While large companies play an important role in accelerating the transition to a circular economy, nimble, fast-moving startups can lead the way and inspire action. Looking ahead to 2024, it is critical that we continue to focus on circular economy solutions so that we can best achieve a Paris-aligned emissions path and net zero by 2050.
We need to redesign the way products are made and consumed according to circular economy principles – eliminating waste and pollution, circulating products and materials, and regenerating nature – to achieve further positive climate impacts.
Since 2020, 11 start-ups have emerged as “unicorns” valued at more than $1 billion, pursuing circular economy business models. Thousands of innovators are recognizing 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 take hold, entrepreneurs are pushing beyond entry-level ideas like recycling into deeper climate solutions.
Fashion, for example, could account for over a quarter of global CO2 emissions by 2050 without significant changes. Second-hand fashion company Vinted – valued at $3.81 billion in 2021 – said it saved 453 kilotons of carbon dioxide equivalent (CO2e) in the same year. Vestiaire Collective, valued at $1.7 billion, reports an overall 90 percent reduction in environmental impact across greenhouse gas emissions, air pollution and other metrics.
As circular economy approaches enter the mainstream, entrepreneurs are pushing beyond entry-level ideas like recycling into deeper climate solutions.
In consumer electronics, BackMarket, France's most valuable startup valued at $5.7 billion in 2022, reports that its refurbished smartphone produces 91.6 percent fewer carbon emissions than a brand new option.
Fresh produce
We can also point to progress in plastics. Apeel – whose celebrity endorsers include Oprah Winfrey and Katy Perry – is tackling both single-use plastic and global food waste by coating fresh produce with an edible, plant-based layer that keeps fruits and vegetables fresh two to three times longer remain, eliminating the need for plastic packaging in some cases. Apeel is valued at $2 billion in 2021 and reports that it saved 7,000 tons of CO2e greenhouse gas emissions through avoided food waste.
Startups like Open Funk focus on longevity instead of obsolescence. The “re:Mix” customizable kitchen mixer is designed to allow 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 everyday household products last longer and stay out of landfills.
Technology is also enabling circular economy startups to address our planet’s crises. The digital circular economy is estimated 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 reduce waste in food and construction materials .
Increasing the climate potential of circular start-ups will have far-reaching and long-lasting positive impacts on the economy and the environment, for the benefit of the economy, society and nature.
Circular startups are starting to advance the scale of their climate solution ambitions by championing the third core principle of the circular economy, the regeneration of nature and natural systems.
Sway and Notpla are replacing fossil fuel-based single-use plastic packaging with algae, a low-impact material that can absorb up to 20 times more CO2 than terrestrial forests.
Scaling the climate impact of circular startups
Of course, with every transformation there are challenges to overcome. In addition to the challenges faced by all startups, those with a circular focus are feeling the gravity of the obstacles to penetrating a global system that has historically been designed for linear companies. Among these challenges is access to finance.
Standardizing measurements and reporting is essential for startups to compete and offers the opportunity to level the playing field.
As money becomes available for climate solutions and progress is made in diversifying this investment into circular startups, it is critical to expand momentum and awareness in both the public and private sectors so that their promise can be realized more quickly.
Startups also need better data. Without a globally coordinated reporting framework, circular startups rely on various methods to measure impact. This makes it difficult to compare with competitors and competitors. Standardizing measurements and reporting is essential for startups to compete and offers the opportunity to level the playing field.
Increasing the climate potential of circular start-ups will have far-reaching and long-lasting positive impacts on the economy and the environment, for the benefit of the economy, society and nature. Each individual participant moves the lever from niche to mainstream, but system-level changes are not achieved from startup to startup. Instead, we need companies, policymakers and financial institutions to work together to help circular startups reach their full potential through collaboration, regulation and investment.
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