Photo: UNDP Indonesia
Today’s global economy is being shaped by growing uncertainty and complexity. Faced with volatile commodity prices and rising geopolitical tensions, countries and industries are exploring how resilient their supply chains are to external shocks and how to best acquire the resources they need.
In this context, circularity—especially how we design, extract, reuse and recycle materials—is becoming increasingly important. Circularity can help build more resilient industrial supply chains and protect against price hikes and commodity shocks, all while helping reduce greenhouse gas emissions and build economic resilience.
Resource use, including the extraction and processing of raw materials, accounted for more than 55 percent of global emissions in 2022. Without urgent action to shift the way resources are used and extracted, by 2060 this number could increase by almost 60 percent from 2020 levels, far exceeding planetary limits. Through circularity, every tonne of material that is reused, recovered, repaired or recycled avoids future extraction, transport, processing and disposal, reducing emissions while supporting economic development and preserving our planet’s constrained resources.
As UNDP, we support governments to advance their industrial decarbonization and integrate targeted measures in national climate plans, or Nationally Determined Contributions (NDCs). Over 90 percent of third-generation NDCs now identify industry as a priority sector for climate change mitigation.
Circularity principles are emerging as key tools for enabling industrial competitiveness in low-carbon economies, whether it’s by developing roadmaps for reducing emissions across value chains in the cement and steel sectors or identifying investment opportunities for low-carbon and energy-efficient construction and manufacturing.
Having said that, as planning and implementation processes unfold on the ground, we often observe circularity being considered as an “add-on” intervention, rather than being placed at the heart of industrial development and climate action. This makes us wonder: how can circularity be more deeply embedded in product and infrastructure design, production processes and waste management, so industries can decarbonize and remain competitive?
1. Circularity begins even before resources are extracted
Some of the greatest opportunities to reduce industrial emissions occur when virgin raw materials are never extracted in the first place. The extraction and processing of raw materials is one of the most resource-intensive and polluting stages of production, significantly contributing to global emissions. Despite this, only 6.9 percent of these materials are being cycled back into the economy after their first use.
How can we make circularity work given the demands of the built environment, particularly in developing regions where much of the infrastructure of the future is yet to be built?
One important step is looking at how to reduce raw material consumption from the design stage. By changing or improving the way a product or service is designed, we can influence all stages of its life cycle from reducing the materials used per unit of production, to prolonging its use and generating minimal waste.
For example, in Ecuador, UNDP is supporting the application of circular economy principles at the design stage in the construction sector. One of the measures being explored is the use of graphene as an additive in concrete, with the potential to reduce the consumption of cement and, at the same time, improve the performance of the material. Opportunities to recover materials from other value chains—such as rubber tires at the end of their useful life—and incorporate them again into production processes have also been evaluated.
Reducing material use by design can help industries create new market opportunities, promote the upskilling of labour and generate innovative solutions through partnerships with designers, architects, engineers and policymakers, along the value chain.
2. Circularity can transform how we produce
Circularity also needs to be embedded at the production stage, in the processing and energy inputs required to develop industrial products. This means looking across production processes for opportunities to use materials more efficiently, substitute carbon-intensive inputs and shift towards recycled or alternative feedstocks. Across several heavy industries—including automotive, metals and chemicals sectors—raw materials constitute a significant share of the overall cost base. Circularity approaches that improve material efficiency and reduce value losses during processing, energy use and waste generation can therefore lower production costs while improving overall profitability.
At the same time, circularity is one part of a broader industrial decarbonization strategy and needs to be pursued alongside other measures, such as energy and material efficiency, electrification and fuel switching, the use of low-carbon energy and feedstocks and, where relevant, carbon capture and storage.
In the cement sector, material efficiency approaches are already reducing reliance on carbon-intensive clinker, a key binding ingredient in conventional cement production. For example, in 2025, Heidelberg Materials and CBI Ghana Ltd joined forces to establish an industrial-scale flash calciner for clay in Ghana. The facility produces calcined clay for use in Limestone Calcined Clay Cement (LC3), a lower-carbon alternative that reduces the amount of clinker needed. By replacing clinker with LC3, this joint venture could potentially reduce the carbon footprint of the product by up to 40 percent, helping to decarbonize the cement industry in Ghana at a time when demand is expected to more than double over the next decade.
