How Circular Are Businesses in Germany?

This requires the increased integration of alternative materials – for example secondary raw materials – into the value chain. The efficient use and recycling of materials and energy as well as the substitution of certain raw materials also play a crucial role for Europe’s industry.

The concept of a circular economy is strongly integrated in the European growth strategy, the European Green Deal (European Commission, 2019), and is seen as a prerequisite for achieving targeted climate neutrality by 2050. The European Union’s Circular Economy Action Plan (European Commission, 2020) pushes regenerative growth and provides the framework for sustainable products, services and business models. The design and circularity in production processes, in particular, forms a critical element.

The transition towards a fully functioning circular economy is only in its early stages, both at the national and at the European level. The circular use of materials in the EU, i.e. the proportion of total material input that is recovered and fed back into the economy as secondary raw material, is about 12% (Eurostat, 2023). Yet, there is great potential arising from a circular economy: in addition to higher resource efficiency, a functioning circular economy can significantly reduce greenhouse gas emissions. Enkvist and Klevnäs (2018) see mitigation potential in the recycling of materials, efficient use of product materials and new circular business models to reduce annual industrial emissions in the EU alone by 56% by 2050. The concept of a circular economy is also becoming increasingly relevant for the alignment and success of corporate strategies. Besides ecological effects, a true circular economy offers economic potential, for example in the form of increased value creation or employment. According to Deloitte and The Federation of German Industries (2021), this could lead to additional gross value added of €12 billion annually until 2030.

The objective of this study is to identify strategies and measures that can transform current business models into circular business models based on the available literature and quantify them through a unique data set using a company survey.