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The circular economy is now an economic and industrial strategy. Here's why
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Three-quarters of business leaders say that circularity is important for economic valueresilience and growth. Image: Photo by Homa Appliances on Unsplash
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This article is part of: Centre for Nature and Climate
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- Once framed predominantly as an environmental imperativecircularity is now an economic and industrial strategy that belongs in the boardroom.
- The focus is currently on implementation: concrete pathways to scalecoordinated action across value chains and measurable economic returns.
- As a core industrial strategycircularity can help transform industriesand strengthen competitiveness and resilience within planetary boundaries.
The circular economy is entering a period of renewed salience. Once framed predominantly as an environmental imperativecircularity has matured into an economic and industrial strategy that now belongs in the boardroom.
Todaynearly 80% of business leaders say that circularity is important or very important to their organizations – up from 36% three years ago.
That figure is expected to rise to 95% within the next three yearsaccording to the Circular Transformation of Industries: The Art of Scaling Circular Supply Chains white paperwhich saw the World Economic Forum and Bain & Company survey nearly 500 global executives across 10 manufacturing-centric industries.
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This shift signals an inflection point. Circularity is no longer only about doing less harm; it is about doing better business.
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Circularity as a driver of resilience and competitiveness
At the World Economic Forum’s 2026 Annual Meeting in Davosbusiness and government decision-makers reinforced circularity as an industrial strategy that can simultaneously strengthen resilience and resource securityenhance competitiveness and growthand advance environmental sustainability.
The conversation has moved decisively beyond awareness of circularity’s strategic relevance. The focus is now on implementation: concrete pathways to scalecoordinated action across value chains and measurable economic returns. Three dynamics explain this renewal moment.
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1. Strengthening resilience and resource security
Firstcircularity strengthens resilience and resource security in a more fragmented and volatile global economy. Supply chain disruptionsmaterial concentration risks and commodity price volatility have exposed structural vulnerabilities in linear systems.
In the current context of geopolitical fragmentation and intensifying competition over critical inputsdependence on primary resource extraction is increasingly viewed as a strategic risk.
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Geopolitical realignments and shifting trade patterns are reshaping corporate and national priorities. Circular approaches that expand the use of secondary materials reduce exposure to external shocks while strengthening regional and national capabilities.
The World Economic Forum’s The Global Risks Report 2026 ranks natural resource shortages and concentration among the top global risks over the next decade. Against this backdropcircularity has emerged as a geoeconomic strategy that enhances resiliencestrategic autonomy and resource security.
2. Enhancing competitiveness and growth
Secondcircularity has become an economic competitiveness and growth strategy. Circular business models are unlocking new revenue streamsstrengthening margins through material efficiencyand building deeper customer engagement models.
In sectors facing constrained volumes and margin pressurecircular approaches enable recurring revenues across services and secondary markets while extending product lifecycles. More than 70% of manufacturing executives expect circular solutions to boost revenues by 2027according to the Forum and Bain.
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How a circular economy could strengthen the clean energy supply chain of the future
Here’s why we should be bullish on extended producer responsibility
Materials: Is this the new frontier for international collaboration?
This momentum is mirrored in global policy shifts. The European Union’s forthcoming Circular Economy Act and China’s 15th Five-Year Plan position circularity and resource efficiency as central to industrial competitiveness.
What was once framed primarily as cost avoidance is increasingly viewed as value creation. According to estimates from the International Labor Organizationthe transition to a circular economy could generate 7-8 million new jobs globally through expanded reuserecycling and refurbishment activities.
3. Advancing environmental sustainability
Thirdenvironmental sustainability remains a core rationale for circularity and becomes more powerful when integrated into economic and industrial strategy.
The annual Earth Overshoot Day – marking the day when humanity’s demand for ecological resources and services in a given year exceeds what Earth can regenerate in that same year – underscores the widening gap between global resource demand and planetary capacityhighlighting the urgency of systemic change.
Pollution is ranked among the top global risks in both the near term and over the next decade in The Global Risks Report 2026. Circular models are among the most effective levers to reduce emissionsminimize waste and pollutionand lower material and energy intensity across value chains.
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Aligning economic value creation with planetary boundaries is no longer a trade-off but a strategic imperative. Scaling circular solutions offers a pathway to move Earth Overshoot Day closer to December 31 by reducing resource extraction and extending material lifecycles.
The European Environment Agency estimates that doubling Europe’s material use rate could cut climate-related impacts from material production by roughly 50%. In this waycircularity bridges environmental stewardship with long-term resilience and economic competitiveness.
