Beyond waste: The circular economy’s value proposition for boards

A recent AICD panel highlighted the circular economy as a strategic opportunity for boards, emphasising its role in cost savings, supply chain resilience, and value creation.

A circular economy seeks to use materials and products more sustainably and efficiently, delivering economic, environmental, and social benefits. It decouples growth from resource consumption by keeping materials in circulation and replaces the ‘take-make-waste’ model with reuse, repair, and recycling.

Australia’s circularity rate – four per cent, half the global average – reflects an entrenched reliance on a linear economy. But that is changing. A new Productivity Commission interim report highlights the economic and environmental benefits of circularity, from reducing raw material extraction to cutting landfill waste. Yet regulatory fragmentation and coordination gaps remain key barriers.

Elsewhere, the barriers are starting to come down. The European Commission’s newly launched Clean Industrial Deal aims to embed circularity in supply chains, reducing reliance on third-country suppliers, while also accelerating clean tech and industrial decarbonisation.

Making the circular business case

'Waste is a significant cost to business,' said Professor John Thwaites FAICD, Chair of the Monash Sustainable Development Institute, speaking at the AICD’s 2025 Australian Governance Summit (AGS).

'More and more businesses are recognising the circular economy as an opportunity for value creation – not only to reduce costs but also to develop products and services that deliver a return,’ he said. 'What we're seeing now is companies recognising that a less wasteful, more circular approach is not only good for business but beneficial for the entire economy.’

Some organisations are already seeing results. The Quay Quarter Tower redevelopment in Sydney retained 60 per cent of its original structure, including its concrete core – saving $130 million and preventing more than 12,000 tonnes of carbon emissions.

Sustainability is becoming a competitive advantage in commercial real estate. 'They actually get more rent if they can show that the premises have been refurbished in a sustainable way,' said Professor Thwaites. He added that tenants – particularly those in financial services – are seeking properties with strong environmental credentials.

Elsewhere, Rio Tinto is embracing circularity through ‘full value mining’, an approach that extracts multiple valuable minerals from a single deposit while repurposing mining waste. 'When they look for copper now, they look for nine other minerals and also explore ways to reuse part of the waste stream and generate revenue from it,' he said.

In agribusiness, Bega, one of Australia's largest dairy processors, is embedding circular principles across its supply chain. 'They have been doing incredible work, engaging with stakeholders to find innovative ways to reduce waste and improve materials use,' said Christie Rourke, Senior Policy Advisor at the AICD, highlighting that a Bega Valley initiative is drawing on First Nations knowledge for better resource stewardship.

Smaller firms are also carving out niches. Sydney-based startup Sircel is tackling the mounting e-waste challenge by extracting valuable materials – such as gold – from discarded electronics, diverting them from landfill.

A missing piece in net zero strategies

'It’s going to be impossible to deliver net zero by 2050 by just moving to renewable energy alone,' said Ms Rourke. She added that while decarbonisation efforts will play a role, addressing supply chain emissions – scope 3 emissions – will be fundamental, and circular economy practices will be important to those efforts.

The government has taken some steps, implementing recommendations from Australia’s Circular Economy Ministerial Advisory Group, chaired by Professor Thwaites. Among them is the adoption of a national circular economy strategy, with a target to double circularity by 2035 – effectively extracting twice the value from materials currently in use.

While circularity remains voluntary, mandatory climate-related financial disclosures are nudging organisations in that direction. Large corporations and financial institutions must now report climate risks, and some investors are integrating circularity metrics into corporate performance assessments.

What boards can do

For directors exploring circularity, the AICD’s Opportunities in the Circular Economy: A Primer for Australian Directors, developed in collaboration with Accenture Australia, offers a structured entry point.

'We wrote the primer to demystify this topic,' says Ms Rourke. 'It lays out a clear process for boards to drive circular practices within their organisations.'

A logical starting point is to evaluate the business case by considering:

• Where circularity generates cost efficiencies;
• How it aligns with risk management and business strategy;
• What the most immediate and scalable opportunities are within operations; and
• How organisations can engage regulators and investors to better support circular initiatives.

‘Ask questions of management,’ said Professor Thwaites. 'How does our business model evolve to embrace the circular economy? What are the implications? How can we support the environment while also strengthening our bottom line?’

For some, circularity will be risk mitigation tool. For others, a competitive advantage. Either way, resource efficiency is no longer just an environmental concern – it is increasingly a financial one.