The circular economy is gaining popularity, but falling short on action

The Circularity Gap Reports have provided crucial analysis and theory on the global state of circularity since 2019.

This year’s report turns theory into action.

It lays out a roadmap for ambitious change to unlock capital, roll out bold policies and close the skills gap.
Circle Economy Foundation, creators of the Circularity Gap Report, is delighted to continue its collaboration with Deloitte for the second consecutive year. This partnership seeks to drive systemic change by investigating tangible solutions and opportunities for collaboration between the private and public sectors.

The circular economy has reached megatrend status.

The volume of discussions, debates and articles on the concept has almost tripled over the past five years.

But global circularity is still in decline.

The share of secondary materials consumed by the global economy has decreased from 9.1% in 2018 to 7.2% in 2023—a 21% drop over the course of five years.

And consumption continues to accelerate.

In the same period, we have consumed over 500 gigatonnes. That's 28% of all the materials humanity has consumed since 1900.
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To walk the talk, governments and industries must break free of flawed development patterns that fuel socially- and environmentally-exploitative practices

The figure shows countries plotted by Human Development Index (HDI) and Material Footprint per capita. As HDI rises, so does material consumption, and consequently pressure on the environment. We need a new economic model for the 21st century: one that maximises benefits for people and minimises the pressure on the planet’s life support systems. This is a circular economy.
Human Development Index (HDI)
Material Footprint per capita
(displayed as the number of planets needed to sustain the lifestyle of each country’s average citizen)

Different countries have different priorities

Our circular solutions cover three key systems: food, the built environment and manufactured goods. For each country profile—lower-income Build, middle-income Grow and higher-income Shift—we highlight the most relevant systems. And, for the first time, we place people at the centre of this story, exploring the jobs and skills powering the circular transition.
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Successful systemic change relies on governments, financial actors and citizens alike to:

Level the policy
playing field

by introducing policies and legal frameworks that incentivise circular practices while penalising harmful ones.

Get the economics right

by adjusting fiscal policy to create true prices and ensuring that circular solutions are funded.

Build circular
expertise and skills

by ensuring that crucial workers are empowered, while circular opportunities are fairly distributed across and within societies.
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Shift countries

On average, residents of high-income Shift countries enjoy affluent, comfortable lifestyles and perform well on social indicators. However, they consume far more than their fair share of materials.

These countries must focus on reducing material extraction and use to lighten their environmental burden.

Two key systems that can lead this transformation are:
Built environment
Reward market players for investing in circular solutions and business models
  • Implement regulations that prioritise renovation, retrofitting and adaptive reuse.
  • Develop certifications and warranties for secondary materials.
  • Roll out standards and criteria for circularity.
  • Roll out circular land ownership models, such as Community Land Trusts.
Make circular building projects an attractive investment option
  • Cut property taxes and provide tax credits or reduce insurance premiums for circular construction.
  • Establish a common language amongst stakeholders in the financial and building sectors.
  • Rethink accounting standards and practices.
Close the labour and skills gap with a mix of education and policy
  • Address labour shortages in the industry by aligning policy and increasing the attractiveness of jobs.
  • Include the circular economy in Technical and Vocational Education and Training (TVET) curricula, lifelong learning systems and workplace training.
  • Review and (re)formulate skills development policies with a focus on migrant and informal workers.
Encourage products to be designed for circularity: durable and easy to reuse, repair and recycle
  • Strengthen universal Right to Repair legislation and Extended Producer Responsibility.
  • Set standards for material efficiency and product durability.
Use pricing and convenience to nudge people toward sufficiency lifestyles
  • Develop an environmental ‘score’ for all products or ban the advertising of unsustainable goods and services.
  • Apply heavier inheritance and wealth taxes to cut luxury consumption.
  • Provide consumers with financial incentives such as bonus cheques or reduced tax on circular products and services.
  • Consider taxing material extraction rather than labour.
Foster a cultural shift through education and legislation
  • Invest in and use just transition funds to foster skills development, education and training.
  • Roll out job guarantees and explore reducing the standard work week to encourage a less materialistic lifestyle.
  • Roll out awareness-raising campaigns to overcome cultural barriers to a more circular lifestyle.
See how it works in practice

Grow countries

Many middle-income countries are and will likely remain key manufacturing and industrial hubs.

