Circle Economy study: How to combat the steadily falling global circularity rate

Together with business consultancy Deloitte, global impact organisation Circle Economy Foundation has published its “Circularity Gap Report 2024” today, which highlights how the global circularity rate is currently falling from 9.1 percent to 7.2 percent despite the number of discussions, debates and articles related to the circular economy having almost tripled over the past five years. This means while everyone is talking the talk, very few are actually walking the walk.

“We are currently overshooting five of the nine boundaries crucial to the health of our planet—continuing along this path will mean putting people and planet increasingly in harm’s way. Through a circular economy, we can relieve these pressures, bringing humanity back within a safe operating space,” states the Amsterdam-based organisation whose goal it is to double global circularity by 2032.

The latest report is a step in that direction and moves from theory to action by identifying how the three main enablers of policies and legal frameworks, finance and labour and skills can drive sustainable progress worldwide across wealthy (“Shift”), middle-income (“Grow”) and lower income (“Build”) countries. Also, “the world's wealthier nations can no longer use progress as an excuse for unrestricted material consumption,” warns the report.

Moving from theory to action also means addressing the root causes of linear impacts and breaking free from flawed economic practices known to be socially and environmentally exploitative, ultimately changing the rules in favour of circular practices. “This will require unlocking capital, rolling out bold, contextually appropriate policies and closing the sustainable and circular skills gap,” proposes the report.

How bad is it?

In the last five years, humans consumed a whopping 500 billion tonnes of materials—nearly equal to what was consumed during the entire 20th century(!). This means that worldwide, we are consuming more virgin materials than ever while the share of secondary materials is in decline.

“Leveraging the Circularity Gap Report, stakeholders are able to prioritise their circular roadmap based on a data-driven analysis. Policymakers, industry leaders and financial institutions can agree on focus areas and work collaboratively on the systemic change needed to stay within our planetary boundaries,” comments Ivonne Bojoh, CEO of Circle Economy Foundation, in a press release.

“To ensure the transition to a circular economy is just and fair, circular solutions must be designed with the world’s most vulnerable populations in mind, then these solutions will reduce inequalities across workforces and increase job opportunities worldwide,” adds Bojoh.

Policies and legal frameworks

In this area, the report stresses that policies and legal frameworks could incentivise sustainable and circular practices while penalising harmful, linear ones, with wealthy nations focusing on adjusting regulations in the construction and manufacturing industries, for example setting standards for product durability and strengthening the Right to Repair legislation.

In middle-income countries, fostering circular agriculture and manufacturing would be a top priority with local governments imposing and enforcing public bans and limits on pollution, mandating Extended Producer Responsibility schemes and requiring a minimum amount of recovered materials for all new production while directing funds to regenerative farming.

„Lower-income countries could prioritise sustainable development through circular policies in construction and agriculture. These include relieving debt and improving access to development and transition capital, securing smallholder farmer rights and incentivising the use of local, organic and secondary materials in construction,” advises the report.

Finance

To unlock finance for circular construction and manufacturing in high-income countries, the study suggests rethinking accounting standards and practices as well as rolling out taxes to increase the price of unsustainable products.

In emerging economies, governments could shift subsidies away from polluting practices in agriculture and manufacturing and towards clean, regenerative ones. In addition, they could ensure that all future investments align with ecological and social wellbeing standards.

For lower-income countries, the study suggests development and transition funds to support circular measures across key sectors like agriculture and construction—regenerative farming and smart urban planning, for example.

Labour and skills

The report underscores the need to enable a just transition by bridging labour and skills gaps: “This means education curricula—especially for vocational education—should include green disciplines and skills. Short-term courses could be a solution to meet the immediate and growing demand for green jobs, from renewable energy technicians to repair specialists.”

In addition, it suggests for developing countries to formalise informal employment and focus on making emerging jobs decent, inclusive and well-paid to ensure a just transition for all.

Fast Fashion

In the area of fashion, the report urges to eschew fast fashion in favour of sustainable textiles. This goes along with drastically reducing new clothing purchases and repairing, reusing or recycling used clothing. Priority should be given to natural and local textile manufacturing, as well as higher-quality and more durable garments.

The report also mentions examples of where sustainable development has been successful, among them Hafencity in Hamburg, Germany, a former industrial brownfield site that was turned into an inclusive city-within-a-city; CocoaAction Brasil, which uses regenerative farming to empower small-scale cocoa farmers and positively impact production systems; Rwanda’s Circular economy Action Plan for the construction sector; and China’s manufacturing sector, which is being upgraded through an eco-industrial park programme, industrial symbiosis and remanufacturing.

The full “Circularity Gap Report 2024” is accessible at circularity-gap.world/2024.