Circular economy policies around the world are overlooking some of the most important renewable materials used by industry, according to a new report from the Ellen MacArthur Foundation (EMF), which argues that cotton, timber, rubber, leather and other bio-based materials have largely fallen outside the mainstream circular economy agenda.
The report, Circular by Nature: A Policy Agenda for Bio-based Materials in a Circular Economy, says circular economy strategies have made considerable progress in addressing finite materials and waste streams, but have paid comparatively little attention to biological materials and the ecosystems that produce them.
“The circular economy has made significant progress in developing strategies for finite materials, yet realising its full potential requires equal ambition for bio-based materials,” the report states.
According to the Foundation, analysis of 13 national circular economy strategies and 18 bio-based materials policy frameworks found that the two policy areas frequently operate in parallel with little coordination. Circular economy policies tend to focus on bio-based materials primarily as substitutes for fossil-derived inputs, while policies governing agriculture, forestry and the wider bioeconomy often concentrate on extraction and production without integrating circular principles such as reuse, repair, refurbishment and recycling.
The report argues that this disconnect is preventing policymakers from capturing the full economic, environmental and social value available from biological resources.
“Most circular economy strategies treat bio-based materials as direct substitutes for non-renewable inputs, rather than focusing on how they are grown, used across successive applications and safely returned to biological systems,” the report says.
At the same time, bioeconomy policies have what the Foundation describes as “the inverse blind spot”, rewarding substitution of fossil-derived materials without ensuring that biological materials circulate through multiple uses before disposal.
The report warns that this approach risks optimising linear systems rather than redesigning them. Regenerative production, value retention through reuse and safe reintegration into natural systems are not systematically embedded in either policy area, limiting progress on climate change, biodiversity loss and pollution reduction.
EMF argues that a circular economy framework for bio-based materials should extend beyond simple material substitution. Biological resources should be sourced regeneratively, designed without substances of concern, kept in productive use through repair and reuse, circulated through secondary applications and ultimately recovered through recycling, composting or anaerobic digestion.
“A circular economy framework for bio-based materials defines the conditions under which a regenerative economy can flourish in the long term,” the report states.
The document makes the point that renewable resources can only remain renewable if ecosystems are allowed sufficient time and space to regenerate. Where extraction exceeds natural recovery rates, resources that are technically renewable can become effectively finite.
It identifies significant economic opportunities from adopting a more circular approach to bio-based materials. For example, regenerative sourcing, greater use of secondary feedstocks, improved material recovery and new business models could unlock additional revenue streams, increase resource productivity and strengthen supply-chain resilience, say the authors.
Examples cited include fashion company Gucci’s investment in regenerative fibre production, Brazilian pulp and paper producer Klabin’s recycling and forestry initiatives, Dutch furniture manufacturer Royal Ahrend’s modular design strategy, and Indian innovator MYNUSCo’s conversion of agricultural residues into bio-composite materials.
According to the report, countries that produce substantial volumes of bio-based materials could gain particular advantages by moving beyond commodity exports towards higher-value circular activities, including innovative biomaterials, repair, reuse and recycling systems.
The report also highlights potential environmental gains. Keeping bio-based materials in use for longer can reduce pressure on land, decrease demand for virgin extraction and help address biodiversity loss, while regenerative production systems can improve soil health, water retention and ecosystem resilience.
To address what it sees as a policy blind spot, the Foundation proposes five priority areas for government action: designing for circularity and regeneration; enabling effective and safe material circulation; reforming economic incentives; investing in innovation, skills and infrastructure; and strengthening collaboration across institutions and borders.
The report concludes that achieving alignment between circular economy and bio-based materials policies could help build more resilient economies while supporting climate, biodiversity and pollution objectives.
“Unlocking the full potential of bio-based materials requires moving beyond fragmented approaches towards a coherent system that maintains the value of resources, supports regenerative natural systems, and strengthens long-term economic resilience.”
