Circular Transformation of Industries 2025

The transition from linear to circular business models is challenging and involves trade-offs. The survey finds that some businesses have not yet identified how to leverage circular solutions to reduce GHG emissions (35% of businesses), increase resilience (35%), grow revenues (27%) and decrease costs (44%). Businesses face high upfront investments, such as allocating sufficient time and building necessary capabilities, to advance along the experience curve. In fact, more than 65% of businesses identify financial concerns, particularly high upfront investment or ongoing costs, as major challenges. Beyond those, organizational structures present obstacles. These include a lack of stakeholder engagement, insufficient time allocation, gaps in capabilities or knowledge and lack of common understanding on circularity, all of which are cited by another 60% of businesses. This is aligned with the significant shift businesses are undergoing from a multi-decade focus on optimizing costs, service levels and inventory to an expanded set of priorities that also includes resilience, responsiveness and responsible operations to stay competitive. The research for this paper suggests that businesses that are successfully mitigating challenges and unlocking broad economic value through circular solutions are applying some combination of the following enabling strategies. 1. Identify the “how” and “when” of key value creation opportunities, as outlined in a previous paper by the World Economic Forum, Bain & Company and the University of Cambridge, entitled “The Circular Transformation of Industries: The Role of Partnerships”:14 –Identify key sources of value in a circular value chain (control points), which include access to materials (e.g. recycled materials and used products for disassembly) and access to information (e.g. technical knowledge of how to produce, repair and dispose of circular goods). Determine how to achieve access to these control points to differentiate from competitors and stakeholders along the value chain. –Identify crucial inflection points that determine the moment when circular products become cost-competitive with their non-circular equivalents, or when a circular solution becomes the market standard. Define which levers can positively affect inflection points with the goal of lowering production costs and accelerating consumer adoption of circular products and services. –Curate a combination of circular solutions with the right sequencing for the organization, for instance by leveraging the operational expertise gained from lifespan extension solutions when implementing capacity-sharing solutions. 2. Embed circularity in the business strategy and secure an executive cross-functional mandate with appropriate funding to develop and implement circular solutions. Define clear roles and decision rights, and engage and incentivize employees across levels to build excitement and ownership. In fact, around 70% of businesses identify organizational engagement as a key enabler for their circular solutions. 3. Create a clear circular partnership strategy to influence control points, for example, gaining access to materials and knowledge. More than 60% of surveyed businesses highlighted it as a key enabler. If necessary, build a value chain-wide coalition to tip inflection points and to set up the infrastructure necessary for change beyond their own organization at the industry and/or regional or national levels. This was outlined in an earlier paper by the World Economic Forum, Bain & Company and the University of Cambridge, entitled “Circular Transformation of Industries: The Role of Partnerships”.15 4. Establish a circular monitoring strategy to identify roadblocks and the dynamics that prevent successful scaling of circular solutions. Double down on the lessons learned to accelerate the experience curve and, as a result, decrease production costs of circular products. The three chapters that follow suggest enabling strategies for each archetype and describe how the circular transformation of industries can unlock value across sustainability (in this paper, sustainability is evaluated in terms of GHG emissions), resilience, revenues and costs. Each can be read independently, allowing readers to focus on the sections most relevant to their needs. Mitigating challenges and identifying enabling strategies Circular Transformation of Industries: Unlocking Economic Value 10