Producers must also be prepared to pay the price of circularity

But where does personal responsibility end and corporate responsibility begin? If consumers are willing to stump up higher prices for circular goods and products, what about the companies that manufacture them? Producers must also foot the bill for circularity—and they must do it up front: they must cover not only the higher initial costs that come with the materials themselves, but also the future costs of collection and disposal for materials that do not meet circular criteria. In some areas—such as the highly commoditized business of plastic items—adjusting to the new economics of circularity will constitute a tough challenge for leaders.

Significant progress has been made in some areas—such as single-use packaging—but other crucial areas remain largely unaddressed. For example, the Green Revolution is fueling the production of composite materials for use in wind turbines and photovoltaic cells, along with hundreds of millions of tons of lithium-ion batteries. Without a coherent strategy on how to manufacture these batteries so that they can be reused, remanufactured, or recycled, the gains made by the Green Revolution may be eroded by an intractable waste management problem in 12 to 15 years from now.

Circularity must be written into law, underpinned by regulation, and rigorously enforced

Beyond consumers and producers, governments and regulators have a decisive part to play in the move toward circularity. Significant steps are already being taken to facilitate the shift to a circular economy, with governments backing increased R&D into waste management for hard-to-reuse materials, incentivizing more circular-friendly consumer behaviors, offering subsidies to support business collaborations across the value chain, and lowering sales tax on goods made from recycled materials.

But both governments and regulators must do more than simply enabling circularity: by working together to actively drive the global transition, they have the power to dramatically change the game. Governments around the world need to set—and enforce—long-term targets on every kind of material—whether it is made from plastic, metal, or paper—and they must ensure that those targets are underpinned by a robust regulatory framework. A prime example of this approach can be found in Europe’s automotive manufacturing sector. Since January 1, 2015, 85 percent of every vehicle manufactured in Europe must be reused or recycled, and 95 percent must be recovered. This process is designed to identify parts that can be reused, such as engine, battery, alternators, and steering systems. Fluids, gases, and other materials and parts can be safely collected and, where appropriate, recycled. After that, the stripped metal bodies can often even be compacted and sent for shredding.

Business leaders must now focus further out than ever before

When it comes to businesses, one of the biggest changes on the circularity agenda is a shift in focus from a short-term, fire-fighting approach to a much longer strategic time horizon. Business leaders must now look much further ahead into the future—not just to the net-zero goals of 2050, but beyond. And that will mean focusing on identifying compelling circular initiatives that will be environmentally, socially, and economically sustainable—and then dedicating the financial resources to making them a reality. Corporate leaders have a responsibility to make a long-term road map for circularity within their organizations, and they must be held accountable for progress against their strategic goals—whether positive or otherwise.

Leaders will also need to ensure they support their younger workforce as they come up through the ranks—empowering them to deliver the right opportunities for this new, more engaged generation to live their commitment to circularity through the roles they perform. Going forward, education and training on circularity must no longer be treated as an add-on for those employees who are already engaged with the agenda. It must be central to companies’ philosophy and embedded into the way that businesses operate and the way they design both their products and their value chain. Because circularity—when properly executed—is not just good for the environment or for the community, but good for business too.