Circular economy and the role of environmental standards

CONTENT

• What is the circular economy?
• Risks and opportunities of the circular economy
• ISO 14001 meets circular economy
• Circular economy at national and EU level
• Standards on the topic of circular economy
• Circular economy and its significance for climate change - a conclusion

What is the circular economy?

The circular economy is an economic model that aims to use resources efficiently, minimize waste, and keep products and materials in circulation for as long as possible.

The basic idea: zero waste management. The concept of a natural material cycle without waste (zero waste) is anything but new. The original form of traditional agriculture is an excellent example of the largely natural and sustainable use of resources. It can be seen as the original model of a functioning circular economy because it works without artificial additives and by-products from production, and the "waste" of having used the manufactured products ends up back on the field.

However, industrialization led to the emergence of a linear economy, which is in stark contrast to the circular economy. In this linear model, products are typically discarded after use, resulting in a total loss of resources . Unfortunately, this still prevails today, with the EU alone generating 2.2 billion tons of waste in 2023. 

The goal of the industrial circular economy: cradle-to-cradle

The circular economy focuses on reuse, repair, processing, and recycling, in addition to waste prevention. Although the idea of a circular economy for the industrial environment is only around 35 years old, it took almost another ten years before the "cradle-to-cradle" principle was developed at the end of the 1990s.

The ideal principle of a circular economy offers a promising solution to our "disposable" society. However, its widespread adoption has yet to be achieved. Given the climate crisis, existing critical dependencies, and supply chain risks, the transition to a circular economy is not just desirable, but urgent.

An ecologically sound and socially acceptable circular economy is based on:

• Sustainable product design
• Sustainably obtained primary and secondary raw materials, preferably from recycling
• Clean, low-energy technology for treatment and manufacturing processes, including the use of renewable energies
• Environmentally friendly trade and modern and intelligent logistics
• Long product lifetimes and high quality standards and reparability
• Low-energy and low-pollutant processing and recycling
• Minimization of waste outside of cycles and rendering it harmless

On closer inspection, product design is the logical starting point for a functioning circular economy. Life cycle assessment in accordance with ISO 14040 and ISO 14044 or the product-related greenhouse gas balance (ISO 14067), which can be used to model the entire life cycle of a product and its environmental impact, can help with decision-making processes in product design.

The following aspects should be aimed for in product design:

• Focus on simple technical solutions, durability and reparability and easy recycling
• Use of easily recyclable parts and materials that are available regionally or on the domestic market
• Use of by-products from other product processes
• Use of renewable materials
• Avoidance of the use of toxic and rare substances
• Use of traceable component compounds and public standards

Or, to paraphrase the ancient Greek fable poet Aesop: "Quidquid agis, prudenter agas et respice finem" (Whatever you do, do it wisely and consider the end).

Risks and opportunities of the circular economy

A sober consideration of the risks and opportunities of a circular economy applied across the board shows that the opportunities of this form of economic activity far outweigh the risks in terms of climate change. But first, let's look at the potential risks:

• Disappearance of companies with linear business models and without contextual consideration in linear markets to be abolished
• High investment costs for the transition to "cradle-to-cradle"
• Higher material and process costs in the short and medium term
• Possibly new (health and safety) risks in new business areas of the maintenance, remanufacturing, and recycling industry

When we talk about risks for the economy in connection with the circular economy, we are primarily referring to those companies or markets whose business models are based on the rapid throughput of low-quality disposable products (such as disposable plastic and electrical items or non-recyclable fast fashion textiles) and planned obsolescence (products with predetermined breaking points). Participation in the circular economy, which may be required by law, or the increasing inefficiency of non-recyclable business models and products, would mean their disappearance.

For companies that require, for example, a technically sophisticated design solution and far-reaching changes in production for the transition to "cradle-to-cradle", higher costs could prove to be a risk - at least in the short and medium term.