Technology as a mission-critical enabler for the circular economy
Circular ambitions are well-establishedyet scaling these economic models has proven operationally complex.
Advances in artificial intelligence (AI)digital twins and traceability technologies are beginning to shift this equation. AI enables end-to-end asset tracking and lifecycle visibilityimproves matching between supply and demand for secondary materialsand optimizes predictive maintenancerefurbishment and asset utilization.
Leading companies are already demonstrating measurable results. One global industrial technology company deploys AI and digital twins across more than 190 factories and hundreds of thousands of product units to manage circular flowsachieving waste recovery rates above 99% at many sites. In East Asiaa large metals and materials company uses AI-enabled robotic sorting systems that reach over 99% accuracy at high processing speeds across plasticsmetalsand electronic waste streams.
Technologyhoweveris an enabler rather than a silver bullet; durable outcomes still require aligned incentivesinteroperable standards and supportive policy frameworks.
From individual action to system-level transformation
Across multiple industriescircular initiatives are advancing – from redesigned products and service-based models to recovery and reuse systems.
Yet much of this progress remains localizedconcentrated in specific business units or pilot programmes rather than embedded across entire value chains. As circularity moves from experimentation to industrial transformationregulatory clarityeconomic incentives and operational integration become increasingly important.
In some marketsmomentum around producer responsibilityrecycled content and eco-design standards has slowedwhile prevailing cost structures can make circular models harder to scale.
Within firmsestablished performance metrics and incentive systems often remain optimized for linear throughput rather than long-term value retention. These dynamics reflect the transitional nature of circular transformation rather than the lack of feasibility.
The next phase therefore requires coordinated alignment. Policy clarity and certaintycapital deploymentshared infrastructureinteroperable standardsdigital integration and scaled secondary material markets must converge to shift the market economics at sector level.
Embedded in executive accountability and treated as core industrial strategy rather than peripheral sustainabilitycircularity can drive the transformation of industriesstrengthening competitiveness and resilience within planetary boundaries.
The World Economic Forum has a number of initiatives working to advance circularity. The Forum’s Centre for Nature and Climate (CNC) works to secure shared prosperity and resilience within planetary boundaries. Within CNCthe Circular Transformation of Industries brings together more than 60 global companies and public sector leaders to accelerate the adoption of circular practices across value chains. The Global Plastic Action Partnership (GPAP) mobilizes governmentsbusinessesand civil society through 25 national partnerships to turn commitments on plastics circularity into coordinated action and system change.
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< data-emotion="wef i0nt5">.chakra .wef-i0nt5{line-height:1.2;border-radius:var(--chakra-radii-radius-full);font-weight:var(--chakra-fontWeights-semibold);transition-property:var(--chakra-transition-property-common);transition-duration:var(--chakra-transition-duration-normal);display:inline-flex;flex:0 0 auto;align-items:center;justify-content:center;border-color:var(--chakra-colors-border-on-image);border-width:var(--chakra-borderWidths-hairline);height:var(--chakra-sizes-size-600);min-width:var(--chakra-sizes-size-600);padding-inline-start:var(--chakra-space-space-200);padding-inline-end:var(--chakra-space-space-200);font-size:16px;color:var(--chakra-colors-text-on-image-default);border-:solid;width:100%;background:var(--chakra-colors-transparent);}.chakra .wef-i0nt5:focus-visible,.chakra .wef-i0nt5[data-focus-visible]{box-shadow:var(--chakra-shadows-outline);}.chakra .wef-i0nt5:disabled,.chakra .wef-i0nt5[disabled],.chakra .wef-i0nt5[aria-disabled=true],.chakra .wef-i0nt5[data-disabled]{opacity:1;cursor:default;box-shadow:var(--chakra-shadows-none);border-color:var(--chakra-colors-surface-on-image-disabled);color:var(--chakra-colors-text-on-image-disabled);pointer-events:none;}.chakra .wef-i0nt5:disabled svg path,.chakra .wef-i0nt5[disabled] svg path,.chakra .wef-i0nt5[aria-disabled=true] svg path,.chakra .wef-i0nt5[data-disabled] svg path{fill:currentColor;}.chakra .wef-i0nt5:hover,.chakra .wef-i0nt5[data-hover]{text-decoration:none!important;background:var(--chakra-colors-surface-on-image-hover);border-color:border.on-image.hover;color:var(--chakra-colors-text-neutral-default);}.chakra .wef-i0nt5:hover:disabled,.chakra .wef-i0nt5[data-hover]:disabled,.chakra .wef-i0nt5:hover[disabled],.chakra .wef-i0nt5[data-hover][disabled],.chakra .wef-i0nt5:hover[aria-disabled=true],.chakra .wef-i0nt5[data-hover][aria-disabled=true],.chakra .wef-i0nt5:hover[data-disabled],.chakra .wef-i0nt5[data-hover][data-disabled]{background:initial;}.chakra .wef-i0nt5:focus,.chakra .wef-i0nt5[data-focus]{box-shadow:var(--chakra-shadows-none);outline:2px solid;outline-color:var(--chakra-colors-border-accent-focus);outline-offset:2px;}.chakra .wef-i0nt5 span:has(svg){margin:var(--chakra-space-0);display:flex;width:var(--chakra-sizes-size-300);height:var(--chakra-sizes-size-300);align-items:center;justify-content:center;padding-inline-start:var(--chakra-space-0);padding-inline-end:var(--chakra-space-0);}.chakra .wef-i0nt5 svg{width:var(--chakra-sizes-size-300);height:var(--chakra-sizes-size-300);}.chakra .wef-i0nt5 svg path{fill:currentColor;}.chakra .wef-i0nt5 span{padding-inline-start:var(--chakra-space-space-150);padding-inline-end:var(--chakra-space-space-150);}.chakra .wef-i0nt5:active,.chakra .wef-i0nt5[data-active]{background:var(--chakra-colors-surface-on-image-pressed);border-color:border.on-image.pressed;color:var(--chakra-colors-text-neutral-default);}Subscribe today
< data-emotion="wef pw060m">.chakra .wef-pw060m{width:100%;max-width:90rem;margin-inline-start:auto;margin-inline-end:auto;padding-inline-start:var(--chakra-space-base);padding-inline-end:var(--chakra-space-base);padding-top:var(--chakra-space-large);padding-bottom:var(--chakra-space-large);}@media screen and (min-width: 56.5rem){.chakra .wef-pw060m{padding-inline-start:var(--chakra-space-large);padding-inline-end:var(--chakra-space-large);padding-top:var(--chakra-space-2xl);padding-bottom:var(--chakra-space-2xl);}}@media screen and (min-width: 90rem){.chakra .wef-pw060m{padding-inline-start:var(--chakra-space-3xl);padding-inline-end:var(--chakra-space-3xl);}}< data-emotion="wef 1k141dj">.chakra .wef-1k141dj{font-family:AkkuratLLWeb,sans-serif;font-weight:var(--chakra-fontWeights-black);line-height:var(--chakra-lineHeights-short);font-size:var(--chakra-fontSizes-h3);color:var(--chakra-colors-white);}< data-emotion="wef 1dtnjt5">.chakra .wef-1dtnjt5{display:flex;align-items:center;flex-wrap:wrap;}
< data-emotion="wef 1fertmg">.chakra .wef-1fertmg{width:100%;max-width:90rem;margin-inline-start:auto;margin-inline-end:auto;padding-inline-start:var(--chakra-space-base);padding-inline-end:var(--chakra-space-base);padding-top:var(--chakra-space-0);padding-bottom:var(--chakra-space-0);}@media screen and (min-width: 56.5rem){.chakra .wef-1fertmg{padding-inline-start:var(--chakra-space-large);padding-inline-end:var(--chakra-space-large);}}@media screen and (min-width: 90rem){.chakra .wef-1fertmg{padding-inline-start:var(--chakra-space-3xl);padding-inline-end:var(--chakra-space-3xl);}}< data-emotion="wef 18lbtgg">.chakra .wef-18lbtgg{display:grid;grid-gap:var(--chakra-space-space-200);grid-row-gap:var(--chakra-space-base);grid-template-columns:repeat(41fr);width:100%;max-width:90rem;margin-inline-start:auto;margin-inline-end:auto;}@media screen and (min-width: 37.5rem){.chakra .wef-18lbtgg{grid-template-columns:repeat(81fr);}}@media screen and (min-width: 56.5rem){.chakra .wef-18lbtgg{grid-gap:var(--chakra-space-space-300);grid-row-gap:var(--chakra-space-3xl);grid-template-columns:repeat(121fr);}}
