Increasing resource use poses significant risks to businesses. Over-extraction leads to scarcity and increased costs. As demand continues to rise while supplies dwindle, businesses face regulatory hurdles and potential conflicts over access to resources. This impacts profitability in the short term and can undermine the long-term viability of the enterprise. 

Moreover, the recently published 2024 Global Resource Outlook report by the International Resource Panel found that resource overuse is the main driver for the triple planetary crises that humanity faces: climate change, pollution and biodiversity loss. Businesses that disregard their environmental impact risk facing public backlash, legal challenges, and reputational damage. 

The circular economy is a sustainable economic model in which products and materials are designed in such a way that they can be reused, remanufactured, recycled, or recovered (also called R-strategies) and maintained in the economy for as long as possible, along with the resources of which they are made. 

The circular economy empowers businesses to bend the curve of resource extraction, through the above mentioned R-strategies, while innovating their business models. By adopting a circular economy, virgin material extraction could drop by 34% and Greenhouse Gase (GHG) emissions could be reduced enough to limit global temperature rise to 1.5°C. Moreover, the circular economy transition could unlock USD 4.5 trillion of economic value globally by 2030 and create 6 million jobs.

Businesses are at the heart of this transition. CEOs, board members and strategists are realizing that they can kill two birds with one stone. They can improve long term business value and reduce their risk profiles while improving on their environmental performance and lowering emissions. 

WBCSD member Royal Philips N.V. is an example in the corporate world, committing to generating 25% of sales from circular products, services, and solutions by 2025. Notably, Philips aims to close their material loop on all professional medical equipment, emphasizing responsible end-of-use management. Beyond products, circularity is to be embedded at all Philips’ sites, as the manufacturer aims to send zero waste to landfill. These successes underscore the practical advantages of circular practices in fostering both sustainability and financial success.  

Rigorous transparency becomes the norm

We are embarking on a new era where rigorous transparency is increasingly demanded as a means to compare businesses not only on their financial performance or core products, but also on the social and environmental impacts of delivering a product or service. This means so called externalities are increasingly becoming visible to wider audiences, including financial decision makers. 

Now the million – or should we say trillion – dollar question is: how can businesses mitigate these externalities by increasing circularity and driving long-term benefits? 

The need for a standardised approach to drive circularity

Businesses face challenges measuring and disclosing circularity due to the absence of a unified and comparable approach. With disclosure frameworks still at an early stage, the lack of standardized metrics hinders businesses’ ability to set meaningful targets and benchmark against industry peers. Navigating the immature and rapidly changing regulatory landscape around circular economy incentives and disclosure further complicates matters. Inconsistent requirements across jurisdictions, such as differing Extended Producer Responsibility schemes or regulations that may disincentivize increased trade of ‘circular’ products, discourage circular practices, as businesses grapple with compliance complexities and badly aligned incentives. 

Driving Value with a Global Circularity Protocol 

The Global Circularity Protocol, due to be published in 2026, aims to address the inconsistencies in disclosure reporting by establishing a common framework for business action. Modelled on the success of the Greenhouse Gas Protocol (GHGP), co-developed by the WBCSD and the World Resources Institute (WRI), and leveraging this experience, the Global Circularity Protocol (GCP) is a voluntary framework devised to address key accountability and policy gaps currently impeding the scaling of circularity globally. The Global Circularity Protocol is designed to address these gaps through:

  • Comprehensive Corporate Performance and Accountability System (CPAS) for circularity to foster harmonized methodologies and accounting metrics to report and disclose on circularity performance (See here WBCSD Climate-related CPAS).
  • Policy Framework for Circularity to support policy makers to create effective incentives and establish a level playing field for businesses.

Corporate Performance and Accountability System

The GCP will provide companies with a standard corporate performance accountability system for circularity, resulting in harmonized methodologies for reporting and disclosing their circularity performance. The science-based methodology will allow business to measure, steer and compare results, holding the key to foster healthy competition and drive innovation.

This framework will help to establish ambitious circularity targets, empowering businesses to set and achieve impactful sustainability goals and drive industry best practices. A comprehensive framework for circularity target-setting also needs to be rooted in scientific knowledge. The Circular Transition Indicators framework, developed by WBCSD, will be utilized as foundational work and subject to further refinement. Recognized for its utility, this framework serves as a valuable methodology to measure circularity within various scopes such as materials, products, or companies. Its adaptability and proven effectiveness make it a valuable reference point in our exploration of circularity metrics.

These harmonized metrics will streamline the process of voluntary disclosure, providing further clarity and transparency. In essence, the adoption of standardized circularity metrics enhances accountability, encourages continuous improvement, and contributes to the collective global pursuit of a more sustainable and circular economy. Moreover, this opens doors to financial markets, attracting capital flows to companies who have derisked by working towards circular objectives. Indeed, financial institutions, as they expand ESG-focused investments, increasingly seek comparable circularity data across their portfolios.

Join our global network

The Global Circularity Protocol is spearheaded by the WBCSD in collaboration with One Planet Network (hosted by the United Nations Environment Programme). It is supported by a diverse range of stakeholders from the Global North and Global South, across international and multilateral organizations, academic institutions, financial institutions, governments, or non-governmental organizations as partners. The project features robust participation from the WBCSD member businesses, with a collective revenue surpassing 2.5 trillion EUR in the year 2023. 

For further information, please contact Filipe Camaño Garcia at filipe.garcia@wbcsd.org.