What's next for the Circular Economy in 2025?

Have you ever wondered where your ‘plastic’ water bottle ended up?

I’m sure it will end up somewhere in another form of goods. Wrong!

Well, not entirely. Based on Circularity metrics, less than 8% of all waste around the world is returned to economic circulation as material or in other forms of goods.

Garden flooring from recycled materials endures better than from original woods! photo from plana.co.id

The circular economy (CE) is a transformative economic model that aims to shift away from the traditional linear “take, make, dispose” approach to one that is restorative and regenerative by design.

Its core purpose is to minimize resource input and waste, emissions, and energy leakage by slowing, closing, and narrowing material and energy loops.

This concept ensures that products and materials are kept in use for as long as possible, maintaining their utility and value

Goals and Principles

The CE redefines how an economy operates physically by optimizing resource transformation to meet societal needs and promote human well-being, while minimizing environmental impacts. It involves a toolbox of strategies and solutions for material consumption

Key principles

• Eliminating waste and pollution: This is a fundamental aspect, moving beyond simply managing waste to designing it out from the outset

• Keeping products and materials in use: This involves strategies such as reducing, reusing, recycling, repairing, refurbishing, remanufacturing, and repurposing. Recycling is often considered the “last resort,” with an emphasis on earlier-stage design and extended use

• Regenerating natural systems: This includes fostering processes like composting and anaerobic digestion that help restore natural capital and ensure renewable materials reintegrate into natural cycles without harm

• Shifting to renewable energy and materials: This supports a more resilient, diverse, and inclusive economic model

Current State of Global Circularity

Despite widespread discussions and efforts, the world is becoming less circular.

The Circularity Metric, which quantifies the share of secondary materials out of total material consumption, has declined from 7.2% to 6.9% in the latest analysis.

This ongoing decline is largely attributed to the sustained growth in virgin material use, which has outpaced the slow increase in secondary material consumption. Global material extraction has more than tripled in the last fifty years, reaching a landmark 100 billion tonnes annually, and is projected to rise by another 60% by 2060 without intervention.

Material extraction and waste generation are trending upwards, while recycling and controlled disposal rates are trending downwards over the past five years. There is a significant lack of official, science-based global material use targets, hindering progress

Benefits of Circular Economy: The CE offers a path to restore balance between people, planet, and prosperity

• Environmental Benefits: It is crucial for climate change mitigation, offering deep cuts in material use needed to stave off climate breakdown, bolster biodiversity, and reduce pollution

More than half of all greenhouse gas (GHG) emissions stem from materials management, making circular economy (CE) approaches essential in addressing climate change. By minimizing environmental burden shifting and reducing reliance on primary raw materials, CE practices help cut the impacts of resource extraction, emissions, and waste.

• Economic Opportunities: The CE presents a multi-trillion-dollar opportunity, estimated at over $26 trillion in growth opportunities and $4.5 trillion by avoiding waste, making businesses more efficient, and creating new employment. It enhances competitiveness, boosts innovation, and creates new revenue streams (e.g., through service models). It also helps future-proof businesses against resource scarcity and market volatility, reducing reliance on volatile global markets and potentially cutting costs

• Social Benefits: The CE can lead to the creation of green jobs and upgraded knowledge and skills. It promotes human well-being within planetary limits, minimizes hazardous materials, and improves safe and decent work conditions

Key Challenges

Despite its potential, the transition to a CE faces several significant challenges:

• Lack of Clear Targets and Policies: Official, science-based global material use targets are lacking

The regulatory framework for CE is not sufficiently developed in some regions, leading to fragmentation in policy designs, producer obligations, and enforcement mechanisms

• Complexity and Ambiguity: There is “Babylonian confusion” around CE concepts and practices, with different interpretations (e.g., 3R vs. 9R vs. 13 resource management actions). The term itself may not be explicitly used in some national policies, even if the principles are embedded

• Knowledge and Skill Gaps: Many Micro, Small, and Medium Enterprises (MSMEs) have limited understanding of CE concepts and practices. There are knowledge gaps in circular business models, sustainable supply chain management, and product design.

Economic and Financial Barriers: Secondary raw materials face price competition from cheaper virgin materials. Businesses may perceive higher production costs associated with CE practices. There is also limited access to capital and investment for circular initiatives, especially for MSMEs.

• Consumer Behavior and Market Demand: Low domestic demand and consumer preference for circular products pose a challenge. Unconstructive consumption habits and a societal value placed on material wealth can hinder adoption

Measuring Circularity

The Circularity Gap Report (CGR), published annually by Circle Economy since 2018, sets the standard for measuring progress.

• Circularity Metric: This single figure quantifies the share of secondary materials out of total material consumption and serves as a “North Star” for tracking progress

• Circularity Indicator Set: For the first time, the CGR 2025 analyzes the broader “Circularity Gap” using a dashboard of 11 headline indicators and 23 sub-indicators

These indicators examine material flows (inputs and outputs) and their environmental impacts, breaking them into:

◦ Circular Flows: Secondary Materials and Carbon-Neutral Biomass

◦ Linear Flows: Non-Carbon-Neutral Biomass, Fossil Fuels combusted for energy, and other Virgin, Non-Renewable Materials destined for landfill

◦ Potentially Circular, Potentially Linear: Net additions of virgin materials to “Stocks” (e.g., buildings, infrastructure) that can be recycled or wasted later

This framework aligns with the System of Environmental-Economic Accounts Central Framework (SEEA-CF) and incorporates aspects of ISO/DIS 59020 and UNECE/OECD guidelines

Role of Stakeholders

Transitioning to a CE requires concerted efforts from various stakeholders:

• Governments: Play a crucial role in driving the circular transition through smart policies and multilateral collaboration, includes:

Reshaping economic incentives (e.g., fiscal policies, taxes, subsidies) to make circularity the default, such as:

◦ Strengthening Extended Producer Responsibility (EPR) and eco-design regulations

◦ Setting minimum mandatory Green Public Procurement (GPP) criteria and targets

◦ Establishing clear, measurable goals and national frameworks for CE

◦ Investing in infrastructure for material efficiency (reuse, recycling) and sustainable transport

Businesses are critical in scaling circular solutions and transforming operations. Business can:

◦ Proactively apply circular economy solutions in procurement, product/service design, operations, and waste management.

◦ Invest in circular models to gain a competitive edge, unlock new revenue streams, and mitigate risks

◦ Adopt circular design principles (durability, reuse, recycling)

◦ Set clear, measurable goals using frameworks like the Global Circularity Protocol and Circular Transition Indicators

◦ Collaborate across value chains to optimize resource use, share knowledge, and build economies of scale.

Following the business core rooted in circular materials:

[embed]Plana.co.id — Indonesian recycle company turning plastics into aesthetics, high performing, and durable architectural luxury.

[embed]Pable.id — Indonesian textile recycling company. Pable® earned the Recycle Content Standard 100 (RCS100) certification from Textile Exchange, a certification body whose aim is to align universal standards of sustainable model businesses.

• International Cooperation and Platforms: Are vital for aligning standards, facilitating knowledge exchange, and driving collective action

Initiatives like Circle Economy, the ASEAN Circular Economy Business Alliance (ACEBA — https://www.aceba.co/aceba/), World Circular Economy Forum (WCEF) and ASEAN Circular Economy Stakeholders Platform (https://ce.acsdsd.org/) facilitate this. Organizations like UNECE and OECD are also developing frameworks and guidelines for measuring the circular economy and addressing trade implications.

Examples below are several ASEAN Member States (AMS) developing policies and initiatives to foster CE, often incorporating waste management, digitalization, energy efficiency, resource efficiency, and ESG factors into their strategies

• Philippines: Has implemented Extended Producer Responsibility (EPR) laws, starting with plastics and drafting regulations for paper cartons. The Philippine Circular Economy Act of 2020 aims to develop green markets through improved reuse, recycling, and reduced plastic consumption, and promote circular public procurement

• Indonesia: Integrates CE policy into its National Mid-Term Development Plan 2020–2024, focusing on key sectors like food and beverages, retail (plastic packaging), textiles, electronics, and construction. Efforts include empowering waste banks, improving domestic plastic waste quality, and providing fiscal incentives for waste recycling. Indonesia is recognized for its potential to influence the regional agenda regarding the trade of recycled or circular goods

• Thailand: Has adopted a Bio-Circular-Green (BCG) Economy Model, a cross-governmental framework for plastics, food, construction, and textiles. Thailand also launched a “Circular Mark” in 2023 to serve as an official environmental label for circular products

• Malaysia: The Ministry of Environment and Water leads national CE initiatives, including the Malaysia Plastics Sustainability Roadmap, 2021–2030, to guide plastic sustainability throughout the value chain. The MYHijau label promotes environmentally friendly products and services

• Singapore: Implemented the Zero Waste Masterplan (2019), which focuses on food, electronic, and packaging waste management, and the Singapore Green Plan 2030 (2021) to advance sustainable development

Corporate Examples and Economic Viability. Many businesses in ASEAN are adopting circular practices, demonstrating their economic viability through cost savings, new revenue streams, and risk mitigation

• Pakin Corporation (Vietnam): Transforms discarded coffee berry waste into cascara tea, minimizing chemical use and optimizing harvesting, creating an additional income source for farmers

• Fair Farms (Cambodia): A pepper farm that revitalizes soil using cover crops and natural fertilizers, reducing erosion, irrigation, and chemical use. This leads to a co-product (vanilla) and offers organic and fair trade certification, benefiting farmers with better crops and rewards

• Siok Springs (Thailand): Produces mineral water in reusable glass bottles, operating a closed-loop system. While initially challenging, this sustainable approach has become a significant selling point, addressing plastic pollution and reducing transport impact

• Pable (Indonesia): Mechanically recycles post-consumer garments and pre-consumption fabric waste into new fabrics, collaborating with small weavers and designers to create new opportunities

• Restyle (Philippines): A community-driven textile waste company that repurposes hotel bedsheets and imported clothing into new products, such as washable sanitary pads for rural students, addressing a social problem while creating value from waste

• Fortune Parts Industry (Thailand): An automotive component manufacturer that has largely transitioned to using recycled plastic products, achieving material reduction and employing renewable energy

• Precious Plastics (Philippines): Manufactures machinery for small-scale plastic recycling and produces recycled plastic board-based items like accessories and furniture, building a network of community-based recycling initiatives

If you come across these brands at your local hypermarket or on an online marketplace, take a moment to see how they are turning circularity into a promising new blue ocean opportunity — offering durable, reliable products while also serving as partners in responsible material reuse and recycling. Cheers, Mates.