Circular Economy

Businesses who enable more responsible production and consumption (SDG 12) via the principles of a circular economy are not only addressing various global challenges such as climate change, biodiversity loss, waste, and pollution, they are providing a way to potentially reduce costs, minimise supply chain risk, build resilience, and create new market opportunities.

What is the circular economy?

A circular economy is a system in which the value of resources and materials are fully recognised and therefore the life cycle of products is extended, material efficiency and utilisation is increased; and waste is reduced to a minimum.

The goal of the circular economy is to consume less of the planet’s finite resources and natural capital.

Why do we need to create a circular economy?

Finite resources

Demand for raw materials is growing as a result of population growth and rising levels of average income, however, supply of critical raw materials is finite. Natural resources such as fresh water are becoming increasingly scarce due to demand pressures and climate change.

Land degradation and deforestation

This increasing demand for raw materials and natural resources is a major cause of biodiversity loss and broader ecosystem degradation. Reducing demand for raw materials provides an opportunity to protect and restore our natural environments.

Greenhouse gas emissions

It is estimated that between 45-50% of global greenhouse gas emissions come from material resource extraction and processing.


We currently extract materials from the Earth, make products from them, and eventually throw them away as waste to landfill or for incineration. This leads to large amounts of waste polluting our environment, and disproportionately impacts the poorest in society.

What can businesses do?

Circular economy strategies can be placed into four categories:

  1. Reduce material inputs, which can be achieved through e.g., refusing unnecessary packaging, material-efficient product design and manufacturing, dematerialisation; and substitution;
  2. Keep products and components in use, which can be achieved through increased durability, upgrading, sharing, reusing, repairing, resale, refurbishing, remanufacturing, repurposing;
  3. Cycle materials back into the economy, usually through recycling;
  4. Regenerate natural systems, which can be achieved through the use of biodegradable materials in products.

Measuring companies’ circular economy performance with regards to material flows, physical assets, and services is a crucial first step in the adoption of circular economy principles. You can learn more about these topics, in our resource section, below.

Support from the UN Global Compact Network UK

Open to members of the UN Global Compact Network UK, our newly launched Circular Economy Working Group provides a forum for companies to discuss ongoing challenges and solutions related to the implementation of circular economy principles that support businesses to reduce greenhouse gas (GHG) emissions and create positive outcomes for nature and people. To find out more about the group and how you can join, visit our webpage here.