Circular Economy and Sustainability: Driving circularity in business

Why now is the time to Think Circular

Our planet is under increasing pressure from a system that was designed for another era. Each year, the world extracts more than 100 billion tonnes of raw materials, yet only 6.9% of those materials are recycled and put back into use. That means more than 90% of resources are wasted, lost, or locked away in long-term infrastructure, such as buildings and machinery.

This gap between what we extract and what we reuse is known as the circularity gap, and it’s widening. But it doesn’t have to. The shift toward a circular economy is not only an environmental imperative, it’s also a strategic business opportunity. It represents a move away from the outdated “take-make-use-dispose” model toward one that moves towards “design-make-use-collect-transform-reuse”.

As the world continues to embrace sustainability, circular thinking is becoming essential for businesses that want to lead with purpose, remain resilient, and meet the rising demand for responsible practices.

So, what is it?

So, what is the circular economy? A circular economy is a systemic approach to economic development designed to benefit businesses, society, and the environment. Unlike the traditional linear model that ends with waste, a circular economy is regenerative by design.

At its core, it revolves around three key principles:

• Eliminate waste and pollution
• Circulate products and materials
• Regenerate natural systems

By doing so, it ensures that we extract the maximum value from resources while in use, then recover and regenerate products and materials at the end of each service life.

Why the circular economy and sustainability go hand in hand

Sustainability is often associated with reducing harm, lowering emissions, cutting waste, and minimising resource extraction. Circular economy thinking goes one step further. It redesigns systems to prevent waste entirely and enables positive environmental impact through innovation.

When done right, the circular economy can:

• Extend product lifespans
• Reduce dependence on finite resources
• Cut carbon emissions
• Boost biodiversity by relieving pressure on ecosystems
• Promote social equity by generating new types of employment and local economies

Simply put, sustainability is the “why,” and circular economy is the “how.”

The Circularity Gap: A global challenge

The circularity gap is a measure of how far off we are from achieving a closed-loop system. Currently, only a fraction of the resources we use are reused. According to data from the Circularity Gap Report, global circularity has dropped from 9.1% in 2018 to 6.9% in 2024.

This drop is alarming and reflects rising material consumption, increasing complexity in product design, and systemic barriers to reuse and recycling. The vast majority of resources are still disposed of in landfills, incinerated, or locked away in infrastructure that won’t be accessible for decades.

The implication is clear: if we are to live within planetary boundaries, closing the circularity gap must become a central goal for all economies.

The business case for circularity

For many organisations, the circular economy might sound like a lofty ideal. But in practice, it offers real, measurable advantages:

• Cost efficiency: Reusing and recycling materials lowers input costs, especially for manufacturing businesses.
• Supply chain resilience: Circularity avoids reliance on unpredictable raw material markets.
• Innovation and competitive edge: Designing for circularity often leads to product innovation, improving functionality, durability, and consumer loyalty.
• Regulatory compliance: As governments introduce tighter rules around waste, emissions, and product life cycles, early adoption of circular principles ensures future readiness.
• Brand reputation: Sustainability-focused customers are increasingly rewarding companies that align with circular values. This translates to stronger customer loyalty and brand trust.

What’s holding circularity back?

Despite rising global awareness, several challenges are still slowing down the shift to a circular economy.

Here are some of the most pressing barriers:

Fragmented global supply chains

Modern supply chains are often sprawling, complex, and increasingly globalised. This makes it difficult to trace materials, recover waste, and return resources into circulation. Products and packaging often cross multiple borders, involve various subcontractors, and end up in regions where waste infrastructure is inconsistent or non-existent.

This complexity severely limits our ability to manage waste efficiently or enable consistent circularity across industries. Without transparent, connected data systems, post-consumer materials are often lost, landfilled, or incinerated instead of being recovered.

For example, in 2022, the world generated 2.3 billion tonnes of municipal solid waste, yet a significant proportion, estimated at over 60% globally, was still not recycled or properly treated.

Among the most challenging waste streams is electronic waste (e-waste), which is growing rapidly due to shorter product life cycles and consumption trends. In 2022, the world produced 62 million tonnes of e-waste, but only 22.3% was formally collected and recycled.

Inadequate infrastructure

Many regions still lack robust waste collection and processing capabilities, leading to underutilisation of circularity adoption.

Design that impacts circularity

Design plays a defining role in materials’ end-of-life recoverability. Choices made at the product stage can either enhance material recovery or lock waste into linear disposal streams.

• Analytics show that around 80% of a product’s environmental footprint is determined during the design phase, impacting its reparability, recyclability, and reuse potential.

Moreover, around 17% of plastic packaging in the EU is multilayer and largely non‑recyclable at scale, less than 5% is effectively recycled due to technical limitations in separation and sorting processes

Policy gaps and regulatory challenges

While regulations are improving, consistent global adoption remains imbalanced. Policy frameworks often lag behind the pace of innovation:

• As of early 2025, 75 countries had published national circular economy strategies, but progress toward implementation varies widely.
• In the EU, packaging waste recycling targets have been raised to 65% by 2025 and 70% by 2030, yet only the recycling of plastic packaging lags significantly behind these thresholds.

How can my business start thinking circular?

Start with an audit

Where is waste being generated? What materials are most costly to dispose of? These questions should form the foundation of a circular strategy.

Focus on extending product lifespan

Explore the introduction of maintenance, repair, and upgrade services to extend product use and build customer loyalty.

Opt for circular materials

Where possible, switch to recycled, recyclable, or biodegradable materials. Even small changes, especially in packaging, can make a big difference.

Train your team

Collaboration is essential; everyone needs to be moving in the same direction. Focus on building internal awareness and knowledge around circularity. Sustainability needs to be everyone’s job.

Measure your impact

Use data to track resource efficiency, waste diversion rates, and carbon savings. Transparency builds trust and guides decision-making.

The bigger picture: A shared responsibility

The circular economy isn’t just a business trend; it’s a societal shift. As the global population grows and resource constraints tighten, we need to find new ways of producing, consuming, and thinking.

Whether you’re a retailer looking to reduce packaging, a manufacturer aiming to minimise raw material costs, or a tech firm exploring repair and reuse programs, circularity presents a path toward meaningful impact.

It’s a system that rewards innovation, collaboration, and responsibility. And importantly, it doesn’t require perfection to begin, just commitment.

Choosing a more sustainable future

The climate crisis, rising material costs, and increased regulatory pressure all point in one direction: business as usual is no longer sustainable. But change doesn’t have to be overwhelming.

By embedding circular principles into their operations, organisations can reduce risk, unlock new value, and contribute to a more resilient world.

The circular economy offers a roadmap to a better future, one where economic growth and environmental value go hand in hand.

Start thinking circular today

At Reconomy, we believe that the circular economy should be accessible to all. Through our three service loops: Recycle, Re-use, and Comply, we support over 23,000 businesses across 150+ countries to embed circularity into their day-to-day operations.

Our #CloseTheGap campaign is a tangible way to help organisations understand their circularity impact and take tangible steps toward a waste-free future. Whether you’re looking to improve your returns logistics, streamline waste management, or stay compliant with evolving sustainability regulations, we’re here to help.

Want to learn how your business can thrive through circularity?

Visit #CloseTheGap and take the first step toward a more sustainable tomorrow.