Circular by Nature: A New Policy Agenda for Bio-Based Materials

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Circular economy and bio-based materials policies have developed in silos for too long. This joint report by the Ellen MacArthur Foundation and the Latin America and Caribbean Circular Economy Coalition proposes a unified five-strategy framework, backed by real business cases, that could unlock USD 10 trillion in annual opportunities by 2030 and deliver a third of the emissions cuts needed for 1.5°C.

A landmark report calls on governments worldwide to align circular economy policy with bio-based materials frameworks, unlocking significant economic, environmental, and social value across global supply chains.

On June 10, 2026, the Circular Economy Coalition for Latin America and the Caribbean and the Ellen MacArthur Foundation jointly launched Circular by Nature: A Policy Agenda for Bio-Based Materials in a Circular Economy during an online webinar hosted on the Ellen MacArthur Foundation’s platform. The report is the product of a collaborative research program between both organizations and reflects input from a steering committee of government members across the Latin American and Caribbean region. It marks the beginning of a multi-year engagement effort at both global and national levels to translate its findings into concrete policy and market action.

The Problem: Two Agendas Running in Parallel

The central argument of the report is straightforward but long overlooked. Circular economy strategies have made significant progress in addressing finite, fossil-derived materials such as plastics and metals, but they have largely left bio-based materials aside. Cotton, timber, natural textile fibers, rubber, leather, and biochemicals sustain major global industries including fashion, packaging, furniture, construction, and mobility, yet circular frameworks rarely address how they are grown, circulated, and returned to nature.

An analysis of 13 national circular economy strategies and 18 bio-based materials policy frameworks from countries worldwide confirms this disconnect. Circular economy policies treat bio-based inputs primarily as substitutes for non-renewable materials, without scrutinizing upstream land-use pressures, biodiversity impacts, or nutrient cycles. Bio-based materials policies, in turn, incentivize renewable substitution without requiring those materials to actually cycle through multiple use phases before reaching end of life. The result is a generation of policy development that has optimized linear bio-based systems rather than redesigned them.

As Guilherme Suertegaray, Senior Project Manager at the Ellen MacArthur Foundation, framed it during the webinar: the critical gap lies in the failure of both policy worlds to capture the full economic value of keeping bio-based materials in circulation.

A Framework Built on Five Strategies

To bridge this gap, the report proposes a circular economy framework for bio-based materials built on five mutually reinforcing strategies. The first strategy is regenerative sourcing: bio-based materials should be derived from agricultural and forestry practices such as agroforestry, permaculture, and silvopastoral systems that restore ecosystems, improve soil health, sequester carbon, and protect biodiversity rather than depleting them. The second strategy is design without substances of concern, ensuring that materials can safely return to nature at end of life without leaving harmful residues in soils or water systems.

The third and fourth strategies address how products and materials move through the economy. Products should be designed for durability, repairability, and modularity so that their embedded value is retained across multiple use cycles, and then designed for sequential reuse into secondary applications before recycling is considered. The fifth strategy is material and nutrient recovery through recycling, composting, and anaerobic digestion, ensuring that nutrients safely re-enter biological systems. Critically, all five strategies must be underpinned by a cross-cutting social principle: fair and inclusive value chains that recognize rural and indigenous communities, smallholder farmers, and waste pickers as rightful participants in the transition.

Business Models Already Leading the Way

The report does not only theorize. It documents concrete company-level examples demonstrating that circular strategies for bio-based materials are already generating resilience and new revenue.

Italian luxury house Gucci is investing directly in regenerative wool and cotton production through a partnership with NATIVA, covering 115,000 hectares of pastureland focused on soil health, biodiversity, and full supply chain traceability. At the product level, its Gucci Circular Hub and Regenerative Denim Project combine certified traceable cotton from regenerative agriculture with recycled fibers, while repair centers extend the lifespan of garments. Brazilian pulp and paper company Klabin deploys a large-scale mosaic forestry model on degraded land, achieving 54 percent higher productivity than the national eucalyptus average, and accounts for 10 percent of Brazil’s installed cardboard recycling capacity. Brazilian fashion retailer Lojas Renner has partnered with startup FarFarm to develop agroforestry cotton cultivation in the Cerrado, and its resale platform Repassa diverted 406,000 items from landfill in 2024 alone, saving approximately 900 million liters of water.

Dutch furniture manufacturer Royal Ahrend operates a business model centered on modular design for disassembly, leasing furniture through a Product-as-a-Service scheme while retaining responsibility for maintenance and end-of-life recovery. Indian innovator MYNUSCo transforms agricultural waste into bio-composite pellets that replace plastics in consumer goods, packaging, and automotive applications, paying farmers two to three times more per kilo than the biofuel industry. Colombian fashion manufacturer Crystal S.A.S. is reviving the country’s cotton sector through regenerative production in rotation with other crops, and is partnering with universities to explore alternative fibers such as pineapple, fique, and banana. Uruguayan firm TraceSurfer provides full product lifecycle traceability and Digital Product Passport tools, enabling companies across Latin America to comply with the EU’s upcoming Ecodesign for Sustainable Products Regulation and mandatory textile Digital Product Passport requirements coming into force in 2027.

