Circular Economy and Carbon Reduction | Tunley Environmental

The growing conversation around circular economy and carbon reduction is reshaping how industries approach sustainability, especially as businesses grapple with rising Scope 3 emissions and tightening regulatory expectations. While net zero targets often focus on renewable energy and direct emissions, the majority of an organisation’s carbon footprint actually sits within the value chain i.e. how raw materials are sourced and products used and disposed of. The circular economy and carbon reduction connection lies in rethinking this entire system whereby a massive transition is at the heart of this system; shifting from a linear “take-make-waste” model to one where waste becomes a resource and products are designed for longevity, reuse and regeneration.

Circular Economy and Its Climate Impact

To understand the link between circular economy and carbon reduction, it’s essential to define what the circular economy entails. The United Nations Development Programme (UNDP) defines circular economy as “a system that aims to minimise waste and promote a sustainable use of natural resources, through smarter product design, longer use, recycling and more, as well as regenerate nature.” In its simplest form, the circular economy is an economic system aimed at eliminating waste and continually using resources. It replaces the traditional linear model with a regenerative approach where materials are kept in use for as long as possible, maximising their value and minimising environmental harm.

According to the Ellen MacArthur Foundation, applying circular economy principles to five key areas like cement, aluminium, steel, plastics and food can cut global greenhouse gas emissions by 40% by 2050. When extended to the food system, this reduction could reach 49%, bringing total emissions from these areas 45% closer to net-zero targets. This underscores how closely circular economy and carbon reduction efforts are intertwined as mutually reinforcing strategies for sustainable growth.

Image credit: Ellen MacArthur Foundation, Completing the picture: How the circular economy tackles climate change (2021)

Key Principles of the Circular Economy

• Design Out Waste and Pollution: Products are designed for disassembly, repair and reuse to prevent waste from the outset.
• Keep Products and Materials in Use: Prioritising remanufacturing, refurbishing and recycling to extend product life.
• Regenerate Natural Systems: Using renewable materials and restoring ecosystems to offset industrial impacts.

These principles reduce the need for virgin material extraction and also lower embodied carbon emissions across entire value chains. Circularity also enhances better resource use reporting and resource efficiency, providing businesses with a more accurate understanding of their material dependencies and impacts throughout the product life cycle.

The Carbon Connection: Tackling Scope 3 Emissions

One of the most direct links between circular economy and carbon reduction lies in Scope 3 emissions i.e the indirect emissions that occur in a company’s supply chain, both upstream and downstream. For most sectors, these represent over 70% of total greenhouse gas emissions.

A circular economy approach helps reduce these emissions by:

• Extending Product Lifecycles: Longer-lasting products mean fewer replacements and reduced production-related emissions.
• Enhancing Material Efficiency: Designing for modularity and recyclability cuts the carbon intensity of manufacturing.
• Substituting Materials: Switching from high-carbon materials (like virgin steel or cement) to recycled or bio-based alternatives reduces embodied carbon.
• Promoting Product-as-a-Service Models: Instead of ownership, businesses offer leasing or sharing services, which optimises resource use and reduces waste.

Circular strategies are among the most effective waste reduction strategies to address these emissions. These strategies contribute directly to an organisation’s carbon emissions reduction goals, enabling measurable progress against Science-Based Targets initiative (SBTi) pathways.

Learn More: What are Scope 1, 2, and 3 Emissions?

Circular Economy and Science-Based Targets

Science-Based Targets initiative (SBTi) frameworks require companies to align their decarbonisation efforts with the Paris Agreement’s 1.5°C goal. Yet many businesses struggle to achieve reductions beyond their direct operations. This is where the circular economy and carbon reduction link could deliver a quantifiable impact.

By rethinking material flows, organisations can:

• Reduce upstream emissions through recycled content and low-carbon procurement.
• Cut downstream emissions through reuse and take-back programmes.
• Demonstrate measurable reductions through resource use audit and product-level life cycle data.

A circular economic advisory approach helps organisations quantify these benefits, guiding material redesigns and process improvements that feed directly into validated SBTi pathways.

Learn more about choosing the right SBTi sector pathway for your organisation: Choosing the Right SBTi Sector Pathway | Tunley Environmental

Practical Circular Economy Models for Emissions Reduction

Different circular economy models can be applied across industries to drive carbon savings:

• Product Life Extension – Refurbishment and remanufacturing save up energy compared to making new products, reducing embedded emissions.
• Resource Recovery – Recycling aluminium cuts emissions compared with primary production.
• Sharing and Service Models – Shifting from ownership to access (e.g. leasing or product-as-a-service) reduces demand for new goods.
• Circular Supply Chain Integration – By designing for disassembly and reusability, industries can dramatically reduce their material footprint and embodied carbon.

Each of these contributes to stronger carbon performance and improved reporting integrity.

Measuring the Carbon Benefits of Circularity

Robust data is critical for tracking the success of circular strategies. Tools such as Circular Economy Assessments and resource use reporting systems enable companies to identify where circularity drives the greatest carbon savings.

Key metrics include:

• Material Circularity Indicator (MCI) – measuring restorative material flows.
• Carbon intensity per product – tracking emission reductions per functional unit.
• Circularity gap – assessing progress toward full circularity.

Together, these tools strengthen ESG disclosure and feed into resource use audit frameworks aligned with Corporate Sustainability Reporting Directive (CSRD) and Global Reporting Initiative (GRI) standards.

The Bottom Line

The link between circular economy and carbon reduction lies in this deeper layer of value-chain transformation, rethinking not just how we power our world, but how we make, use and reuse its resources. As the research from the Ellen MacArthur Foundation demonstrates, circular strategies could reduce emissions in key industries by up to 49%, closing nearly half the gap to net-zero targets. For organisations ready to act, the first step is understanding where circularity can deliver the most impact. These barriers to a truly circular economy can be mitigated by implementing resource efficiency policies, supply-chain collaboration and expert support from sustainability consultants offering circular economic advisory services.