The Circularity Gap Report 2026 introduces the Value Gap, quantifying the avoidable economic value lost due to linear material use, estimated at €25.4 trillion annually (± €4.7 trillion). This represents nearly 31% of global GDP, highlighting the significant opportunity for circularity to enhance value recovery and long-term value retention.
The report identifies five key pathways of value loss:
- Processing losses: €904.2 billion (± €112.5 billion) from material waste during transformation.
- Energy losses: €8.7 trillion (± €1.6 trillion) due to inefficiencies across the energy system.
- Food losses and waste: €650.7 billion (± €28 billion) from edible food exiting the supply chain.
- End-of-life waste: €10.0 trillion (± €1.2 trillion) from residual material/product value and treatment costs.
- Consumption of fixed capital: €5.2 trillion (± €1.7 trillion) from the premature deterioration of long-lived assets.
These losses occur through four main mechanisms:
- Mismanagement of materials and products.
- Premature obsolescence.
- Premature deterioration of long-lived assets.
- Internalisation of shadow costs (unpriced environmental and social externalities).
Value loss is concentrated across different stages of the value chain:
- Upstream: €5.3 trillion, primarily energy losses and shadow costs.
- Use phase: €10.1 trillion, mainly from asset deterioration and energy losses.
- Downstream: €10.0 trillion, dominated by end-of-life waste.
The report emphasizes that closing the Value Gap requires coordinated action across value chains, involving businesses, financiers, and policymakers. Key actions include:
- Businesses: Build a holistic business case for circular value creation, innovate and scale circular business models, and collaborate across value chains.
- Finance: Integrate resource-use concerns into credit and investment decisions, reorient capital flows towards resource-efficient investments, and assess exposure to resource-related risks.
- Policymakers: Support target-setting for material use, orient tax systems towards reducing value loss, and encourage policies that better reflect externalities in market prices.
The Value Gap highlights the need to rethink value beyond monetary metrics, incorporating sustainable well-being and the broader impacts of resource management. By addressing the root causes of value loss, a circular economy can unlock trillions in economic value while strengthening resilience and promoting long-term prosperity.
