While big businesses have a major role to play in accelerating the transition to a circular economy, nimble, fast-moving startups can show the way and inspire action. Moving into 2024, it’s vital that we push ahead with bringing circular economy solutions into focus so that we can best get to a Paris-aligned emissions trajectory and net zero by 2050.
We must redesign how products are made and consumed using circular economy principles — eliminating waste and pollution, circulating products and materials, and regenerating nature — to drive further positive impacts on the climate.
Since 2020, 11 startups have emerged as "unicorns," valued at more than $1 billion, that are pursuing circular economy business models. Thousands of innovators are realizing the economic and environmental potential of the circular economy. Many can be seen in the Ellen MacArthur Foundation’s Circular Startup Index. As circular economy approaches enter the mainstream, entrepreneurs are pushing beyond entry-level ideas such as recycling into deeper climate solutions.
Fashion, for example, could account for over a quarter of global carbon emissions by 2050 without significant changes. Secondhand fashion company Vinted — valued at $3.81 billion in 2021 — says it saved 453 kilotonnes of carbon dioxide equivalent (CO2e) that same year. Vestiaire Collective, worth $1.7 billion, reports a combined 90 percent environmental impact saving across greenhouse gas emissions, air pollution and other metrics.
As circular economy approaches enter the mainstream, entrepreneurs are pushing beyond entry-level ideas such as recycling into deeper climate solutions.
In consumer electronics, France’s most valuable startup, BackMarket, valued at $5.7 billion in 2022, reports its refurbished smartphone generates 91.6 percent fewer carbon emissions than a brand-new option.
We can also point to progress in plastics. Apeel — whose celebrity supporters include Oprah Winfrey and Katy Perry — is addressing both single-use plastic and global food waste in one by coating fresh produce with an edible, plant-based layer that allows fruit and vegetables to stay fresh two to three times longer, in some cases eliminating the need for plastic packaging. Valued in 2021 at $2 billion, Apeel reports saving 7,000 metric tonnes of CO2e GHG emissions from avoided food waste.
Startups such as Open Funk are leaning into longevity over obsolescence. Its "re:Mix" customizable kitchen blender is designed to enable repair, with modularity at its core. Using a mix of circular design and business model opportunities to enable repair and reuse, Open Funk and other startups are helping to keep everyday household products in use for longer and out of landfill.
Technology is also enabling circular economy startups to tackle planetary crises. The digital circular economy is projected to be worth $6.7 billion by 2028, and many startups, including Winnow and Concular (German), are using tech tools such as AI and Digital Product Passports to help cut wasted food and building materials.
Supercharging the climate potential of circular startups will have far-reaching and long-lasting positive impacts on the economy and environment, for the benefit of business, society and the natural world.
Circular startups are beginning to push the scope of their climate solution ambitions by championing the circular economy’s third vital principle, the regeneration of nature and natural systems.
Scaling the climate impact of circular startups
Naturally, in any transformation, there are challenges to overcome. Along with the challenges all startups face, those with a circular focus can feel the weight of obstacles in making inroads into a global system historically set up for linear businesses. Among these challenges is accessing finance.
Standardizing measurement and reporting is essential for startups to compete, presenting the opportunity to level the playing field.
While money is available for climate solutions and progress is being made to diversify this investment into circular startups, it’s critical to expand the momentum and awareness into both the public and private spheres so that their promise can be realized sooner.
Startups also need better data. Without a globally aligned reporting framework, circular startups draw on various methods to measure impact. This makes it difficult to compare with peers and competitors. Standardizing measurement and reporting is essential for startups to compete, presenting the opportunity to level the playing field.
Supercharging the climate potential of circular startups will have far-reaching and long-lasting positive impacts on the economy and environment, for the benefit of business, society and the natural world. Each individual entrant nudges the dial from niche to mainstream, but change at a systems scale won’t be achieved on a startup-by-startup basis. Instead, we need businesses, policymakers and financial institutions to work together to help circular startups reach their full potential through collaboration, regulation and investment.