Economies worldwide fundamentally depend on materials, yet a significant portion of their value is lost at each stage of production, use, and disposal. Each year, an initial estimate of euro (€) 25.4 trillion in economic value is lost due to resource inefficiencies, premature product disposal, and under utilised assets, according to the latest Circularity Gap Report.
Compared with a Gross Domestic Product (GDP) of €82.6 trillion, this highlights the immense scale of material-related losses.
This means that for every €3 of economic value created globally, around €1 is lost due to linear material use. These losses are avoidable and represent a significant opportunity for circularity to enhance value recovery and long-term value retention across economies.
Circle Economy, a non-profit organisation in collaboration with Deloitte Netherlands, released its updated Circularity Gap Report 2026 on April 16.
The report introduces the concept of the Value Gap, which measures avoidable economic losses tied to linear systems. This gap reflects not only financial inefficiencies but also hidden environmental and social costs, such as pollution, resource depletion, and negative health impacts. Understanding this gap helps identify where interventions can reduce waste and improve long-term prosperity.
Value loss can be understood through three lenses: pathways, mechanisms, and value chain stages. Five key pathways — processing losses, energy losses, food losses and waste, end-of-life waste, and the consumption of fixed capital (the deterioration of buildings, infrastructure, and machinery) illustrate where losses occur.
Processing losses account for €904.2 billion due to inefficiencies in manufacturing. Energy losses contribute €8.7 trillion driven by wasted energy throughout extraction and use. Food losses and waste total €650.7 billion representing edible food that exits the supply chain without being consumed, including losses during storage, transport, retail, and final consumption. End-of-life waste contributes €10.0 trillion reflecting discarded products whose value is not recovered. Lastly, the deterioration of infrastructure and machinery, known as consumption of fixed capital, leads to €5.2 trillion in losses.
These losses are driven by four main mechanisms: poor management of materials, premature obsolescence, early deterioration of assets, and the internalisation of shadow costs like environmental damage.
Viewed through this lens, mismanagement of products and materials accounts for €6.2 trillion, or about 24 per cent of total value loss. Internalised shadow costs contribute €7.5 trillion, representing about 30 per cent of total value losses. Premature obsolescence of long-lived assets accounts for €6.5 trillion (about 26 per cent of total value loss), while deterioration of long-lived assets—equivalent to consumption of fixed capital—amounts to €5.2 trillion, about 20 per cent of total value loss.
Looking at the value chain, losses are spread across all stages. Upstream activities account for €5.3 trillion, mainly from energy inefficiencies. The use phase sees €10.1 trillion in losses due to energy waste and asset deterioration. Downstream, value loss reaches €10.0 trillion, largely from discarded products.
Closing this Value Gap requires systemic change. The report calls for coordinated action across businesses, financiers and policymakers to address systemic inefficiencies driving the Value Gap. Businesses must adopt circular models, financiers should prioritise durable investments, and policymakers need to align regulations with true environmental costs. Addressing these inefficiencies offers a path toward a more resilient and sustainable global economy.