The nexus between economy and sustainability: the challenges of circularity according to the Circularity Gap Report 2026

For every three euros generated by the global economy, one is lost. Not because of bad luck or isolated crises, but as a result of the normal functioning of a system designed to extract, produce, and discard. The Circularity Gap Report 2026 quantifies this for the first time with a figure that is hard to grasp: 25.4 trillion euros a year, the equivalent of 31% of global GDP, evaporated through the inefficiency of the linear model.

The report also comes with an underlying figure worth keeping in mind: the world is only 6.9% circular, meaning that barely 6.9% of the materials entering the economy come from recovered or recycled sources. That circularity rate is not only low, it has actually fallen back from the 9.1% measured in 2018, while material extraction keeps rising.

Where value disappears: five leakage points worth trillions

The report, produced by Circle Economy in collaboration with Deloitte, breaks down in considerable detail where this value is being lost. The largest source is waste at the end of products’ useful life, with around 10 trillion euros lost every year when buildings, vehicles, or machinery are discarded before their full potential has been exhausted. Next comes the energy system, which loses 8.7 trillion across extraction, conversion, and end use, largely due to dependence on fossil fuels. The premature deterioration of infrastructure and long-life assets accounts for another 5.2 trillion. Then there are losses during the industrial processing of materials, close to 1 trillion, and food waste throughout the supply chain, which amounts to roughly 650 billion euros annually.

GDP does not account for it, and that matters more than it seems

What is striking about all this is that none of these trillions in lost value appear in the indicators we usually rely on to measure whether an economy is performing well or badly. GDP records what is produced, but it is largely blind to what is destroyed in the process. A building that deteriorates prematurely does not show up as a loss in any national accounting system. Nor do the environmental and social costs of pollution or resource depletion.

The report identifies this as a significant blind spot, because these same indicators are what guide the decisions of governments, companies, and investors. If the map does not show the hole, it becomes much harder to avoid it.

The circular economy is not just about recycling, it is about preventing value loss

The circular economy is the alternative to the linear model. Where the traditional system extracts, produces, and discards, the circular model seeks to keep materials and products in use for as long as possible through repair, reuse, remanufacturing, and, only as a last resort, recycling. The idea itself is not new, but this report provides an economic argument that has been missing until now: every time a product is discarded prematurely, every time material is lost during the production process, or every time an asset deteriorates due to lack of maintenance, there is a real and measurable cost that someone ultimately pays.

Put differently, circularity is not just an environmental strategy. It is a more efficient way of managing the value already embedded in materials, products, and assets. And according to the report, the recovery potential is enormous, because most of these losses are not inevitable, they are a direct consequence of how the current system is designed. It is the same logic driving innovation in circular materials and packaging.

25 trillion lost is also 25 trillion in opportunity

This is where the analysis becomes particularly interesting for those already operating under a different logic: keeping products in use for longer, recovering materials, or reducing extraction from the outset. Because the Value Gap is not only a measure of what is being lost, but also of what could potentially be recovered.

The report identifies four mechanisms behind this waste:

• Poor management of materials and products, often caused by a lack of infrastructure or coordination across supply chains.
• Premature obsolescence, where perfectly functional products are discarded due to design decisions or market pressure.
• Avoidable asset deterioration, in which infrastructure and equipment degrade faster than necessary because of insufficient maintenance.
• And the most systemic issue of all: environmental and social costs remain largely external to market prices.

For companies already measuring and managing their environmental impact, this analysis confirms something everyday practice has long suggested: you cannot reduce what you do not measure, and you cannot improve what you do not manage. Tools like Manglai, which enable organizations to consolidate carbon, water, and waste data into a single platform, respond directly to the need to turn fragmented information into concrete decisions that reduce both environmental impact and operational costs.

What companies, investors, and governments can do

The report distributes responsibilities quite clearly. Companies need to identify where materials and value are being lost within their own supply chains, explore business models that decouple growth from resource consumption, and collaborate with suppliers and even competitors to create shared circular infrastructure.

Investors and financial institutions have an equally important role. Valuing assets without considering their durability, repairability, recoverability, or exposure to material scarcity risks is becoming an increasingly consequential decision. The report notes that this shift is already taking place in the climate arena, with central banks and regulators incorporating climate-risk disclosure into their frameworks, and suggests that the next step will be extending this approach to material resources.

For governments, the argument is even simpler. As long as prices fail to reflect the real costs of extraction, pollution, and waste, circular alternatives will continue to appear more expensive than they truly are. Correcting these signals through taxation or regulation is, essentially, a way of fixing a market failure that has been accumulating unaccounted-for costs for decades.

Waste is not inevitable, it is a design issue

The Circularity Gap Report 2026 succeeds in translating a problem that traditionally belonged to the environmental sphere into a language that economists and corporate boards also understand. The cost of the linear economy is not only ecological; it is economic, measurable, and to a large extent avoidable.

For any company that wants to be on the right side of that equation, the first step is gaining real visibility into its own impact. Without reliable and centralized data, environmental management remains a manual, fragmented, and difficult-to-scale task. A good place to start is measuring and reducing the organization’s carbon footprint, because what happens next depends largely on whether that information begins to be used to make different decisions.