Too often seen as an approach to end-of-life waste management, circularity is in fact a resource-productivity and value-retention strategy. Embedded in products, components, and materials already in use is a rich source of materials that lie within companies’ reach. If these leave the system or return flows are not controlled, this value can be lost. But through circularity—better design, longer use, component recovery, and eventually material recovery—it can be retained and monetized.
In macroeconomic terms, gains could be substantial. In Germany, for example, research by BCG and the Federation of German Industries (BDI) estimates that by 2045 the country’s circular economy’s gross value added (GVA) could be €130 billion, twice today’s €65 billion.
For CEOs, at a time of price volatility and supply constraints—BCG modeling shows demand for critical minerals at 120% to 250% of forecast supply through 2040—circularity offers increased economic value and enhanced resilience and strengthens the business model, allowing companies to remain closer to existing customers while accessing new segments. Gains show up in more than revenue: BCG analysis points to about 15% savings on materials and 60% to 70% lower manufacturing costs through refurbishment and remanufacturing—adding more than five percentage points to margins. By identifying where value leaves the system, controlling return flows, and building mechanisms to capture it, CEOs can access this value, and do so right now.
Accessing Resources Already in Use
Unlike linear strategies, which source primary materials and consume them once before discarding them, circular strategies seek to recover a “hidden resource balance sheet” embedded in existing products, components, and materials. Appliances and consumer electronics in use across the EU provide a good illustration of this phenomenon.
Circular strategies seek to recover a “hidden resource balance sheet” embedded in existing products, components, and materials.
These products contain critical minerals—copper, aluminum, rare earths, and precious metals chief among them—collectively worth more than €65 billion in stock across the EU (see Exhibit 1). The gap in these materials flows is striking. The products that reach the end of their use in the EU each year contain about €9 billion of that critical-mineral value, more than the roughly €6 billion of critical minerals EU electronics manufacturing requires every year.
Europe imports most of its finished electronics—fewer than 1% of smartphones and fewer than 20% of vacuum cleaners sold there are made locally—but the products stay in Europe until they reach the end of their use. This creates an annual critical-mineral value that is higher than what is needed to make new products in the EU. Where production is largely domestic, the picture is clearer still. For large appliances sold in Europe—about 75% of which are made domestically—the end-of-use stream holds great value. Washing machines, for example, contain about €0.5 billion in critical minerals, roughly 70% of the €0.7 billion required by EU production each year.
This has important implications for CEOs. In certain industries, what is recovered from domestic stock could provide a significant share of the materials needed to produce new goods. This cuts costs by reducing the need to buy primary materials and decreases reliance on imports.
Today, only part of this value is captured. Only about 43% of European e-waste is formally collected, against a 65% EU target, and critical minerals account for 75% of the value in that stream. The missing 57% is not sitting in people’s homes. Just 13 of the average 74 electrical items in European households are unused, and collection rates for large appliances, which are too bulky for households to store, are high.
Instead, the problem is often one of processing rather than collection. Electronic devices and appliances are often picked up outside the formal system, where the materials are downcycled rather than recovered at value. For example, an estimated 13% of European e-waste is absorbed by scrap metal channels that recover bulk steel but lose refrigerants, plastics, and critical minerals; around 8% goes into residual waste; and an estimated 5% is reported as illegally exported.
Capturing more of this value means first identifying what can be repaired or refurbished and where component harvesting and material recovery is feasible. It then means building the reverse logistics, ownership, and service models needed to bring products back into the system.
Product data requirements support circularity. For example, for certain products, the EU is phasing in its Digital Product Passport (DPP) containing details such as a product’s origin, material composition, components, and repair and recycle information. Digital platforms can match supply and demand for used assets. Condition data allows returns to be priced and routed automatically. And new digital tools such as AI-assisted sorting and grading will increase recovery quality.
Circular value has a hierarchy: preserving product life through design; then reuse, resale, repair, refurbishment, and product-as-a-service models; and then through component harvesting, remanufacturing and ultimately recycling. This hierarchy matters economically. For example, the value of a secondhand smartphone in sales is about €200 to €600, compared with only about €5 for its recovered material.