The opportunities far outweigh the risks

The opportunities of a consistent circular economy, on the other hand, are obvious - if implemented in an energy-efficient way, for example:

• Saving resources
• Saving energy
• Reduction of greenhouse gas emissions
• Conservation of habitats and ecosystems
• Independence from raw material imports and greater availability of raw materials
• Reduction of (toxic) waste
• Creation of new jobs
• Promotion of innovation in product design
• Higher product quality and longer product life
• Long-term cost reduction

The opportunities therefore not only point to significant ecological benefits for people, such as limiting the climate crisis, preserving ecosystems, reducing air, soil and water pollution, etc. They also point to a noticeable boost in innovation and enormous economic potential, including greater customer benefits. In addition, there are a number of social aspects, including the prospect of new and, above all, sustainable jobs, as well as a reduction in demand from problematic raw material sources.

ISO 14001 meets circular economy

ISO 14001 is an internationally valid and recognized environmental standard. It is implemented voluntarily by companies without any legal obligation and for various ecological, economic, and social reasons. The standard can therefore have a certain influence on aspects of the circular economy. However, its influence is limited to the standard's users, whose number, according to the annual ISO Survey, is steadily increasing.

Of the numerous standard requirements, those in chapter 6.1.2, "Environmental aspects," are essentially relevant to the circular economy. According to the standard definition, an environmental aspect is "[a] component of an organization's activities or products or services that interacts or may interact with the environment."

The main goal is to define those environmental aspects within the scope of the environmental management system that arise both from the company's activities and from its products and services, at least to the extent that these are sufficiently significant, controllable, or influenceable. The environmental aspects must be defined by "considering the life cycle"—this is the central statement for relevance in relation to the circular economy.

This raises two questions: when is an environmental aspect "significant," and what does the life cycle assessment of a product or service mean in terms of the ISO 14001 standard?

1. Your company itself determines which environmental aspects are significant!
2. What needs to be done to ensure that the life cycle is considered in accordance with the standard can be found in the annex to the standard under A.6.1.2: "This [i.e., consideration of the life cycle] does not require a detailed life cycle assessment; careful consideration of the sections of the life cycle that can be controlled and influenced by the organization is sufficient."

Therefore, implementing and certifying the environmental standard can be the first step for a company toward a meaningful circular economy. However, the relevant standard requirements are quite vague as a driving force. This situation will remain relatively the same with the ongoing revision of ISO 14001, which is due to be completed by the end of 2025. At present, it can be assumed that no major changes will be made to the requirements but that certain topics in Annex A - including the "circular economy" - will be highlighted.

Circular economy at national and EU level

Cirlular economy in Germany

The German government's National Circular Economy Strategy (NKWS) is intended to bring together objectives and measures in Germany for a circular economy and the conservation of resources from all existing strategies so that the reduction in primary raw material requirements set out in the coalition agreement can be achieved. At the same time, the NKWS should make a decisive contribution to reducing environmental pollution, protecting biodiversity, and protecting the climate.

In the primary industry, for example, GHG emissions and energy consumption are to be significantly reduced through increased recycling and the use of secondary raw materials. This is because most GHG emissions are not generated during production but during the extraction of raw materials. At the same time, the NKWS in Germany should make a significant contribution to securing the supply of raw materials, such as rare earths, and thus reduce dependence on raw material imports. 

Circular Economy Action Plan of the EU

The European Commission published its new Circular Economy Action Plan (CEAP) back in March 2020. It is an important part of the European Green Deal, the European agenda for sustainable growth. "The EU's transition to a circular economy aims to reduce pressure on natural resources and create sustainable growth and jobs," according to a press release from the European Commission. The plan is seen as a prerequisite for achieving the EU's climate neutrality targets and halting the loss of biodiversity. 

The EU action plan contains initiatives throughout the product's life cycle. The focus is on product design, promoting circular economy processes and sustainable consumption, avoiding waste, and retaining used resources within the EU economy. This is to be achieved with both legislative and civil measures.

Circular economy in the context of standardization

The German government believes that the rapid transition from the currently predominant linear economy to a functioning circular economy is essential to achieving the goals formulated in the Green Deal and the National Climate Protection Act 2021 or its revision in 2023. Standardization of processes and products should play a vital role in this.

DIN (German Institute for Standardization), DKE (German Commission for Electrical, Electronic & Information Technologies), and VDI (Association of German Engineers) have, therefore, developed the "German Standardization Roadmap" on the circular economy with specialists from industry, science, the public sector, and civil society.

