Since 2018, Amsterdam-based impact organisation Circle Economy has analysed the circularity of the global economy—singling out the share of secondary materials flowing into the economy in a single figure. Their latest Circularity Gap Report, released earlier this year, found that just 6.9% of global materials are cycled back into use—down from 9.1% in 2018. It’s a sobering figure, especially in a world increasingly grappling with the consequences of supply chain shocks, resource scarcity, and climate breakdown.
Materials have always been at the centre of this story—but it’s becoming increasingly clear that they’re only a part of it. If capital is not effective in scaling the most transformative applications of circularity—for key business models in key value chains—then it is unlikely this downward trend will reverse. However, just as we once lacked a global view on material flows prior to 2018, until now we have not had a comprehensive understanding of capital flows to the circular economy.
The recently-launched Circularity Gap Report Finance, authored by Circle Economy, in collaboration with KPMG and with support from the International Finance Corporation, provides this insight. It shows that a strikingly low share of capital is directed towards circular business models: just 2%* of tracked investment is supporting the kinds of solutions that keep products and materials in use longer, reduce dependency on finite resources, and offer a roadmap for more resilient economies. Of the businesses that do receive funding, the bulk reflect conventional applications of circularity—the second-hand sale and repair of vehicles, for example—rather than those that truly rethink our relationship with resources. This is more than just a missed environmental opportunity: it’s a wasted economic one.
