How to boost the access to funds for circular businesses to grow


A group of professionals within the Ellen MacArthur Foundation’s network developed a white paper in which they described a methodology for the valuation of used parts which serves as a basis for further discussions. The paper shows the impact of the current valuation approach and the expected impact of an adapted valuation of used parts in the balance sheet on the company valuation. For a better demonstration, remanufacturing in the automotive aftermarket is used as an example.

The availability of external financing is a key factor for a successful implementation of circular business models. With the rise of companies implementing circular solutions, inputs based on primary raw materials will be increasingly replaced with the shift to using secondary sources of materials. With this shift, circular businesses must evaluate these secondary inputs in their financial statements directly impacting on the company valuation.

Practical examples in the automotive sector show that businesses and investors often do not reach an agreement on the valuation of circular businesses. This limits investments by investors and access to the necessary funds for circular businesses to grow.


The Team

Under the lead of C-ECO, a team of the Ellen MacArthur Foundation's network collaborated in a two-year Co.Project. The multidisciplinary team from the remanufacturing, reverse logistics, investment and accounting industry as well as circular economy professionals formed to tackle this circular economy challenge. The team investigated the issue from different angles through a series of face-to-face and virtual meetings as well as workshops within and outside of events organized by the EMF to discuss whether and how existing accounting standards can be used to financially evaluate used parts.

The participating members include employees from ING, Accounting Norwary, The Royal Netherlands Institute of Chartered Accountants, Circularity Capital, PGGM, University College London at Bartlett School of Environment Energy and Resources as well as three colleagues from the C-ECO team.


The white paper

The outcome of the Co.Project is the white paper “ReValu-Parts Rethinking the Value of Used Parts – Necessary next steps on the valuation of used parts for enabling a circular economy: a pathway to implement the International Financial Reporting Standard (IFRS) for used parts using a remanufacturing business cases in the automotive aftermarket”, accessible here.

In this paper the team proposed using an established accounting standard - the IFRS – to help remanufacturers access necessary funds to grow their business and investors as well as financiers to better analyse risks and opportunities. The result of the white paper is a description of a methodology for the valuation of used parts, based on IAS 2 and IFRS 13, including the rules of inventory valuation at FMV, which should be further discussed.

 Revalu parts Bild

Next steps

The Co.Project team strives to broadly disseminate the whitepaper to various industries, such as automotive, finance, accounting, other industries, and the broad circular economy arena to further discuss this circular economy challenge and the elaborated methodology for valuating used parts.


C-ECO reported about the Co.Project before

Ellen MacArthur Foundation