Earth Day, celebrated every year on April 22, is a reminder that the world’s resources must be used wisely, in a way that respects and protects the environment. This event is a symbol of the urgent need to create a circular economy, to propel us towards a more sustainable, waste-free and regenerative society, with longer product lifecycles and lower pollution.
The pressure to be circular comes from many quarters, fueled by consumer and investor pressure activism, new laws and regulations, fears over climate change and environmental damage, and a growing sense that what’s good for the planet is good for business.
But there’s a desperate need to speed up the rate of progress, with the latest Global Circularity Gap report showing that the global economy is only 8.6 percent circular.
Measuring and reporting circularity brings much-needed structure and transparency to corporate efforts to advance sustainability and track performance.
And with the newly updated waste reporting standard from the Global Reporting Initiative (GRI), there’s a real opportunity to re-energize circular behavior.
GRI 306: Waste 2020 strengthens expectations on companies’ circular economy disclosure. After the Standard becomes effective from January 2022, companies who report through GRI – and identify waste as a ‘material topic' – are required to disclose their waste related impacts along the entire value chain – and describe the efforts they’re making to prevent waste in the first place.
As the 2020 KPMG Survey of Sustainability Reporting confirms, GRI provides the world’s most widely used sustainability reporting standards, adopted by a majority of leading companies internationally to disclose their impacts.
This updated standard helps organizations better understand how they generate waste, which can in turn lead to opportunities to prevent waste, reduce pollution and become more circular in design, procurement and operations – across the value chain.
Chair of the GRI Global Sustainability Standards Board
Time passes quickly, so it’s imperative to start preparing for this disclosure today. Companies must show how they’re generating, managing and preventing waste throughout the value chain, and gather and interpret the data that shows their performance. The disclosure, and its associated actions, represents another important step away from the ‘take, make, waste’ model towards a more sustainable form of production.
Thankfully, help is at hand in the form of the latest circular measurement framework of the World Business Council for Sustainable Development (WBCSD) – which is closely aligned with GRI and its objectives. WBCSD is a global, CEO-led collaboration of more than 200 leading companies, working to accelerate the transition to a sustainable world. Together, they represent the leading business voice for sustainability, with a vision to enable 9 billion people to live well and within the boundaries of our planet, by 2050. A circular economy is fundamental to achieving this vision, WBCSD's Circular Economy Program convenes over 50 companies across 15 different sectors to co-develop new standards, tools, advocacy, insights and experiences that empower companies to drive their circular transition.
Along with other organizations, KPMG firms have played an integral role in developing the WBCSD’s Circular Transition Indicators (CTI), of which the latest Version 2.0 was launched in February 2021. The indicators help companies to embed circularity, with clear steps for measuring and tracking efforts. CTI Version 2.0 includes ways to calculate water inflow and outflow, as well as guidance on how to apply the framework for bio-based materials and link circular with financial performance.
The CTI can help companies in their approach to GRI reporting, as the two share a common language, structure and ambition.
Perhaps more importantly, CTI v2.0 and GRI 306: Waste 2020, when used in a complementary fashion, can add granularity and measurement to circular activities, helping companies better understand how they can be more sustainable, set targets and monitor progress.
True circularity is about designing assets, products, parts materials and bio-based streams that can be continually re-used, refurbished, recycled or regenerated. Waste is ‘designed out’, with the outputs re-circulated or returned to nature safely, minimizing pollution.
The CTI framework, which has accompanying software for ease of use, was jointly developed with 30 major global organizations. It builds on the previous version that’s already being used by more than 600 organizations worldwide, with more than 1,000 using its digital tool.
It works for whatever industry you’re in, or whatever materials or technologies you’re involved with.
When it comes to waste disclosure, GRI, along with CTI, provides a common language for both internal and external stakeholders, and is another marker in the move towards universal standards for environmental, social and governance (ESG) reporting.
Disclosure is a great way to demonstrate progress towards a sustainable, circular economy. It provides assurance to a range of stakeholders, with CTI helping companies get the right data – and get the data right. But, perhaps more importantly, it creates an internal momentum and focus on circularity, by forcing everyone in the organization to consider waste and re-usability in design, processes and operations.
Global Head of KPMG IMPACT
Global Head of Infrastructure
The more a company has to gather data on its circular performance, the more it will consider the value of such data in terms of outcomes: less waste, more recycling, less pollution, longer-lasting products, increased value chain collaboration and improved business performance.
And with finite resources in ever greater demand, circularity is also a route to longer-term commercial success.
Managing Director of Circular Economy
World Business Council for Sustainable Development
More and more, circularity will drive corporate performance, and a reliable reporting structure is one of the foundations of the drive towards a waste-free world.
As outlined in KPMG: Our Impact Plan, KPMG will use the insights from the Circular Transition Indicators (CTI) Framework to continue to move towards eliminating use of single-use plastics, reducing water and paper use, and reusing or recycling electronic waste.