A similar pattern can be seen in German industry as a whole. According to the BCG-BDI research, there are five segments—mobility, mechanical engineering, construction, energy, and textiles, which together account for 62% of national industrial value added—in which circularity can strengthen resilience and security of supply. For example, by 2045, import dependency on rare earths and strategic battery materials could be reduced by 20% and 10%, respectively, versus the baseline scenario, even after accounting for higher demand. And for both electronics and broader industry, the prize is usually accessible without rebuilding the system.
Enhanced coordination, infrastructure, and market development could lift circular GVA. In Germany, for example, this could total about €130 billion by 2045, with roughly €33 billion in investment. Even today, however, regulatory and market trends make circular strategies accessible, with an estimated €7 billion in one-off investments generating up to €100 billion by 2045.
In other words, deep structural disruption is not necessary to capture value. While system redesign and ecosystem coordination expand the potential upside over time, with the right strategies, circular value is available right now.
Capturing Value Both Internally and Externally
For business leaders, the goal is to maximize the value of each product over its life, reducing material and supply risk, capturing more of its value—and improving margins. Three strategies are critical: preserving its high-value state, regaining access to it, and monetizing it.
To preserve the high-value state, product design is key, determining whether repair, refurbishment, component harvesting, and high-quality material recovery will be technically and economically feasible. For long-lived products, today’s design decisions will shape tomorrow’s secondary resource streams.
The second strategic imperative is regaining access to value through returns. Current return flows are leaving value on the table. For example, about 60% to 70% of end-of-use washing machines can technically be reused or refurbished. Yet only around 1% to 2% of collected machines are resold. Reverse logistics, trade-ins, take-backs, customer relationships, ownership structures, and product visibility (the ability to track a product’s life stage and location) are all needed to recapture this value.
Finally, monetization makes retained value priceable and economically attractive. When providers retain the asset, ownership and service models turn durability, useability, repairability, and recovery from externalities into economic levers.
Washing machines again provide an illustration. For example, some commercial pay-per-use models have margins more than 15 percentage points higher per machine than those of one-off sales. And as a share of lifetime revenue, the embedded material value (derived from reusing products multiple times) in washing machines is about four times lower as a service than in a one-off sale.
There are trade-offs, however. A key challenge is that retaining ownership keeps products on the company’s balance sheet, tying up capital and spreading revenue over time rather than booking it up front. Retained-value models can cannibalize sales of new products. To attract incremental sales or avoid lost demand, this means designing and pricing offers that target the right customer segments and product tiers. Nor do all commercial incentives favor circularity. For example, in manufacturing and retailing, payments are frequently made by units shipped, so a product kept in use is one not sold. And recyclers are paid by tonnage processed; this rewards recovery of bulk metal over that of the critical minerals, which hold 75% of the material value in e-waste.
Circularity’s starting points also differ by sector (see Exhibit 2). In mechanical engineering, for example, the priority is retaining the highest value of the installed base and preserving customer relationships through repair services, refurbishment, and remanufacturing of components. In construction, value sits at each end of the chain: the renovation and retrofit of existing buildings, which requires far less material than new construction, and higher-quality recycling of concrete, steel, aluminum, glass, wood, and plastics.
In the mobility sector, auto repair and maintenance already make up a large and established aftermarket; the incremental opportunity lies in component remanufacturing and battery and material recovery. In energy, functioning infrastructure and components offer the highest value through life extension, component reuse, and second-life batteries. And in textiles, value is accessed through continued product use and reuse (resale, rental, and repair), and ultimately through fiber value (collection and sorting, fiber-to-fiber recycling).
Meanwhile, the ability to scale circularity’s value capture relies not only on what companies can control internally but also on a chain of external conditions. Returned assets cannot be traded unless their condition can be assessed and priced, which requires shared standards such as condition grades for electronics, part specifications for machinery, and material-quality classifications for building products. Data standards, in other words, matter at least as much as physical infrastructure.
