Policies and Practices to Enable Business Models for Resource Efficiency and a Circular Economy

By Joyita Ghose and Shilpi Kapur


If current patterns of production and consumption continue, the global demand for materials is expected to more than double by 2050. The efficient use of resources can enable economic growth while also ensuring resource security and environmental sustainability. The promotion of business models which reduce the extraction of primary raw materials, increase the use of secondary materials, and generate less waste is central to achieving resource efficiency and a circular economy. However, the market share of these ‘circular’ business models has been limited.

G20 member countries can take the following measures to enable circular business models: (i) incentivize circular business models through policy instruments that improve access to finance, the provision of tax incentives and subsidies, integrating resource efficiency criteria in procurement policies and practices, and enabling industrial symbiosis; (ii) develop mechanisms, which may be either voluntary or binding, to mainstream circularity in business models through the promotion of design and material re-use standards, certification schemes, labeling requirements, and extended producer responsibility; (iii) provide institutional support to circular business models through developing indicators and targets for resource efficiency, harmonizing waste and material use regulations, and facilitating partnerships between key resource users; and (iv) enable a behavioral shift among consumers through consumer awareness and education programmes, feedback mechanisms, and peer-based nudges.