Circular Advantage Innovative Business Models and Technologies to

Create Value in a World without Limits to Growth

3rd Nov 2014

CSR Leadership World 2014

Copyright © 2014 Accenture All rights reserved. 2

Agenda

Content

• About Accenture

• Background

• Circular Advantage & the 5 business models

• Key questions

Accenture is the world’s largest consulting,

technology and services firm and partner of High

Performance Companies

Revenue US$ 30 bn in FY2014

Clients 91 of the Fortune Global

100

and > 75% of the Fortune

Global 500

Employees 305,000 worldwide

Listed Since July 2001 at the

NYSE

Offices 200 in 56 countries

Alliances With more than 150

companies

Quality Control DIN EN ISO 9001:2000

Accenture Company Profile

Accenture is a Consulting & Services company, covering

Strategy, Digital, Technology and Operations across

industries

Facts and Figures Industry & functional Expertise

Communications,

Media &

Technology

Financial

Services

Health &

Public

Service Products Resources

Accenture Strategy

Accenture Digital

Accenture Technology

Accenture Operations

Source: Accenture

We have operated in Greater China

for over 25 years.

Our offices are located in Beijing,

Shanghai, Dalian, Guangzhou,

Chengdu, Shenzhen, Hong Kong

and Taipei

We have a team of more than 10,000

people, among which 90% are

Chinese. This outstanding local

talent pool, with ongoing exposure to

first-class training and best practices

around the world, continues to bring

to our clients extensive global

experience and local know-how.

Our Footprint in Greater China

Beijing

Shanghai

Taipei

Hong Kong

Dalian

Guangzhou

Chengdu

Shenzhen

Accenture Company Profile

Accenture lives by its core values and is committed to being a long-term partner of choice for

businesses and governments on their sustainable growth journeys

50%

80% FORTUNE’s Global 100 clients. 91

3/4 More than three-quarters of the FORTUNE’s Global 500 clients.

SOEs account

for 80% of our

top 100

clients.

More than a half of

the client base

consists of long

term partners.

40 40 out of 95

Chinese

companies on

FORTUNE’s

Global 500 are

our clients.

Accenture brings in industry and functional expertise having

delivered on various global projects for clients across public and

private sector in over 120 countries

Accenture Sustainability Services

Our Sustainability Team

• Helps clients move from sustainability strategy

to execution, delivering tangible business benefits

• >100 sustainability practitioners globally

• Broad and deep industrial expertise

• Functional knowledge

• Strong Accenture internal network

Our Alliances

• Extensive collaborations with global

business leaders and NGOs

• Cooperative arrangements with renowned

international organizations

• Strategic alliances with leading companies

and research institutions

Our Thought Leadership

• “Architects of a Better World“ (UNGC-Accenture

CEO Study on Sustainability 2013)

• “Engaging Tomorrow’s Consumer (WEF)

• “Carbon Capital” (Barclays )

• “Seven Climate Change Lessons

from the Cities of Europe“ (CDP)

We help clients drive innovation and profitable growth while

striving for a positive economic, environmental, and social

impact

Our Clients

Source: Accenture

Copyright © 2014 Accenture All rights reserved. 7

Agenda

Content

• About Accenture

• Background

• Circular Advantage & the 5 business models

• Key questions

Today’s presentation in a slide: To grow in a world of finite

resources companies need to adopt circular business models and

value chains

1 Accenture and World Economic Forum (2012) “More with less”

Circular Economy

Circular Supplies Product Life

Extension Sharing Platforms

Product as a

Service Resource Recovery

Circular value chain

Value Proposition: Capture $2tr+ sustainable growth

opportunity by using the CEI platform to

transform and align strategy,

sustainability & operations

Rising resource prices

and volatility

Growth and resource

availability dilemma

Post-material consumer

preferences

Critical consumption

footprint

Drivers

Enablers

Reverse supply chains and

repurposing operations

Digital technology, platforms

and traceability systems

Policy incentives for

resource efficiency

Goal: Decouple growth from resource use and

externalities by ‘closed loop’ value

chains with multi-lifecycle product and

material use within & across industries

CEOs in Asia and China are more keen to employ circular economy models in their

businesses than their global counterparts

Source: UN Global Compact-Accenture CEO Study 2013 9

Accenture – UNGC CEO study shows that CEOs are committed

to leading the world in developing a circular economy

To what extent do you agree: Over the next five years, my company will employ circular economy business models (e.g. Product life extension, sharing economy, )