Governments also have a role to help create the markets that make these approaches viable. Green public procurement is a particularly powerful policy tool, allowing governments to be major purchasers of industrial materials, including the steel and cement used in roads, bridges and public buildings. By incorporating requirements for lower-carbon materials into public procurement, governments can use their purchasing power to create demand, give producers greater confidence to invest in cleaner production and help products with embedded circular innovations reach scale. In China, UNDP is supporting efforts to transform the plastics industry, assisting ministries in combining measures to eliminate unnecessary plastics, reduce harmful chemicals, redesign products and packaging and use green procurement to shift demand.
In Indonesia, UNDP and partners are supporting efforts to advance the conversion of non-recyclable waste into refuse-derived fuel, which can be used in energy-intensive industries. Photo: UNDP Indonesia
In Ukraine, UNDP is working with cement and concrete producers to re-use war-generated demolition waste as material inputs for new cement and concrete production. Photo: Oleksandr Ratushniak / UNDP Ukraine
3. Leveraging waste as a temporary resource on the road to a fully circular economy
In countries around the world, industrial parks serve as platforms for industrial clustering, shared infrastructure and investment, helping countries enhance economic competitiveness. While these parks play a pivotal role in national and local economic development, their traditional growth model leads to significant environmental and sustainability challenges including waste generation, pollution hotspots and ecosystem degradation.
However, they also offer ample opportunities for circularity through industrial symbiosis, where one industry’s waste becomes another’s wealth. For example, scrap steel can be recycled to create new steel structures, and construction and demolition waste can replace virgin materials in cement and concrete. At the same time, non-recyclable waste and biomass residues can be processed and used as alternative energy inputs to industrial processes, reducing reliance on fossil fuels.
In Indonesia, UNDP and partners are supporting efforts to integrate circular economy principles into infrastructure planning. One intervention is advancing the conversion of non-recyclable waste into refuse-derived fuel, which can be used in energy-intensive industries, including cement production, to substitute coal and reduce reliance on fossil fuels.
In Ukraine, UNDP is working with cement and concrete producers to re-use war-generated demolition waste as material inputs for new cement and concrete production. The pilot project will test how these materials can safely and effectively substitute conventional raw materials, helping to reduce limestone extraction and the amount of clinker needed in cement production. It will also assess the market conditions, enabling policies and investments needed to scale these solutions and contribute to low-carbon, resource-efficient and resilient reconstruction in Ukraine.
Circularity is an opportunity to create economies of the future
Our planet’s resources and materials are finite, and circularity offers a way for development to unfold despite growing climate and economic pressures.
Rather than following the resource-intensive, linear development pathways of the past, circularity can give developing countries the opportunity to build more efficiently from the outset, gaining greater economic and social value from materials and resources while reducing waste and emissions.
If developing countries choose circularity, they can leapfrog linear economic models. They can expand their industries, bring supply and value chains home, create safer and cleaner jobs, and regenerate their land. By choosing to do things differently, they will ultimately be rewarded with one of the most critical social and environmental transformations of our era.
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The work in Indonesia and Ukraine is being carried out under the Pledge to Impact Programme. Delivered in collaboration with a wide variety of partners, the programme has supported over 120 countries to enhance and implement Nationally Determined Contributions under the Paris Agreement. Pledge to Impact is generously supported by the governments of Germany, Japan, United Kingdom, Sweden, Belgium, Spain, Iceland, the Netherlands, Portugal and other UNDP core contributors. This programme underpins UNDP’s contribution to the NDC Partnership.
The work in China is funded through the generous contribution of the Global Environment Facility (GEF). UNDP has partnered with the GEF since 1991, supporting over 160 countries with over US$8 billion in grant funding. In its active portfolio, for every $1 in grants received, an additional $6 in co-financing investments are unlocked.
The work in Ecuador was supported with funding from Sitra, the Finnish Innovation Fund, which contributed to the first phase of the Building Circularity into NDCs initiative, including the development and piloting of the Practical Toolbox in Ecuador.
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