A €320-BILLION CIRCULAR ACHIEVING ECONOMY INVESTMENT OPPORTUNITY AVAILABLE ‘GROWTH TO EUROPE UP TO 2025 WITHIN’ ACHIEVING ‘GROWTH WITHIN’ | 3 CONTENTS 02 FOREWORD 03 IN SUPPORT OF THE REPORT 06 ACKNOWLEDGEMENTS 08 EXECUTIVE SUMMARY 16 MAIN FINDINGS 54 10 INVESTMENT THEMES 135 APPENDIX – ANALYTICAL METHODOLOGY 139 REFERENCES 4 | ACHIEVING ‘GROWTH WITHIN’ FOREWORD The shift from a linear to circular economy in Europe is accelerating by the transitional power of new technology and business models. As the previous report “Growth Within” (2015) pointed out the value chains mobility, building and food- representing 60 percent of the average EU household budget and 80 percent of resource consumption - could contribute significantly to Europe’s overall economic performance and welfare by adapting a restorative and regenerative economic system. Circular mobility, building environment and circular food systems offer ground-breaking, attractive innovation and investment opportunities, and the EU is uniquely placed to exploit these. This comes at a time when the EU is in great need of industrial renewal and attractive investment opportunities. Circular economic investments offer resilience and transformation of those assets that otherwise might face being stranded or becoming redundant. However, circular economy investment opportunities have remained unrealized until now. I am therefore very pleased with the A European transition would also have insights that this report “Achieving impact far beyond its borders: it could Growth Within” gives in ten attractive create de facto global standards for circular innovation and investment product design and material choices, themes , totaling €320 billion through and provide other world regions with a to 2025: much-needed blueprint. This would put - €135 billion in the mobility system Europe’s political as well as corporate - €70 billion in the food system. leaders at the forefront of a major - €115 billion in the built environment global industrial innovation. These ‘next wave’ of priority circular economy investments could realistically Achieving Growth Within is well- be unlocked with modest policy reform timed and inspiring. I wish you a or action by industry in the near term. pleasant reading. I endorse the message of this report Wiebe Draijer that increasing investments into the Chairman Executive Board circular economy is a very attractive Rabobank option for Europe’s companies and policymakers. This agenda is hugely synergistic to Europe’s social, competitive, regional, environmental and digital agenda. A circular economy system could provide Europe with a new industrial agenda with a clear and positive message. ACHIEVING ‘GROWTH WITHIN’ | 5 IN SUPPORT OF THE REPORT “The European Commission’s circular economy package resulted from a genuine cross-sectoral effort within the Commission, and benefited from fruitful discussions with businesses, NGOs, national authorities and academia. It remains a central political project for Europe, with an enormous potential for renewed competitiveness, innovation and job creation. The circular economy can make a substantial contribution to sustainable development; as well as to some of our major political commitments. We are progressing towards a circular economy; implementing the package and learning with others in the process. Investment is of course a key element here. The environmental community needs to work together with the investment community to ensure that we deliver on the Sustainable Development Goals, the Paris Agreement on climate change, the transition to resource-efficient, circular economies, to halting biodiversity loss and the degradation of our natural capital. This new, inspiring report is a useful and timely contribution to help us focus our efforts and resources on the most promising aspects of the circular economy.” Karmenu Vella, European Commissioner for the Environment, Maritime Affairs and Fisheries “This report shows clearly how unlocking the significant potential of circular models could be reached within relatively short time. it reminds us policy makers that change doesn’t come by itself - but also that major benefits can be realised relatively painlessly with targeted policy moves. Europe needs to be more circular: old, linear ways of thinking, producing and consuming have made us reach the limits of our planet. Once again, this report stands to show that circularity is a win for our environment but even more so, a great win for our economy.” Sirpa Pietikäinen, Member of the European Parliament 6 | ACHIEVING ‘GROWTH WITHIN’ IN SUPPORT OF THE REPORT “The circular economy offers a real opportunity for economic growth and for managing that growth sustainably, making better use of existing assets and space, leveraging