial sectors in table 1.

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 6 High impact sectors and CEAP 2020 developments Table 1:

Mandatory Review Aspirational

CEAP 2020 KEY ACTIONS LEGISLATIVE ACTION

OVERARCHING ACTIONS Mandatory Green Public Procurement (GPP) • criteria • Promote longer product lifetimes – targets in sectoral legislation and phasing-in GPP by 2021 • Increase reuse and recycling mandatory reporting on green claims • Promote sustainable labeling and sourcing of raw • Legislative proposal on substantiating by 2020 materials Review of the Industrial Emissions Directive • Enhance data collection and harmonization • (including best available technologies – BAT) by • Encourage bio-based material use 2021 Global Circular Economy Alliance • Proposal for a international and initiation of discussions on an agreement on the management of natural resources by 2021

ELECTRONICS AND ICT New “Right to Repair” measures by 2021 • restriction of the use • Introduce a Circular Electronics Initiative to promote • Review of the directive on the of certain hazardous substances in electrical and longer product lifetimes electronic equipment • Create regulatory measures for electronics and ICT, and guidance to clarify its links including mobile phones, tablets and laptops with REACH and Ecodesign requirements by 2021 • Make priority for “right to repair” • Create an EU-wide take back scheme to return or sell back old mobile phones, tablets and chargers19 • Review EU guidelines for hazardous substances20

BATTERIES AND VEHICLES • Proposal for a new regulatory framework for batteries • Create rules on recycled content and measures by 2020 end-of-life vehicles by 202121 to improve the collection and recycling rates of all • Review of the rules on batteries, ensure the recovery of valuable materials and provide guidance to consumers; • Address non-rechargeable batteries to phase out their use • Create sustainability and transparency requirements for batteries • Ensure ethical sourcing of raw materials and security of supply

PACKAGING • Review to reinforce the essential requirements22 for • Review Directive 94/62/EC27 to reinforce the packaging and reduce (over)packaging and packaging mandatory essential requirements for by 2021 • Reduce (over)packaging and packaging waste, including by setting targets and other waste prevention measures • Drive design for reuse and recoverability of packaging • Reduce the complexity of packaging materials

PLASTICS • Mandatory requirements on recycled plastic content • Reinforce EU Strategy for Plastics in the Circular and plastic waste reduction measures for key products Economy23 by stipulating essential requirements for such as packaging, construction materials and packaging vehicles by 2021/2022 • • Ensure sourcing and labelling of bio-based plastics Restriction of intentionally added microplastics and • Ensure measuring of released microplastics measures on unintentional release of microplastics by • Study use of biodegradable or compostable plastics 2021 • • Ensure implementation of Single Use Plastic Products Policy framework for bio-based plastics and Directive24 biodegradable or compostable plastics by 2021 • Tax on non-recycled plastic waste as of 2021

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 7 TEXTILES • High levels of separate collection of textile waste by • Empower businesses to choose sustainable textiles 2025 per Member State • 25 Incentivize and support product-as-service models, • EU Strategy for Textiles 2021 circular materials and production processes • Ensure sorting, recycling of textiles

CONSTRUCTION AND BUILDINGS • Revision of the Construction Product Regulation26 to • Use EU building sustainability framework Level(s) integrate life-cycle assessment in public procurement to integrate life-cycle assessment (LCAs) in public and the EU sustainable finance framework procurement and the EU sustainable finance • Strategy for a Sustainable Built Environment by 2021 framework • Explore the appropriateness of setting carbon reduction targets and the potential of carbon storage • Revise material recovery targets for construction and reduce soil sealing

FOOD AND WATER • Initiative to substitute single-use packaging, tableware • Create an integrated nutrient management plan, with and cutlery with reusable products in food services by a view to ensuring more sustainable application of 2021 nutrients and stimulating the markets for recovered • Water Reuse Regulation27 to encourage circular nutrients approaches to water reuse in agriculture • Ensure the sustainability of renewable bio-based materials through a Bioeconomy Strategy and Action Plan and the Circular Bioeconomy • Reduce food waste as a key action under the forthcoming EU Farm-to-Fork Strategy

2.4 Ensure less waste • Enhance extended producer All these EU waste regulation responsibility (EPR) schemes efforts will address demand in the The decoupling of waste from by providing incentives for secondary raw materials market economic growth is a vital priority waste recycling and promote standardization in the mission of the CEAP 2020. of their reuse and recycling. The CEAP 2020 will strengthen • Harmonize the various waste Integral to new waste proposals is and renew EU waste laws28 collection systems analyzing integrating circularity to create a and the CEAP 2019 proposals.29 the density and accessibility toxic-free environment, supporting The Commission intends to: of separate collection points, a safe and healthy secondary both urban and suburban. raw material market in the EU • Revise EU legislation on and addressing waste exports. batteries, packaging30, The EU intends to halve the The Chemicals Strategy for end-of-life vehicles31 and amount of non-recycled municipal Sustainability will be an important hazardous substances32 waste by 2030, a 2020 target set roadmap of actions to combat in electronic equipment to focus on non-compliance. toxicity while the Commission considers the revision of current • Introduce waste reduction EU waste shipments.34 targets for specific streams in view of revising existing waste legislation33

