Packaging plays a vital role in how products move through the world. It protects, markets, and connects goods to people—but it also leaves a mark on the planet. With growing pressure from regulations, consumers, and the environment, businesses will need to start viewing packaging through the lens of the circular economy.

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This isn’t just about keeping up. It’s about getting ahead. By embracing the principles of the circular economy, you can reduce costs in the long term, streamline your operations, and strengthen your brand's reputation. Plus, staying ahead of regulatory changes will save you from future headaches and penalties. Here’s what you need to know, why it matters, and how making these choices today can benefit your bottom line tomorrow.

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What Is the Circular Economy?

At its heart, the circular economy reimagines waste as a resource. Instead of a “make, use, dispose” model, it’s about “make, use, remake.” Resources cycle through the system, reducing waste and minimizing the need for raw materials.

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For packaging, this means moving toward options that fit into a regenerative loop. Whether it’s through recycling, reusing, or innovating entirely new materials, the goal is to keep resources in play rather than letting them end up in landfills or oceans.

A good example of this from the flexible packaging industry is mono-materials.

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Most conventional flexible plastics contain a variety of plastics or other ingredients. Recycling these multi-materials is challenging because each ingredient must be separated out in order for any of them to be recycled, which requires a lot of energy and often leads to contamination or resource waste.

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Mono-materials have a much higher chance of being recycled since they use just one type of material with minimal additives, meaning they can easily be processed through a dedicated waste stream.

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By choosing materials designed for existing recycling systems, packaging designers can greatly improve circularity.

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Expanding on Circularity: The Return on Investment and Core Principles

The circular economy isn't just an environmental trend—it’s a strategy with strong financial and operational benefits. According to the Ellen MacArthur Foundation, businesses that embrace circularity see tangible returns. A report of theirs showed that adopting circular business models can generate up to $4.5 trillion in economic benefits by 2030, driven by resource efficiency, new business opportunities, and innovative product designs (cited below). The circular approach can also help reduce costs over time, especially when it comes to raw materials, waste management, and energy consumption.

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This return on investment is made possible by aligning with the three core principles of circularity:

1. Design Out Waste and Pollution: The principle of designing out waste encourages companies to rethink products and packaging from the beginning. The aim is to ensure they are designed for reuse, recycling, or refurbishment. For packaging, this could mean shifting away from multi-layer materials that are hard to recycle and opting for mono-materials that are more easily processed. By preventing waste at the design stage, businesses reduce the costs and complexities of end-of-life disposal.
2. Keep Products and Materials in Use: Keeping resources in circulation is a key principle. By focusing on reusability, recycling, and refurbishment, businesses can minimize the need for raw materials. A great example is the closed-loop recycling system, where the same materials are reused to make new products. This reduces dependence on virgin resources, cutting costs and lowering environmental impact.
3. Regenerate Natural Systems: The third principle emphasizes the importance of restoring and renewing natural resources. Packaging that is compostable, biodegradable, or made from renewable materials can contribute to regenerative agricultural systems. This principle is especially relevant to businesses looking to support sustainable sourcing practices, reduce carbon footprints, and contribute positively to ecosystems.

Ellen MacArthur Foundation, Towards the circular economy Vol. 1: an economic and business rationale for an accelerated transition (2013).

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By applying these principles, businesses create packaging that minimizes environmental impact and supports circularity.

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Why This Matters

Whether you’re managing a product line or designing the next hit in consumer goods, here’s why the circular economy should be on your radar:

1. Legislation is Catching Up: Governments worldwide are implementing stricter rules, like Extended Producer Responsibility (EPR) programs, plastic taxes, and single use plastic bans. These make businesses accountable for the full lifecycle of their packaging. Non-compliance isn’t just costly—it could leave your business behind.
2. Consumers Are Watching: People care about sustainability, and their buying habits reflect that. Brands that prioritize circularity gain trust and loyalty.
3. Future-Proofing Saves Money: Getting ahead of these changes—before you’re forced to adapt—saves time, resources, and money in the long run.

