National CRE News In Your Inbox.
Sign up for Connect emails to stay informed with CRE stories that are 150 words or less.
Reducing Waste and Improving Net Value Gain in the Built Environment
According to McKinsey, the built environment is one of the largest global industries, valued at $14 trillion and accounting for 12% of global employment. Furthermore, urbanization is pushing global construction; the sector’s estimated value by 2040 will be $22 trillion.
Here’s another fact: The international built environment generates a higher rate of global emissions than any other sector, responsible for almost 40% of energy-related CO2 emissions and one-third of the world’s waste.
In a recent report entitled “How Circularity Can Make the Built Environment More Sustainable,” McKinsey analysts explain the concept of circularity and how it can improve the economics of global construction while increasing sustainability.
What is Circularity?
Most supply chains are linear, stretching from raw materials to finished products. Circularity shifts the supply chain into a “closed-loop system in which resources and materials are continually reused and repurposed,” the McKinsey analysts commented.
Within the built environment, circularity could include using recycled construction and demolition waste in construction, increasing the supply and use of “regrind” plastics, creating flat glass from smashed glass, and using renewable energy in producing gypsum wallboards.
The Benefits and Challenges
One huge benefit is cost savings. McKinsey analysts indicated that circularity could yield $361 billion in net value gain for the built environment by 2050. Additional benefits include:
- A reduction in carbon offset emissions
- New job opportunities in on-site material recovery and refurbishment
- Lower negative environmental impact
- Increased building resilience
Along with the circularity advantages, potential obstacles could include:
- An overhaul of the current value and supply chains
- Lack of business and use cases supporting the concept
- The need for greater data transparency and materials tracking
- Better shareholder engagement and alignment
The Takeaway
Circularity carries multiple advantages for the built environment, especially in the areas of cost savings, resource management and environmental sustainability.
The McKinsey analysts acknowledged that “large-scale adoption of circularity will ultimately require a sea change in mindsets, collaboration across the sector, and bold, creative thinking about new business models and possibilities by all stakeholders in the built environment.” However, the results could lead to a more sustainable and economically resilient built environment.
- ◦Development
- ◦Economy