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 8 3 Implications for business

Sustaining a competitive The CEAP 2020 provides • innovate in their production edge while promoting a blueprint to address the processes and achieve more health and labor to the business challenges associated circularity. This includes market. with the shift to a more circular mobilizing the potential of economy. Based on public This includes regulatory digitalization of product consultation responses35 and alignment to allow SMEs information and fostering the from WBCSD member to better compete. availability of information on companies, we highlight several Governments should the environmental impacts recurring themes in the CEAP reward products based on of products. 2020 that have cross-cutting their different sustainability Fiscal measures to implications for businesses in all performance, including by • incentivize circular industries: linking high performance economy initiatives levels to incentives. • Incentivizing sustainable (second-hand trade, production and supporting • Establishing a fair and repair services) or deter consumer participation. international playing field unsustainable behaviors

for the circular economy. (taxes on pollution and Encouraging the proliferation natural resources, rules of product-as-a-service Addressing waste exports on corporate financial or other models where while encouraging regulatory responsibility and producers keep the measures on non-EU transparency). ownership of the product products entering the Single or the responsibility for its Market. It is necessary These include subsidies performance throughout to prepare and create such as VAT exemption to its life cycle. For example, new strategies to ensure improve the competitiveness the product environmental alignment with potential of recycled materials and footprint (PEF) pilot projects trade regulations and the implementation of an currently under consultation taxation. EU-wide one-stop-shop for include service- and retail- EPR. Financial incentives Optimizing R&D focus focused strategies for • underline the importance and investments. businesses. The of guidelines and financial CEAP 2020 highlights the support, especially for need for R&D and stronger SMEs to provide innovative investments in both solutions to meet public products and technologies demand for greener to allow companies to products and services.

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 9 3.1 Industry-specific impacts 2020 as highly impacted by the industry-specific impacts to the circular economy. We summarize discussion. Table 2 presents The most relevant industry- key policies associated with an overview of the sectors specific impacts will occur in the this group of industries in and important developments sectors identified by the CEAP section 2.3 and add important regarding the CEAP 2020.

CEAP 2020 legislation and impacts on five industries Table 2:

CEAP 2020 LEGISLATION INDUSTRY IMPACTS

ELECTRONICS AND ICT New “right to repair” • • measures by 2021 “Right to repair” will focus on requirements for An EU-wide take back • scheme to return or sell back manufacturers, not their distributors, retailers or old mobile phones, tablets and chargers franchisees. Manufacturers will decide how best to EU guidelines 36 • for hazardous substances deliver parts and information. • redesign It will be necessary to IT to support repairs and the processing of wasteful components as part of consumer offering. • It will be necessary to expand product information to include information on the life span of products and where customers can source spare parts.37 • It will be necessary to re-evaluate downstream prices . One main reason that consumers avoid repair is cost. If companies better reflect the costs of products over their lifetime, consumers will buy less and keep products in use longer. For example, battery replacement will be more affordable compared to the price of buying new.38

BATTERIES AND VEHICLES • Proposal for a new regulatory framework for • Platform sharing and digitization will be even more batteries by 2020 popular, including use of the Business Invest end-of-life vehicles by 40 • Review of the rules on Platform supporting the European Battery Alliance. 202139 • As the electricity market expands with the climate demand transition, expected for raw materials for batteries will rise sharply , pushing for sustainable sourcing and recyclability of final products.41 • Stakeholder will need to allocate sufficient investment funds for research and development in new projects, similar to the Nordic Green Battery Cell Supply or the E-BUS Battery project. • Car manufacturers will see a need to create a robust market for electric vehicles to meet policy regulations and ensure that 85% to 95% of new vehicles are reusable or recyclable by weight.42 • This must only impact manufacturers of passenger vehicles and small trucks.43

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 10 PACKAGING • Review to reinforce the essential requirements44 • This will improve and level the playing field for for packaging and reduce (over)packaging and secondary, recycled materials in competition with packaging waste by 2021 virgin and fossil-based materials. • As online sales continue to grow, bans or restrictions will have significant impacts on packaging producers and what they can place on the market.45 • Driving design for reuse and recyclability requires R&D investments. increased mobilize groups of companies • It is necessary to to join in the effort and promote leadership over digital platform services.

PLASTICS recycled plastic Internal business targets will increasingly cover • Mandatory requirements on • content packaging and weight requirements. and plastic waste reduction measures They will for key products such as packaging, construction cover less virgin plastic in packaging for businesses, materials and vehicles 2021/2022 by target weight reductions to decrease material use • Restrictions on intentionally added microplastics in end-produce, reduce waste associated with and measures for unintentional release of product disposability, and increase the use of post- microplastics by 2021 consumer recycled plastic material (PCR).47 bio-based plastics and Added taxes on non-recyclable waste will drive • Policy framework for • biodegradable or compostable plastics by 2021 innovative business models Tax on non-recycled plastic waste as of 202146 develop the business • • Businesses will need to case to improve the profitability of recycling plants and plastic reuse48 in order to better design new business models and innovate in new sustainable products.