55%

5% 35% Global

46% 9%

30%

Strongly Agree

81% 86% 5%

Asia

China

Agree

Log plot of Resource use and Economic development (2010, 166 countries)1

In today’s economy growth and prosperity is tightly linked to

natural resource use and competition for supplies is growing

Copyright © 2014 Accenture All rights reserved. 10

2 OECD Development Centre, Working Paper No. 285, The Emerging Middle Class in Developing Countries

Res

ou

rce

use

Economic development

1

10

100

10,000 100,000 100 1,000

Tons/

Cap

GDP/Cap

Colombia

China Brazil

Bangladesh

Australia

Germany

Chile

Sweden

Niger India

1 SERI and Dittrich, M. (2014). Global Material Flow Database, World Bank (2014) GDP per capita in current US$ (outliers Mongolia & Bahamas removed)

2.5 billion additional consumers

expected to join the middle class by

2030 (+100% vs. 2013)

Commodity price & GDP index 1975-2013

Due to intensified demand, in 2000 the era of cheap and

plentiful resources with stable falling prices came to an end

Copyright © 2014 Accenture All rights reserved. 11

0

50

100

150

200

2004 2002 2000 1998 1996 1994 1992 1990 1988 1986 1984 1982 1980 1978 1976 1975 2013 2012 2010 2008 2006

Index (2010=100)

GDP index Precious Metals

Commodity index Metals & Minerals

Fertilizers

Raw Materials

Food

Energy

World Bank (2014), Accenture analysis

1975-2000

For every 1% growth in GDP

commodity price index fell 0.5%

2000-2013

For every 1% growth in GDP

commodity price index rose 1,9%

Years left for selected major commodities

Copyright © 2014 Accenture All rights reserved. 12

Growth in cost of extracting different resources will impact

business more than physical supply limitations...

Data: Mudd (2010), Resources Policy, Volume 35, Issue 2, June 2010, Pages 98–115

60

70

88

45

132

38

174

37

90

47

40

115

20

91

96 39Bauxite 135

Zinc 58

Iron ore 160

97 Oil

265 Black Coal

Copper

84

Nickel

Lead

247

135

Sub-economic reserves Reserves

Years left of...

Rising energy & economic

cost of extraction

Copyright © 2014 Accenture All rights reserved. 13

...but the likely strongest driver of disruption will be

commodity price driven technological innovation

Source: Boliden, Future Exploration Network

Example disruption: Urban mining

Enabled by technologies like M2M sensors to automatically

identify and sort waste streams, RFID tags and resource

passports to track and trace product use and connected

reverse vending machines to link up consumers

Inefficiency in global value chains – the Circular Economy opportunity

Copyright © 2014 Accenture All rights reserved. 14

The room for improvement is huge with 60-90% of material

value currently lost and in scope for circular recovery

Sources for cost data: Accenture analysis based on Steel Benchmarker, WRAP,

Yarns and Fibres, Skogsstyrelsen, Let’s recycle

1 600

50

600

1 500

460

5

240

150

Textiles (Polyester)

Plastic (PET)

-90%

-60%

-69%

-91%

Wood

Steel

Scrap (material in waste stream) Virgin (new material)

Virgin and scrap material value ($ per ton)

60-90% of

embedded

resource value is

lost in global value

chains today

...

to be recovered

by leveraging

Circular Economy

business principles

Resource supply / demand imbalance and value potential 2015-2050 1990-USD

Copyright © 2014 Accenture All rights reserved. 15

By 2030 the Circular Economy can unlock $4tn value

opportunity from decoupling growth and resource use

28

18

12

31

00

5

10

15

20

25

30

35

40

45

2050 2045 2040 2035

8

2030

4

2025

$ trillion

2020 2015

Rising costs for material, energy, land, water

Volatility in commodity markets

Economic and social risks of runaway commodity prices

Key Q: What can be done and what solutions are scalable?

