Countries, multinationals and enterprises are increasingly embracing the circular economy (CE) to address environmental, health and economic concerns. However, as a systems change solution, CE requires cohesive, collaborative and rapid action to address our urgent ecological crisis. This paper presents 5 universal policy goals as a roadmap for CE, and the cross-sector needs and opportunities at present. Policymakers, businesses, and the finance sector with the ability to make direct, upstream decisions are critical to the uptake of CE. Upstream innovation treats the root cause of a problem rather than the symptoms. 

CE is characterised by three principles: 

1. Eliminate waste and pollution
2. Keep products and materials in use 
3. Regenerate natural systems 

Goal 1 – Stimulate design for the circular economy

• Circular design policy addresses SDG12 by supporting waste prevention, circular business models, and high-value resource loops.
• Product policies can extend the use of materials/products and improve footprints.
• Construction and planning policies can enable the sustainable use of assets and building components, which can be supported by investments into smart-building technologies.
• Agriculture, land use and food policies can incentivise regenerative growing practices.
• Harmonised chemical legislation along the value chain will require joint efforts with business and investments in technology.

Goal 2 – Manage resources to preserve value

• Tax incentives and public procurement can incentivise circular business models.
• Extended Producer Responsibility (EPR) and Deposit Return Schemes (DRS) are market based instruments that can scale up collections for reuse and recycling.
• Reviewing resource classification in waste legislation can keep materials compatible with CE in use.
• There is a need to separate resource streams in waste collection to enable subsequent resource loops.
• Spatial planning policies can enable material flow and industrial symbiosis opportunities between enterprises.
• Import/export policies can be aligned with CE objectives.
• Disincentivising landfilling and incineration can incentivise upstream solutions.

Goal 3 – Make the economics work

• Shifting economic policy from linear to circular is key to enable Goal 1 & 2.
• Aligning tax with CE can include the taxation of resources rather than labour.
• Subsidies can be redirected from fossil fuels to regenerative practices.
• Governments can attach CE conditions to state aid and funding.
• Regulators should enhance transparency by standardising definitions and metrics for circular activities.
• Harnessing technologies for CE is a major opportunity.

Goal 4 – Invest in innovation, infrastructure, and skills

• While profitable circular business models will often attract private funding, aspects of the CE transition currently require public funding or blended finance; this can work in concert with previous Goals.
• Funding for CE skills, knowledge, research and training is needed in all sectors.
• Investments appraised as high risk in the current market can benefit from public backing to attract private funding; including in physical and digital infrastructure.

Goal 5 – Collaborate for system change

• The CE transition requires collaborative system change across sectors.
• A cross-government, inter-ministerial process can mainstream CE across policy portfolios.
• International policy alignment is needed to address cross-border material flows and value chains.
• Thematic mission-driven approaches, awareness-raising campaigns, setting targets and data gathering are methods recommended for this Goal.

1. Private sector investment in circular economy opportunities is rising sharply with, for example, the assets under management in public equity funds dedicated to the circular economy having grown fourteenfold in 2020 alone.
2. Public and private sector investment is needed in developing the skills required to create circular economy opportunities and ensure an inclusive transition, supporting innovation, and developing the infrastructure necessary to scale the transition.
3. Although the transition is underway within the financial sector, many financial institutions still appraise circular economy innovations and business propositions as expensive and risky, while underplaying the risk of linear investments. Government clarity about the direction of travel in the transition to circular economy can help de-risk private sector investments that support the transition. Other solutions include early-stage public funding for circular economy propositions, and redirecting economic frameworks towards circular economy principles to create the optimal market conditions for scale.
4. Establishing collaboration and international harmonisation between the public and private sectors to ensure that the synergies and trade-offs between upstream design policies, chemical legislation, and waste classification legislation is key, especially as material innovations occur and legacy materials are dealt with.
5. Blended finance solutions can close the investment gap for harder-to-finance infrastructure and riskier, long-term innovation, as demonstrated by European Investment Bank’s (EIB) InnovFin and the European Commission's InvestEU.
6. Relying solely on energy efficiency and switching to renewable energy will only address 55% of global GHG emissions. The remaining 45% are a direct result of the way we make and use products and food, and can be significantly reduced through circular strategies.
7. The circular economy can also offer solutions to the 90% of biodiversity loss and water stress that is brought about by resource extraction and processing.
8. The finance sector influences upstream decisions through their assessment of risks and business models.