The current circular economy target-setting landscape needs to be more cohesive and could benefit from consistent guidance on defining and implementing circular targets. With this, existing targets are self-defined and easier to compare, making progress easier by establishing the true impact of the circular Economy on business models.
PACE (Platform for Accelerating Circular Economy), a global public-private partnership platform created within the World Economic Forum to accelerate the transition to a circular economy model, launched a metrics-focused initiative for companies to support the establishment of corporate circular targets. The plan comes as a new approach from the Circular Economy Indicators Coalition, in partnership with Accenture. The goal is to enable companies to create quantitative and specific targets that drive measurable progress toward circularity and help companies navigate existing resources to measure and manage their progress.
At COP27, PACE published a " Corporate Target Setting for the Circular Economy: Mobilizing Measurable Progress" discussion paper. The publication presented research and consultation results on current challenges in corporate circular economy target setting and solutions needed to help mobilize more companies to set targets and help companies better navigate the existing circular landscape.
At the 2023 World Economic Forum, they also published the "Guide to Setting Circular Targets for Companies," which builds on the discussion paper and provides companies with a clear starting point for selecting and reporting impactful targets. It aims to mobilize corporate circular target setting further and harmonize the circular metrics landscape. This guide has combined a wealth of materials to orient users to relevant standards, tools, approaches, and methodologies. Companies can use this guide to learn about best practice KPIs for a Circular Economy and how to select and set these KPIs.
In the context of the PACE initiative, some cases stand out, such as Philips and Enel. Philips, the world leader in healthcare technology, is leading in the PACE Platform, setting global action agendas and driving change to incorporate circular thinking and working methods. The company has reinforced its commitments as a purpose-driven company with the announcement of a Plan 2025 with an enhanced and fully integrated approach to doing business more responsibly and sustainably.
Philips' new framework includes several vital objectives that address all the environmental, social, and corporate governance dimensions that guide the execution of the company's strategy. The Group has set several challenging commitments for 2025, including generating 25% of revenue from circular products, services, and solutions.
Last January, during the World Economic Forum in Davos, Enel presented the new 'Economic CirculAbility©®' (KPI) to measure the Group's circularity by comparing the financial results with the total resources consumed. Economic CirculAbility© considers the Group's overall EBITDA (in euros) and compares it with the number of resources consumed, including fuels and raw materials, along the value chain by the different business lines (expressed in tons). Enel has also committed to double its performance in this KPI by 2030 compared to 2020, which means consuming half the amount of resources relative to EBITDA generated.
Circularity measurement has been vital in implementing Enel's circular strategy since 2015 when the Group began considering the circular Economy as a strategic driver.
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