TEXTILES • EU Strategy for Textiles 2021 New extended producer responsibility schemes • textile waste • High levels of separate collection of will drive producers and manufacturers to internalize by 2025 per Member State end-of-life costs in their business models.49 strong SME • The Commission expects a role to change and implement legislation as more than 90% of the EU workforce is engaged in small businesses.50 • Companies will further promote high value-added products to avoid mass production and prevent price hikes.

CONSTRUCTION AND BUILDINGS Industry-wide waste regulations • Using EU building sustainability framework Level(s) • will impact to integrate LCAs in public procurement and the construction and buildings, which will serve as EU sustainable finance framework an important sector for the Commission’s goals • Exploring the appropriateness of setting of carbon to address local and regional circular economy reduction targets and the potential of carbon policies. storage • Businesses serving the built environment will need Revision of material recovery integrate life-cycle assessment • targets for to into public construction as well as reductions in soil sealing procurement and better assess sustainability in product use. imbed material recovery • Business will need to targets into modified business models. Digital solutions • will increase, including a planned Digital Industrial Platform51 for construction and calculators and tools such as Level(s) to integrate LCAs into public procurement. cross-border investment • Expect more from industry associations in support of including full value chain of products into planning.

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 11 FOOD, WATER AND NUTRIENTS • The Integrated Nutrient Management Plan, with a • Single-use directives for packaging and plastics view to ensuring more sustainable application of will impact this sector’s downstream production by nutrients and stimulating the markets for recovered decreasing manufacturing and increasing end-of- nutrients life treatment. • Ensuring the sustainability of renewable bio-based • Legislation will affect farming (agricultural waste materials, through the Bioeconomy Strategy and into energy),52 manufacturing53 (product design, Action Plan and the Circular Bioeconomy resources) and consumers (transparency and • Food waste reduction as a key action under the labelling).54 forthcoming EU Farm-to-Fork Strategy • Business will need to promote cross-sector partnerships to build products with the right expertise, such as turning waste into fertilizer. • The sector will require change management and new missions throughout global supply chains and across multiple regions and countries.55

New legislative measures For example, the food and business-as-usual models within promised in the CEAP 2020 beverage, plastics, packaging the value chains of these key will strongly impact electronics and electronics industries may sectors. and ICT, batteries and vehicles, substitute fossil-based raw 3.1.1 Barriers and packaging and plastics materials with biomaterials to recommended enablers industries. Rules on recycled better achieve their circular content and the recovery of economy goals.56 The bio- valuable materials include based sector can address Key to understanding how revisions to end-of-life vehicles resource demands to effectively implement the and promoting circular business in the economy. This means CEAP 2020 and its roadmap models through mandatory substituting fossil resources is identifying the barriers and recycled content. In line with the in the food and beverage enablers associated with Circular Electronics Initiative, industry value chain, as well fundamentally transforming the Commission will heavily as the plastics, packaging and the product value chains of emphasize the Right to Repair, electronics industry.57 each industry or sector. Table a 5-year plan to make use of Similarly, with the revision of 3 outlines these barriers59,60,61 otherwise disposable products Packaging and Packaging Waste and provides suggestions for and sustain longer lifetimes for Directive 94/62, the EU plans to businesses and policy-makers to electronics and ICT value chains. address bottlenecks, in particular overcome them and accelerate the limited competitiveness of the circular economy. The circular economy efforts secondary, recycled materials of downstream retail and vis-à-vis fossil, virgin materials consumer-based industries will and the increasing generation impact upstream industries such of packaging waste,58 thereby in as oil and gas. effect transforming fossil-based

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 12 Barriers to implementing the circular economy and recommended enablers Table 3:

BARRIERS ENABLERS

GETTING THE RIGHT DEMAND FOSTERING EU CIRCULAR ECONOMY MARKET • Economic and sector growth makes implementation GROWTH • pressing and essential, however difficult for Businesses could use a strong market signal that manufacturers.62 would support better demand incentives to use • For example, current prices for raw materials renewable and secondary raw materials. • used in batteries are providing limited incentive to Policy initiatives that consider the negative develop much of the necessary capacity and may of virgin materials while monetizing not support the development of new capacity.63 the positive externalities to reduce environmental The battery industry must deliver supply growth to footprints, i.e., a or taxation, could meet anticipated demand from the electric vehicle support this.64 • market. Governments can support the secondary market through investments in and standardization of high- quality sorting and removing of contaminants from waste. • Businesses and governments can work together to combine incentive mechanisms, such as EPR schemes, green public procurement and VAT; the resulting recycled content would tilt value chains towards better material efficiency.

