The world is becoming less circular.
Despite years of progress in recycling and policy changes, the global economy is now just 6.9% circular, down from 7.2% in 2018.
This year’s Circularity Gap Report sends a strong message: we're using more recycled materials, but the demand for raw materials is growing even faster. The gap is widening.
What the report says
- Global material use hit 106.1 billion tonnes per year.
- High-income countries use six times more materials per person than low-income countries.
- Recycled material use grew by 200 million tonnes between 2018 and 2021. Yet, the overall circularity rate is falling.
- 70% of global greenhouse gas emissions are tied to producing and using materials.
In short, the report confirms what many working in this field have long understood: recycling alone is not enough.
So what is the problem?
Overconsumption is outpacing efficiency
More recycling doesn’t mean more circularity when overall demand continues to surge. Material use is growing faster than improvements in resource efficiency.
Recycling alone won’t close the gap
Even if we recycled all materials that are technically recyclable, the global circularity rate would only reach about 25%. While that would be a significant improvement, it still falls short of what is necessary.
Why?
Recycling addresses waste, not demand. Recycling is often the least circular of the circular strategies and typically provides the lowest economic value. For many everyday products (especially packaging), raw material costs are low and recycling brings minimal economic benefit.
Recycling also can’t preserve the value added through manufacturing and integration in items like buildings, vehicles and electronics.
A smartphone, for example, contains just a few dollars’ worth of raw materials, but hundreds of dollars in components and thousands in final value. Recycling recovers only a fraction of that.
Reuse, repair, and durability retain the real value, including the energy, labour, knowledge, and logistics, not just materials.
We need better metrics
Headline recycling rates ignore strategies like:
- Extending product life
- Designing for reuse
- Shifting to product-as-a-service models
How can we make progress?
The sectors that matter most
The report identifies four high-impact sectors where circular strategies will deliver the biggest return:
- Housing and the built environment
- Mobility and transport systems
- Food and agriculture
- Consumer goods (especially electronics and textiles)
These sectors are responsible for the bulk of material use and emissions. That’s where change counts.
A smarter circular strategy: Use less, use longer
To close the circularity gap, the report proposes a three-part strategy:
- Smarter – Use materials more efficiently and design better.
- Lighter – Reduce the total amount of material we consume.
- Longer – Extend the life of products, buildings, and infrastructure.
This approach could cut global material use by one-third while still meeting human needs.
Example: A report by Autocraft Solutions shows that repairing EV batteries instead of replacing them can save 12 tonnes of CO₂ per unit. On average, only 1.1 modules need replacing, which keeps essential materials and makes manufacturers less dependent on volatile supply chains.
Beyond recycling: better metrics for a fuller picture
Tools like the Material Circularity Indicator (MCI) and the Circular Transition Indicators (CTI) provide better ways to account for the value retained when products are kept in use for longer, rather than simply measuring flows of recycled material.
These tools account for:
- Design for reuse and disassembly (Smarter)
- Regenerative sourcing and composting (Smarter)
- Service-based models (Smarter & Longer)
- Lightweighting (Lighter)
- Product lifespan (Longer)
- Repair and remanufacturing (Longer)
Example: Extending product life from 12 to 13 months delivers similar circularity gains as using 15% recycled content.
These indicators are being embedded into:
- Green Star for Buildings (v1.1) in Australia.
- Infrastructure Sustainability Council Credits in Australia
- EU regulations, such as the Ecodesign for Sustainable Products Regulation (ESPR).
Implication for exporters: Products entering the EU must show circularity performance or risk being blocked or penalised under the Green Claims Directive.
Progress in Australia and New Zealand
It’s not all bad news. There’s positive movement across the region:
- Green Star Buildings v1.1 includes MCI and CTI, aligning with ISO 59020 (Circular Economy).
- Environmental Product Declarations (EPDs) in Australasia are increasingly reporting circularity metrics, particularly the MCI.
- Design for disassembly and reuse of structural components are gaining traction in building projects.
- National packaging strategy through Australian Packaging Covenant Organisation (APCO) is setting clear design guidelines, targets, and recovery labels.
- Circular procurement guidance is now available through the Better Building Partnership (BBP) and GBCA Guidelines
But even with this progress, consumption growth is outpacing recycling gains, mirroring the global trend.
A call to action for business leaders
This isn’t just about sustainability. it’s about economic resilience and risk management.
Circular strategies:
- Reduce reliance on volatile global supply chains
- Protect against resource scarcity and price spikes
- Help build more resilient, localised economies.
This approach also addresses trade deficits by reducing the need for imported materials and making local products last longer, creating local job opportunities.
Where to start:
- Measure more than recycling: Include longevity and reuse in your sustainability metrics.
- Prioritise high-impact sectors: Focus your circular efforts where material use is highest.
- Adapt to global regulations: Get ready for digital product passports and mandatory circularity reporting.
- Design for value retention: Build products that can be reused, repaired or upgraded.
The bottom line?
Doing more with less isn’t just a nice-to-have. It is essential for staying competitive, meeting climate goals and keeping your business running.