What is the circular economy?
When considering the circular economy, most people understandably focus on the environment first. It's about adopting a fresh mindset, moving away from traditional linear models that rely on finite resources to produce goods and services, towards regeneration and reuse. In recent years, there's been a growing recognition that these circular economy principles also foster economic innovation and growth. The World Economic Forum predicts that the Circular Economy could generate up to $4.5 trillion in global economic benefits by 2030.
A circular economy business model shifts from the traditional approach, where raw materials are used to create products with limited lifespans, eventually discarded without considering environmental effects. In a circular economy, materials, products, and energy are reused, repaired, recycled, shared, and composted, returning natural resources to the earth and extending the life of technological resources.
What are the benefits of a circular economy?
A transition to a circular economy holds many benefits for the environment, and the climate crisis. It aims to eliminate waste, with biological materials being reused until they can be composted or used as fuel, and prolonging the lifecycle of finite materials like metals by focusing on reusing, refurbishing and replacing parts. In turn, by aiming to return natural resources to the earth, it aims to regenerate nature, with the economy operating on a principle of reusing resources many times over. This reduces the reliance on finite resources and allows the economy to actively regenerate the natural environment.
Circular Economy investment highlights – 2024
- Disclosed capital invested has increased by over 60% from £1.3bn in 2023 to £2.2bn in 2024 with average investment increasing 64% from £10.7m to £17.5m
- Based on an average disclosed investment of £17.5m per transaction, we estimate that the total capital invested into the UK circular economy was around £3bn in 2024
- Annual deal volumes have stayed relatively consistent at 183 in 2024 compared to 184 in 2023
- 131 of 183 deals were funded by generalist investors evidencing the breadth of market appetite for the circular economy
- Venture capital accounted for 58% of 2024 circular economy transactions, followed by private equity at 19%