LACK OF UNDERSTANDING OF POTENTIAL BENEFITING FROM GOVERNMENT FINANCIAL IMPLICATIONS OF NEW AND SUBSTANTIVE SUPPORT • PRODUCT ENHANCEMENTS/EFFICIENCIES Governments could steer financing towards • The assessment and availability of information with research and piloting projects similar to the respect to environmental impacts and resource use Environmental Footprint Pilots launched by the is not yet fully transparent. Commission65 • Disclosure of environmental data by companies and the climate risks associated with downstream production requires substantive change to laws.

POLICY AND STAKEHOLDER MISALIGNMENT66 CREATING FRAMEWORKS SUPPORTED BY • Focusing different EU product laws to the maximum LEGISLATION TO HARMONIZE/ALIGN extent possible without risking unintended trade- • Governments can align and consolidate offs among economy, society and environment will existing regulation to address challenges. The require greater alignment. Sustainable Product Policy Framework seeks to • It is necessary to finetune each law and regulation set comprehensive requirements to ensure the towards the needs of stakeholders to promote and testing of all products for circularity. Expansion of enable the circular economy. the Ecodesign Directive and EU Ecolabel instrument are examples of existing initiatives that can support alignment. • Focused communication between governments and business can target new legislation based on stakeholder responses, such as imposing circular requirements on products that can differentiate the outcomes of material recycling in terms of preserving material properties.67

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 13 COMPLEX LOCAL AND INTERNATIONAL ESTABLISHING LOCAL AND GLOBAL ALLIANCES, COORDINATION AND COMMITMENT MEMBERSHIPS AND PUBLIC DIALOGUE • Supporting the shift to a circular economy is • Stronger alliances among companies locally and complex. It requires leadership for direction, access globally can enhance coordination and commitment. to information, stronger legislative frameworks, and • Governments can use existing initiatives to promote multilateral coordination at local and global levels. global leadership, such as building on the European Plastics Strategy to lead efforts at the international level to reach a global agreement on plastics.68 • The EU can step up outreach activities, including through European Green Deal diplomacy and Circular Economy missions, and work with EU Member States to enhance coordination and joint efforts for a global circular economy. • Governments can target free trade agreements and ensure they reflect the enhanced objectives of the circular economy.

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 14 4 Recommendations for the business community 4.1 Key actions for businesses 2. Compare how the CEAP 4. Engage with stakeholders , 2020 and associated such as industry directives complement or We base our key actions for associations, NGOs and contradict other regional businesses on a synthesis of public and private sector and national policies the core elements of the CEAP for forums, to initiate a dialogue 2020, its industry implications, your business and share on how your industry or and the barriers and enablers challenges with the most value chain can work with identified in the previous section. appropriate stakeholders. the public sector to establish Actions can be from individual constructive, progressive 3. Develop an action plan business and collective groups with and enforceable measures. (e.g., through industry-wide all relevant departments 69,70 5. Share expertise and actions). Based on an in- to ensure compliance with best practices depth policy analysis of the legislation in the future. showing CEAP 2020, we offer the Engage company leadership how your company has following recommendations for to prioritize this effort and achieved compliance businesses: make sure they will consider with relevant policies with these results in future other companies in your 1. Coordinate with public decision-making. value chain, industry and affairs colleagues to geography. conduct an in-depth study of specific directives (proposed and adopted) to determine how the CEAP 2020 and its various elements will affect your business and over what timeline.

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 15 Glossary

CEAP ICT REACH

Circular Economy Action Plan Information and communication A regulation of the European technology Union adopted to improve the CO 2 protection of human health and GHG Carbon dioxide the environment from the risks Greenhouse gas emissions that chemicals can pose, while EPR enhancing the competitiveness GPP Extended producer responsibility of the EU chemicals industry. Green public procurement ECE SDGs

LCA European Commission Sustainable Development Goals Life-cycle assessment EEN SME

PEF European Enterprise Network Small and medium-sized Product environmental footprint enterprise EU

WBCSD European Union World Business Council for Sustainable Development

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 16 Annex – CEAP 2020 key actions and dates

Businesses should note the following key actions and associated dates highlighted in the Circular Economy Action Plan (CEAP) 2020.

KEY ACTIONS DATE A sustainable product policy framework

Legislative proposal for a sustainable product policy initiative 2021

Legislative proposal empowering consumers in the green transition 2020

Legislative and non-legislative measures establishing a new “right to repair” 2021

Legislative proposal on substantiating green claims 2020

Mandatory green public procurement (GPP) criteria and targets in sector legislation as of 2021 and phasing in mandatory reporting on GPP

Review of the Industrial Emissions Directive, including the integration of circular as of 2021 economy practices in upcoming best available techniques reference documents

Launch of an industry-led reporting and certification system 2022 Key product value chains

Circular Electronics Initiative, common charger solution, and reward systems to 2020/2021 return old devices

Review of the directive on the restriction of the use of certain hazardous substances in electrical and electronic equipment and guidance to clarify its links with REACH 2021 and Ecodesign requirements

