By Shelly Trench, Benjamin Deschietere & Simon Birkebaek

For Saudi Arabia and the GCC, the coming years represent a critical period on the path toward a secure, sustainable future. The circular economy is a significant opportunity for the region as it is in the early stages of the adoption and integration of circularity practices.

Circular economies effectively serve as restorative industrial systems that replace the end-of-life concept with more resource-efficient practices such as renewable energy adoption, waste minimization, regenerative materials production, and integrated business models.

Prioritizing circular development can both drive economic growth and overall societal wellbeing. However, inevitable challenges must first be overcome before such advantages are realized, and strategic choices must be made to unlock full circular economy potential.

Regional Outlook

With environmental health and green infrastructure as core priorities for the GCC, national leaderships have identified circularity as a key enabler for long-term federal ambitions. For example, economic resilience and competitiveness can be strengthened by prudent resource utilization, shielding the economy against external disruptions, and creating a stronger supply chain.

Furthermore, circular practices support a better quality of life. Circular cities can achieve emissions reductions, improved energy efficiency, reduced waste, and cross-sector synergies. GCC countries have been laying the foundations to support circular activities and numerous strategies are already in place that are beginning to make valuable contributions.

In the Kingdom, Saudi Arabia’s Ministry of Environment, Water, and Agriculture recently circulated a draft policy mandating waste treatment and recycling infrastructure development. This circularity focus has already proven influential, with industry players proactively sourcing waste segregation while approaching waste treatment and recycling with newfound determination.

The Kingdom has also introduced regulations preventing non-biodegradable plastic imports, while the ‘Mostadama’ green building rating system was established to standardize sustainable construction sector practices.

Steps Towards a Circular Recovery

Firstly, Saudi Arabia and othert GCC countries must adopt holistic strategies, policies, and funding models to enable circular city actions, enabling frameworks within centers of economic activity, such as industrial hubs and free zone areas.

Consumption of materials is a central aspect in the circular economy vision that can result in a complete overhaul of material flows: the construction sector is a good example due to the large volumes of raw materials it consumes and the waste it generates.

Traditional building products must be replaced or modified as they are usually neither sustainable nor reusable; real estate blueprints require an overhaul so developments can better incorporate circular elements such as waste, water, and treated sewage effluents (TSE).

Secondly, key-value chains must evolve to incorporate a cradle-to-cradle (C2C) approach that promotes inter-sector connectivity to optimize resource use and reuse.

Skill-building and stakeholder engagement to enable circular innovation. Priority private and public sector actions should include skill-based information management programs to advance widespread use of Internet of Things (IoT) technologies and prioritize demand planning for resource optimization processes.

Furthermore, the availability of capable reverse cycle markets for refurbished materials will be important. These markets can facilitate increases in the lifecycle of products with high resource requirements (e.g. automobiles, pumps).

While such efforts will not be straightforward, best practices have emerged from cities with leading circular practices.

Organizations in London are being educated on circular economy-enabled business models and being provided with incentives to ensure the city thrives through materials and resources utilization, with success measured by several indicators, including the number of jobs created, businesses supported, and new products introduced to the market.

Circularity has also become a driver for improving efficiency, maximizing local resources, encouraging innovation and entrepreneurship, and stimulating the local economy in Brussels, where over 140 circular economy-related organizations have been availed financial support to date, and more than 200 have received guidance for implementing circular economy approaches.

Similarly, Singapore established an industrial park embedded with circular economy principles to pilot interactions, foster innovation, and create a synergistic network of eco-minded businesses that unlock circularity opportunities. Much like London, success in Singapore is being benchmarked based on jobs creation, as well as the establishment of new businesses, incentives, and facilities that foster innovation and knowledge sharing.

The GCC can initially utilize these examples as benchmarks, eventually surpassing them the following reliance for informative purposes. Yet to realize success in this regard, four themes do serve as strategic priorities for countries striving to uncover impactful circularity opportunities:

• Re-think value chains: GCC countries striving for circular cities should innovate along the value chains of key industries, redesigning, optimizing, and implementing new technologies wherever feasible to drive sustained growth.

• Champion waste reduction and valorization: Through technology, infrastructure, processing facilities, and related policies, city-wide waste can be limited while enhancing value. A viable option could be to introduce tariffs per material for domestic and industrial players to ensure compliance.

• Orchestrate shared city services: Countries should ensure the availability and penetration of circular economy elements across water, sewage, power, and transportation. As an example, circularity could be improved through smart metering infrastructure for utilities in highly populated areas.

• Create a sharing economy: New models for interaction and symbiosis between government entities, corporates, SMEs, and residents will optimize resource utilization. Examples include ridesharing, coworking, talent sharing, crowdfunding, and increased leverage of reselling and trading platforms.

As GCC countries including Saudi Arabia move forward pursuing sustainability, achieving circular economy aspirations will solidify a secure, vibrant landscape for businesses, industries, and society in the future.

Because circularity revolves around doing more of what is beneficial, rather than doing less of what is detrimental, the above priorities should be pursued with haste, so emissions and waste reductions are recycled in a new and influential value chain.

Prominent cities will be key to such development and, by learning from other nations while carrying out the above requirements, regional incumbents will ultimately unlock potential value and continuously derive new economic benefits.

— Writers Trench (managing director and partner, BCG), Deschietere (managing director and partner, BCG), and Birkebaek (partner, BCG) contributed to the article.