Companies are turning to circular strategies—and they’re discovering meaningful economic upside.
At a glance
In a recent survey, over 70% of manufacturing leaders said circular solutions will lift revenue by 2027.
About 65% expect circularity to improve business resilience.
Large upfront investments and ongoing operating costs remain the biggest hurdles to adoption.
Supply chain shocks and tightening resource constraints are pushing organizations to adopt circular business models. Originally framed as a sustainability play, these models are now proving their worth as levers for resilience, growth, and cost efficiency.
A Bespoke Business Development–World Economic Forum survey of 420 manufacturing executives found that 97% of companies pursuing circularity do so for multiple reasons beyond sustainability, including profitability and competitive differentiation. Seven in ten expect circular approaches to increase revenue by 2027, and nearly two-thirds foresee stronger operational resilience. More than half anticipate net cost savings even after accounting for initial capital outlays (see Figure 1).
Figure 1
Executives expect circular solutions to unlock meaningful economic value.
Source: Bespoke Business Development and World Economic Forum, Circular Transformation of Industries Survey 2024 (n=420).
At its core, a circular business model keeps materials and products in productive use for as long as possible, slowing virgin resource consumption. Three primary pathways dominate:
Circular feedstocks (e.g., recycled or bio-based inputs)
Lifespan extension (design for durability, repair, refurbishment, secondary markets)
Capacity sharing (“as-a-service” and rental models)
Beyond waste reduction, these strategies reimagine how value is created, delivered, and captured.
Transitioning from linear to circular is nontrivial. Leaders must rethink product design, sourcing, operating models, sales, and customer relationships. The biggest barriers executives cite include:
Financial constraints—notably high upfront investments (65%)
Organizational challenges—capability gaps and misaligned stakeholder expectations (60%)
System frictions—regulatory misalignment and limited access to quality recycled inputs (60%)
Even so, adoption is scaling. A quarter of surveyed companies report operating at scale across all three circular pathways; another 20% have scaled at least two. Firms executing on all three report higher economic returns than those focused on just one or two—evidence that an experience curve exists in circularity just as it does in traditional linear models.
Winners follow a consistent playbook. They map value nodes across the circular chain (e.g., high-quality scrap streams or predictive maintenance data) and secure privileged access. They track profit pool shifts as circularity spreads, time their entry to cost parity inflection points, drive cost-down to accelerate adoption, and forge partnerships to secure materials, data, and technology.
The power of circular feedstocks
One of the most direct routes to circular value is replacing virgin inputs with recycled or bio-based alternatives. This cuts environmental impact and hardens supply chains in sectors exposed to price volatility and material scarcity. It’s especially attractive in short-lifecycle categories and in industries with strong customer or regulatory pressure (e.g., chemicals, packaging), where recycled-content rates already surpass 50%.
Hydro, the global aluminum producer, has put recycling at the center of its strategy. Recycled aluminum uses ~5% of the energy required for primary production—slashing emissions and costs. To secure consistent, high-grade scrap, Hydro invested in advanced sorting and long-term partnerships. Its HySort technology cleanly separates post-consumer scrap and enables alloy recipes tailored to customers such as Porsche and Mercedes-Benz. By embedding circularity into product design and co-developing specifications with OEMs, Hydro helps customers shrink their Scope 3 footprints while expanding demand for low-carbon metal.
The economics are compelling. Recycled products command premiums, and demand for recycled aluminum is projected to grow roughly twice as fast as for primary metal. Hydro plans to process up to 1,200 kt of post-consumer scrap by 2030, a scale-up that could add up to $750 million in EBITDA (market-dependent). Challenges remain—rising scrap costs and capital-intensive sorting/processing—but Hydro continues to invest, including a $150 million greenfield recycler (2023) and a $200 million expansion (2024).
Hydro’s results show how circular feedstocks create durable competitive advantage: its recycled aluminum averages ~1.9 kg CO₂e/kg, roughly eight times lower than the industry average for primary metal. As customers increasingly spec low-carbon materials, leaders with high-quality circular inputs will pull ahead.
Extending product lifespans
Another powerful lever is designing for longevity and monetizing repair, refurbishment, upgrades, and secondary markets. This approach shines in high-value, durable goods—machinery, rail, automotive, and enterprise hardware—where products are often customized and expensive to replace.
Companies extend life by:
Designing for circularity (modularity, standard fasteners, recoverable materials)
Offering repair/refurb/upgrade programs
Building certified resale and take-back channels
Design-for-circularity is the most prevalent tactic in our survey. Cisco, for example, applies 25 circular design principles. Its modular Catalyst IR1101 rugged router lets customers swap/upgrade components as tech evolves, extending life and cutting idle power draw by ~45% vs. prior generations—while deepening customer stickiness.
In rail, Siemens Mobility orchestrates circularity across the full asset lifecycle. Predictive maintenance, refurbishment, and advanced recycling extend rolling stock life and reduce material waste. The AI-enabled Railigent-X platform improves fleet performance and lowers maintenance costs by up to 15%. Additive manufacturing produces on-demand spares—even for obsolete models—reducing material waste by ~70% and ensuring near-100% availability of critical parts. These capabilities not only de-risk supply chains but also help Siemens win tenders as buyers prioritize circularity.
Trade-offs are real. Lifespan extension can be labor-intensive and capex-heavy, and it reshapes commercial rhythms. Sectors accustomed to annual launches must adapt to longer product cycles and service-led economics. Financial markets, in turn, must value services and certified pre-owned sales (often at higher margins) alongside new-unit volume. For firms with the right capabilities, the payoff is new revenue, lower total cost, greater resilience, and loyalty.
The capacity-sharing advantage
A third path is rethinking ownership: shift from selling units to providing “product-as-a-service” access. This model fits high-cost, intermittently used assets—industrial equipment, HVAC/R systems, specialized tools—where customers value flexibility and capital avoidance.
Trane Technologies expanded rental offerings for HVAC and refrigeration, allowing customers to rent to need rather than purchase outright. Older units are redeployed into short-term rentals, extending asset life and unlocking additional revenue streams. The business has grown rapidly—particularly across EMEA, where demand for energy-efficient cooling has risen >10% annually over the past three years.
By standardizing designs, retaining asset ownership, and recovering end-of-life components, Trane reduces costs, improves uptime, and stabilizes production through cycles. Capacity sharing also creates recurring revenue, higher-margin services, and stickier customer relationships—while enabling systematic materials recovery at end of life.
For product-centric firms, this shift can require structural changes in sales incentives, accounting, and lifecycle management. But the strategic advantages—diversified revenue, resilience, and premium service margins—make it a compelling evolution.
A circular future
Linear models are bumping into hard limits—from raw material shortages to geopolitical shocks. Circularity offers a practical path to better financial performance, stronger competitiveness, and future-proof operations—with the added benefit of more sustainable outcomes.
The transition requires bold leadership and near-term investment, yet momentum is building. More companies are demonstrating that scaling circular business models is both feasible and valuable. Organizations that pioneer and systematize circular solutions will be poised to thrive in a resource-constrained world, creating enduring economic and environmental value.
The views and opinions expressed in this article are solely those of the authors and do not necessarily reflect those of Bespoke Business Development. They are intended to encourage discussion and reflection, rather than serve as legal, financial, accounting, tax, or professional advice.
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