< data-emotion="wef 1dtnjt5">.chakra .wef-1dtnjt5{display:flex;align-items:center;flex-wrap:wrap;}More on Circular Economy< data-emotion="wef 17xejub">.chakra .wef-17xejub{flex:1;justify-self:stretch;align-self:stretch;}< data-emotion="wef 1ugksho">.chakra .wef-1ugksho{transition-property:var(--chakra-transition-property-common);transition-duration:var(--chakra-transition-duration-fast);transition-timing-function:var(--chakra-transition-easing-ease-out);cursor:pointer;text-decoration:none;outline:2px solid transparent;outline-offset:2px;font-size:1rem;line-height:1.5rem;letter-spacing:1.3px;text-transform:uppercase;font-weight:700;color:var(--chakra-colors-greyLight);}.chakra .wef-1ugksho:focus-visible,.chakra .wef-1ugksho[data-focus-visible]{box-shadow:var(--chakra-shadows-outline);}.chakra .wef-1ugksho:hover,.chakra .wef-1ugksho[data-hover]{text-decoration:none;}See all
More on Circular Economy
< data-emotion="wef 17xejub">.chakra .wef-17xejub{flex:1;justify-self:stretch;align-self:stretch;}< data-emotion="wef 1ugksho">.chakra .wef-1ugksho{transition-property:var(--chakra-transition-property-common);transition-duration:var(--chakra-transition-duration-fast);transition-timing-function:var(--chakra-transition-easing-ease-out);cursor:pointer;text-decoration:none;outline:2px solid transparent;outline-offset:2px;font-size:1rem;line-height:1.5rem;letter-spacing:1.3px;text-transform:uppercase;font-weight:700;color:var(--chakra-colors-greyLight);}.chakra .wef-1ugksho:focus-visible,.chakra .wef-1ugksho[data-focus-visible]{box-shadow:var(--chakra-shadows-outline);}.chakra .wef-1ugksho:hover,.chakra .wef-1ugksho[data-hover]{text-decoration:none;}See all< data-emotion="wef qrllub">.chakra .wef-qrllub{grid-column:span 12/span 12;}
< data-emotion="wef sw29ts">.chakra .wef-sw29ts{display:flex;flex-direction:column;border-radius:0px;background:var(--chakra-colors-black);overflow:hidden;}< data-emotion="wef xnqvtg">.chakra .wef-xnqvtg{margin-bottom:var(--chakra-space-base);position:relative;width:auto;}
< data-emotion="wef 1qbpo0l">.chakra .wef-1qbpo0l{width:auto;height:auto;}
< data-emotion="wef 1xnlgsk">.chakra .wef-1xnlgsk{flex:1;justify-content:initial;flex-direction:column;}< data-emotion="wef 1c0if2w">.chakra .wef-1c0if2w{transition-property:var(--chakra-transition-property-common);transition-duration:var(--chakra-transition-duration-fast);transition-timing-function:var(--chakra-transition-easing-ease-out);cursor:pointer;text-decoration:none;outline:2px solid transparent;outline-offset:2px;color:inherit;display:block;height:100%;width:100%;position:relative;}.chakra .wef-1c0if2w:hover,.chakra .wef-1c0if2w[data-hover]{text-decoration:underline;}.chakra .wef-1c0if2w:focus-visible,.chakra .wef-1c0if2w[data-focus-visible]{box-shadow:var(--chakra-shadows-outline);}< data-emotion="wef 5sz0t5">.chakra .wef-5sz0t5{position:absolute;left:var(--chakra-space-small);bottom:var(--chakra-space-small);}
< data-emotion="wef 1kmcw0o">.chakra .wef-1kmcw0o{position:relative;max-width:var(--chakra-sizes-full);min-height:100%;}.chakra .wef-1kmcw0o>*:not(){overflow:hidden;position:absolute;top:var(--chakra-space-0);right:var(--chakra-space-0);bottom:var(--chakra-space-0);left:var(--chakra-space-0);display:flex;justify-content:center;align-items:center;width:100%;height:100%;}.chakra .wef-1kmcw0o>img,.chakra .wef-1kmcw0o>video{object-fit:cover;}.chakra .wef-1kmcw0o::before{height:var(--chakra-sizes-0);content:"";display:block;padding-bottom:56.25%;}
< data-emotion="wef 1cj5ood">.chakra .wef-1cj5ood{line-height:var(--chakra-lineHeights-short);font-size:var(--chakra-fontSizes-large);font-weight:var(--chakra-fontWeights-black);overflow:hidden;text-overflow:ellipsis;margin-bottom:var(--chakra-space-0);color:var(--chakra-colors-white);text-align:left;margin:var(--chakra-space-0);display:-webkit-box;-webkit-line-clamp:4;-webkit-box-orient:vertical;}@media screen and (min-width: 37.5rem){.chakra .wef-1cj5ood{font-size:var(--chakra-fontSizes-largest);}}@media screen and (min-width: 56.5rem){.chakra .wef-1cj5ood{font-size:3rem;}}
< data-emotion="wef 8xl60i">.chakra .wef-8xl60i{margin-top:auto;}Digital product passports: When does transparency truly matter for circular products?