technology innovation. We aspire to London becoming the global centre for circular economy leadership by engaging and collaborating with a range of actors in the space. This is becoming an unstoppable movement with a wide range of like- minded organisations coalescing in the city to start demonstrating the impact that circular practice can bring. This report helps to bring focus and clarity to the areas that can have the greatest impact – the potential economic benefits identified to the European economy should make every business leader sit up, take note and join the movement!” Wayne Hubbard, Chief Operating Officer, London Waste & Recycling Board “Shifting Europe towards a fully circular economy has been forecasted to provide significant economic, environmental and societal benefits. Achieving this will require investments towards technology and business model innovations. Increasing the capital deployment towards these innovations will require investors, both small and large, to identify these new growth opportunities as well as understand their risks. This report provides new ideas on how to approach this topic for the investment community. PGGM, as founder of a joint working group FinanCE, welcomes this dedicated research very much.” Else Bos, Chief Executive Officer, PGGM ACHIEVING ‘GROWTH WITHIN’ | 7 “In a resource constrained environment, Circular economy must become a priority for Europe, and the world. While European investment is still lagging behind since the crisis, banking on the Circular Economy, coupled with the digital transformation, offers a unique opportunity to boost growth, employment and reduce CO2 emissions. Suez believes that the resource revolution will be circular, concrete and collaborative, and has already started to invest in innovative circular water and resource recovery technologies and business models, notably through its corporate venture vehicle. Businesses need to close the loop on resources to become more competitive and protect themselves from resource scarcity and price volatility. This is particularly true in areas such as mobility, food systems, or the built environment. The Achieving Growth Within report provides substantial evidence that Circular Economy is becoming a game changer investment opportunity.” Jean-Louis Chaussade, Chief Executive Officer, Suez Environment 8 | ACHIEVING ‘GROWTH WITHIN’ ACKNOWLEDGEMENTS This report has been sponsored and training platforms on the circular by SUN (Stiftungsfonds für economy, encompassing work with Umweltökonomie und Nachhaltigkeit) leading universities, schools and and authored by the Ellen MacArthur colleges, and online events such as Foundation and SYSTEMIQ the Disruptive Innovation Festival. By establishing platforms such as the SUN Institute Environment & New Plastics Economy initiative, the Sustainability (Stiftungsfonds für Foundation works to transform key Umweltökonomie und Nachhaltigkeit material flows, applying a global, cross- GmbH) The Deutsche Post Foundation sectoral, cross value chain approach established SUN as a non-profit that aims to effect systems change. organisation in September 2014 in The Foundation promotes the idea order to strengthen its international of a circular economy via research activities supporting institutions, reports, case studies and books programmes, and projects dealing with series, using multiple channels, web the challenges and opportunities of and social media platforms, including globalisation and enhanced cross-border Circulatenews.org which provides activities. Research funded by SUN aims a leading online source for circular at developing concepts to reconcile economy news and insight. economic needs with ecological reason and social responsibility. Further information: ellenmacarthurfoundation.org The Ellen MacArthur Foundation @circulareconomy The Ellen MacArthur Foundation was created in 2010 to accelerate the SYSTEMIQ Ltd. is a new kind of transition to a circular economy. The enterprise, that combines advisory, Foundation works across five areas: business building and investment insight and analysis, business and expertise to deploy human talent government, education and training, and long term capital into new and systemic initiatives, and communication. disruptive systems of land use, energy With its Knowledge Partners (Arup, generation, circular industrial systems IDEO, McKinsey & Co., and SYSTEMIQ), and urban living. SYSTEMIQ, accelerates the Foundation works to quantify system change by cultivating, the economic opportunity of a incubating and scaling solutions more circular model and to develop that deliver superior economic, approaches for capturing its value. The environmental and social value. Foundation collaborates with its Global Partners (Cisco, Danone,