The current landscape for the setting of circular economy targets is fragmented and could benefit from consistent guidance on how to define and implement them. Without this, existing targets are self-defined and difficult to benchmark. This makes progress problematic, as it’s hard to establish the real impact of the circular economy on business models.
PACE (the Platform for Accelerating the Circular Economy) is a global public-private collaboration platform that was created within the World Economic Forum in order to accelerate the transition to a circular economy model. PACE has launched an initiative to leverage metrics for companies to support corporate circular target setting. It is part of a new approach by the Circular Economy Indicators Coalition, in partnership with Accenture. The aim is to enable companies to create quantitative and specific targets to drive measurable progress toward circularity that will help them to navigate existing resources in measuring and managing their progress.
At COP27, PACE presented a discussion paper, "Corporate target-setting for the circular cconomy: Mobilizing measurable progress." This features research and consultation results on the current challenges in setting the corporate circular economy targets and solutions that are needed to help more companies set targets which will enable them to better navigate the existing circular landscape.
The 2023 World Economic Forum also saw the publication of the "Corporate circular target-setting guidance." This builds on the discussion paper and provides companies with a clear starting point for selecting and reporting on impactful targets. The aim is to further mobilize corporate circular target setting and harmonize the circular metrics landscape. It brings together a wealth of materials to orient users to relevant standards, tools, approaches and methodologies. Companies can use this guide to learn about best practice Key Performance Indicators (KPIs) for the circular economy and how to select and set them.
In the context of the PACE initiative, some cases stand out, such as Philips and Enel. Philips is a world leader in healthcare technology and plays a leading role in PACE, setting global action agendas and driving change to incorporate circular thinking and ways of working. The company has reinforced its commitments as a purpose-driven organization with the announcement of a Plan for 2025 with an enhanced and fully integrated approach to doing business in a more responsible and sustainable way.
Philips's new framework includes a number of key objectives that address all the environmental, social and corporate governance dimensions that guide the execution of the company's strategy. The Group has set itself a number of challenging commitments for 2025, including generating 25% of its revenue from circular products, services and solutions.
In January, during the World Economic Forum in Davos, Enel presented the new 'Economic CirculAbility©®' (KPI) for measuring the Group's circularity by comparing the economic results with the total resources consumed. Economic CirculAbility©® takes into account the Group's overall EBITDA (in euros) and compares it with the amount of resources consumed, including fuels and raw materials, along the value chain by the different business lines (expressed in tons). Enel has also committed to doubling its own performance for this KPI by 2030 compared to 2020, which means consuming half the amount of resources in relation to the EBITDA generated.
Effective measurement has been key to the implementation of Enel's circular strategy since 2015, when the Group began to consider the circular economy as a strategic driver.
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