Proposal for a new regulatory framework for batteries 2020

Review of the rules on end-of-life vehicles 2021

Review of the rules on proper treatment of waste oils 2022

Review to reinforce the essential requirements for packaging and reduce (over) 2021 packaging and packaging waste

Mandatory requirements on recycled plastic content and plastic waste reduction 2021/2022 measures for key products such as packaging, construction materials and vehicles

Restrictions on intentionally added microplastics and measures aimed at 2021 unintentional release of microplastics

Policy framework for bio-based plastics and biodegradable or compostable plastics 2021

EU Strategy for Textiles 2021

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 17 Strategy for a Sustainable Built Environment 2021

Initiative to substitute single-use packaging, tableware and cutlery with reusable 2021 products in food services Less waste, more value

Waste reduction targets for specific streams and other waste prevention measures 2022

EU-wide harmonized model for separate collection of waste and labelling to facilitate 2022 separate collection

Methodologies to track and minimize the presence of substances of concern in 2021 recycled materials and articles made thereof

Harmonized information systems for the presence of substances of concern 2021

Scoping the development of further EU-wide end-of-waste and by-product criteria 2021

Revision of the rules on waste shipments 2021 Making the circular economy work for people, regions and cities

Supporting the circular economy transition through the Skills Agenda, the forthcoming Action Plan for Social Economy, the Pact for Skills and the European as of 2020 Social Fund Plus

Supporting the circular economy transition through cohesion policy funds, the Just as of 2020 Transition Mechanism and urban initiatives Cross-cutting actions

Improving measurement, modeling and policy tools to capture synergies between the circular economy and climate change mitigation and adaptation at EU and as of 2020 national levels

Regulatory framework for the certification of carbon removal 2023

Reflecting circular economy objectives in the revision of the guidelines on state aid 2021 in the field of environment and energy

Mainstreaming circular economy objectives in the context of the rules on non- financial reporting and sustainable corporate governance and environmental 2020/2021 accounting initiatives Leading efforts at the global level

Leading efforts to reach a global agreement on plastics as of 2020

Proposing a Global Circular Economy Alliance and initiating discussions on an as of 2021 international agreement on the management of natural resources

Mainstreaming circular economy objectives in free trade agreements, in other bilateral, regional and multilateral processes and agreements, and in EU external as of 2020 policy funding instruments Monitoring progress

Updating the Circular Economy Monitoring Framework to reflect new policy priorities and develop further indicators on resource use, including consumption and material 2021 footprints

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 18 Endnotes

1 European Commission (2018). 5 Based on an internal WBCSD 11 European Commission (2010). Impacts of Circular Economy survey of Factor 10 members, Regulation (EC) No 66/2010 of Policies on the Labour the top-rated elements the European Parliament and Market. Retrieved from https:// include standardization, of the Council of 25 November circulareconomy.europa.eu/ definition, certification, policy 2009 on the EU Ecolabel, OJ L platform/sites/default/files/ and stakeholder alignment, 27, 30.1.2010, p. 1. ec_2018_-_impacts_of_ incentive mechanisms, target circular_economy_policies_on_ setting, public procurement, 12 European Commission (2020). the_labour_market.pdf performance management, and EU GPP Criteria. Retrieved capacity building. from https://ec.europa.eu/ 2 European Commission (2018). environment/gpp/gpp_criteria_ Impacts of Circular Economy 6 Policy enablers to accelerate en.htm Policies on the Labour the circular economy: https:// Market. Retrieved from https:// www.wbcsd.org/Programs/ 13 European Commission (2020). circulareconomy.europa.eu/ Circular-Economy/Factor-10/ Environmental performance platform/sites/default/files/ Resources/Policy-enablers- based products. https:// ec_2018_-_impacts_of_ to-accelerate-the-circular- ec.europa.eu/info/law/ circular_economy_policies_on_ economy better-regulation/have- the_labour_market.pdf your-say/initiatives/12511- 7 (2015). Environmental-claims-based- 3 Ellen Macarthur Foundation Transforming our world: the on-environmental-footprint- (2017). “Growth Within: a 2030 Agenda for Sustainable methods circular economy vision Development. Retrieved from for a competitive Europe”. https://sustainabledevelopment. 14 European Commission (2020). Retrieved from https://www. un.org/post2015/ “Results and deliverables of the ellenmacarthurfoundation.org/ transformingourworld Environmental Footprint Pilot publications/growth-within-a- Phase”. Retrieved from https:// circular-economy-vision-for-a- 8 European Commission (2020). ec.europa.eu/environment/ competitive-europe “Changing how we produce eussd/smgp/ef_pilots.htm and consume”. Retrieved 4 The first circular economy from https://ec.europa.eu/ 15 European Commission (2019). action plan came out in 2015, commission/presscorner/detail/ Directive (EU) 2019/771 of the focusing on life cycle and en/ip_20_420 European Parliament and of , with a the Council of 20 May 2019, timeline of 54 actions mapped 9 European Commission 22.5.2019. Retrieved from: from 2016 onward. Key to the (2020). An SME Strategy for a https://bit.ly/2TMvj3Q 2018 iteration was a focus sustainable and digital Europe. on the plastic economy to COM (2020) 103 final. 16 European Commission (2020). reduce the impact of certain A New Industrial Strategy for plastic products, a working 10 European Commission (2009). Europe. COM (2020) 102 final. communication on the EU Directive 2009/125/EC of the Strategy for Plastics and a European Parliament and of 17 European Commission monitoring framework. The the Council of 21 October (2020). An SME Strategy for a 2019 iteration saw increased 2009 establishing a framework sustainable and digital Europe. use of the EU Circular Economy for the setting of ecodesign COM (2020) 103 final. Stakeholder Platform following requirements for energy- the stakeholder conference related products, OJ L 285, launch and an update on the 31.10.2009, p. 10. status of the Circular Economy Action Plan roadmap.

