Why circularity becomes relevant as climate maturity increases
Circularity, much like climate, emerges as a material topic for many companies through their DMA. An independent assessment of more than 200 published and audited sustainability reports shows that approximately 75% of companies identify Resource Use and Circular Economy (ESRS E5) as a material sustainability topic.
For companies that have already progressed on their climate journey, this finding should feel familiar rather than surprising. Scope 3 emissions are often dominated by purchased goods and services, making materials and products a key emission hotspot. Organizations that have begun to operationalize their climate transition plans quickly recognize that material-related decarbonization levers are critical to achieving their targets.
As expectations around transition plans increase, driven by evolving regulation and investor scrutiny, companies are under growing pressure to move from high-level ambition to measurable execution. In this context, circularity is not a parallel initiative, but a core component of a credible and actionable transition plan.
The overlooked connection between climate and circularity
What is oftentimes overlooked is that much of the transition plan work already touches the core principles of circularity. Through transition planning, companies usually identify a variety of material- and product-related decarbonization levers that are fully aligned with circular principles and have thus, already laid an important foundation for a robust circularity agenda.
This connection is frequently missed because circularity initiatives are often associated with topics that can be found at the lower end on the circularity maturity curve, such as packaging minimization or waste management. As a result, companies may overlook that their transition planning efforts have surfaced far more mature circularity opportunities related to key materials and products purchased, including the use of recycled materials.
Recognizing circularity as an embedded element of the transition plan helps reposition it from a standalone sustainability topic to a lever for delivering measurable emissions reductions and supporting broader business transformation.
Why moving from insight to action remains challenging
Even with this realization, translating circularity into action is not straightforward. Based on experience supporting organizations across industries throughout their sustainability strategy, many organizations struggle to get started, often constrained by the perceived complexity and breadth of the topic circularity. As a result, circularity remains a patchwork in many companies, making it difficult to define metrics and targets.
Questions around recycled material availability, supplier capabilities, product requirements and technical feasibility quickly surface. As circularity spans multiple functions and processes, assigning clear ownership and prioritization are perceived as a difficult task.
Addressing these challenges requires a structured, portfolio-wide assessment that links circularity initiatives directly to climate targets, financial implications and operational feasibility.
Getting started by turning existing climate momentum into progress on circularity
By connecting circularity to existing climate-related work, companies unlock two immediate advantages. First, circularity acts as a key enabler for decarbonizing Scope 3 emissions by addressing material-related levers already identified in transition planning. Second, building on existing work allows companies to leverage existing data for reporting against ESRS E5 metrics and targets. This strengthens the credibility of a company’s’ transition plans and enables reporting against sustainability topics beyond climate.
From climate ambition to integrated transformation
Anchoring circularity in established climate insights and operational structures reduces complexity and creates momentum. It becomes a practical way to operationalize the company’s climate strategy while simultaneously initiating concrete circularity initiatives.
Over time, further circularity initiatives can be progressively integrated and scaled, supporting the development of a robust and cohesive circularity strategy.
As companies face increasing pressure to demonstrate credible climate action, the integration of circularity into transition planning will be a defining factor in distinguishing leaders from laggards.
