The Next Economy
WEF Report Outlines 30 Steps to a Circular Construction Industry

The construction industry has been slower than most to adopt technological innovations, which has stagnated the sector’s labor productivity in the United States and elsewhere in the last 40 years. At the same time, the construction industry is the world’s largest consumer of raw materials, yet only a fraction of its waste gets recycled. According to a new report from the World Economic Forum (WEF), these factors coupled with the industry’s size and weight make construction ripe for disruptive transformation that could have profound benefits for the world.

The WEF claims that less than a third of all construction and demolition waste is recovered and reused, resulting in billions of tonnes of materials being wasted. In the United States, about 40 percent of solid waste derives from construction and demolition.

“Such waste involves a significant loss of valuable minerals, metals and organic materials,” wrote the WEF’s Keith Beene. “With such quantities involved, even small improvements in the way the construction industry works will have significant impacts on sustainability.”

The organization suggests that focusing on reusing and recycling materials – ‘closing loops’ and adopting so-called ‘circular’ models – could result in huge efficiency gains and cost-effective benefits. For example, lumber could be reused for flooring material, asphalt for road-building materials, concrete, rock and brick for gravel or erosion control, or gypsum board could be repurposed for fertilizer additives – and the list goes on.

Of course, if such actions were taken, there would be environmental benefits beyond reducing waste, as well. For instance, the construction sector accounts for an estimated 25 to 40 percent of global carbon emissions, which represents a great opportunity for countries to cost-effectively curb their emissions and achieve energy savings. Some have already set industry-specific targets, such as the United Kingdom, which aims to reduce the greenhouse gas (GHG) emissions of its construction industry by a full 50 percent by 2025.

The WEF’s report, Shaping the Future of Construction: A Breakthrough in Mindset and Technology, presents 30 measures needed to realize the industry’s potential for change. It notes that change is already underway, headed by the construction firms themselves. Emerging technologies are already affecting all subsectors and stages of a building asset’s life cycle – from planning and design through to operations and maintenance – but their adoption remains sparse and uneven.

“Individual companies have serious transformative opportunities now, by exploiting new technologies and materials,” said Santiago Castagnino, a partner and construction expert at BCG, and co-author of the report. “If you also optimize the planning and the processes, you could easily end up cutting costs by 15% and reducing the completion time by as much as 30%.”

The WEF asserts that it is time for the construction industry - which accounts for 6 percent of global GDP - to move forward and transform, particularly given its a prominent, central role in everyone’s daily life, its powerful impacts on other industries, and given global trends that will impact the sector going forward, such as population growth in urban areas and aging populations.

“The report provides a preview of the upcoming changes in the industry, and a way of accelerating their realization. It offers a toolkit for success, and also serves as a necessary rallying call,” said Pedro Rodrigues de Almeida, Head of Basic Industries and member of the Executive Committee at the WEF.

For example, the case on flooring company Tarkett's circular economy transition highlights the development of its closed-loop design system. It refers to Tarkett's selection of ‘good’ materials, ensuring a positive impact on health and wellbeing and the environment as well as its efforts to improve energy and water efficiencies. Further, the report includes a collaboration example of Tarkett company Desso working closely with one of its yarns suppliers to turn post-consumer carpet fibers into new yarn.

“For many in the industry, the approach described in the report is a new and possibly radical one,” said John M. Beck, the Executive Chairman of Aecon, a construction firm represented on the Steering Committee of the Future of Construction Project. “But it is the path to a more innovative, productive and socially responsible future.”