The Ellen MacArthur Foundation has urged governments to rethink how bio-based materials are addressed within circular economy policies, warning that existing frameworks focus too narrowly on replacing finite resources while overlooking broader environmental and regenerative opportunities.
Its latest report, “Circular by Nature: A Policy Agenda for Bio-based Materials in a Circular Economy,” argues that current policy approaches fail to provide comprehensive guidance on how bio-based materials should be produced, managed, and reused within truly circular systems.
The findings come as global momentum behind circular economy initiatives continues to grow. By April 2026, more than 100 countries had introduced national circular economy strategies or action plans, representing a 34% increase compared with 2024.
Despite this progress, the foundation’s review of 13 national policy frameworks found that bio-based materials in a circular economy are still largely viewed as substitutes for conventional materials rather than resources that can actively support regeneration, biodiversity, and long-term environmental resilience.
Bio-based materials are derived entirely from renewable biological resources such as plants, animals, algae, and microorganisms. However, the report argues that many policy documents give limited attention to critical issues including land-use impacts, biodiversity protection, and nutrient cycling.
The analysis also highlights shortcomings in many existing certification systems. Rather than assessing the overall environmental value of bio-based materials, most schemes primarily verify whether products can be industrially composted.
The report states: “Circular economy policies remain largely silent on upstream land-use pressures, biodiversity impacts and nutrient cycles. Similarly, certification schemes verify that a material can be industrially composted, not that it restores soil health or that the infrastructure to process it at scale exists.”
According to the foundation, this narrow focus prevents policymakers and businesses from unlocking the full environmental benefits that circular systems could deliver.
The report further notes: “Most bio-based materials are still produced and consumed within linear systems.”
To address these gaps, the foundation advocates a regenerative circular model that encourages responsible sourcing, keeps valuable materials in circulation for longer, creates additional value from production by-products and residues, and promotes innovative business models that reduce dependence on continuous resource extraction.
As an example of industry progress, the report highlights Gucci’s collaboration with Nativa, developed by Chargeurs Luxury Fibers. The initiative spans approximately 115,000 hectares of pastureland and focuses on improving soil health, increasing biodiversity, enhancing carbon sequestration, and delivering full traceability across Gucci’s wool supply chain.
The report also points to Gucci’s repair services and the Gucci Circular Hub, introduced in 2023, as examples of circular business practices.
It states: “Driven partly by risk management for key materials (wool, cotton, leather), Gucci reinvents its luxury catalogue and value chain with a sustainability approach that involves strategic decisions from the farm level to a management system for raw material sourcing, design, and post-use materials.”
Five priorities for policymakers
The report outlines five key areas where governments should strengthen policy to accelerate the transition toward bio-based materials in a circular economy:
- Embed circular design and regeneration: Update product design standards to prioritize regenerative practices, strengthen traceability, and integrate circular design principles.
- Improve material circulation: Reform waste regulations that divert bio-based materials into low-value disposal streams and establish clearer pathways for reuse.
- Create stronger economic incentives: Redirect agricultural subsidies toward regenerative farming, introduce eco-modulated Extended Producer Responsibility (EPR) schemes, reduce VAT on repair and secondary-use products, and phase out policies that discourage circular practices.
- Support innovation and infrastructure: Increase investment in regenerative agriculture, fibre-to-fibre recycling technologies, biorefineries, composting facilities, and workforce training across agriculture and manufacturing.
- Strengthen collaboration: Encourage coordinated action between government departments, improve international recognition of sustainability standards, and align trade policies with climate and biodiversity objectives.
Prepared with contributions from the Latin America and Caribbean Circular Economy Coalition, the report is intended to help governments and industry stakeholders develop more effective policies that maximise the environmental, economic, and circular potential of bio-based materials.
