Circular Economy as an Opportunity for Resilient Supply Chains

In today's fast-paced world, the fragility of global supply chains is becoming increasingly evident. Technological innovations, growing regulatory requirements, and the pressure to operate more sustainably pose significant challenges for businesses. In light of these challenges, Circular Republic, in collaboration with Porsche Consulting, Allianz, and Agora Strategy, has written a white paper that highlights key aspects of the circular economy and presents tangible solutions for companies to prepare for the future.

The emphasis is on the transition from linear to circular business models, which are not only ecologically necessary but also economically advantageous. Europe, as a resource-poor continent, offers unique opportunities for job security and independence from global supply chains.

One of the biggest challenges is the dependence on critical raw materials, such as magnesium and rare earth elements (REE), which are produced in China at a rate as high as 80%. These materials are essential for lightweight components and technologies, such as the electric motor. The importance of magnesium will continue to grow until 2030, highlighting the need to develop alternative sourcing and recycling strategies.

Regulatory requirements are also accelerating the transition: the proposed revision of the End-of-Life Vehicles Regulations mandates that 25% of the plastics automotive manufacturers incorporate must come from post-consumer recyclates, such as plastics from end-of-life vehicles. Meanwhile, the Packaging and Packaging Waste Regulation (PPWR) imposes requirements on the packaging industry, potentially leading to an estimated shortfall of 7.5 million tons of recycled plastic by 2030. A crucial aspect of this transformation is the development of recycling and dismantling hubs, which could efficiently process over 1.5 billion vehicles worldwide, conserving resources and strengthening local economies.

To mitigate the risks arising from dependencies and regulations, Porsche Consulting has developed six key strategies to help companies build more resilient and sustainable supply chains. These strategies not only provide solutions for managing raw material shortages and regulatory pressures but also actively leverage the opportunities presented by the circular economy.

The implementation of these strategies by companies is explained in detail in the white paper.