How the circular economy can reach its full potential

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Integrating systems thinking with circular economy models can enhance environmental sustainability, improve resource efficiency, and build long-term resilience.
Systems thinking provides a framework for understanding how different elements within a system interact. When applied to sustainability, it helps assess the broader impact of environmental strategies. The circular economy, meanwhile, focuses on keeping resources in continuous use by repurposing materials and regenerating them for future applications.
A key approach within this framework is life cycle analysis, which evaluates a product’s environmental impact from resource extraction to disposal. According to a 2023 report by the Ellen MacArthur Foundation, companies that adopt LCA strategies can reduce material use by 30 percent and lower their carbon footprint by 20 percent.
By transforming waste into raw materials, circular economy systems drive better product design and environmental progress. Businesses that implement systemic innovation see, on average, a 25 percent improvement in operational performance and a 15 percent reduction in production costs.
For circular economy initiatives to succeed, collaboration is essential. Governments, businesses, local communities, NGOs, and academic institutions all play a role in driving sustainable change.
The EU, for example, has developed the Circular Economy Action Plan, which sets recycling targets, funds eco-innovation projects, and assigns sustainability responsibilities to manufacturers. Standardized regulations help businesses transition to circular models, making them more competitive while also reducing costs.
Academic institutions contribute by researching sustainable materials and designing efficient circular systems. At the same time, NGOs and community groups advocate for policy changes, educate the public, and engage in grassroots efforts to promote circular practices.
For the circular economy to reach its full potential, positive stakeholder engagement and a systems-oriented approach are crucial.
Majed Al-Qatari
According to the Circular Economy Alliance, organizations that collaborate with multiple stakeholders achieve 40 percent better results in their circular projects than those working alone. Joint efforts not only foster innovation but also accelerate the adoption of sustainable practices across industries.
Despite its benefits, stakeholder engagement in the circular economy faces several challenges. Different groups often have competing priorities.
Businesses focus on profitability and operational efficiency, while governments continue to emphasize traditional economic growth over sustainability targets. Environmental organizations and local communities push for greener policies but frequently clash with industries over costs and feasibility.
Additionally, 60 percent of small businesses and non-professional groups find circular economy practices difficult to implement, leading to reluctance in adopting new models. This hesitancy, combined with fragmented funding, slows the large-scale transition to circular systems.
For the circular economy to reach its full potential, positive stakeholder engagement and a systems-oriented approach are crucial. Aligning sustainability efforts with a broader understanding of interconnected systems creates solutions that balance environmental protection, social well-being, and economic growth.
By fostering collaboration, embracing innovation, and minimizing waste, societies can build a more sustainable future — one that benefits both current and future generations.
• Majed Al-Qatari is a sustainability leader and ecological engineer experienced in advancing environment, social, governance and sustainability goals.