Trend watch: construction circularity in 2026 (angle 2)

Only 1% of materials from building demolitions are reused globally, yet the construction sector consumes more than 50% of the world's raw materials and generates 33% of global waste (McKinsey, 2024). For procurement professionals in North America, this waste-value gap represents both an operational imperative and a market opportunity. The US circular economy materials in construction market reached $9.1 billion in 2024 and is projected to grow at 11.7% CAGR through 2034, driven by expanding "Buy Clean" policies and accelerating demand for Environmental Product Declarations (EPDs).

Why It Matters

The built environment generates approximately 40% of global energy-related CO₂ emissions, with construction and demolition (C&D) waste accounting for 30-40% of global solid waste streams. In New York State alone, 18 million tons of C&D debris are generated annually—representing 46% of all state waste—with 7.7 million tons from buildings alone, of which 58% is landfilled or combusted according to Cornell's Circular Construction Lab analysis.

For procurement teams, circularity is transitioning from sustainability aspiration to supply chain requirement. Over 22 US cities have adopted formal deconstruction ordinances as of 2024, with Portland, San Antonio, and Seattle leading on material salvage requirements. These mandates create compliance obligations while simultaneously opening procurement pathways for reclaimed materials at competitive price points.

The financial case compounds environmental drivers. Energy retrofits—which represent a core circular strategy—offer cost savings of up to 77% compared to fully new construction while reducing total carbon emissions by 50-75%. The retrofit market, currently valued at $500 billion globally, is projected to reach $3.9 trillion by 2050, representing 8% annual growth that procurement functions must plan to capture.

EPD submissions grew more than 30% since 2021, signaling that specification of low-embodied-carbon materials is becoming standard practice. Federal and state "Buy Clean" policies accelerate this trajectory: California's Buy Clean California Act applies to structural steel, flat glass, and mineral wool insulation on state projects, with expansion to additional materials underway. Similar legislation in Colorado, New Jersey, and at the federal level through the Inflation Reduction Act creates a cascading mandate structure that will reshape material supply chains through 2030.

Key Concepts

Circular Construction Hierarchy

Procurement strategies should reflect the circularity hierarchy, prioritizing interventions with highest material retention:

Strategy Level	Description	Carbon Impact	Implementation Maturity
Refuse/Reduce	Avoid construction; optimize space utilization	Highest	Low adoption
Reuse	Relocate or repurpose entire buildings/components	Very High	Emerging
Refurbish	Upgrade existing structures with minimal replacement	High	Growing
Remanufacture	Restore components to original specification	Medium-High	Limited
Recycle	Process materials into new products	Medium	Established
Recover	Extract energy or downcycle materials	Low	Widespread

The US market remains concentrated at the lower hierarchy levels, with recycled construction materials generating $4 billion (48% market share) in 2024. Higher-value strategies—particularly reuse and refurbishment—represent the growth frontier but require procurement process adaptations including new supplier qualification approaches and material traceability systems.

Life Cycle Assessment Integration

Procurement decisions increasingly require life cycle assessment (LCA) data to inform material selection. The key metrics include:

Embodied Carbon (A1-A3): Emissions from material extraction, manufacturing, and transport to site. This is where procurement has direct influence and where EPD data enables comparison.

Operational Carbon (B1-B7): In-use energy consumption and maintenance impacts. Relevant for equipment and system procurement but less directly influenced by material sourcing.

End-of-Life (C1-C4): Demolition, transport, and disposal impacts. Circular materials with designed-for-disassembly characteristics reduce these impacts.

Module D Credits: Avoided burden from material recovery and recycling. Increasingly important for demonstrating circular value but methodologically complex.

Certification and Labeling Landscape

Procurement teams must navigate an expanding certification ecosystem:

EPDs (Environmental Product Declarations): Third-party verified LCA data per ISO 14025. Increasingly required by specification.
Cradle-to-Cradle (C2C): Material health, circularity, and social fairness assessment. Premium positioning in sustainability-focused projects.
Declare Labels: Ingredient disclosure format popular for healthy building specifications.
LEED/BREEAM Credits: Rating system points for certified materials influence procurement decisions.
EC3 (Embodied Carbon in Construction Calculator): Free tool for comparing material carbon intensity. Rapidly becoming specification baseline.

What's Working

Material Passports and Digital Tracking

Projects implementing material passports—digital records documenting material composition, origin, and end-of-life potential—demonstrate measurably higher material recovery rates. These systems enable procurement teams to specify reclaimed materials with confidence in performance characteristics.