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 19 18 European Commission (2010). 25 European Council (2020). 30 European Commission (2006). Directive 2010/75/EU of the Special meeting of the Directive (EC) 2006/66/EC European Parliament and of European Council – of the European Parliament the Council of 24 November Conclusions. Retrieved from and of the Council of 6 2010 on industrial emissions https://www.consilium.europa. September 2006 on batteries (integrated pollution eu/media/45109/210720- and accumulators and waste prevention and control),J L euco-final-conclusions-en. batteries and accumulators 334, 17.12.2010, p.17. pdf and repealing Directive 91/157/EEC, OJ L 266, 19 European Commission 26 European Commission (2011). 26.9.2006, p. 1-14. (2012). Directive 2012/19/EU Regulation (EU) No 305/2011 of the European Parliament of the European Parliament 31 European Commission (2020). and of the Council of 4 July and of the Council of 9 March Commission Delegated 2012 on waste electrical and 2011 laying down harmonised Directive (EU) 2020/362 of 17 electronic equipment (WEEE). conditions for the marketing December 2019 amending OJ L 197, 24.7.2012, p. 38. of construction products and Annex II to Directive repealing Council Directive 2000/53/EC of the European 20 European Commission 89/106/EEC, OJ L 88, Parliament and of the Council (2011). Directive 2011/65/ 4.4.2011, p. 5. on end-of-life vehicles as EU on the restriction of the regards the exemption for use of certain hazardous 27 European Commission (2020). hexavalent chromium as substances in electrical and “Water Reuse.” Retrieved anti-corrosion agent of the electronic equipment, OJ L from: https://ec.europa.eu/ carbon steel cooling system 305, 21.11.2017, p. 8. environment/water/reuse. in absorption refrigerators htm in motor caravans, OJ L 67, 21 European Commission 5.3.2020, p.116 –118. (20000). Directive 2000/53/ 28 European Commission (n.d.). EC of the European “Review of Waste Policy 32 European Commission (2011). Parliament and of the Council Legislation”. Retrieved Directive (EU) 2011/65/EU of of 18 September 2000 on from: https://ec.europa.eu/ the European Parliament and end-of life vehicles, OJ L 269, environment/waste/target_ of the Council of 8 June 2011 21.10.2000, p. 34. review.htm on the restriction of the use of certain hazardous substances 22 European Commission (1994). 29 These four proposals relate in electrical and electronic Directive 94/62/EC27 of the to: 1) the Waste Framework equipment, OJ L 174, European Parliament and of Directive (2008/98/EC); 2) the 1.7.2011, p. 88 –110. the Council of 20 December Directive (1999/31/ 1994 on packaging and EC); 3) the Packaging and 33 European Commission (2008). packaging waste, OJ L 365, Packaging Waste Directive Directive (EC) 2008/98/EC 31.12.1994, p.10-23. (1994/62/EC); 4) the of the European Parliament directives on End-of-Life and of the Council of 19 23 European Commission Vehicles (2000/53/EC) on November 2008 on waste and (2018). European Strategy Batteries and Accumulators repealing certain Directives, for Plastics in a Circular and Waste Batteries and OJ L 312, 22.11.2008, p. Economy. COM (2018) 28 Accumulators (2006/66/ 3–30. final. EC) and on Waste Electrical and Electronic Equipment 34 European Commission 24 European Commission (2019). (2012/19/EU). (2006). Regulation (EC) No Directive (EU) 2019/904 of the 1013/2006 of the European European Parliament and of Parliament and of the the Council of 5 June 2019 Council of 14 June 2006 on on the reduction of the impact shipments of waste, OJ L of certain plastic products on 190,12.7.2006,p.1. the environment, OJ L 155, 12.6.2019, p. 1. 35 European Commission (2019). 41 European Commission 48 For instance, only about two- Circular economy – new action (2020). EU legislation with thirds of the plastics recycling plan to increase recycling the European innovation businesses in today and reuse of products in the partnership EIP on raw are profitable. Source: French EU. Retrieved from: https:// materials. Retrieved from Environment and Energy ec.europa.eu/info/law/better- https://ec.europa.eu/growth/ Management Agency (2015). regulation/have-your-say/ sectors/raw-materials/eip_en Analyse de la chaîne de valeur initiatives/12095-Circular- du recyclage des plastiques en economy-new-action-plan- 42 Trinomics (2020). ELV France. March 2015. to-increase-recycling-and- Evaluation Study – Directive reuse-of-products-in-the-EU/ Provisions. Retrieved from 49 Since France introduced F502902 https://www.elv-evaluation.eu/ EPR schemes in 1992, it has public-consultation/directive- incentivized recycling schemes 36 Repair (2020). Fair Repair provisions that have created 3,000 jobs Legislation. Retrieved from for 50,000 tons of treatment. https://repair.org/stand-up 43 Trinomics (2020). ELV Source: French Ministry of Evaluation Study – Directive Environment (2014). 37 Right to Repair (2020). “The Provisions. Retrieved from 20 years of EPR in France: Circular Economy Blueprint https://www.elv-evaluation.eu/ achievements, lessons paves the way for a Right to public-consultation/directive- learned and challenges ahead. Repair in Europe”. Retrieved provisions Retrieved from https://www. from https://repair.eu/news/ oecd.org/environment/waste/ circular-economy-action-plan/ 44 European Commission (1994). France%20(final).pdf Directive (EC) 94/62/EC27 38 European Parliamentary of the European Parliament 50 European Commission (2020). Research Service (2019). and Council Directive of 20 “Internal Market, Industry, Consumers and repair December 1994 on packaging Entrepreneurship and SMEs”. products. retrieved from and packaging waste, OJ L Retrieved from https:// https://www.europarl. 365, 31.12.1994, p. 10-23. ec.europa.eu/growth/sectors/ europa.eu/RegData/etudes/ /textiles-clothing/ BRIE/2019/640158/EPRS_ 45 Lexology (2020). “EU Starts eu_en BRI(2019)640158_EN.pdf Revision of Packaging Law”. Retrieved from https://www. 51 European Commission (2020). 39 European Commission (2000). lexology.com/library/detail. “From Construction 2020 to 6 Directive (EC) 2000/53/EC of aspx?g=4f7b8a20-e52b- a new vision for a sustainable the European Parliament and of 4b71-b92a-4c92a5e7d85a Built Environment”. Retrieved the Council of 18 September from https://bit.ly/2HbQqJH 2000 on end-of life vehicles, 46 European Council (2020). OJ L 269, 21.10.2000, p. 34. Special meeting of the 52 Food Drink Europe (2018). European Council – “Ingredients for a Circular 40 The European Commission Conclusions. Retrieved from Economy – Farming”. Retrieved launched the European Battery https://www.consilium.europa. from https://circulareconomy. Alliance (EBA) in October 2017. eu/media/45109/210720- fooddrinkeurope.eu/farming/ Its purpose is to ensure that all euco-final-conclusions-en.pdf Europeans benefit from safer 53 Food Drink Europe traffic, cleaner vehicles and 47 Unilever (2020). “Rethinking (2018). “Ingredients for more sustainable technological plastic packaging – towards a a Circular Economy – solutions. It will achieve this circular economy”. Retrieved Manufacturing”. Retrieved by creating a competitive from https://www.unilever. from https://circulareconomy. and sustainable battery cell com/sustainable-living/ fooddrinkeurope.eu/ manufacturing value chain in reducing-environmental- manufacturing/ Europe. impact/waste-and-packaging/ rethinking-plastic-packaging/