This action plan intends to create a basis for norms and standards along the entire value chain and thus enable a circular economy to be practiced in the first place. At the heart of the roadmap are seven critical areas for which sustainability-based standardization of the value chain appears particularly necessary and which are based on the focus topics of the EU's Circular Economy Action Plan:

• Digitalization, business models, management
• Electrical engineering, information and communication technology
• Batteries
• Packaging
• Plastics
• Textiles
• Buildings and municipalities

Around 2,100 individual standards already exist for these key topics. They can all be relevant to the circular economy and are now being looked at again with the topic in mind. Five over-arching topics were also identified across all sectors that can be advanced using standards and environmental standards:

• Sustainability assessment
• Service life extension
• Digital product passport
• Recyclability
• The end of waste

Standards on the topic of circular economy

ISO 59004

ISO 59004 is an international standard from the ISO 59000 family that promotes the transition to a circular economy and provides comprehensive guidance for organizations. It aims to tackle environmental issues such as resource scarcity, climate change, and biodiversity loss by emphasizing sustainable resource management. By complying with ISO 59004, organizations can deliver more sustainable solutions, improve their relationships with interested parties, and increase their resilience to environmental and economic risks. The standard supports organizations in contributing to the United Nations 2030 Agenda for Sustainable Development and ensuring a sustainable future.

ISO 59004:2024-05 - Circular economy - Vocabulary, principles and guidance for implementation 

ISO 59010

The guide supports organizations that want to transform their business models and value networks from a linear economic model to a circular model. ISO 59010 focuses on management strategies for implementing circular economy practices both at the company level and between different companies. The guide complements the ISO 59004 standard by providing detailed guidance on assessing current value creation models, mapping value chains and value networks, and developing circular economy strategies.

ISO 59010:2024-05 - Circular economy - Guidance on the transition of business models and value networks 

ISO 59020

The ISO 59020 standard provides a clear, structured method for measuring and evaluating circular economy performance. It helps organizations identify how effectively they minimize resource consumption and optimize material circularity. The standard not only helps to achieve environmental sustainability but also supports the Sustainable Development Goals (SDGs) by aligning with the United Nations 2030 Agenda and the SDGs. For companies, it provides a way to quantify progress and demonstrate their commitment to sustainable practices.

ISO 59020:2024-05 - Circular economy - Measuring and assessing circular performance

ISO 59040

The guide provides a generic method for improving the accuracy and completeness of circular economy information based on using a product circularity datasheet in procuring or supplying products. The methodology includes a set of requirements to be defined by the organization itself, including trustworthy reporting and sharing of circular economy information. The document also provides guidance on how to define and exchange a circular economy product fiche, taking into account the type, content, and format of the information to be provided.

ISO/DIS 59040:2023 - Draft - Circular economy - Product circularity data sheet 

Circular economy and its significance for climate change - a conclusion

The circular economy, based on principles such as zero waste and cradle-to-cradle, offers enormous potential for combating climate change. Through sustainable product design, the use of renewable energy, and effective recycling, resources can be saved, greenhouse gas emissions reduced, and waste minimized.

Legislation, norms, and environmental standards, such as ISO 14001, as well as national and European strategies, play a crucial role in implementing and promoting this economic model. Despite some challenges and risks, the environmental and economic opportunities clearly outweigh the risks. This makes the circular economy an important tool in the fight against climate change and offers economic benefits.

For companies, the consistent application of the circular economy not only means the sustainable use of resources, but also the opportunity to drive innovation and reduce costs in the long term. Compliance with norms and standards helps to make the circular economy efficient and effective.

DQS - what we can do for you

Economic security and sustainable action - understanding both of these as aligned goals and anchoring them in the production process is considered one of the most important corporate tasks today. The growing global importance of sustainability and the ongoing change in awareness are reflected in increasingly complex environmental legislation.

The introduction of an effective environmental management system in accordance with ISO 14001 is a forward-looking way of strengthening trust and expanding market opportunities. Successful companies also see certification as an opportunity to identify risks and potential for improvement more clearly through a neutral, independent view from the outside.

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