Example: Skanska USA—The construction giant implemented digital material passports across multiple commercial projects in 2024, tracking steel, concrete, and facade components through their lifecycle. Their "Sustainability Hub" platform connects project teams with verified reclaimed material inventories, enabling specification of circular materials without performance uncertainty. Skanska reports 15-25% reclaimed material incorporation on flagship projects, with cost premiums of <5% offset by avoided disposal fees.

Deconstruction-Focused Demolition

Cities with mandatory deconstruction ordinances demonstrate dramatically higher material recovery. Portland's 2016 ordinance requiring deconstruction of pre-1940 residential buildings achieved 86% diversion rates compared to typical demolition's 25-40% recovery.

Example: Delta Institute's ReBuilding Exchange (Chicago)—This nonprofit operates the Midwest's largest reclaimed building materials warehouse, processing materials from deconstruction projects throughout the Chicago metropolitan area. Their 2024 expansion added 45,000 square feet of inventory space, enabling bulk procurement relationships with commercial contractors. Pricing typically runs 40-60% of new material costs for verified structural components, creating direct procurement value while achieving 90%+ diversion from demolition projects they manage.

Modular and Design for Disassembly

Procurement of modular building systems inherently supports circularity by enabling future component reuse. These approaches show particular promise for repetitive building types (schools, healthcare, hospitality) where standardization supports secondary markets.

Example: Katerra (lessons from failure) and Rise Modular—While Katerra's 2021 bankruptcy illustrated the execution risks in modular construction, subsequent entrants like Rise Modular have demonstrated viable business models. Rise's Minneapolis factory produces cross-laminated timber modules with documented disassembly pathways, and their procurement partnerships with major hospitality brands guarantee secondary market demand. This demand certainty addresses the core barrier—uncertainty about future material value—that limits circular design adoption.

What's Not Working

Fragmented Reclaimed Material Supply Chains

Despite growing inventory, reclaimed material procurement remains transactionally complex. Buyers face:

Quality uncertainty: Inconsistent testing and grading standards for salvaged materials
Availability volatility: Supply dependent on demolition timing rather than demand cycles
Logistics complexity: Decentralized inventories requiring multiple sourcing relationships
Liability concerns: Unclear responsibility allocation for performance failures

These friction points limit reclaimed material procurement to organizations with dedicated sustainable procurement functions—a capability gap that perpetuates the 1% reuse rate despite ample material availability.

LCA Data Gaps for Non-Standard Materials

While EPDs proliferate for mainstream products, reclaimed and unconventional circular materials frequently lack standardized environmental data. This creates specification barriers: architects cannot confidently include materials without verified carbon performance data, and procurement cannot evaluate options on consistent terms.

The EC3 tool has accelerated EPD adoption for conventional materials but does not yet adequately address the unique considerations of reclaimed products, where manufacturing emissions are zero but processing, testing, and logistics create new impact categories.

Split Incentive Structures

Building owners who invest in circular design—higher upfront costs for disassembly-ready connections, material passport systems, and higher-quality components—do not capture end-of-life material value unless they retain long-term ownership. This temporal mismatch between investment and value realization limits voluntary adoption of circular approaches beyond regulatory mandates.

Procurement functions typically operate on first-cost optimization mandates that conflict with life-cycle value creation, requiring explicit policy direction to prioritize circularity.

Key Players

Established Leaders

Skanska USA: Industry leader in sustainable construction with advanced material tracking and reclaimed material procurement programs. Their EC3 integration and digital passport initiatives set procurement benchmarks.
Turner Construction: Major general contractor with dedicated sustainable procurement function. Their "Building L.I.F.E." program includes circularity metrics in supplier evaluation.
Interface: Flooring manufacturer pioneering circular business models including take-back programs and recycled content. Demonstrates closed-loop potential for building products.
Holcim: Global cement and building materials company investing heavily in circular concrete solutions, including recycled aggregate products and carbon capture technologies.

Emerging Startups

Rheaply: Chicago-based circular asset marketplace enabling B2B material exchange. Raised $20M Series A in 2024 to expand construction materials vertical.
Madaster: Netherlands-origin material passport platform expanding into North American market. Provides digital twin integration for component-level circularity tracking.
Renuity: End-to-end deconstruction and material recovery platform connecting demolition projects with reclaimed material buyers. Operating in 12 US metro areas as of 2024.
Cambium Carbon: Connects urban tree removal with wood products manufacturing, demonstrating circular pathway for biomaterials. Expanded to 8 cities in 2024.

