Strengthening ESG Performance with Circular Economy Practices

Strengthening ESG Performance with Circular Economy Practices

In today’s dynamic and eco-conscious business environment, prioritising Environmental, Social, and Governance (ESG) performance is not just a nod towards corporate sustainability, but an imperative strategy for success and survival. One such innovative strategy gaining prominence among corporates is the adoption of circular economy practices.

Enhancing Environmental Performance

The circular economy presents a tangible and robust strategy for enhancing the ‘E’ in ESG. By promoting resource efficiency and waste reduction, circular economy practices encourage businesses to make the most out of their resources while minimising waste and its associated impacts. A report by WRAP UK indicates an impressive saving potential in waste prevention; the UK business sector could save an estimated £4.4 billion if circular economy practices were widely adopted [1].

Moreover, the Green Alliance has highlighted the immense contribution the circular economy can make to reducing greenhouse gas emissions. By applying circular principles to just five key areas – food and drink, textiles, electronics, health, and agriculture – the UK could see a reduction of CO2 emissions by 200 million tonnes by 2050 [3].

Driving Social Benefits

Turning to the ‘S’ in ESG, circular economy practices are catalysts for considerable social benefits. The creation of new jobs in remanufacturing, recycling, and service-based models can significantly boost local economies. The Ellen MacArthur Foundation, in collaboration with WRAP, suggests that a transition to a circular economy in the UK could generate around half a million jobs and reduce unemployment by over 100,000 by 2030 [2]. Additionally, the healthier environments resulting from waste reduction and efficient resource use directly contribute to social well-being.

Upholding Good Governance

Finally, the ‘G’ in ESG relates to how businesses exercise their responsibilities and obligations. Embracing circular economy practices indicates a proactive approach towards sustainability and resilience, satisfying an important governance criterion. It also shows a business’s willingness to align with evolving regulatory expectations, as more governments globally set circular economy targets to meet environmental and social objectives.

In conclusion, integrating circular economy principles into a company’s ESG strategy is a smart and forward-thinking business move. It can enhance environmental stewardship, drive social benefits, and demonstrate good governance. These, in turn, have the potential to boost a company’s financial performance and solidify relationships with its stakeholders, affirming that businesses can thrive while acting responsibly and sustainably.


[1] WRAP UK. (2022). The UK’s Transition to a Circular Economy.

[2] Ellen MacArthur Foundation, WRAP. (2022). Circular Economy Jobs in the UK.

[3] Green Alliance. (2022). The Circular Economy and Climate Change in the UK.