Why it’s time to transform markets and embrace the circular economy

We don’t have time for incremental change. In addition to its devastating planetary impacts, the linear “take, make, waste” system does not offer the long-term stability and resilience our economy needs to deliver prosperity.

The business case for change has never been stronger: economic headwinds, supply chain disruptions, consumer distrust and geopolitical conflict are reshaping the landscape. In times of disruption, entrenched systems are questioned, opening the door for innovation and new market leadership.

Leaders have two choices: act with urgency to accelerate change or adapt to markets that will change around them.

Business leaders increasingly agree that finding ways to succeed commercially while respecting planetary boundaries is a key business imperative. Just ask anyone in the insurance industry – the supreme arbiters of risk.

Insurance leaders have been consistently warning that the effects of climate change will make insurance premiums unviable, potentially undermining the entire financial system and putting capital at risk. In the food industry, manufacturers are seeing that unless they act to help nature thrive, their supply chains will literally dry up.

Innovative leadership can shape the future of markets but it requires a shift in mindset.

The circular economy is not a nice-to-have sustainability play; it’s a competitive strategy to generate long-term value, reduce risk to capital and build resilience, balancing commercial interests with the needs of the planet.

Through design, we can eliminate waste and pollution, circulate products and materials at their highest value and regenerate nature, creating an economy that benefits people, businesses and the natural world.

It’s firmly on leaders’ agendas. Today, 75% of businesses recognize circularity as important, up from 40% just three years ago. Capital investment in circular initiatives has grown by over 70% in the same period. The shift is real and it’s happening now.

Here’s what we’ve learned: individual business transformation gets you started but market transformation gets you results. The more businesses prioritise reuse initiatives, the easier it becomes for the entire market.

The most visionary business leaders are looking beyond their own operations to transform the conditions in which they compete. Because while markets continue to externalize environmental costs and undervalue crucial transition investments, even the most committed businesses hit systemic barriers.

This requires more than just agreeing on a vision – it’s a new type of leadership. Businesses need to collaborate and cooperate in new ways to break down shared barriers.

Individual business action towards a shared vision is crucial to identifying systemic barriers and can accelerate solution development. However, it’s time to take the next step, to take everything we’ve learned about roadblocks to change and build shared pathways through them.

Commercial collaboration paired with collective advocacy can unlock circular solutions at scale. When businesses align on systemic barriers, we can present a unified voice to policymakers, who need clear evidence of positive business intent to create supportive policies.

Policy alone will not move fast enough, though – businesses can go further. By working together, companies can invest in solutions, launch joint ventures, share infrastructure or co-develop products and services that create new circular value.

Take critical minerals. Tech and energy firms, as well as governments, are seeking to safeguard access to critical minerals such as copper, nickel, and lithium, in the face of an expected fivefold rise in demand by 2040.

A circular economy for these materials could keep them circulating at their highest value, closing the supply-demand gap while insulating companies against supply shocks and price volatility. The environmental wins are substantial but the business case drives action.

Commercial collaboration can accelerate innovation, create new markets, build key infrastructure and drive customer adoption much more efficiently and effectively than businesses focusing only on transforming themselves. And they can still compete robustly in the marketplace.

With the right governance, safeguards and ambition, commercial collaboration can expedite system change well within the bounds of competition laws.

We have to redesign the “rules” and how businesses operate within them. To achieve a thriving circular economy, we need policies that support innovation and innovation that supports infrastructure.

The plastics industry is working towards this right now. Over 280 companies, including market leaders such as PepsiCo and Unilever, have joined the Business Coalition for a Plastics Treaty to speak with an aligned voice in advocating for global regulatory changes for every business using plastic.

In parallel, these businesses continue to work towards reducing their own use of virgin plastic. The advocacy supports the business action and the business action strengthens the advocacy while both accelerate results.

This twin strategy of working towards changes at the market level while pursuing parallel investments within businesses can break markets out of linear limitations. It takes negotiating skills and new thinking but next-gen collaboration and cooperation create unstoppable momentum.

The circular economy is a strategic business imperative. The world needs bold, integrated action from business leaders who are ambitious for market transformation. Leaders who understand that transforming their market transforms their results.