Imagine trying to fill a leaky bucket. Despite the sincerest efforts, the bucket does not stay full due to unnoticed cracks that allow water to escape. This analogy perfectly sums up the challenges associated with circular economy goals.
In theory, this may not seem to be the case. After all, the 2025 circular economy market size is $517.79 billion. The market is even exhibiting a CAGR of 11.4% until 2029.
The concept does promise a closed-loop system where resources are reused, recycled, and regenerated. However, there may be hidden threats that act as cracks undermining progress.
To truly seal the system, we need to first identify the invisible leaks. This article will expose those hidden threats and share practical ways to fix the circularity problem.
Current Status of Circular Economy Efforts
A bird’s-eye view of the world tells us that circularity has been a policy priority in recent years. Europe has emerged as the largest consumer of recycled materials, with a 2023 circularity rate of 11.8%. The European Economic Area (EEA) has a clear vision for a circular economy, where every stage of a product’s lifecycle is considered.
In other words, sustainability is emphasized in design, production, consumption, and even waste management. Can we already picture smart robots sorting textiles for recycling and stylish packaging that can be used again and again? Certainly, the basics have been covered. Here’s a breakdown of three key drivers of circular economy efforts worldwide:
Government-Led Initiatives
Since we have just mentioned Europe, let’s begin with the regulations introduced by the European Union (EU). Perhaps the most notable one is that of eco-design, which bans the destruction of unsold textiles and footwear (with some SME exemptions).
There were 35 actions listed in the action plan, which the government would implement. As mentioned, this framework has enabled member nations to increase secondary material consumption.
The Finland circular economy roadmap is another example, which has enabled the country to be a pioneer. The Circular Economy Index is 25% in Finland, compared to just 14% in Denmark.
The US is in a separate class, as there is no single national-level initiative. The Environmental Protection Agency (EPA) has introduced a national recycling strategy, but there are also initiatives on the local and state levels. Even this decentralized system has achieved improvements in recycling infrastructure and the reduction of plastic waste.
Corporate Engagement and Innovation
Companies, motivated by cost savings and regulatory pressures, are devising innovative solutions to meet circularity goals. Progress has been made in product design, supply chain circularity, and recycling methods.
Take the example of Adidas, which converted oceanic plastic into sneakers. Apple, on the other hand, introduced modular components. Additionally, 24% of the company’s raw materials came from recycled sources.
Both Apple and IKEA have committed to becoming circular by 2030. Others, like Microsoft, are also making strides towards zero-waste goals. This has created room for recyclable products, material reuse, and resale models.
Tech-Fueled Transformations
We cannot miss out on the technologies of the Fourth Industrial Revolution. They have acted as critical enablers in advancing circular economy goals.
For instance, AI-powered recycling robots are sorting materials accurately (as previously mentioned). Not only that, but robotics also helps with the dismantling of products. An example is Apple’s Daisy robot, which deconstructs iPhones to recover rare materials.
Blockchain is helping verify product provenance and condition. 3D printing is fueling on-demand production using recycled materials. Digital marketplaces are facilitating the reuse and resale of goods.
The Silent Disruptors of Circular Transformation
Despite the progress, our world is not moving at the pace of Europe when it comes to circularity. A study has discovered that the share of secondary materials in the global economy dropped from 9.1% in 2018 to 7.2% in 2023. That’s a shocking 21% drop in five years.
What’s keeping the world at large stuck in a backward loop? Let’s look at the top silent disruptors to circularity that need to be addressed:
Poor Product Design
In a circular economy, products are designed to be reused, refurbished, and eventually recycled so the materials can circulate within the economy as long as possible. However, poorly designed products undermine this vision.
They are often difficult or downright impossible to disassemble without damaging the components. Examples would include:
- Use of glue instead of screws
- Incompatible parts
- Fragile components that indicate planned obsolescence
Worse yet, some products use hazardous substances like per- and polyfluoroalkyl substances (PFAS). These toxic chemicals, with their use in manufacturing Aqueous Film Forming Foam (AFFF), are responsible for causing injuries like cancer.
Furthermore, components are no longer designed with industry standards in mind. This makes products unfit for multiple ownership cycles.
Hidden Chemical Hazards
The broader vision of a circular economy relies on one critical assumption: the materials being cycled are safe. Since most products designed today use some form of chemical, their safety largely depends on the chemicals used.
Hidden chemical hazards contaminate material streams, endangering human and environmental health. Ultimately, they derail circular economy goals. One example already mentioned is PFAS. Their use in AFFF may be banned or restricted, but consumer goods with unclear sourcing still carry the risk of PFAS.
The AFFF lawsuit exposed the depth of chemical integration in firefighting foam and everyday materials and how toxic substances persist across product lifecycles. Not only that, but even waste management is compromised.
The widespread presence of PFAS in drinking water sources has raised serious concerns. How did the chemicals end up there? Through industrial discharge, landfill leachate, and improper disposal of firefighting foam and consumer products. Besides PFAS, this issue perpetuates through phthalates, brominated flame retardants, and heavy metals.
Lack of Circular Infrastructure
Imagine if the systems needed to enable resource reuse, recovery, and recycling were undermined. That’s the reality, where physical, technical, and organizational circularity infrastructure is missing or underdeveloped.
