Circular Transformation of Industries 2025

Historically, businesses often looked at circularity only through the lens of waste collection/recycling and predominantly focused their circularity efforts on increasing sustainability or complying with regulations. As is clear now, circularity also generates economic value that extends beyond sustainability and regulatory compliance to resilience, revenue growth and cost savings to support long-term competitiveness in terms of customers, talent and scarce resources. A survey of 420 global top executives in 10 manufacturing industries, completed in July 2024, outlines that executives understand the broader value creation opportunity that circularity can provide. It shows that today 3% of businesses pursue circular solutions for sustainability reasons only, while 97% of businesses adopt circular solutions for a broad set of reasons that may include sustainability but also extend to profitability and resilience. The survey shows that businesses expect broad positive economic value from their circular solutions three years from now. As many as 73% of businesses in the survey expect circular solutions to deliver revenue gains. Repair, refurbishment and other lifespan extension services, as well as capacity-sharing such as the rental of heavy equipment, open the possibility of new revenue streams. Businesses also stand to gain access to new customer segments and increase demand among existing customers who opt for circular products and the services to maintain them. Some 65% of businesses expect their resilience to improve with circular strategies, mainly by reducing their reliance on scarce raw materials, reducing complexity of supply chains and increasing predictability of supply and demand. The same proportion of businesses expect their greenhouse gas (GHG) emissions to decrease with circular solutions. The size of emissions savings, however, depends on the products and the specific circular solutions being deployed. In contrast, 22% of businesses expect an increase in carbon emissions. In some circular models, businesses must account for emissions at a product’s end of life which would have been outside their Scope 1 emissions in linear models – for example, the GHG output from transporting used products back to businesses’ facilities for refurbishment and repair. The anticipated impact on cost savings was slightly more balanced: 56% of respondents expect circular solutions to deliver cost savings, mostly driven by lower cost for customer acquisition and retention. Some businesses, however, anticipate higher costs due to initial investments in circular solutions and operational complexity. Unlocking broad economic value Circularity as an opportunity for value creation FIGURE 3 Businesses expect that circular solutions will unlock economic value GHG emissions 65% 13% 22%Revenue 73% 17% 10%Resilience ~65%65% 11%24%Cost ~56%56% 19% 25% Positive Neutral Negative% of businesses engaging in circularity that expect a positive/ neutral/negative impact three years from now Source: Global market survey by Circular Transformation of Industries initiative of 420 top executives (conducted during the second quarter of 2024) Circular Transformation of Industries: Unlocking Economic Value 8