CGR The Value Gap: Sweden
Construction
The Construction sector is one of the most resource- and carbon-intensive parts of the Swedish economy, contributing significantly to the country’s material footprint, waste generation, and emissions profile. It holds the largest material footprint of any sector, accounting for 82.2 million tonnes—or 32% of Sweden’s total material use. [21] As the population grows, so does demand for new housing, schools, and healthcare infrastructure, further intensifying the sector’s environmental and resource impact.
In this analysis, the Construction sector also includes real estate, reflecting the full scope of activities from building to long-term property management.
Together, these activities represent approximately 19% of the total Swedish economy, underscoring the sector’s economic importance alongside its environmental challenges.
Most value creation in Construction occurs during the distribution phase—once buildings are completed and in operation. In contrast, the extraction phase, while highly material-intensive, contributes relatively little to economic value. This imbalance reflects a broader pattern seen across industrial value chains, where large volumes of raw materials are handled at low economic value until they are transformed into intermediate or final products.
Where value is lost in construction
As shown in Figure seven, Sweden’s Construction sector generates approximately SEK 855 billion in consumption value, yet 39% of this is either lost or never created. [22]
The majority of this loss occurs at the end-of-life stage, where buildings are demolished and their embedded value—amounting to SEK 180 billion—is discarded. This makes end-of-life a critical point of value erosion in the built environment. The most impactful interventions for reducing the sector’s value losses are those that slow resource flows and enable reuse and material cycling. Strategies such as renovation and refurbishment can extend the lifespan of buildings, reduce the need for new construction, and keep materials in use at their highest possible value.
Significant losses also occur during the use phase, where inefficiencies such as unnecessary renovations driven by aesthetic preferences, flawed design, and underutilised building space—including vacant or partially used properties—result in losses of about SEK 89 billion. Overconsumption adds to this picture: around 14% of construction-related consumption, equivalent to SEK 123 billion, stems from excessive living space. This estimate is based on excessive aesthetic renovations and excess living space (see Methodology Document for details).
By contrast, the early stages of the Construction value chain contribute smaller economic losses. Although these phases deal with lower-value materials and generate lower-value waste, they still represent an untapped opportunity worth SEK 37 billion.
Finally, it is important to note that this analysis represents a one-year snapshot. For long-lived assets such as buildings, the true Value Gap compounds over decades, magnifying the potential impact of circular interventions.
Figure seven shows yearly value creation and losses in the Construction sector.
Unlocking value through better use, renovation, and construction processes
The high percentage of value lost—whether through demolition or unnecessary consumption—highlights a significant opportunity for circular solutions. Extending the lifespan of buildings through better design, smart renovations, and increased utilisation of existing spaces offers the most effective pathway for retaining value. At the same time, this approach is the most promising strategy for reducing the sector’s material footprint. [23]
Upstream losses also stem from the use of non-durable materials and poor design, which often lead to avoidable renovations. In addition, inefficient planning, over-ordering of materials, and improper storage or handling contribute to unnecessary waste. Addressing these issues through circular practices—such as design for durability, modular construction, and improved logistics—can help prevent value loss before it occurs.
The Circularity Gap Report is an initiative of Circle Economy, an impact organisation dedicated to accelerating the transition to the circular economy.
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