Regional business models for circularity in the construction material industry

Transitioning towards more sustainable modes of production and consumption is the ambition of an increasing number of public policies. Despite the considerate efforts, the speed of transition is insufficient. This project combines business model research with regional material flows to analyse structural reasons for the systemic inertia to change. Traditional business models couple economic success to material turnover, but increasingly face conflicts with the societal goal of resource efficiency. Traditional construction material business models provide products, such as gravel, cement and concrete, focussing on their role as material or resource suppliers. Driven by stricter regulations, companies extend their business models with additional services, e.g. in waste management and logistics. Public policies therefor, aim to stimulate more sustainable modes of production and consumption, but are faced with slow or insufficient transition. Since business models present the dominant logic of production and consumption, they are an important stepping stone to understanding barriers or incubation potential to transition towards sustainability. Understanding of business models and their role within an industry helps designing more effective mixes of policy instruments. The research project “Co-Evolution of Business Strategies in material and construction industries and public policies” will identify the most relevant business models along the value chain for construction materials in Switzerland. Based on case studies with ten different companies, business models and the associated strategies are discussed, considering developments in the respective socio-technical environment. On a company level, the analysis reveals how business-models differ with regards to value added, jobs creation, resource consumption and CO2-emissions. To analyse the role of the different business-models on regional scale, a complementary Material-Flow-Analysis and economic Input-Output-Analysis are used to understand systemic implications of these business models. Idealizing the value chain of construction materials in specific regions helps understanding long-term developments as well as designing policy mixes to increase desirable dynamics.Path dependent dynamics aim to stimulate positive effects on job creation, resource consumption and CO2-emissions, but understanding of potential trajectories is important. A comparison between the results of both analyses – companies scale versus regional scale – reveals how alternative business-models could affect resource management and economic development on a regional scale. Preliminary results indicate that whereas public procurement policies stimulate circular products, local land allocation polices undermine these efforts. This results in undesirable competition and inefficient resource allocation. The research results enhance knowledge about the dynamics underpinning dominant regional business-models and sharpens the scope for policy interventions. It will provide decision support for public policies to accelerate transitions towards a sustainable build environment.