At the webinar, TraceSurfer’s Mariano Pineyrua underscored the role of data infrastructure, explaining that the digital passport serves as a close communication channel between brands and consumers to extend the useful life of products within the supply chain. Crystal Group’s Catalina Posada Salazar added that building ecosystems and alliances, including with local female workers in reverse logistics and remanufacturing, is essential because individual corporate action is not sufficient on its own.

Five Pillars of Policy Action

The report translates this analysis into actionable policy recommendations structured around five pillars. The first is designing for circularity and embedding regeneration, including developing design standards for bio-based materials that build on existing international frameworks, mandating traceability, and establishing harmonized definitions for key concepts such as regenerative production, safe compostability, and bio-based content.

The second pillar is enabling effective and safe circulation of bio-based materials, beginning with reviewing waste classifications that currently push bio-based residues prematurely into low-value treatment pathways and block their reuse as secondary feedstocks. The third pillar is promoting suitable financial and economic incentives: redirecting agricultural and forestry subsidies toward regenerative practices, deploying eco-modulated Extended Producer Responsibility (EPR) schemes, reducing Value Added Tax on repair and remanufacturing services, and phasing out incentives that entrench linear production models.

The fourth pillar calls for investment in innovation, skills, and infrastructure, including funding for fibre-to-fibre recycling, modular timber systems, biorefineries, and composting facilities, alongside skills development integrated across vocational, agricultural, and industrial training programs. The fifth pillar is cross-border and cross-institutional collaboration: establishing cross-ministerial task forces, strengthening mutual recognition of sustainability standards across markets, and aligning trade policy with climate and biodiversity commitments.

Latin America and the Caribbean as a Strategic Opportunity

A recurring theme throughout the report and the launch webinar is that Latin America and the Caribbean occupy a uniquely advantaged position in this transition. The region is home to enormous biodiversity, significant biomass production, and growing policy leadership in circular economy thinking. Luis from CEPAL (the UN Economic Commission for Latin America and the Caribbean) stated clearly at the webinar that for a region still heavily dependent on linear raw material exports, a circular bio-economy is a core economic development strategy in its own right, capable of generating new value chains and skilled employment. His observation that “an economy that is not regenerative is not circular” captured the report’s foundational logic.

Colombia’s Ministry of Environment highlighted national efforts to build a circular strategy for the textile sector, emphasizing eco-design before products reach the market and policy frameworks that address both material flows and resource flows, including water and energy. The report points to Brazil’s national circular economy strategy as a model for embedding regeneration as a shared cross-sectoral principle, notably through the Nova Indústria Brasil program promoting biofertilizers and agroindustrial traceability.

Future Outlook

The report is explicit that it marks a beginning, not a conclusion. It establishes the analytical foundation for a multi-year program of engagement at both global and national levels, with the Ellen MacArthur Foundation and the Latin America and Caribbean Circular Economy Coalition committed to translating its insights into policy and market action. Three concurrent global processes provide momentum. In April 2026, over 100 countries adopted national circular economy roadmaps or action plans, representing a 34 percent increase since 2024. During COP30, a Bioeconomy Challenge was launched as an international multi-stakeholder platform to implement global bioeconomy principles by 2028. The EU’s Ecodesign for Sustainable Products Regulation and mandatory Digital Product Passport for textiles, coming into force in 2027, will create direct compliance incentives for bio-based material producers worldwide.

The economic opportunity is substantial. Studies cited in the report estimate that a nature-positive transition aligned with the Global Biodiversity Framework’s targets could represent USD 10 trillion in annual opportunities globally by 2030. Bio-based products could eliminate up to 2.5 billion tonnes of CO₂ equivalent annually in Europe by 2030, while a global shift toward a bioeconomy could deliver up to one-third of the emissions reductions needed to limit warming to 1.5°C. For countries in Latin America and the Caribbean, the shift from commodity export toward regenerative production, innovative bio-based materials, and local recirculation loops offers the prospect of more diversified economic returns, stronger domestic industries, and skilled employment opportunities.

The path forward requires moving beyond fragmented, sector-specific approaches toward a coherent system that maintains the value of biological resources, actively regenerates natural systems, and strengthens long-term economic resilience. The report argues that the tools, frameworks, and business models already exist. What is needed now is the policy will to align them.

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Disclaimer: The author did not participate in this study. The opinions expressed are solely those of the author and cannot be attributed to any affiliated organizations. Portions of the text and images were supported by artificial intelligence. Contact me if you find the factual error.