BackBy Pilar Gomez, Managing Partner at Marguerite
What market forces are driving circular economy investments in 2026?
The degradation of the environment, the impact of climate change and the consequential depletion of resources are the main challenges that companies, consumers and governments are facing – and will inevitably continue to face in the decades ahead, if no remedial actions are taken.
As the world’s consumption continues to accelerate, waste has become a global issue affecting the environment, the ecosystems and threatening economic stability. In response, governments and international organisations are creating regulatory frameworks to support a “circular economy model” – focused on minimising waste and promoting reuse, repair, and recycling – as a sustainable alternative to the traditional “take-make-waste” approach.
Policy and regulatory trends are now supporting the circular economy as both a solution to the waste crisis and a potential way to reduce dependence on primary materials and energy, whilst increasing economic growth and prosperity.
Is Europe positioned to lead this transformation?
Circularity is gaining momentum as more public and private funding is directed toward developing efficient technical solutions to extend product life cycles. The circular economy represents a tremendous investment opportunity for Europe, and many businesses and stakeholders are embracing it as a path to increasing growth and profitability.
The model offers clear benefits: improved resource efficiency, added value for investments, and environmental sustainability for future generations – all while safeguarding biodiversity and minimising negative externalities.
We expect significant attractive investment opportunities consistent with the circular economy model to arise in Europe in 2026 and over the coming years.
Why is plastic waste at the centre of circular economy innovation?
Finding solutions to reduce plastic waste has been at the heart of many recent initiatives, particularly those focused on reducing plastic pollution and the CO2 emissions from plastic production to mitigate its negative impact on the planet.
Plastic is relatively new, but its low production cost has made it one of the most widely used materials, with applications ranging from construction and healthcare to electronics and, extensively, packaging. Because of its durability, plastic waste can remain in the environment for generations, contaminating ecosystems with microplastics and eventually affecting human health.
Can recycling solve the plastic crisis?
Reducing global plastic consumption and finding alternatives is a clear goal, but changing consumer behaviour will take time. Reducing plastic use alone will not solve the problem of plastic waste in the short to medium term.
Therefore, there is an increasing need to invest in improving the collection and sorting of plastics, as well as applying new, improved recycling technologies to treat plastic waste, preserve its value, and extend its lifecycle.
What’s driving investment momentum?
The European Union has set ambitious targets for mandatory recycled content, aiming for 100% recyclable plastic packaging by 2030. This will increase demand for recycled plastic from manufacturers who need to meet regulatory targets and eventually avoid penalties.
It will also incentivise the acceleration of innovation and attract investment aimed at finding better ways to recycle plastic, reduce waste, and improve recycling efficiency.