Optimistic

Expected

Pessemistic scenario

Source: Accenture analysis

2030 Circular

Economy value

opportunity

Copyright © 2014 Accenture All rights reserved. 16

Agenda

Content

• About Accenture

• Background

• Circular Advantage & the 5 business models

• Key questions

Linear vs. circular value chains

Copyright © 2014 Accenture All rights reserved.

At core of the solution lies the move from linear to circular

value chains to protect and recover resource value

Resell

Take back

Re-process

Reuse Remanufacture

Repurpose

Circular Value Loop Linear Value

Chain

…to circular

Take

Make

Waste

From linear…

Closed & open loops Low return & recycling

Zero waste & value recapture Waste & externalities

Selling performance Selling volume

Manage resources in markets Manage resources in production

Growth decoupled from resource use Growth tied to resource use

In our research we found five circular economy business

models that have proven ‘resource light’ growth is possible

Business models of the circular economy

Copyright © 2014 Accenture All rights reserved.

Circular Supplies: Provide

renewable energy, bio based- or fully

recyclable input material to replace

single-lifecycle inputs

Resource Recovery: Recover

useful resources / energy out of

disposed products or by-products

Product Life Extension: Extend

working lifecycle of products and

components by repairing, upgrading

and reselling

Sharing Platforms: Enable

increased utilisation rate of products by

making possible shared use / access /

ownership

Product as a Service: Offer

product access and retain ownership to

internalise benefits of circular resource

productivity

Source: Circular Economy book project

Success stories are many and spread across innovative

disrupters and established industry leaders

Circular economy success cases

19

Circular

Supplies

Resource

recovery

Product as

a Service

Product Life

Extension

Sharing

Platforms

Enablers

Remanufacturing of

industrial equipment

Floow2-community for

the sharing of industrial

equipment

Engages people globally

to collect waste for

up-cycling and new

products

Leasing of Jeans and

other fashion items,

including free repair

World leading tire

company offering “pay

by the mile” service

Automated machine

buying used electronics

for repair and resell

Packaging material from

agricultural waste and

mycelium

Sustainable biofuels and

bio-based materials

Start-ups Established companies

New carpets from old

carpets through DESSO

Refinity®.

Global rental of private

homes for travelers to

utilize unused space

Smart phone enabled

heating optimization of

homes to save energy

The C2C Institute offers

trainings, certifications

and licensing of C2C

products Source: Circular Economy book project Copyright © 2014 Accenture All rights reserved.

Five major shifts in business capabilities are critical to

deliver circular economy business models successfully

Circular economy capability shifts

20 Copyright © 2014 Accenture All rights reserved.

Source: Circular Economy book project

2. Innovation &

product development

From designing for

single use to designing

for many life cycles

and users

4. Sales & product use

From never seeing your

product again to customer

and asset life cycle

management

3. Sourcing and

manufacturing

From homogenous supply

chain to heterogeneous

resource flow innovation

and cascading

5. Return chains

From compliance to

opportunity driven

take-back

1. Strategy

From focus only on

core business to

manage complex

& collaborative

networks

Copyright © 2014 Accenture All rights reserved. 21

Agenda

Content

• About Accenture

• Background

• Circular Advantage & the 5 business models

• Key questions

Discussion questions

Copyright © 2014 Accenture All rights reserved. 22

Three discussion themes for every organisation

What is going to be the most important

change-driver for your organisation and in

what segments / markets? 1

What are the most relevant circular economy

business models for your organisation and are

there any risks of disruption? 2

How far progressed is your organisation at

securing technology leadership to decouple

growth from resource use? 3

Thank you!

23 Copyright © 2014 Accenture All rights reserved.