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 21 54 Food Drink Europe (2018). 60 European Commission (2019). Other financial mobilization “Ingredients for a Circular Circular Economy Action vehicles, such as InvestEU as Economy – Consumers”. Plan 2019 consultations. of 2021, will help finance the Retrieved from https:// Retrieved from https:// circular economy circulareconomy. ec.europa.eu/info/law/better- fooddrinkeurope.eu/ regulation/have-your-say/ 66 IBG International Consulting consumers/ initiatives/12095-Circular- (2020). “Support the public economy-new-action-plan- consultation on a new Circular 55 Nestlé works directly with to-increase-recycling-and- Economy Action Plan”. small-scale dairy producers reuse-of-products-in-the-EU/ Retrieved from. and cooperatives to build F502902 the supply chain in order to 67 Arcelor Mittal notes that the improve storage, cold chain 61 Internal WBCSD surveys of current EN 45555 standard on facilities and transportation. members. calculating recyclability does More than 30 countries have not differentiate outcomes. adopted the model, including 62 The electronics and ICT sector Retrieved from https:// , Chile, , India, are currently one of the fastest ec.europa.eu/info/law/better- Mexico and Pakistan. Retrieved growing waste streams in the regulation/have-your-say/ from https://circulareconomy. EU, accounting for annual initiatives/12095-Circular- fooddrinkeurope.eu/farming/ growth rates of 2% and less economy-new-action-plan- than 40% of recycled waste. to-increase-recycling-and- 56 European Commission (2018). Similarly, lithium prices have reuse-of-products-in-the-EU/ A Sustainable Bioeconomy for risen significantly from 2015, F502902 Europe - Action 1.6. Retrieved reflecting stronger demand in from https://bit.ly/356CGZ2 e-mobility 68 The Commission will propose a Global Circular 57 See Action 1.6 of the 63 European Commission (2018). Economy Alliance to identify Bioeconomy strategy. Report on Raw Materials for knowledge and governance Battery Applications. Retrieved gaps in advancing a global 58 Lexology (2020). “EU Starts from https://ec.europa.eu/ circular economy and Revision of Packaging Law”. transport/sites/transport/ take forward partnership Retrieved from https://www. files/3rd-mobility-pack/ initiatives, including with major lexology.com/library/detail. swd20180245.pdf economies aspx?g=4f7b8a20-e52b- 4b71-b92a-4c92a5e7d85a 64 European Commission (2020). 69 WBCSD (2019). Policy Circular Economy – new action enablers to accelerate the 59 European Commission (2020). plan to increase recycling circular economy. Retrieved Circular Economy – new action and reuse of products in the from https://www.wbcsd.org/ plan to increase recycling EU. Retrieved from https:// Programs/Circular-Economy/ and reuse of products in the ec.europa.eu/info/law/better- Factor-10/Resources/Policy- EU. Retrieved from https:// regulation/have-your-say/ enablers-to-accelerate-the- ec.europa.eu/info/law/better- initiatives/12095-Circular- circular-economy regulation/have-your-say/ economy-new-action-plan- initiatives/12095-Circular- to-increase-recycling-and- 70 Recommendations include economy-new-action-plan- reuse-of-products-in-the-EU/ forming partnerships and to-increase-recycling-and- F502991 participating in pilot projects, reuse-of-products-in-the-EU/ proactively exploring new F502991 65 The Commission has worked means to implement and to achieve this with the EU finance circular economy Taxonomy Regulation and EU solutions, and establishing Ecolabel criteria for financial company-wide commitments. products. The Circular Economy Finance Support Platform offers guidance to project promoters on circular incentives, capacity building and financial risk management.

