Redefining value: The circular economy

For decades, the global economy has largely operated in a way in which resources are extracted, transformed into products and then discarded once they reach the end of their useful life – a linear model.

Circularity challenges this logic, designing systems for continuous use. The circular economy, an approach that seeks to keep resources in circulation at their highest value for as long as possible, is increasingly being viewed not simply as an environmental ambition but as a practical response to mounting economic and resource pressures.

A system under strain

Global material consumption has more than tripled since 1970 and now exceeds 100 billion tonnes each year, yet less than 8% of those resources are cycled back into the economy.

Meanwhile, demand for infrastructure, energy systems and housing continues to accelerate as populations grow and urbanisation expands. The built environment alone accounts for roughly 40% of global material use and energy-related emissions, while waste streams are also expanding rapidly. The world currently generates around 2.2 billion tonnes of municipal solid waste annually, a figure projected to rise to 3.4 billion tonnes by 2050 if current consumption patterns persist.

What has become increasingly clear is that circularity is not simply about improving recycling rates, but about rethinking how the systems that underpin modern economies are designed so that growth no longer depends on ever-increasing resource consumption.

Reimagining infrastructure

One response to the material intensity of construction and urban development is the growing concept of urban mining. Rather than treating buildings as fixed endpoints in the economic cycle, urban mining views cities themselves as repositories of valuable materials that can be recovered and reused when structures are dismantled.

An emerging tool I've been watching in this space is the use of material passports, digital records that document the composition and reuse potential of building components, allowing them to be recovered when structures reach the end of their lifecycle. In this sense, cities essentially begin to resemble "material banks", where steel, timber and other components can circulate through multiple construction cycles rather than being lost through demolition and waste.

Growing the built environment

Alongside efforts to recover materials from existing infrastructure, another development is the emergence of bio-based construction materials that are challenging how buildings themselves are made.

Among the most innovative developments is the use of mycelium, the root-like network of fungi that grows beneath mushrooms, breaking down organic matter and transforming waste into new life. It's long been understood that these underground networks can spread across vast areas, with some fungal systems extending for kilometres beneath forest floors.

Researchers are now beginning to harness this natural process in construction, cultivating mycelium on agricultural waste to form lightweight yet durable building components. Rather than being manufactured through energy-intensive industrial processes, these materials are grown, with the fungal network binding organic fibres together to create insulation panels, bricks and structural composites that are both biodegradable and low-carbon.

Early architectural experiments are beginning to show what this shift could look like in practice. In Seoul, the Mycelial Hut, developed with researchers at the Seoul National University of Science and Technology, has combined robotic fabrication with mycelium panels grown from organic substrates, exploring how biological materials can be cultivated rather than manufactured.

Similar experiments are emerging across Europe, including the Growing Pavilion in the Netherlands, where mycelium panels are being used for the façade alongside other materials such as hemp, wood and cotton. In this sense, if cities can be mined for the materials they already contain, perhaps the next step is learning to cultivate what we build next, we believe it is creating new opportunities for investors in sustainable materials and circular value chains.

Concept to policy

Of course, this transition toward circular construction will not be without challenges, as standards for reused materials remain uneven and many construction processes continue to prioritise demolition rather than recovery. Despite these challenges, real momentum is beginning to build across Europe, as policymakers are increasingly recognising the circular potential of the construction sector – a shift that is also beginning to shape how investors can think about resource risk and long-term infrastructure investment.

The Waste Framework Directive now requires EU Member States to reuse or recover 70% of non-hazardous construction and demolition waste, while the Energy Performance of Buildings Directive is expanding the focus to the full lifecycle emissions of buildings, including embodied carbon, in a sector that employs nearly 25 million people across Europe.⁵

For investors, these developments are increasingly relevant as resource constraints and supply-chain volatility become more prominent in portfolio considerations. Circular construction models can help reduce exposure to volatile commodity markets while opening new investment opportunities across recycling infrastructure, sustainable timber and alternative materials.

For long-term investors, early exposure to resource-efficient and resilient infrastructure may offer the potential both to protect capital and capture the growth of solutions that are expected to define markets in the decades ahead.

Looking ahead

What ultimately emerges from these developments is a change in how value itself is understood, as circular systems challenge the long-standing assumption that economic growth must rely on continual extraction. Instead, investors, policymakers and businesses alike are beginning to look inward, towards new opportunities for innovation and potential value creation.

In a world where resources are finite but human ingenuity is not, the most resilient economies may ultimately be those that learn not simply to consume resources, but to circulate them.

This article is also published on LinkedIn. illuminem Voices is a democratic space presenting the opinions of leading Sustainability Thought Leaders, their views do not necessarily represent those of illuminem.

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