The circular economy has become a ‘strategic issue’ in the manufacturing and automotive sectors, extending beyond environmental considerations, a new study by KPMG has suggested.
KPMG’s study, Reduce, Reuse, Recycle – Resilience? The Potential of the Circular Economy in Automotive and Industrial Manufacturing, notes that firms in both sectors are increasingly viewing circular economy strategies as drivers of resilience, competitiveness, and long-term value creation, particularly given recent market and geopolitical volatility.
Shaping circular strategies
The study surveyed industry executives from both sectors, assessing the level to which external and internal drivers, customer and investor expectations, and technological developments are shaping circular strategies.
As it found, in Germany, the circular economy topic is considered less important than in North America or European countries, while on an internal basis, companies that adopt circular economy practices are primarily motivated by efficiency gains, cost advantages, and improved competitiveness.
Allied to this, the report notes that value creation through the circular economy is increasingly being linked to innovation capacity and organisation-wide resilience.
Circular value creation
KPMG‘s report also cites the obstacles that stand in the way of circular value creation, noting that companies continue to face ‘regulatory requirements that pose significant challenges, particularly for those operating internationally. Added to this are operational hurdles along global supply chains, cultural barriers within organisations, and gaps in data availability.
‘The latter, in particular, make it difficult to systematically measure circular performance or demonstrate efficiency gains. Successful companies embed the concept of the circular economy at the highest levels of management. From there, it is gradually integrated into core processes and structures rather than being treated as an isolated measure.’
When it comes to measuring circular impact, meanwhile, performance is often tracked operationally, in terms of metrics such as circular turnover, recyclability, and material efficiency. Broader strategic indicators, such as extended product lifespans have to date played a lesser role, however end-of-life management, product design, and raw material procurement are increasingly areas where tangible gains can be realised, the study noted. Read more here.
