The Circular Economy Transition: 5 Key Drivers In 2021

You are currently viewing The Circular Economy Transition: 5 Key Drivers In 2021

2021 is to be a year of recovery and recalibration. Both provide the opportunity to change processes, be it physical, mechanical, thought, or habitual. Such anticipated change and adaptation to how we think, behave and act as individuals, organisations and as a society provides a unique opportunity for 2021 to be the year where the circular transition really gains momentum. This article explores why five key drivers are likely to play an important role in the circular economy transition this year.

Three focus areas of the ISO 14009

Three focus areas of the ISO 14009

Right to Repair:
Legislative and non/legislative measures establishing a new “right to repair”

Green Procurement
Mandatory green public procurement (GPP) criteria and targets in sectoral legislation and phasing in mandatory reporting on GPP

Mandatory requirements on recycled plastic content and plastic waste reduction measures for key products such as packaging, construction materials and vehicles

Built Environment:
Sustainable built environment strategy with specific circular economy guidelines and targets

Non-Financial Reporting:
Mainstreaming circular economy objectives in the context of the rules on non-financial reporting and initiatives on sustainable corporate governance and on environmental accounting

As these come into force, be they regulatory or otherwise, their introduction will further bring the circular economy transition mainstream and, above all, significantly speed up the transition throughout 2021.

Driver #3: Circular Investment and Access to Finance

Both investment in the circular economy and access to finance with respect to product development, start-ups, city initiatives etc. are of critical importance to the circular transition. This third driver is sometimes overlooked, but the last 12 months have seen a shift from taking tentative steps to real progress with respect to investment and finance.

There has been a significant increase in, for example, the creation of debt and equity instruments related to the circular economy. While no such fund existed in 2017, ten public equity funds focusing partially or entirely on the circular economy have been launched by mid-2020 by leading providers including BlackRock, Credit Suisse, and Goldman Sachs2.

Since 2016, there has been a tenfold increase in the number of private market funds, including venture capital, private equity and private debt, investing in circular economy activities.

Similarly, the European Investment Bank partnered with five of Europe’s largest national promotional banks and institutions to launch a EUR 10 billion (USD 11.8 billion) loan and investment initiative dedicated to the circular economy.

Since the beginning of 2020, assets managed through public equity funds with the circular economy as the sole or partial investment focus have increased 6-fold, from USD 0.3 billion to over USD 2 billion3.

Source: Ellen MacArthur Foundation

Source: Ellen MacArthur Foundation

This article originally appeared on