A Five-Move CEO Agenda
While these three strategies focus on the sources of circular value, successful capture of that value means implementing the right organizational strategies. Five moves are key to making this happen (see Exhibit 3).
Put one executive in charge. Circularity frequently fails on organization, not technology. Design sits in R&D, returns in after-sales, recycling in sustainability, and material savings in procurement. But nobody owns the value that falls between them. To address this problem, a single executive should be made accountable for circularity, with a mandate that covers design, service, returns, and sourcing, and a numerical target to deliver against. Without this leadership, the next four moves are likely to stall.
Establish the value of priority products and identify points where this value drops. Value exists not only in the installed base but also in materials, infrastructure, and business models. For each priority product and material cluster, companies need to quantify primary-supply exposure, installed-base value, residual component value, return rates, and recovery quality; and they need to size the value tied to the infrastructure and business models around them. The purpose is to locate the “cliffs”—points at which a product’s worth collapses by an order of magnitude—and to decide which of these products it makes economic sense to recover.
Follow the value hierarchy and build the end-to-end business case. Take product and function life first, then component retention, then material recovery. Evaluate the end-to-end economics—including capex, feedstock availability, processing cost, product cannibalization, reduced material use and capital spend, downstream demand, and partner economics—and assess its impact on product lifetime margins rather than first-sale revenues. In the near term, much of the return comes from cost savings: lower material intake, cheaper repair using harvested parts, and fewer losses in reverse flows.
Make data and AI the operating backbone. Retained value can be priced only if it is visible. Integrate traceability, digital records such as the DPP, and asset condition data into core processes so that product returns can be identified, graded, priced, and routed for reuse, repair, refurbishment, remanufacturing, or recycling. Digital platforms that identify recoverable or idle assets across a product group offer a positive return on investment and enable every other move. Use AI for sorting, grading, and predictive maintenance that extends asset life. The same data foundation makes circularity measurable. The KPIs that best assess circularity’s value are retained value per unit of resource, return-flow capture, revenue beyond first sale, margin on circular lines, customer lifetime value, and primary-material exposure avoided.
Retained value can be priced only if it is visible. Digital platforms that identify recoverable or idle assets across a product group offer a positive return on investment and enable every other move.
Line up partners and investors and sequence the spending. Circular value is created in ecosystems. Suppliers, logistics providers, refurbishers, recyclers, investors, and customers all need to access a share of this value. This means establishing the roles, data contributions, and value split for each stakeholder up front. Early investments should focus on areas where current regulation, markets, and public funds strengthen the case. Public-sector vehicles are an under-used source; for example, the funds that advanced economies have allocated to critical minerals reached about $65 billion in 2025, yet less than 20% have been used. System redesign investments should be made only once the additional value justifies them.
Value Can Be Accessed Today
As the BCG-BDI analysis shows, if companies put value retention at the heart of their competitiveness and resilience agendas, they need not wait for a fully redesigned circular economy to capture meaningful value. The near-term prize is a better return on the resources they can already reach, including increased margins on refurbishment and remanufacturing service-based lines, lower material intake, cost savings, and fewer losses across the value chain.
While accessing these benefits remains the primary reason for pursuing circularity, the environmental and social benefits are compelling, too. The European Environment Agency estimates that 17 circular economy measures could cut the EU’s consumption-based emissions by around 22%, in part because less waste is generated and more resources are reused instead of newly extracted and processed. The same shift can create new jobs in repair, remanufacturing, and recycling—closer to home.
A successful circular strategy prioritizes resource productivity and value retention. Reaping its benefits means assessing the potential value to the business, establishing clear ownership, gaining better data, and aligning partners around returns. For companies that seize the opportunities, circularity can create more value with fewer resources—improving margins, cutting costs, generating additional revenue, and strengthening the business while building resilience. And all by taking steps to unlock the resources sitting in their value chains right now.
