A circular economy is a nonlinear approach aiming to eliminate waste and pollution, keep products in use for longer, make better use of finite resources and help regenerate natural systems. In recent years, its critical role in combating global challenges, most notably climate change and in supporting humankind’s quest for a sustainable future is gradually being recognized, evidenced by consensus in global events such as COP28.

Despite public discourse around the concept nearly tripling in the past five years, global circularity has declined. The 2024 Circularity Gap Report by Circle Economy Foundation reveals a gradual decrease in global circularity from 9.1% in 2018 to 7.2% in 2023. The public’s consensus and increased awareness of the circular economy have not been effectively translated to practical implementation.

Enhancing circularity, the cornerstone of the circular economy, requires a concerted effort from society. Both the public and private sectors play a critical role in driving consumers’ participation in recycling and reuse. This article delves into three critical ways to realize a circular economy through increased circularity: policy incentives, consumer education and a closed-loop system.

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1. Policy measures to propel circularity forward

Faced with the pressing challenges of resource depletion and environmental degradation, major economies worldwide are moving forward with policy frameworks to bolster circularity, demonstrating a growing commitment to circular economy principles worldwide.

The EU’s new circular economy action plan (CEAP), adopted in March 2020, inherited its earlier version in 2015. The new action plan aspires to aid the union’s transition into a circular economy. It focuses on sectors where the potential for circularity of resources awaits to be leveraged, including but not limited to electronics, batteries, plastics and textiles. According to data from the European Environment Agency, an increase in circular material use rate has been observed from 2010 to 2022, and countries including Belgium and Italy have achieved more than a 5% increase on the benchmark.

Meanwhile, China has pledged to its “Dual Carbon” goals, peaking carbon emissions by 2030 and achieving carbon neutrality by 2060 through a mix of regulatory measures and economic incentives that aspire to increase circularity across the society. China recently promoted a nationwide, large-scale trade-in scheme for equipment and consumer goods, establishing a comprehensive recycling and reuse system. While incentivizing the circularity of goods and materials, the program hopes to optimize and diversify the reuse options of recycled items other than raw materials, enabling more fiscal support for industrial bodies and consumers who take part in the action.

2. Empowering consumers through education

Consumers can play a significant role in backing businesses’ environmental ambitions, and business-led educational campaigns to increase consumers’ awareness and exposure to recycling options have been proven pivotal to increasing consumers’ participation in recycling and circularity across society.

IKEA, known for its commitment to sustainable practices and operations, has launched a series of educational campaigns to increase the circularity of its products by promoting the idea that its furniture can be repurposed and reused. The Swedish company directly involves consumers in their circular economy by repurchasing consumers’ used furniture and listing them in IKEA’s second-hand stores, fostering a more sustainable way to treat furniture and encouraging mindful consumption.

In China, ATRenew, a NYSE-listed company venturing into the recycling business, has launched a public welfare project in 541 communities across 15 cities nationwide. The project aims to educate residents about recycling by using smart recycling kiosks installed in communities, and those who put recyclable materials into the kiosks are rewarded with points. With increased exposure and more convenient access to recycling options, residents’ participation in garbage sorting has surged. Within nine months since its launch, over 50,000 residents were acquainted with green consumption and circularity-related education.

3. Creating a closed-loop system with supply chains

To further advance circularity, it has become imperative to establish a closed-loop system that encourages the return of products for refurbishment, resale, recycling or reuse. This approach goes beyond traditional supply chains by integrating reverse logistics to preserve or recover the value of used products, followed by their subsequent reentry into the market.

This vision is embraced by manufacturers worldwide, including Coca-Cola. Through collaboration with recyclers, packaging manufacturers and other parties across its supply chain, the company aims to maximize the reuse of its packaging materials, particularly PET plastic bottles and aluminum cans. To close the loop fully, the company has set an ambitious target in its World Without Waste campaign of collecting and recycling every bottle sold or can by 2030.

In addition to manufacturing giants, recycling and second-hand companies, including India’s Cashify, are pioneering circular economy models with closed loops. In India, tens of millions of smartphones are resold yearly in a vibrant second-hand market. Through its integrated platform, which includes online services, physical stores and kiosks, Cashify facilitates the convenient sale and purchase of used smartphones and other electronics.

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The journey towards a circular economy necessitates a multifaceted strategy through economic incentives, consumer education and the creation of a closed loop for recycling and reuse. The shift towards a circular economy emerges not merely as the responsibility of an individual sector but as a collaborative endeavor spanning governments, businesses and consumers. Through unified efforts and a commitment to these discussed strategic approaches, the increase of global circularity and the transformation of the current linear economy into one that is circular and sustainable for the planet’s generations is well within reach.