Climate change is one of the biggest challenges facing our generation and one of the most pressing issues that governments and businesses need to address today. Yet, one of the key strategic routes to achieving our net zero goals – circularity – remains significantly underutilised.
According to recent data from the Circle Economy Foundation (CEF) only 7.5% of the UK economy is circular. This means that more than 90% of materials are either wasted, lost or remain unavailable for reuse. Boosting circularity can not only help cut down UK carbon emissions by 43%, but it can also drive economic growth.
The Department for Environment Food and Rural Affairs (Defra) estimates that UK businesses could benefit by up to £23 billion per year through improvements in the efficient use of resources. So why is then circularity so limited? How can we create a circular economy in the UK to advanFce the government’s net zero goals and tap into the huge growth potential of circularity?
Addressing the challenges with systems change
One of the answers to these questions lies in addressing the challenges to scaling circularity initiatives. Many business leaders struggle to translate strategy into real-life initiatives that can deliver tangible results as circularity touches many areas of their business, making it harder to determine the right approach. Another issue is that circularity initiatives are sometimes seen as an additional cost to the business that can hinder growth.
To address these challenges, business leaders need to find effective ways to drive growth through green business models and optimise resources across the supply chain. Organisations also need to think strategically about key enablers such as skills and building partnerships to scale and support the business circularity goals. This may require process changes, reconfiguring supply chain relationships as well as a change of mindset and ways of working.
By driving systematic changes across the business ecosystem, organisations will be able to turn their green initiatives into a long-term competitive advantage. As consumers demand more sustainable products, adopting circularity across the product lifecycle ensures the customer remains central. Further, circular design and operational principles drive the creation of business value and can be a catalyst for growth.
Despite the challenges, circularity adoption is growing
Despite the challenges around scaling circularity initiatives, we are seeing significant uptake in business adoption. A healthy 72% of organisations in our 2024 survey said that recycling products is a core aspect of their manufacturing strategy, up from 53% in 2022. A similar proportion have now incorporated sustainable design principles to reduce dependency on fossil-fuel feedstock sources and forest resources. Our data also shows increased emphasis on sourcing raw materials locally, waste recovery, and product recycling, with 80% of the advanced adopters stating that they are working towards a circular value chain compared to 59% of late adopters.
As businesses become more mature in their circularity adoption, data-driven decision making will become increasingly important. Technological solutions such as AI and data analytics can play a significant role in driving circularity initiatives by improving life cycle assessment, resource discovery, and identifying opportunities for material and process optimisation.
Creating opportunities for innovation
There is a huge untapped opportunity for new circular business models: from building circular supply chains, through product life extension, introducing sharing platforms, recovery & recycling services or delivering product as a service. For instance, the peer-to-peer fashion rental app, By Rotate, allows consumers to hire luxury designer clothes and accessories from top brands, while commercial food waste management platform, Winnow, helps chefs cut food waste in half. Other businesses like Kabadiwalla Connect provide waste collection and processing solutions for cities, while companies like Bundles offer home appliances on a pay-per-use basis.
Innovations like this are important for driving circularity forward but there is more work that needs to be done to scale these solutions and drive mainstream adoption. To achieve this, organisations need to take more accountability for what they are putting into the market, alongside developing effective incentives that encourage consumers to adopt new sustainable behaviours, including reusing, repairing and recycling. From offering rewards to proving easy and efficient return services, changing consumer behaviour is a key factor in scaling organisations’ circularity efforts.
Building a successful circularity strategy
Building a successful circularity strategy requires clear vision and a holistic approach that looks at every aspect of the product lifecycle to determine key areas that require change or optimisation. Gathering data insights from across the business value chain can help answer key questions that can inform the circularity strategy. For instance, how do we make procurement more circular? What changes do we need to make to our product design processes to drive circularity? How can we extend the life of our products and improve waste management? Many organisations are focusing only on the recycling component, but they should be also thinking about how they can reduce waste and the broader aspects of circularity.
Identifying realistic goals and concrete metrics for assessing the impact of circularity initiatives is a key factor for ensuring success. By embedding circularity in the full value chain, investing digital technologies, and making sustainability goals an enterprise-wide priority, organisations will be able to advance their circularity strategies and build a long-term competitive advantage that drives innovation and growth. This, coupled with government policies and industry collaboration that encourage circularity, can help drive widespread adoption, getting a us a step closer to achieving ournet zero goals.