Circular Transformation of Industries 2025

The circular path to value The climate crisis and unsustainable resource consumption are existential threats to the planet and to the long-term productivity of businesses and industries. At current rates, humans are consuming 1.7 times more natural resources than the Earth can replenish each year.5 This overconsumption will, sooner rather than later, drive supply shocks and shortages of key materials. One solution, as explored in this paper, is a circular economy, which focuses on increasing the useful lifespan of manufactured goods, leveraging shared access to increase their utilization, as well as replacing the use of virgin materials with circular feedstock. The circular transformation will fundamentally reshape industries – a transformation in the world’s business models that is already under way. Circularity can unlock substantial value across stakeholders. Circular solutions can reduce the greenhouse gas (GHG) footprint of products. In fact, the Ellen MacArthur Foundation projects that by 2050, circular solutions could reduce emissions from the production of new products by 40% if applied to four key materials – plastic, aluminium, cement and steel.6 Additionally, reducing, reusing and recycling can lower the amount of waste generated, decrease pollution and preserve biodiversity by reducing the frequency with which products are replaced.7 Furthermore, circularity can exert a positive impact on society by spurring innovation and employment. The International Labour Organization estimated in 2019 that the circular economy could generate seven to eight million new jobs around the world by 2030, as compared to a business-as-usual scenario.8 In the business environment, circular models can create new revenue streams,9 giving businesses a competitive edge and delivering profitability and resilience superior to those of existing linear systems.10 The shift towards a circular economy is a multifaceted process that requires the participation of many actors, from policy-makers and academics to scientists, innovators and the entire value chain.11 But businesses are uniquely positioned to accelerate the momentum for circular transformation as they can influence both suppliers and customers to adopt circular practices.12 While acknowledging the substantial environmental and social benefits of circularity, this paper focuses on illustrating how a circular transformation can unlock substantial economic value for businesses and outlining enabling strategies to capture that value.The transition to circular business models involves trade-offs and requires a change in mindset as well as substantial resources. Circular Transformation of Industries: Unlocking Economic Value 7