< data-emotion="wef jwp324">.chakra .wef-jwp324{margin-top:auto;padding-top:var(--chakra-space-smaller);}@media screen and (min-width: 37.5rem){.chakra .wef-jwp324{padding-top:var(--chakra-space-base);}}
< data-emotion="wef t0m58g">.chakra .wef-t0m58g{line-height:var(--chakra-lineHeights-tall);font-size:var(--chakra-fontSizes-smallest);font-weight:var(--chakra-fontWeights-bold);margin-top:var(--chakra-space-0);margin-bottom:var(--chakra-space-0);color:var(--chakra-colors-white);}@media screen and (min-width: 37.5rem){.chakra .wef-t0m58g{font-size:var(--chakra-fontSizes-smaller);}}@media screen and (min-width: 56.5rem){.chakra .wef-t0m58g{font-size:var(--chakra-fontSizes-base);}}
Deborah DullPhil Brown and Judith Ketelslegers
< data-emotion="wef i054we">.chakra .wef-i054we{line-height:var(--chakra-lineHeights-tall);font-size:var(--chakra-fontSizes-smallest);font-weight:var(--chakra-fontWeights-normal);margin-top:var(--chakra-space-smallest);margin-bottom:var(--chakra-space-0);color:var(--chakra-colors-greyLight);}@media screen and (min-width: 37.5rem){.chakra .wef-i054we{font-size:var(--chakra-fontSizes-smaller);}}@media screen and (min-width: 56.5rem){.chakra .wef-i054we{font-size:var(--chakra-fontSizes-base);}}March 32026
< data-emotion="wef l545ti">.chakra .wef-l545ti{position:relative;border-radius:0px;background:var(--chakra-colors-black);overflow:hidden;color:white;}< data-emotion="wef 70qvj9">.chakra .wef-70qvj9{display:flex;align-items:center;}
< data-emotion="wef 3eu5vo">.chakra .wef-3eu5vo{position:relative;flex-shrink:revert;margin-right:var(--chakra-space-base);align-self:start;flex:0 0 auto;width:86px;}@media screen and (min-width: 56.5rem){.chakra .wef-3eu5vo{margin-right:var(--chakra-space-large);width:114px;}}< data-emotion="wef 1rb8idd">.chakra .wef-1rb8idd{flex:1 1 calc(100% - 80px - 24px);padding-right:var(--chakra-space-base);width:calc(100% - 80px - 24px);min-width:var(--chakra-sizes-0);}@media screen and (min-width: 56.5rem){.chakra .wef-1rb8idd{padding-right:var(--chakra-space-large);}}
< data-emotion="wef bbeb4l">.chakra .wef-bbeb4l{overflow:hidden;text-overflow:ellipsis;margin-bottom:var(--chakra-space-0);display:-webkit-box;-webkit-line-clamp:2;-webkit-box-orient:vertical;}
< data-emotion="wef 1nqbcyt">.chakra .wef-1nqbcyt{line-height:var(--chakra-lineHeights-short);font-weight:var(--chakra-fontWeights-black);color:var(--chakra-colors-white);font-size:var(--chakra-fontSizes-smaller);margin:var(--chakra-space-0);}@media screen and (min-width: 37.5rem){.chakra .wef-1nqbcyt{font-size:var(--chakra-fontSizes-large);}}
How a circular economy could strengthen the clean energy supply chain of the future
< data-emotion="wef 1fv70ju">.chakra .wef-1fv70ju{margin-top:var(--chakra-space-base);display:none;}@media screen and (min-width: 56.5rem){.chakra .wef-1fv70ju{display:block;}}
< data-emotion="wef ik8izd">.chakra .wef-ik8izd{line-height:var(--chakra-lineHeights-tall);font-size:var(--chakra-fontSizes-smallest);font-weight:var(--chakra-fontWeights-normal);color:var(--chakra-colors-greyLight);}@media screen and (min-width: 37.5rem){.chakra .wef-ik8izd{font-size:var(--chakra-fontSizes-smaller);}}@media screen and (min-width: 56.5rem){.chakra .wef-ik8izd{font-size:var(--chakra-fontSizes-base);}}