Next steps

The way forward for businesses, financiers, and policymakers

Achieving circularity at scale calls for coordinated action from businesses, financiers and policymakers to help drive systemic change. The Value Gap highlights where value is lost across the global economy, revealing the risks embedded in current linear practices. Closing this gap will look to collective action to help address system-level challenges, dismantle linear lock-ins, and unlock transformational change. [42] Doing so is key not only to minimise value loss but also to help reduce economic risks, strengthen resilience, and build a circular economy that operates within planetary boundaries.

Business

Turning efficiency into opportunity

Businesses are practical enablers in translating circularity opportunities into real-world outcomes. By identifying inefficiencies in material use and innovating with new business models, organisations can preserve existing value and create new sources of value. Developing a robust business case for circularity is, therefore, an important first step. Such a case should be holistic: it should account not only for the value losses that stem from inefficient material use, but also for benefits such as enhanced supply-chain resilience, reduced vulnerability to fluctuating input costs, and stronger alignment with emerging regulatory and finance frameworks. Circular business models, ranging from lifetime extension and higher utilisation to the prioritisation of circular material inputs and technological innovations, offer concrete pathways to help reduce material throughput. Their success, however, could depend on business design choices, user behaviour, access to finance, and broader system conditions that often sit beyond the control of individual organisations. [43]

Key actions for businesses:

Business models and projects should demonstrate clear value and robust business cases to enable investors and financiers to prioritise them. This is essential to unlocking investments. As businesses begin to identify and pursue circular opportunities, a new set of questions emerges that extends beyond the remit of individual organisations. Which opportunities are most likely to deliver durable value creation and material impact? How can execution, technology and commercial risks—often higher or less familiar than in linear models—be robustly assessed and appropriately priced? And which financial vehicles or mechanisms may be best suited to support these initiatives as they move from pilots to scale? Addressing these questions is crucial to unlocking investment and translating circular business ambitions into system-level change, thereby requiring businesses to proactively engage the financial sector to co-create new investment models and mitigate risk in circular innovation.

Finance

Reorienting capital flows for circular transformation

Addressing value loss at scale calls for financial systems to recognise, preserve, and enhance the long-term economic value of materials, products, and fixed assets. Current approaches to residual value, depreciation assumptions, and risk assessment often undervalue circular strategies that retain value over time, and underestimate the risks associated with resource use, thereby exacerbating systemic value loss. Closing the Value Gap calls for the financial system to adopt methods that better reflect the economic logic of value preservation, align capital flows with circular outcomes, and leverage financial sector regulation as a key enabler. Additionally, by fostering deeper sectoral expertise and innovation in investment structures, investors can unlock the full potential of the circular economy. Engaging with stakeholders to understand their needs, ambitions, risks, and capital requirements, and co-creating tailored solutions will likely be important to driving progress.

Key actions for the financial sector:

Even where businesses innovate and finance is willing to engage, the scale and pace of the circular transition ultimately depend on the broader market conditions in which these actors operate. Persistent market failures, ranging from mispriced externalities and information asymmetries to fragmented standards and misaligned incentives, continue to constrain circular business models and investment. Policymakers therefore play an important role in shaping an enabling environment: helping to address structural barriers, align rules and incentives across value chains, and provide the long-term signals to reduce risk. By doing so, public action has the potential to help unlock system-level value retention and creation that neither businesses nor financiers can deliver on their own.

Policy

Creating an enabling environment

Closing the Value Gap could benefit from coherent, supportive policy frameworks that help address system-level challenges and linear lock-ins across fiscal rules, sectoral standards, international agreements, and behaviours. Helping to address market failures through consistent regulations and fair market conditions is important not only to help reduce value loss and waste but also to lower economic risks and unlock new value opportunities. With the right regulatory and market incentives, governments can help create the enabling conditions for circular, systemic solutions and drive structural reductions in value loss at scale. Together, the actions below could build a policy landscape that internalises shadow costs, strengthens the competitiveness of secondary materials, and systematically reduces avoidable value loss across the economy.

Key actions for policymakers: