This research paper has been written with the express intention of contributing ideas to this emerging SDG reset, both at forthcoming events in the autumn of 2024 – most notably, the UN’s Summit of the Future – and in continuing discussions into 2025 and beyond. We make the case for accelerating and deepening the shift to circular economic models, taking into account the potential trade-offs and unintended consequences that disruptive innovations may bring. The paper underlines the vital role that expansion of the circular economy could play in supporting the SDGs and in shaping what comes after them. On the latter, specifically, we present a policy blueprint for development of the circular economy to 2050.

At the heart of our argument is the idea that the circular economy and the SDGs are naturally complementary. Prominence in the SDG framework could help the circular economy to reach a critical scale and breadth, which in turn would improve prospects for achieving many of the SDGs’ targets. Linking the two offers mutual benefits. The circular economy needs the imprimatur of the UN system and other multilateral institutions to establish itself globally. At the
same time, the circular economy offers the prospect of vastly more effective action on the triple planetary crisis of pollution, climate change and biodiversity loss – precisely the sort of catalyst the UN’s ailing 2030 Agenda for Sustainable Development could use.

A ‘circular economy’ can be thought of as a system designed to deliver social and economic prosperity without requiring unsustainable levels of raw material extraction, consumption or pollution. In simplified terms, a circular economy combines three design principles: eliminating waste and pollution; extending the lifetime of products and materials for as long as possible; and regenerating natural systems. It can entail many different types of activity – ecodesign of goods, ‘product-as-a-service’ alternatives to product ownership, regenerative and restorative farming, and the use of refurbished and second-hand goods are just a few examples. Achieving a circular economy is not simply about recycling more: it requires reorienting and redesigning the fundamental goals and structures of societal provisioning systems (food, transport, energy, shelter) in ways that dramatically reduce raw material and energy consumption.

The story of the circular economy so far has often been one of modest ambition, localized initiatives, and small-scale or experimental projects implemented incoherently.

A robust scientific literature underlines the advantages of circular economic models over today’s predominantly extractive, resource-intensive ones (often described as ‘linear’ by researchers). By some estimates, moving to a circular economy could unlock up to $1.5 trillion in value in just three sectors of the US economy alone. It could help achieve 45 per cent of the global greenhouse gas emissions reductions needed to mitigate climate change by transforming the way products and materials are made and used. It could also restore global biodiversity to its 2000 levels within little more than a decade. Yet without introduction of the circular economy at scale, in contrast, resource consumption could increase by 60 per cent from 2020 levels by 2060, while over half of the 169 targets within the 17 SDGs may be unachievable. Put another way, the circular economy is becoming too important for policymakers to ignore, all the more so amid mounting concerns about rising global temperatures, the lack of progress on the SDGs, and the world’s failure to meet many environmental targets.

Yet the story of the circular economy so far has often been one of modest ambition, localized initiatives, and small-scale or experimental projects implemented incoherently. As we argue in this paper, the circular economy needs to be both scaled up and globally coordinated. One of the most basic challenges is that not enough circular economy activity is going on: according to one estimate, the global economy is just 7.2 per cent ‘circular’, if measured by the percentage of secondary (i.e. cycled) materials it consumes. A second problem is the lack of dedicated institutional representation. Whereas the UN Framework Convention on Climate Change (UNFCCC) exists for global climate policy coordination, and the International Energy Agency (IEA) provides a coordinating structure for the energy sector, no equivalent exists for the circular economy. What is needed is a kind of IEA for the circular economy, so to speak: a multilateral body that can champion the circular economy with policymakers and in the UN system, and that can coordinate policy, regulation and standards.

A third problem, partly stemming from the above, is that action on the circular economy remains fragmented at a global level. All countries depend to varying degrees on foreign trade for the materials, goods and services associated with circular activities. Equally, ‘ecodesign’ standards requiring products to meet strict circularity criteria will affect global supply chains, with implications potentially beyond the jurisdictions where such standards are enacted. However, the basic interconnectedness of the circular economy is not fully reflected in policy. More than 75 national circular economy action plans, roadmaps and strategies have been launched to date (another 14 are in development). These documents have been drafted unilaterally by the countries in question, resulting in a kaleidoscope of around 3,000 rapidly evolving commitments spanning 135 policy areas and 17 sectors. While the amount of activity is a positive sign of rising interest in the circular economy, fragmentation of its operating and regulatory environments risks increasing barriers to trade (for example, when regulations on the export of industrial waste or recycled electronics are incompatible between one country and another).

A fourth concern is that current government practice on the circular economy risks encouraging counterproductive resource nationalism and zero-sum economic competition, hurting resource-poor developing countries in particular and undermining the SDGs. In some cases, the national action plans and roadmaps mentioned above have narrow domestic goals, such as boosting competitiveness against trade partners, supporting the (often politically motivated) reshoring of industry and jobs, and reducing dependence on imported critical materials. Trends towards deglobalization and nationalism increase the temptation for governments to treat the circular economy as an opportunity to assert, or contest, control over supplies of critical raw materials.

Summary of recommendations

To address these challenges, this paper proposes solutions and ideas in two parts. The first part covers the period to 2030, the UN’s currently envisioned deadline for achieving the SDGs. The second focuses on 2030–50, a period during which the SDGs may be extended (most likely in modified form) or replaced with new goals as part of a refreshed sustainable development agenda.

In terms of immediate action on salvaging the SDGs between now and 2030, we have identified five priority areas for international collaboration on the circular economy. These proposed actions draw on input from stakeholder workshops and consultations with participants from Africa, Asia, Europe and Latin America, and are intended for a varied audience of multilateral institutions, governments and businesses. With the 2030 SDG deadline approaching, work on implementing these recommendations would need to begin immediately.

The five priorities are as follows:

1. Embed principles of justice and inclusivity in circular economy development.

This is more than a moral imperative; it is a pragmatic necessity both for engagement with the UN system, where such values already underpin the SDGs, and for achieving political and popular support around the world for the economic reforms implied by the circular economy. Key tasks include rectifying environmental injustices such as illegal dumping of waste in low- and middle-income countries, providing decent work and meaningful employment, and consulting a wide range of countries and stakeholders on the design of circular economy policies. Other recommendations include establishing UN guidelines on social equity in the circular economy; setting up a platform under the UN’s Economic and Social Council (ECOSOC) to facilitate sharing of expertise and best practices of Indigenous communities; and launching a global information campaign on the benefits of the circular economy.

2. Enhance global policy coordination on the circular economy.

A multilateral or intergovernmental policy coordination mechanism is needed to help governments develop and implement national circular economy roadmaps. One option would be to establish a cross-sectoral circular economy alliance between UN development agencies. Such an alliance could work with national governments, multilateral development banks (MDBs), the private sector and civil society to offer guidelines, best-practice examples and technical knowledge. The Global Alliance on Circular Economy and Resource Efficiency (GACERE) – which currently consists of just 16 countries plus the EU – could conceivably be repurposed and expanded for this role. Another option would be to set up an international resource agency, akin to the International Energy Agency (IEA) in some respects but with a mandate specific to material resources and the circular economy. Additionally, the G7 and G20 should be encouraged to increase their ambition on the circular economy and to align policy in areas such as product and producer standards. International coordination between environmental agendas could also be improved by applying circular economy principles to achieve the targets set in multilateral environmental agreements such as the Convention on Biological Diversity and the Paris Agreement on climate change.

3. Reform the global financial architecture.

Scaling up the circular economy will require significant investment. At present, the circular economy is poorly integrated into the global financial architecture, and thus largely off the radar of many investors or perceived as too risky. Creating a circular economy-specific framework for international financial institutions could facilitate development of investment taxonomies, financial benchmarks and technical criteria that would underpin the funding of projects, technologies and business models at scale. Multilateral development finance – though historically focused on ‘linear’ economic models – also has a role to play in de-risking circular economy investments. The ongoing reform of MDBs presents an opportunity to embed circularity principles in international public finance. Most fundamentally, MDBs will need to increase their lending capacity and adjust their mandates to allow the financing of global public goods. A Global Circular Economy Fund, financed through public sources and modelled on the Green Climate Fund, could also be set up to mobilize private capital, concentrating on low- and middle-income countries that might otherwise struggle to attract financing for their circular economy transitions.

4. Rewire the global trade system.

Changes in policy and regulation are needed to support circular economy-enabling trade while preventing problems such as the illegal dumping of waste and trade in goods that inhibit the circular economy. Reconfiguring global supply chains to be circular in nature will require policies and regulations to streamline trade in many kinds of goods and services, including: remanufacturing and recycling equipment; second-hand goods; secondary raw materials; non-hazardous scrap and industrial residues; and design, rental and repair services. ‘Trusted circular trader’ schemes could be established to reduce red tape, pre-certifying circular economy-compliant exporters. ‘Resource recovery lanes’ similar to customs green lanes could expedite documentation for shipments of secondary raw materials. Technical cooperation to make circular trade compatible with the World Customs Organization’s Harmonized System (HS) codes is also needed. Finally, the informal circular economy working group hosted by the WTO’s Trade and Environmental Sustainability Structured Discussions (TESSD) would benefit from more formal status.

5. Develop shared standards and metrics.

Common standards and metrics will be crucial to expanding the circular economy worldwide, and to reducing policy and regulatory fragmentation. In addition to supporting disclosures by businesses and organizations, new metrics will be needed for monitoring and reporting the circular economy’s aggregate impact on other multilateral environmental agreements, such as the Paris Agreement on climate change and the upcoming binding instrument to end plastic pollution by 2040. A circular economy-specific taxonomy of standards will need to cover many different areas, including product design, procurement, cleaner production, supply-chain transparency and traceability, and financial performance. The recent publication of the first tranche of ISO 59000 standards on the circular economy is a step forward, but micro, small and medium-sized enterprises (MSMEs) in particular may need support on compliance costs. The new voluntary Global Circularity Protocol (GCP), launched in 2023, could drive the development of universal metrics for assessing circularity.

After the SDGs – 2030 to 2050

Most of the SDGs will not be achieved by 2030. Only 17 per cent of the SDG targets are on track to be met globally by 2030. Some prominent voices propose that, instead of abandoning or replacing the SDGs, the UN should revise the current set of targets and extend the SDG framework to 2050. To provide ideas in this area, Chapter 4 presents an indicative, longer-term policy blueprint to be considered in the context of a possible extended or revised SDG framework post-2030.

Specifically, we propose a set of circularity targets in 17 categories for 2050, and corresponding levers and actions for achieving them. Each category of target is mapped to one of the 17 SDGs. For example, for SDG 1 (‘No poverty’), our proposed targets envisage the circular economy providing affordable basic services to the poor, and sustaining local businesses that can help make communities resilient to economic shocks and environmental disasters. For SDG 7 (‘Affordable and clean energy’), we propose actions that would enable societies to achieve full, affordable access to renewable and circular energy systems. Under this target, most critical materials would be supplied through secondary sources or substituted with alternative materials – highlighting the importance of circularity in ensuring that the resource demands of the energy transition are reduced as much as possible.

To enshrine circular economy principles more prominently in the next set of goals post-2030, we recommend several steps:

1. Introduce a specific high-level objective, within the extended post-2030 SDG framework, that recognizes the transformative potential of the circular economy for global development and for addressing the triple planetary crisis.

2. Explicitly outline ambitious but achievable global targets related to reducing unsustainable resource use, reducing global waste generation, and enhancing circularity rates for key resources and materials.

3. Ensure that circular economy targets are integrated across all SDGs, emphasizing the interconnectedness of sustainable resource management with economic, social and environmental objectives.

4. Align the post-2030 framework and circular economy targets with the ‘Beyond GDP’ initiative that forms part of the UN secretary-general’s ‘Our Common Agenda’ vision.

5. Develop clear, measurable indicators for inclusive circular economy practices with specific relevant targets for 2050.

To read the Research paper as it was published on the Chatham webpage, click here.

To read the full Research paper, click here.

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Achievement of sustainability goals is an epic task for developing economies that still strive to fulfil their basic needs. The availability of limited resources in the developing world vis-à-vis the ever-increasing demand poses further challenges to developing economies willing to transition into circular economies. Reverse logistics (RL) can facilitate this transition towards a circular economy (CE) by maximising resource utilisation and minimising waste, contributing to sustainability goals. This paper contributes to emerging literature by analysing the development and comprehensive potential of reverse logistics as a sustainability tool. It explores the significant barriers to the adoption of reverse logistics towards a circular economy, considering long-term sustainability. In the first phase, thirteen barriers have been identified from the past academic literature. Three barriers with a defuzzification number less than the threshold limit are excluded, and the final ten barriers are then prioritised using the decision-making trial and evaluation laboratory (DEMATEL) method. The findings suggest that a lack of strategic plans for returns is crucial for RL adoption towards a circular economy, followed by a lack of visibility for recycling/reuse. Organisations can increase customer satisfaction, promote environmental sustainability, and gain a competitive edge in the market by creating a strategic plan for reverse logistics. Organisations may lower costs and contribute to a more sustainable and ecologically responsible supply chain by improving visibility across the reverse logistics process. The results serve as a framework for decision-making in RL towards sustainable development. Managers and policymakers can formulate more robust and realistic decisions that align with “maximising profits,” “saving the planet,” “social concerns,” and, most importantly, “consumer concerns” in the circular economy ecosystem. Several implications are derived, leading to increased competitiveness and resilient business strategies. The novelty of this work lies in the identification of barriers to reverse logistics adoption towards a circular economy using an integrated fuzzy Delphi-DEMATEL approach, considering long-term sustainability. This approach is studied for the first time in a developing economy context, proposing social, economic, and environmental effects and actions to be taken by organisations for sustainable development.

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Critically, too, countries in the Global South are often the final destination for internationally traded low-value or illegal waste. Lack of capacity in these countries to properly manage and treat such waste brings greater environmental risks and social burdens.

If an explicit goal to reduce inequality is not built into the global circular economy transition, the gains to be made from circular trade are likely to be highly unevenly distributed between developed and least developed countries.

This paper sets out a framework for inclusive circular trade, intended to enable a pathway in which circular trade helps to promote fair, inclusive and circular societies. The framework was developed through the work of an alliance of organizations spanning Africa, Southeast Asia, Latin America and the Caribbean, and Europe.

To read the full report from the Chatham House, please click here.

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When the phrase “Dual Circulation Strategy” (DCS) entered the lexicon of China’s economic policy in May 2020 following the meeting of the Politburo standing committee, it was not clear what the strategy might entail. Consequently, substantive commentary about the potential impact of DCS on China’s growth or engagement with the outside world has been scarce.

A plethora of more recent policy announcements provide the world a better idea of what the DCS might mean, putting forward some fundamental questions: What is Dual Circulation Strategy? What are its objectives? What are the ramifications of its implementation for China and the rest of the world?

This paper by Hinrich Foundation Research Fellow Stewart Paterson attempts to answer these questions by placing the Chinese Communist Party’s (CCP) economic planning and policymaking process in the context of the country’s overall political and economic structure. The analysis briefly looked at China’s previous policy drives and slogans, and their impact on the direction of development. Finally, it examines the different directions DCS could take, as well as its likely impact on the country’s growth and its economic and political system.

To read the full report by the Hinrich Foundation, please click here.