Poor infrastructure contributes to the contamination of recyclable streams, mixed waste, and an increased risk of toxic substances. The United Nations Environment Programme (UNEP) has deemed reduced waste generation as the only viable solution to the world’s waste problem.
It is expected that municipal waste will rise by two-thirds in the next two decades. The costs to process this waste safely will double. A major roadblock is the lack of even basic waste services in developing regions.
At this rate, we are in no position to think in terms of advanced waste management systems. The disparities, unless removed, will allow linear models to persist, thereby failing overall circularity efforts.
Complex Regulatory Environments
Regulations are indeed needed to ensure human and environmental safety. However, overly complex and poorly aligned regulatory requirements inadvertently hinder circularity. They become a hidden threat because the barriers often exist within legal and bureaucratic processes.
Take the example of fragmented or conflicting regulations that vary at local, national, and international levels. Manufacturers and recyclers must then navigate inconsistent standards for product design, material safety, and waste classification. Moreover, overly restrictive definitions of waste continue to define certain resources as waste. This leaves no incentives to reuse or recycle.
A pertinent example of this hidden threat is the European Union’s Waste Framework Directive (WFD) 2008/98/EC. There were several loopholes, like inconsistent implementation across member states and ambiguities in end-of-waste criteria. This stifled innovation and increased operational costs.
Practical Measures to Neutralize the Barriers
Is it possible to fix the world’s waste problem and envision a successful circular economy? The International Finance Corporation (IFC) believes so. However, climate tech investments need to rise; the funding dropped by nearly 41% back in 2023.
This drop was fueled by geopolitical turmoil, inflation, and rising interest rates. If this continues to happen, circular infrastructure development will stall, and new business models will be undermined. In line with greater climate tech investments, governments and companies need to take the following practical measures:
Strengthened Regulatory Framework
Governments worldwide need to maintain clear and strict regulatory standards without making them too complex. One example to emulate is the PFAS ban to be enforced from early 2026.
Beyond that, extended producer responsibility (EPR) should be mandated. This will ensure that companies manage the end-of-life impacts of their manufacturing/production processes.
There is also a dire need for digital product passports to ensure transparency of chemicals and raw materials. Most importantly, the regulations should stay consistent at all levels to avoid confusion and encourage circularity.
Embracing New Business Models
Based on the regulatory standards, businesses will have to make relevant changes. This would include designing products with modularity/circularity in mind and implementing supply chain transparency.
What’s even more important to embrace is a wholly new business model that does not prioritize short-term profits and rapid consumption. The take, make, and waste concept must be replaced with models that maximize resource value, reduce waste, and extend product lifecycle.
What would a possible new business model cover? Products would become a service as businesses lease or rent them out. Instead of discarding outdated products, services would facilitate repairs. Reverse logistics programs (like IKEA’s furniture takeback program) would help recover products at the end of their useful life.
Tracking and Reporting Progress
This one can be a collaborative action where governments and companies maintain robust monitoring systems to make circularity goals measurable and transparent.
The former would have to develop standardized circular metrics. This can be done using indicators like material circularity, recycling rates, and product lifespan. Once the consistent baseline is established, these indicators can be integrated into company ESG frameworks.
Progress tracking is then possible via circular economy public dashboards. Companies can use advanced technologies like IoT to track products throughout their lifecycle. Key Performance Indicators (KPIs) can be set at the departmental level to drive internal accountability.
The bottom line that one and all are concerned with is whether it is possible to build a circular economy (despite the challenges). The answer to that is thankfully affirmative.
The International Chamber of Commerce recognizes opportunities in practically every realm: financial, technological, social, and infrastructural. Four key areas must underpin all circularity efforts, including:
- Multilateralism cooperation to address barriers globally
- Harmonization of regulations to create one standard for all companies
- Technical expertise and inclusivity for practical and scalable solutions
- Basel Convention beyond linearity for proper waste management
The right mix of policy, innovation, and collaboration can dismantle the hidden threats. It’s not a question of whether that’s possible, but of how quickly and boldly we choose to act.
Frequently Asked Questions
What are the top hidden threats to achieving circular economy goals?
Some of the top threats that silently destroy circular economy efforts include poor product design, chemical hazards, a lack of circular infrastructure, and complex regulations. They obstruct material flow, disrupt product lifecycles, and create new waste streams.
How can technology empower circular economy efforts?
Technology can play a transformative role in circularity by enabling more efficient use of resources. It can lead to innovative product design, enhanced tracking, and supply chain transparency. Even recycling accuracy can be improved using smart waste management systems.
Is it possible to overcome the hidden threats to circular transformation?
Yes, but doing so will require coordinated action on the part of the government and companies. Unless stronger regulations, corporate accountability, and consumer awareness become a priority, circular economy efforts may continue to fall short.
References
International Finance Corporation: The World has a Waste Problem. Here’s How to Fix It
International Chamber of Commerce: Putting the circular economy into motion
UN Industrial Development Organization: NATIONAL CIRCULAR ECONOMY ROADMAPS
UN Environment Programme: Beyond an Age of Waste