Key Investors & Funders

Breakthrough Energy Ventures: Climate-focused fund investing in construction decarbonization including circular material solutions.
Fifth Wall: Real estate technology investor with sustainability thesis including circular construction startups.
NYSERDA (New York State Energy Research and Development Authority): Funds circular construction pilots and demonstration projects through BuildSmart NY program.
EPA Solid Waste Management Grants: Federal funding source for C&D waste diversion infrastructure and program development.

Sector-Specific KPI Benchmarks

Metric	Poor	Adequate	Good	Excellent
Recycled content (by weight)	<10%	10-25%	25-40%	>40%
Reclaimed/reused materials	<1%	1-5%	5-15%	>15%
EPD-covered specifications	<25%	25-50%	50-75%	>75%
C&D waste diversion rate	<50%	50-70%	70-85%	>85%
Material passport coverage	None	Structural only	Major systems	Comprehensive
Supplier circular certification	None	<25%	25-50%	>50%

Action Checklist

Audit current C&D waste diversion rates and establish improvement targets aligned with local regulatory requirements
Develop supplier qualification criteria that include circular economy certifications and EPD availability
Identify pilot projects for reclaimed material procurement with appropriate quality verification protocols
Integrate EC3 or equivalent embodied carbon analysis into specification review processes
Establish material passport requirements for new construction projects exceeding defined value thresholds
Build relationships with regional deconstruction contractors and reclaimed material warehouses for supply chain development
Track emerging Buy Clean requirements across operating jurisdictions and prepare for compliance expansion

FAQ

Q: How do Buy Clean policies affect procurement practices? A: Buy Clean policies require procurement of materials meeting maximum embodied carbon thresholds, verified through EPDs. Current implementations focus on structural steel, concrete, and glass, but expansion to additional materials is underway. Procurement teams should require EPDs from suppliers now—even ahead of mandate—to build evaluation capabilities and identify compliant supply chains. Price premiums for compliant materials typically range from 2-8% but are compressing as production scales.

Q: What liability considerations apply to reclaimed material procurement? A: Liability allocation for reclaimed materials requires explicit contractual treatment. Best practices include: (1) requiring seller certification of testing and grading, (2) specifying performance warranties rather than material warranties, (3) securing professional liability coverage from project engineers certifying use, and (4) documenting chain of custody for traceability. Insurance markets are evolving; several carriers now offer circular material-specific coverage products.

Q: How can procurement teams evaluate circular material suppliers? A: Develop supplier scorecards incorporating: (1) EPD availability and carbon performance, (2) recycled/reclaimed content verification, (3) take-back program participation, (4) packaging circularity, (5) third-party certifications (C2C, Declare), and (6) transparency on manufacturing waste streams. Weight these criteria at 15-25% of supplier evaluation alongside traditional cost, quality, and delivery metrics.

Q: What return on investment should procurement expect from circular strategies? A: ROI varies by strategy: recycled content typically achieves cost parity or slight savings; reclaimed materials offer 30-50% savings on material cost but require higher transaction costs; design for disassembly adds 5-15% upfront cost but creates future recovery value difficult to monetize under short-term ownership. Focus initial efforts on recycled content and waste diversion where economics are clearest, building toward more transformative circular strategies as capabilities mature.

Q: How does construction circularity interact with carbon accounting requirements? A: CSRD and SEC (if reinstated) require Scope 3 emissions disclosure, including purchased goods and services. Circular procurement directly reduces Scope 3 through lower embodied carbon. EPDs provide verified data for corporate carbon accounting; material passports support end-of-life emission tracking. Procurement data systems should be designed to feed carbon accounting platforms, creating operational efficiency alongside compliance.

Sources

McKinsey & Company. "How circularity can make the built environment more sustainable." (2024). https://www.mckinsey.com/industries/real-estate/our-insights/how-circularity-can-make-the-built-environment-more-sustainable
GM Insights. "U.S. Circular Economy Materials in Construction Market, 2034 Report." (2024). https://www.gminsights.com/industry-analysis/us-circular-economy-materials-in-construction-market
Cornell Circular Construction Lab. "Constructing a Circular Economy in NYS: Deconstruction and Building Material Reuse." (2024). https://labs.aap.cornell.edu/ccl/whitepaper
Precedence Research. "Sustainable Construction Materials Market Size 2025 to 2034." (2024). https://www.precedenceresearch.com/sustainable-construction-materials-market
Frontiers in Built Environment. "Adopting circular economy in construction: a review." (2025). https://www.frontiersin.org/journals/built-environment/articles/10.3389/fbuil.2025.1519219
NREL. "Circular Economy for Building Materials." (2024). https://www.nrel.gov/buildings/circular-economy