30 June 2026 – Have you ever wondered why while Europe’s policy momentum on circular economy is very evident, the European economy is still mostly linear? The circular material use rate in the EU is only just over 12% and circular economy sectors accounted for only for only 1.8% of the EU’s economy in 2023. A major reason is that the widespread adoption and scaling of circular business models in Europe is not yet happening. To meet EU policy goals on circularity as well as competitiveness, resource security and climate, an important challenge now is to find ways to scale circular and sustainable business models.
In this article, I summarise some key insights from the European Environment Agency’s new briefing Scaling circular business models in Europe.
Which are the types of circular business models?
Longevity- and durability-focused circular business models produce and sell high-quality, long-lasting products, enabling extended product and material lifetimes, both technically and emotionally.
Access-based circular business models, based on renting, leasing and sharing, are sometimes referred to as product-as-a-service models. They create value by providing temporary access to products through renting, leasing or sharing instead of ownership, increasing how many times each product is used.
Reuse and remanufacture circular business models extend the useful life of products and components beyond the first user, including brand take-back for refurbishment and resale, and platforms that enable peer-to-peer second-hand sales.
Recycling and material reuse circular business models focus on collecting and sorting discarded products, recovering parts and materials, and converting waste into secondary raw materials.
What are the types of scaling needed?
Scaling has traditionally been seen as simple scaling in numbers of products sold or expansion to new markets, However, we have found that it is important to distinguish between and pursue three different types of scaling, either separately or together:
Scaling out: Involves expanding the customer base by entering new geographies or replicating and diffusing circular practices in additional markets. This pathway often aligns with conventional growth strategies within a company’s control, but can also mean encouraging peers to adopt similar approaches.
Scaling up: Change rules, standards and institutions so circular models become financially and legally viable at scale. This can include reforming regulations and procurement, creating supportive standards, and adjusting financial incentives. The aim is to remove barriers and create conditions for circular models to thrive economy‑wide.
Scaling deep: Shift culture, consumer behaviour and norms so circular practices become the default. Lasting circular transformation requires changes in values and beliefs that translate into preferences, trust and collaboration. For circular models to endure, they must align with how people think, consume and interact – not just how markets operate or policies are set.
What are the five enablers to unlock scaling of circular business models?
To unlock the scaling of circular business models in Europe and beyond, we have identified five key enablers, ranging from policy to innovation and behaviour change. For successful scaling, all five enablers should ideally be in place at the same time.
Regulation and other policies are foundational to scaling circular business models. Because markets often fail to internalise environmental and social externalities, circular models face structural disadvantages relative to linear incumbents. Without enabling frameworks, they struggle to compete. Instruments such as extended producer responsibility, eco-design requirements for sustainable products, targeted tax incentives and circular public procurement can reset the rules and market signals that enable circular models to scale.
Technological innovation is a crucial enabler for developing and scaling circular business model capabilities: from modular design and digital product passports to service delivery and predictive maintenance.
Finance and insurance are critical to helping any business model emerge, stabilise and scale. For circular models, financing is often harder to secure because value depends on unfamiliar asset structures, longer payback periods, and revenue tied to product longevity or services rather than one‑off sales. Insurance is equally important, especially for access‑based offerings, where risks related to damage, loss and hygiene can erode already thin margins.
Social innovation and behavioural change are essential to embed circular business models in everyday practices, social norms and shared values, supporting well-being and a just transition. They build the trust, legitimacy and participation needed for uptake and long-term viability.
Supply-chain and ecosystem collaboration. Circular business models cannot operate in isolation. They depend on value chains and ecosystems where actors coordinate across design, production, use and recovery. Collaboration enables shared infrastructure, mutual trust and aligned standards which is vital for efficiency, legitimacy and scale. Collaboration enables value propositions that no single actor can deliver alone.
What is the bottom line?
We have found that scaling circular business models are essential not only for Europe’s circularity, but also for competitiveness, resource security, resilience and sustainability. They are not yet scaling and will not scale on their own. Coordinated action across key enablers of policy, finance, technology, behaviour and value-chain collaboration is needed now to move from promising pilots to mainstreaming Europe’s circular economy.
