What is a Circular Credit?

A Circular Credit™ represents the service of recovery (collection, sorting) and appropriate destination of 1 metric tonne of waste material that is inappropriately discarded, causing pollution of our natural environment.

The objective of the credits is to facilitate the contracting of services that remove waste materials from the environment and send them to an appropriate, responsible destination. The destination of residues varies depending on the circumstance of the project or operation and the availability of economically viable options. In some cases, it may be a recycling plant; in others, where this option is not available, it could be the next best alternative available.

The use of Circular Credits enables companies and individuals to compensate for the volume of residues they feel responsible for, through a one-in-one-out approach to reducing their waste footprint.

Circular Credits can be issued for any type of material, including plastics, beverage cartons, glass, paper, metals, e-waste, tyres. In the future, the Hub will aim at including organic material as well. All credits for the same material are fungible, but buyers may want to select them by country of origin.

The Credit Lifecycle - How to create circular credits

Traditional credit lifecycles for environmental markets (e.g., carbon markets) require the validation, registration, independent verification, and issuance of credits before developers can receive any financial return.

The Circular Credits Mechanism (CCM) adopts an inverted credit lifecycle where developers can post their offers based on self- declarations that are verified only after projects secure financial support. Transaction costs are covered by the buyers of environmental services.

Projects must follow the process described below to create and sell credits under the Circular Credits Mechanism:

 

 

  1. The project is registered and showcased in the Circular Action Hub
  2. Once a buyer shows interest in a project, an initial Validation Audit is carried out by an independent third party
  3. The project performs its activities implementing a monitoring routine with adequate impact measurement
  4. At the end of the project or periodically, an independent third party carries out a Verification of results
  5. The verified Circular Credits are issued for the project in the CAH Registry
  6. Circular Credits are transferred to the buyer in the CAH Registry
  7. Once Circular Credits are used for any specific claim, they are retired from the Registry.

Start the Process

 

Using credits and associated claims

The objective of Circular Credits is to allow companies to reduce their waste footprint by contributing (via the financial value of credits) to activities that mitigate their negative environmental impact.

The CCM was designed as an international scheme, so that Circular Credits can be created in one country and used in another one. This would enable transnational support for waste collection and recycling activities.

The use of Circular Credits will enable companies to claim that they mitigated the impact of a certain amount of post-consumer waste pollution derived from their operations. It does not, however, enable companies to make claims such as “plastic neutral”, “waste offset”, etc., unless complementary measures are put in place. For this, the CCM recommends adoption of the 3RI Guidelines for Leadership in Corporate Plastic Accounting.