Four scenarios on the future of circular economy
The circular economy holds the promise of a zero-waste future, yet formidable challenges in technology, finances, and regulation persist. How will governments and businesses overcome these obstacles to achieve true sustainability?
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How close are we to a world where everything, from towering skyscrapers to the smallest household item, is designed with its entire lifecycle in mind? The circular economy envisions a future free from waste, where materials are continuously reused, recycled, and repurposed. But substantial technological, financial, and regulatory obstacles stand in the way.
While they’re not an exhaustive list of all the possible future directions, the four scenarios below analyse pivotal trajectories that could shape the future of the circular economy in the decades ahead, providing a strategic lens for organisations to explore the diverse ways the future might unfold.
In our scenario-building process, we focused on the following set of key driving forces that will influence the future development of a circular economy:
Regulations to promote circular economy
Development of environmental technologies
Metrics to measure circularity
Adoption of circular business models
Investments in the transition to circular economy
Adoption of carbon pricing
Climate awareness
Scarcity of resources
In each scenario, we examine the different ways these drivers may evolve in the years ahead, as well as the different ways they may interact and influence each other. All four scenario descriptions also include a development timeline section, which lists three to six steps that could plausibly happen to move us closer to the given scenario. The purpose of this section is to give readers a list of signs and indicators to look out for when monitoring future developments.
Learn more about our scenario-building method here.
Scenario 1: Global shift to a circular economy fuels sustainable economic growth
Across the globe, a large-scale transition towards a circular economy is already underway. Governments are actively leading the change by enacting robust policies and offering economic incentives to encourage companies to adopt greener practices and improve recycling efforts. This push from the public sector is synergised by advancements in technology, the emergence of successful case studies, and the increasingly evident cost benefits, all of which spur corporations toward more circular business models.
The transformation is bolstered by global collaboration and substantial investments, particularly in developed nations, and increasingly in developing ones. These joint efforts are dramatically reducing the reliance on newly mined raw materials while simultaneously decreasing environmental pollution, carbon emissions, and energy consumption.
The adoption of circular production models also catalyses economic growth in several key ways. It stimulates innovation in green technologies and processes, attracts investment in circular models, and creates new jobs focused on recycling, remanufacturing, and circular product design. Additionally, reduced material costs and enhanced efficiency lower operational expenses for businesses, boosting profitability and competitiveness on a global scale.
Development path for scenario 1
2026: The shift towards a circular economy gains momentum, fueled by new public and private initiatives, increased global cooperation, and escalating societal demands for climate action.
2028: An increasing number of cities and companies across the globe begin to finance their transition towards a circular economy through mechanisms like green bonds.
2030: Through public and private investments, along with strong governance frameworks, circular economy practices are scaled up significantly in developing countries, bridging the gap between developed and emerging economies.
2035: Technological advancements—such as AI robotics, landfill mining, rapid recycling, blockchain, virtual reality (VR), augmented reality (AR), the Internet of Things (IoT), 3D printing, and drones—propel the implementation of circular economy models.
2037: Various business models rooted in circular principles, such as the sharing economy, Product-as-a-Service, and resource recovery and recycling, gain mainstream appeal and momentum.
2040: The circular economy becomes the global standard, increasing employment and economic growth while reducing the use of scarce raw materials and mitigating the severe impacts of emissions and climate change.
Scenario 2: Uneven progress across the world
Many developed nations, particularly in Europe, have achieved notable levels of circularity thanks to large-scale public and private investments and technological advancements. However, the substantial economic and political costs associated with this transition pose significant challenges for developing countries, which lack the infrastructure and capital to build the foundation for a circular economy.
Without a coordinated international effort to bridge the gap, global progress towards a circular economy remains uneven, hindering the achievement of climate targets and leaving many environmental challenges unresolved.
This uneven progress not only hampers efforts to mitigate climate change but also perpetuates global inequalities. The gap between developed and developing countries in adopting circular practices leads to a dual-speed world where wealthier nations enjoy the benefits of resource efficiency and reduced environmental impacts, while poorer regions continue to deal with resource scarcity and pollution. Such disparities exacerbate economic divides, as countries lagging behind in the circular transition face trade barriers and decreased competitiveness in a global market increasingly valuing sustainability.
