Circularity in materials isn’t a buzzword; it’s a strategic approach that can help you achieve your CO2 reduction targets, diversify materials supply chains, and manage costs, while meeting sustainability goals.
But what it takes to scale circularity requires a fundamental shift in how we manage these resources.
How do we get there, and is it worth it?
Our new series explores decarbonization and circularity opportunities for materials including plastics, copper, aluminum, rare earth elements, and glass. And for each, we’ve identified primary emission hot-spots, untapped circular materials pools, and potential pathways towards decarbonization and circularity, evaluating their technical and economic feasibility.
The current challenges to circularity include limited visibility on operational drivers and interdependencies and a significant gap between the demand for low-carbon, circular materials and the current supply capacity. But the opportunities are significant.
Implementing circularity can lead to cost savings, as in many cases (such as aluminum), circular materials can be less expensive than using virgin materials. It can also allow you to develop a distinctive product portfolio and meet growing consumer demand for eco-friendly products. And it could enable you to benefit from regulatory tailwinds, such as the EU Battery Passport and the Critical Raw Materials Act, which aim to make recycled materials more competitive compared to linear alternatives.
Setting aside the sustainability aspect – circularity is a must-have to close the supply gap in many of our commodities, such as copper. With significant opportunities and demand across the ecosystem, the question is no longer why to achieve it, but how.
If you have any questions, please don't hesitate to reach out.
Peter Spiller
Actions to increase circularity in your supply chains:
- Focus on increasing collection rates to access incremental material streams, especially for materials with significant exposure to nonindustrial applications like waste and electronic equipment.
- Form alliances with stakeholders across the value chain to pool demand and diversify risk, which can improve unit economics in sorting and processing circular materials and accelerate the technology learning curve.
- Build specific e-waste recycling channels and infrastructure through partnerships.
- Invest in and develop advanced technologies such as dismantling technology for rare-earth elements and advanced sorting for high-quality feedstocks of aluminum scrap or plastic waste.
- Scale these technologies to become cost-competitive and unlock new pools of secondary materials, reducing carbon costs.
Recommended McKinsey Insights on Circularity
Looking upstream: A path to unlocking low-carbon, circular materials
Chasing the lost copper: Global scrap and its role in decarbonization
Aligning the value chain to decarbonize plastics
Sustainable Materials Hub
Sustainable Materials Hub