This necessitates a shift to make their growth sustainable as well as supportive and safe for workers.

Two key systems that can lead this transformation are:
Food system
Roll out policies to encourage nutritious choices and cut food waste
  • Roll out market-based incentives that make healthy and sustainable foods the most attractive option.
  • Mandate food waste reporting and reduction targets.
  • Raise awareness about food products' environmental and social impact.
Reform economic incentives and regulations to prioritise regenerative farming and holistic land management
  • Direct subsidies away from industrial agriculture and towards sustainable farming.
  • Establish fact-based regulatory frameworks by introducing efficient approval processes, certifications, labels and accessible intellectual property.
Empower and protect farmers engaged in regenerative agriculture
  • Create just transition funds to de-risk and enable changes in farming practices.
Remove barriers to scaling circular manufacturing with clear and mandatory targets and aligned incentives
  • Introduce policy measures that impose and enforce public bans and limits on pollution.
  • Tax material- and carbon-intensive production and subsidise energy- and material-efficient practices.
  • Integrate eco-industrial parks and hubs into national policy frameworks.
Direct capital investments and promote technology transfers to scale up green tech
  • Regulate and incentivise corporations to revise intellectual property laws towards more flexibility.
  • Ensure investments integrate social requirements.
Develop a plan for sustainable skills development for the jobs of tomorrow
  • Invest in skills development programmes with a focus on workers vulnerable to the transition.
  • Set up systems for mapping skills needed across the entire value chain.
  • Encourage exchanges between vocational education institutions and industry.
  • Promote social dialogue and partnership in planning, designing and implementing national and sectoral policies.
See how it works in practice

Build countries

Lower-income Build countries generally struggle to meet basic needs for healthcare and education.
Two key systems that can lead this transformation are:

For these countries, the primary objective is to use materials to improve living standards.

Food system
Unlock investment in climate mitigation and adaptation
  • Implement debt relief and fair access to capital markets via Green Bonds and Climate Funds.
  • Implement efficient, stable and transparent regulatory and business frameworks.
  • Secure land rights and tenure policies to protect smallholder farmers.
  • Set concrete policy targets for soil, water and biodiversity.
Enable farmers to invest in innovations to increase agricultural output and quality
  • Credit farmers and landowners engaged in regenerative agriculture.
  • Make the transition less risky for small-scale farmers through grants, microfinance and smallholder loan guarantees.
Ensure ‘future-proof’ skill sets with training and skills pathways and recognise Indigenous, regenerative practices
  • Facilitate the transition from the informal to the formal economy for both workers and economic units.
  • Promote knowledge transfer, training and comprehensive skills development programmes.
  • Support a holistic curriculum for skills development and training, involving all relevant stakeholders.
  • Establish employment-related services that are adapted to the needs of the rural populations.
  • Recognise informally learnt and practised regenerative approaches in formal education.
  • Establish funding for skills development initiatives.
Built environment
Cultivate enabling policy conditions for a circular built environment value chain
  • Develop and implement localised, tailored and simplified building codes.
  • Leverage circular public procurement to support traditional circular building techniques.
  • Identify dominant regional waste streams and offer guidelines on integrating waste into construction.
  • Ensure regulations prioritise circular practices such as repair, renovation, retrofitting and maintenance.
Allow local governments to plan and adapt for circularity with financial and technical resources
  • Use development funds to support urban planning departments.
  • Provide affordable access to capital and technologies such as prefabrication and 3D printing.
Facilitate labour-intensive circular building solutions with skills development and informal economy processes
  • Establish and fund training programmes and TVET courses.
  • Design, revise and update curricula to include circular construction skills.
  • Ensure community participation by involving local workers and businesses in decision-making for construction projects.
See how it works in practice

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