Development path for scenario 2
2025: A wave of disruptive technologies helps boost resource productivity and reduce material consumption in developed economies.
2028: Regulations are updated to support the implementation of a circular economy in many developed countries. For example, new laws mandate the reuse or recycling of materials in sectors like construction and electronics. In contrast, developing countries lack legal frameworks to promote circular economy practices.
2030: Many developed countries establish new metrics to measure circularity, such as the longevity of infrastructure and products. These metrics start to rival traditional economic indicators such as GDP.
2035: Without a globally unified approach to the circular economy, the world makes little progress towards achieving the Sustainable Development Goals and climate targets, leaving major environmental problems unsolved.
Scenario 3: Greenwashing remains a major barrier to achieving a fully functional circular economy
As political and social support for sustainable practices grows, the transition toward a circular economy gains momentum. Carbon pricing emerges as a formidable tool to combat climate change, rapidly gaining traction globally. With widespread and globally coordinated adoption of carbon pricing, recycled and reused resources start having a price advantage over carbon-intensive natural resources. This, along with societal demands for corporate responsibility, incentivises companies to adopt circular business models.
Despite this progress, greenwashing remains a significant barrier that prevents the circular economy from maturing into an effective economic model. Many established companies struggle to adapt to the changing competitive landscape. Faced with the pressure to appear environmentally friendly yet reluctant to implement fundamental changes, these companies often resort to misleading environmental claims to maintain market relevance.
Moreover, carbon trading systems introduce an alternative but problematic solution. Companies can sidestep the need for recycling and reduction efforts by purchasing emission rights. This option, often cheaper and less demanding than overhauling business practices to align with circular principles, allows companies to meet regulatory requirements without reducing their actual carbon footprint. This loophole underscores a critical gap between policy intentions and real-world environmental outcomes.
Development path for scenario 3
2025: An increasing number of countries are turning their ambitious emission reduction goals into tangible actions.
2026: The use of carbon pricing and trading instruments expands globally, supported by coherent policy actions that more accurately price emissions' environmental costs.
2028: Purchasing emission rights and genuinely adopting circular economy principles become two competing market strategies for companies.
2030: New companies founded on circular principles begin to disrupt the market, as they have a competitive advantage over traditional businesses rooted in linear economic models.
2032: Despite some achievements in circularity, greenwashing remains a problem for both new and established companies due to the absence of transparent and stringent regulations guiding the green transition.
Scenario 4: The traditional linear economy continues to dominate globally
The push for a circular economy is hindered by the ongoing availability of raw materials, which diminishes the urgency to innovate in recycling technologies. Technologies like rapid recycling processes, AI-driven recycling robotics, and landfill mining are still nascent, which further slows the shift towards resource sustainability. Additionally, the current economic structures do not favour recycling—often, it is more costly than profitable, deterring businesses from adopting more sustainable practices.
Furthermore, the general preference for convenience over sustainable practices, coupled with a widespread lack of understanding about the circular economy among citizens, businesses, and governments, stalls the implementation of regulations necessary to promote a circular economy. Consequently, much of the world continues to operate under a "business as usual" linear economic framework, delaying critical climate action.
Development path for scenario 4
2025: Due to inadequate education on circular economy principles, both consumer awareness and market penetration of circular products remain limited.
2026: Business practices and regulatory frameworks continue to support an economy centred on consumption and convenience.
2028: Technological barriers and the prevalence of linear business models hinder the design of products for repairability, upgradability, reusability, and recyclability.
2028: The expansion of resource extraction to new frontiers—from the Arctic to the deep sea and outer space—mitigates any immediate resource scarcity concerns for businesses and major global powers.
2032: Rapid industrialisation in developing countries boosts the global middle class, leading to a sharp increase in consumption. The capitalist modes of production persist in many developing economies to meet this demand.
2035: Many companies founded in the linear economy continue their business-as-usual practices due to the lack of coordination across companies, industries, and governments.