Circular Economy Action Plan 2020 Summary for businesses: Implications and next steps 22 ACKNOWLEDGMENTS GUIDEHOUSE LLP ABOUT WBCSD

We acknowledge the support of Preeti Srivastav, Director WBCSD is a global, CEO-led Guidehouse LLP and WBCSD’s Tiffany Chow, Associate Director organization of over 200 leading Factor10 members in the writing Louis Mark, Consultant businesses working together of this report. to accelerate the transition to Guidehouse LLP is a consulting a sustainable world. We help firm whose mission is to make our member companies engage, inspire and empower DISCLAIMER our professionals to solve more successful and sustainable big problems. We are actively by focusing on the maximum This publication is released in working with our clients, positive impact for shareholders, the name of the WBCSD. Like governments and other the environment and societies. other reports, it is the result entities to promote solutions Our member companies come of collaborative efforts by for long-term environmental from all business sectors and all WBCSD staff and experts from sustainability. Our energy major economies, representing a member companies. Drafts were consultants collaborate with combined revenue of more than reviewed by Factor10 Circular utilities and energy companies, USD $8.5 trillion and 19 million Policy workstream participants, investors and large corporations, employees. Our global network ensuring that the document and governments and NGOs to of almost 70 national business broadly represents the majority help them thrive in the rapidly of Factor10 members. It does changing energy environment councils gives our members not, however, necessarily mean and on the journey to a unparalleled reach across the that every member company decarbonized society. globe. Since 1995, WBCSD has agrees with every word. This been uniquely positioned to publication has been prepared work with member companies for general guidance on matters FACTOR10 along and across value chains of interest only and does not to deliver impactful business constitute professional advice. Factor10 is WBCSD’s Circular solutions to the most challenging You should not act upon the Economy project. We bring sustainability issues. Together, information contained in this companies together to reinvent publication without obtaining we are the leading voice of how business finds, uses and business for sustainability: specific professional advice. disposes of the materials united by our vision of a world No representation or warranty that make up global trade. By (express or implied) is given as to collaborating on solutions that where more than 9 billion people the accuracy or completeness of go beyond business as usual, are all living well and within the the information contained in this Factor10 will deliver high- boundaries of our planet, by publication, and, to the extent impact, large-scale results where 2050. permitted by law, the WBCSD, companies use resources wisely, its members, employees and Follow us on Twitter and LinkedIn agents do not accept or assume implement processes that create the greatest possible value, and any liability, responsibility or duty www.wbcsd.org of care for any consequences nothing is wasted. of you or anyone else acting, or refraining to act, in reliance on Copyright the information contained in this publication or for any decision Copyright © WBCSD, based on it. October 2020.

World Business Council for Sustainable Development

Maison de la Paix Chemin Eugène-Rigot 2B CP 2075, 1211 1 Switzerland www.wbcsd.org