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Commercialisation contracts could be implemented as a temporary measure to remove the risk associated with uncertain carbon prices for ambitious low-carbon projects. The aim of the contracts would be to increase private investment to the socially optimal level. Contracts would be allocated through auctions in which fixed prices for abated emissions over a fixed duration would be agreed on a project-by-project basis. On an annual basis, public subsidies amounting to the difference between the agreed carbon price and the actual EU carbon price would be provided to investors, depending on the total carbon emissions abated. As long as EU carbon prices are low, investors would receive larger subsidies to ensure their competitiveness. 

Contracts would be auctioned at EU level. This would generate increased competition compared to national auctions, leading to more efficient outcomes and preventing fragmentation of the single market. From about €3 billion to €6 billion would be provided to the main industrial emitting sectors annually, with the amount reducing as the EU carbon price rises and low-carbon technologies become competitive without subsidy.

To read the full report from Bruegel, please click here. 

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This paper reviews work at the WTO related to the circular economy. It shows how WTO members have addressed issues related to the circular economy through policy dialogue, peer review, negotiations and more recently, Aid for Trade. Experience in these four areas provides valuable insights into how WTO members can expand the positive contribution of trade to a circular economy, not least by: (i) improving their collective understanding of how trade interacts with the circular economy; (ii) building trust and confidence to engage in mutually beneficial activities related to circular economy; (iii) opening and facilitating trade in key areas of the circular economy; and (iv) supporting efforts in developing countries to seize the potential environmental, economic and social benefits of a circular economy through enhanced trade.

Karsten Steinfatt has been with the Trade and Environment Division of the WTO Secretariat since 2011. He supports the work of the WTO’s regular and negotiating committees on trade and environment, including through research and analysis of relevant economic issues.

To read the original report from the World Trade Organisation, please visit here

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Since 2017, annual global primary resource extraction and use has exceeded 100 billion tonnes per year; and estimates by the International Resource Panel indicate that by 2050 annual global material use could amount to between 170 billion and 184 billion tonnes – an unsustainable level that increases global environmental risks. Today, only 8.6 per cent of the resources and materials in the global economy are reused or recycled. A transition to circular economy is required to move away from the current linear economic model of ‘take–make–throw away’. This transition is crucial for reaching the environmental goals of the 2030 Agenda for Sustainable Development, and to achieve countries’ climate targets as set out in the 2015 Paris Agreement. In the context of these two critical multilateral undertakings, it is important to ensure that the transition to a resource-efficient and circular economic model will also deliver on social objectives – poverty eradication, improved livelihoods and well-being, decent work, and reduced inequalities.

The concept and the political agenda of ‘just transition’ has gained significant traction in international and national debates on climate change and energy transitions. In this context, it refers to deliberative political processes that:

• Support regions, industries, workers and communities that are adversely impacted by climate change mitigation measures and environmental policies through reskilling and training;
• Give affected stakeholders a seat at the table in decision-making processes about future economic and social development in their regions and countries;
• Recognize rights to resources and resolve competing development interests through participatory processes;
• Anticipate and address unintended social consequences that emerge from industrial restructuring and phasing out of high-polluting industries and sectors; and
• Rectify existing inequities at an international level between countries, and mitigate emerging conflicts between countries through collaboration and support mechanisms.

The political economy of the transition from a linear to a circular economy has a number of similarities with that of low-carbon transition. As pointed out by the UN World Social Report 2020: ‘A just, equality-enhancing transition towards green economies calls for the integration of climate action with macroeconomic, labour and social policies aimed at job creation, skills development and adequate support for those who will be harmed. So far, the circular economy narrative has been mainly framed as a purely technological matter or a question of ‘making the business case work’. As with the energy transition, the circular economy transition will not only be a technological transition; it will likely also be intensely political.

This research paper makes the case that considerations of justice and social equity are as important for the circular economy transition as they are in the contexts of low-carbon transitions and digitalization of the economy. Without social justice considerations, the circular economy transition will face challenges in getting established as an alternative new economic model, let alone in being sustained over time. Adopting a just transition approach will be critical from an ethical point of view, as well as to ensure active participation and public acceptance of policies and regulatory reforms.

To read the full report from Chatham House, please click here. 

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To read the original concept paper, click here. 

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