Circular Transformation of Industries 2025

Conclusion The world is about to experience an accelerated revolution in business models, with many linear models28 reaching their limits and businesses having to respond to big shifts in the business environment – including labour challenges, supply shortages, broad demands for more sustainability, evolving customer expectations, evolving regulation and the emergence of transformative technologies such as artificial intelligence – which are obligating businesses to re-examine the way they operate. When the triple planetary crisis,29 fuelled by the overconsumption of resources, is added to this mix, circularity offers a way forward. Circularity creates a compelling value proposition for a broad set of stakeholders while allowing businesses to remain competitive and productive. It is more sustainable because it reduces resource extraction, waste and GHG emissions. It has the potential to enhance resilience in a world of near- constant turbulence and directly addresses what is possibly one of the biggest challenges of the future: scarcity. Moreover, circularity offers the opportunity to increase corporate revenues through growing customer demand and a shift from one-off sales to lifetime servicing. And while circularity may initially face high investment outlays, it can decrease costs in the long run. Circular business models, however, do involve trade-offs. For businesses used to yearly product launches, making goods that last longer, are replaced less often and are used at a higher frequency will require not only a change in business models, but also a significant shift in mindset. It requires executives to allocate sufficient resources, including time to upskill employees and to acquire the necessary expertise and partnerships, for circular transformation. Ultimately, both operating models and monetization models have to evolve.The research conducted gives reasons for optimism. A growing number of businesses are demonstrating that these challenges can be overcome and that circular transformations can deliver substantial economic value if done right. It suggests that businesses that successfully unlock economic value through circularity do the following: –Understand which of the three archetypes (or combination of archetypes) can generate the most value from circular transformation, and consider the archetype-specific enabling strategies. –Gain access to critical sources of value by establishing a circular partnership strategy. –Embed circularity in the business strategy, secure an executive cross-functional mandate and adopt incentives. –Establish a circular monitoring strategy that allows for identifying roadblocks and scaling circular solutions. The World Economic Forum, together with Bain & Company and the University of Cambridge, launched the Circular Transformation of Industries initiative to support businesses with their circular transformations. In particular, the initiative seeks to help businesses overcome challenges, set up circular pilot programmes, and explore how to form ecosystems and partnerships to accelerate their circular transformations. Learn more and join the community on the Forum’s Circular Transformation of Industries web page.30Businesses active across 10 manufacturing industries increasingly recognize that circular solutions can deliver broad economic value. Circular Transformation of Industries: Unlocking Economic Value 22