Circularity in the built environment could add $360 billion in net value gain by 2050

Circularity, the practice of recirculating used materials through harvesting, recertifying, and testing, could make construction projects be delivered at a lower cost than by using virgin materials with equivalent performance criteria, according to a McKinsey report.

What’s more, circular principles could abate 13% of the built environment’s embodied carbon emissions in 2030 and nearly 75% in 2050, McKinsey says.

The built environment is responsible for almost 40% of global energy-related CO2 emissions and produces about one-third of the world’s waste. Only 1% of materials from building demolitions are reused.

“A shift toward circularity could benefit a range of stakeholders—including asset owners, contractors, designers, end users, engineers, and material manufacturers—by improving construction efficiency, lowering embodied carbon, mitigating climate risks, and reducing risks by localizing supply chains,” the report contends. “Circular practices can accelerate project timelines by minimizing the total work required for an equivalent outcome, mitigating labor productivity challenges by reducing the impact of resource and manufacturing lead times.”

Integrating circular principles would require “a complete rewiring of the value chain because closing the material loop disrupts traditional material flows and creates new business opportunities.” For change to occur, the industry would have to recognize long-term cost efficiencies, risk mitigation, and value creation beyond short-term gains.