In 2017, the Circle Economy Foundation identified a critical need for accurate measurements of the circular economy. Recognizing the absence of baseline data to gauge the circular state of the world and track progress, the first Circularity Gap Report was introduced in January 2018 at the World Economic Forum in Davos.
This inaugural report revealed a global circularity of only 9.1 per cent, highlighting a substantial Circularity Gap and laying the foundation for a framework and knowledge base to assess and monitor efforts aimed at closing this gap. Since then, there have been seven iterations of the Circularity Gap Report, with the latest being launched in January.
So, where are we after seven years of tracking global circular economy metrics? Let’s take a look at the key findings of the 2024 Circularity Gap Report.
Circularity remains in decline globally.
The 2024 CGR reveals a concerning trend despite the concept of circular economy gaining popularity worldwide. While discussions on circularity have tripled in the past five years, the use of virgin materials in the global economy is on the rise, and the share of secondary materials has dropped from 9.1 per cent in 2018 to 7.2 per cent in 2023. This reflects a continuation of the trend since 2018 and exacerbated by the global pandemic in 2020/21.
Despite circular economy aspirations reaching 'megatrend' status, actual progress is lagging, and the total materials consumed globally has surged in the past six years. Urgent action is needed to avoid missing out on crucial social and environmental benefits, risking a slide into circular washing without tangible impact.
Planetary boundaries continue to be exceeded, and circular economy solutions can help.
Currently, six out of nine key 'planetary boundaries' crucial for environmental health have been breached, mainly due to the linear 'take-make-waste' model. The Circularity Gap Report 2023 proposes implementing 16 circular economy solutions in order to reverse the overshooting of planetary boundaries and reduce global material extraction needs by one-third. Embracing principles such as using resources more efficiently, incorporating regenerative materials, and recycling materials at their end-of-life can drive this reduction. In the face of escalating environmental challenges, there is a critical need for a circular economy.
While material consumption historically improved living standards, we are at a pivotal moment where its continual acceleration, particularly in high-income countries, no longer ensures increased human wellbeing. Wealth and material disparities exacerbate societal instability and strain Earth's life support systems. Wealthier nations can no longer justify unlimited material consumption in the name of progress. To enhance development, resilience, and safeguard wellbeing during times of uncertainty, the global economy must embrace circular principles.
Government and industry must embrace change.
To effectively transition to a circular economy, governments and industries must depart from flawed development patterns that sustain socially and environmentally exploitative practices.
This requires:
Creating a level policy playing field:
Establish a fair policy environment by implementing rules and legal frameworks that incentivize sustainable and circular practices. Penalize harmful practices to shape economic activities at the industry and national levels.
Getting the economics right:
Adjust fiscal policies and utilize public investment to establish accurate prices. This ensures that circular solutions gain value, gradually replacing traditional linear norms.
Building circular expertise and skills:
Prioritize the development of expertise and skills essential for a circular economy. Ensure that individuals are adequately trained to facilitate a just transition, distributing opportunities and livelihoods equitably across societies.
The circular economy must meet environmental and human wellbeing needs.
Achieving a just transition requires a practical application of the circular economy with a systems thinking approach. This is essential not only because systemic change must meet people's needs, but also because people and their skills are crucial for implementing these solutions.
While human wellbeing encompasses various factors, the 2024 CGR report focuses specifically on how the circular transition can enhance wellbeing through the provision of decent work. Jobs are identified as a robust indicator of human wellbeing, addressing financial security, meaning, fulfillment, community, and social mobility.
Designing circular solutions with the world's most vulnerable in mind is crucial. When implemented effectively, the circular economy goes beyond creating jobs and meeting basic needs. It has the potential to enhance job quality and safety, reducing inequalities not only within workforces but also across entire populations.
A resilient and forward-looking system should prioritize wellbeing by directing materials towards industries and practices that uplift communities and restore ecosystems. Simultaneously, it must phase out harmful ones, with a particular focus on reducing their impact in higher-income countries. This approach is essential for building a sustainable and regenerative future that safeguards both human prosperity and the health of the ecosystems we rely on.
We must target key global systems: food, the built environment, and manufactured goods.
The report highlights the impact of key global systems on Earth, pushing us beyond safe limits in six planetary boundaries. Three crucial systems are examined, focusing on transformative circular solutions:
1. The Food System:
Nourishes populations and employs 50 per cent of the global workforce.
Drives a quarter of climate change overshoot due to greenhouse gas (GHG) production.
Animal farming alone uses over one-quarter of all land (equivalent to the Americas).
Nearly a quarter of freshwater resources are lost due to rampant food waste.
The single largest driver of biodiversity loss
2. The Built Environment:
Essential for livelihoods, including housing, commercial buildings, and mobility infrastructure.
Extraction of minerals for construction materials causes a quarter of global land use change.
Buildings' construction, use, and demolition contribute to approximately 40 per cent of global GHG emissions.
Construction and demolition processes drive nearly one-third of all material consumption.
3. Manufactured Goods:
Includes vehicles, textiles, appliances, and equipment with associated production processes.
Big employers with production processes often relying on fossil fuels, driving one-third of climate change overshoot.
Material- and energy-intensive industrial activities linked to deforestation, contributing to 15 per cent of land use and freshwater planetary boundaries.
Manufacturing goods generates substantial hazardous industrial waste and chemical leaks into the environment.
Strategies for building a global circular economy should be catered to the level of development and overall impact of the countries in question.
The report tailors recommended policy solutions according to country income levels. These tailored approaches aim to address the unique challenges and opportunities associated with varying income levels across countries.
For high-income countries (HICs) such as Australia, the US, Japan and EU nations, a "shift" is advocated, emphasizing a radical reduction in material consumption while preserving well-being.
In the case of middle-income countries (MICs) such as Indonesia, Brazil, Mexico and Egypt, the report suggests a "grow" strategy, aiming to stabilize material consumption.
Meanwhile, low-income countries (LICs) such as Bangladesh, Pakistan, Ethiopia and Nigeria are advised to "build," focusing on increasing material consumption to fulfill the needs of their populations.
Summary
The 2024 CGR finds that the circular economy movement is “gaining popularity, but falling short of action”. Despite the volume of discussion among government, industry and academia increasing over the past five years, the share of secondary materials consumed in the global economy continues to decrease and overall consumption continues to increase.
It is crucial for governments, financial institutions and the general public to act now by introducing policies and frameworks that incentivise circular practices, ensure circular solutions are funded, remove pricing externalities and empower workers with circular expertise and skills. At the heart of all this must be a dedication to a new economic model that maximises benefits for people across and within countries while minimising pressure on the planet and the systems that support life on it.
To read the 2024 CGR or previous iterations in full, visit https://www.circularity-gap.world/.