Theme article: Circular economy as the stepping stone to a sustainable society

Circular economy helps save natural resources by extending the life cycle of raw materials before they are disposed of as waste. In Finland, the consumption of raw materials is still high by global standards, but applying the principles of circular economy has the potential to put a stop to the rise in consumption of natural resources.

Human activities have exceeded the Earth’s carrying capacity

Sustainable development is strongly linked with the concept of planetary boundaries that represent critical factors that have an impact on the state of the Earth system. The planetary boundaries concept presents a set of nine planetary boundaries within which human activities should remain. It also presents how global consumption and production put the well-being of humans and the environment at risk because crossing these boundaries results in unforeseen consequences for ecosystems and ecosystem services.

In 2023, a team of scientists quantified, for the first time, all nine planetary boundaries1, which are: climate change, ocean acidification, stratospheric ozone depletion, biogeochemical flows in the nitrogen cycle and phosphorus cycle, freshwater use, land system change, biodiversity loss, atmospheric aerosol loading, and chemical pollution. According to the scientists, six of the nine boundaries have been crossed. Planetary boundaries are strongly interlinked, which means that actions are needed across all areas.

According to the Circularity Gap Report, the consumption of materials should be reduced by one-third of the current level for human activities to remain inside the planetary boundaries. Experts believe that this goal can be achieved by applying the principles of circular economy without sacrificing the needs of the human population2.

However, over 90 percent2 of the materials used globally are new virgin materials, while the global circular economy rate sits at just 7 percent. In other words, more than 90 % of materials used either end up in landfills, are lost or remain unused for years while they are tied to long-term assets, such as buildings and machinery. In addition, solutions of the green transition, such as building the infrastructure for renewable energy, will require massive amounts of minerals and materials, which further increases future demand for and consumption of materials.

Circular economy can help reduce the consumption of Finland’s natural resources

Circular economy aims to create closed-loop processes in which resources remain in use for as long as possible in an economic system. The objective of circular economy is to save natural resources through recycling, repairing and using products for longer and reducing the use of materials in the first place. This means transitioning from the linear cradle-to-grave model to a closed-loop system that uses fewer natural resources and produces less emissions. Circular economy has the potential to become a major driving force of sustainable development in the coming decades.

In Finland, the consumption of raw materials per capita is very high by global standards. The Finnish Environment Institute has recently published a national circular economy report3 that, for the first time, examines the possibilities of different operators to transition to circular economy on a large scale, and the impact of such a transition on the national economy and the environment. Preliminary results show that circular economy has the potential to put a stop to the rise in consumption of Finland’s natural resources. In addition, the scenarios presented in the report show that circular economy activities also support the achievement of Finland’s climate targets, i.e., reducing emissions and increasing the number of carbon sinks, and boost the economy as a result of improved material efficiency and competitiveness. In other words, circular economy brings significant added value to decarbonisation efforts while also boosting economic growth. The challenges facing Finland on the road towards a higher circular economy rate are material-intensive economy and low utilisation rate of waste materials.

Funding provided by the Climate Fund promotes circular economy transition in the manufacturing industry

The more sustainable use of natural resources not only requires a more ambitious attitude and new way of doing things but also new technological solutions. The Climate Fund has provided funding to several companies that promote the transition to circular economy with solutions that reduce the use of new virgin materials and improve material efficiency in line with the principles of circular economy. In addition to promoting circular economy, the projects and companies often also strive to reduce emissions.

Magsort focuses on by-products of the iron and steel industry
  • Founded in 2014, Magsort is a Finnish growth company with a focus on the recycling of steel slag, a by-product waste material that is generated in steel-making process.
  • Magsort’s solution helps to improve material efficiency in the iron and steel industry by making it possible to collect metals from waste slag and to reuse them in production process. Magsort’s goal is to reduce emissions by up to 7.5 Mt CO2 equivalent in ten years through circular economy.
  • The Climate Fund has financed the company with a capital loan of EUR 4.5 million. This funding is intended to strengthen the company’s working capital by financing equipment investments.
Resand recycles sand used in the metal industry
  • Founded in 2013, Resand is a technology company that focuses on the recycling of sand materials. The company provides foundries with sand reclamation solutions for preparing spent foundry sand for reuse.
  • Metal foundries generate vast amounts of waste sand that is often landfilled due to its poor reuse potential. With Resand’s reclamation technology, about 95 % of spent foundry sand can be reclaimed for reuse in the process. It is estimated that the company’s solutions could reduce emissions by roughly 1 Mt CO2 equivalent in ten years by replacing new virgin sand with recycled sand.
  • The Climate Fund has provided a capital loan of EUR 8 million to Resand. The funding is aimed at accelerating the deployment of foundry sand reclamation equipment and expanding the company’s operations beyond Finland’s borders.
Lamor Recycling facilitates the circular economy of plastics
  • Lamor Recycling is a project company that was founded in 2022 to offer solutions to combat plastic waste. The company is building a chemical recycling plant in Kilpilahti, Porvoo, where difficult-to-recycle plastic waste will be converted into pyrolysis oil. Pyrolysis oil can be used as a raw material in the manufacture of new plastic products instead of crude oil.
  • Lamor Recycling’s solution addresses the global plastic waste problem by making it possible to reuse the raw materials of waste plastics in new products. In addition, replacing virgin raw materials helps reduce emissions and the plant’s potential to reduce emissions over a period of ten years is estimated to be approximately 0.2 Mt CO2
  • The Climate Fund has financed the construction of Lamor Recycling’s ten-kilotonne recycling plant with a capital loan of EUR 6 million.
Wastewise makes it possible to reuse difficult-to-recycle plastics
  • Established in 2022 through a merger, Wastewise Group has developed a proprietary technology for the chemical recycling of plastics and rubber. This technology makes it possible to recycle difficult-to-recycle plastics. The process produces pyrolysis oil, which can be used to replace crude oil in the manufacture of plastics and other chemicals.
  • Converting plastic waste – that in the past would have been incinerated – into a new raw material reduces the demand for virgin crude oil and mitigates environmental issues caused by plastic waste. The company’s emission reduction potential is estimated to be 0.4 Mt CO2 equivalent over a period of ten years.
  • The Climate Fund has provided Wastewise a capital loan of EUR 4.2 million, which is aimed at accelerating the company’s plastic recycling expansion programme.

1Planetary boundaries – Stockholm Resilience Centre
2CGR 2023 (
3Kiertotaloudella on mahdollisuus taittaa luonnonvarojen käytön kasvu ja edistää ilmastotavoitteiden saavuttamista taloutta heikentämättä | Suomen ympäristökeskus


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