Of course, this is to say nothing of the environmental factor. Adopting circular economy principles goes beyond compliance or consumer appeal—it’s about reducing waste, conserving resources, and contributing to a sustainable future. Businesses that take the lead in these efforts will not only thrive in an evolving market but also demonstrate accountability for their impact on the planet.

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Key Things to Know About Packaging and Circularity

Circularity score

Circularity scores are an essential tool for assessing packaging sustainability. These scores evaluate the environmental impact of a packaging option across its entire lifecycle, considering factors like material choice, recyclability, energy use, and potential for reuse. However, not all scores are created equal—some materials may excel in one area but lag in another.

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Understanding how different packaging options score in key areas can help businesses make more informed decisions. While one material might perform better in a specific regulatory environment, another may offer more cost-effective, sustainable solutions for a different market. A well-rounded circularity score is key to navigating these complexities, helping businesses meet compliance while positioning themselves as leaders in sustainability.

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How Circularity Scores Are Calculated

The Material Circularity Indicator (MCI), developed by the Ellen MacArthur Foundation, offers a widely recognized methodology for evaluating packaging's role in the circular economy. It measures how well materials flow through the economy, staying in use rather than becoming waste. The MCI looks at three core factors:

• Material composition: The proportion of renewable or recycled content in the material.
• Utility: How the product is intended to be used, including whether it's single-use, multi-use, or reusable.
• End-of-Life Likelihood: The probability that the material will be recycled, composted, or repurposed rather than ending up in a landfill.

Scores range from 0 (entirely linear, with virgin materials and waste ending up in a landfill) to 100 (perfectly circular, with 100% renewable/recycled content and continuous reuse or recycling). Essentially, the MCI helps to understand whether a material follows a linear “make, use, dispose” model or a circular “make, use, remake” loop.

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Materials with a higher proportion of renewable or recycled content score better on the MCI. For example, materials derived from sustainably managed sources, like sugarcane or recycled paper, can help reduce reliance on fossil fuels. By using renewable resources, businesses avoid the environmental costs associated with virgin plastic production, making packaging more sustainable. However, to ensure the materials' renewability, companies must trace their sourcing practices to confirm they are sustainably harvested.

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Utility refers to the functional lifespan of a product and its ability to be reused. Multi-use packaging, like durable containers, scores higher than single-use products. However, if single-use packaging is necessary, designing it to be recyclable or compostable improves its utility score by extending its value through reuse or safe decomposition.

For example, reusable bags and containers are a perfect example of how utility improves circularity. Their ability to replace single-use plastic bags and serve repeated purposes reduces waste and energy consumption in production.

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End-of-life consideration looks at how easily materials can be processed after their use. Key factors include:

• The availability of recycling or composting facilities.
• Local recycling rates.
• The material's ability to be sorted or contaminated issues (e.g., multi-layer laminates complicate recycling).

Packaging materials that are mono-material (one material type) often score better on end-of-life likelihood because they are easier to recycle or compost. Adding clear disposal instructions or promoting consumer education can also improve end-of-life outcomes.

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What Can You Do?

Adopting circular practices doesn’t mean overhauling everything overnight. Small steps can add up:

1. Start With Your Materials: Consider swapping out non-recyclable or multi-layer materials for renewable materials, mono-materials or those with high recycled content. Compostable materials are also a great option for specific applications, and we are likely to see increased infrastructure support for compostable alternatives moving forward for these, especially within food service packaging.
2. Embrace Design for Recycling, Composting & Re-use: Consider everything from adhesives to inks—small changes can make a big difference in where your packaging can go.
3. Collaborate and Stay Informed: Join initiatives like CEFLEX or keep up with standards like the Ellen MacArthur Foundation’s guidelines. Staying plugged in will help you align with where the industry is heading.

To learn more about how businesses have applied these concepts to their packaging design, check out our case studies here. You can also watch how Lyka did this in the video below:

How Grounded Packaging Supports Your Journey

This is a lot to consider. Grounded Packaging takes the guesswork out of navigating the circular economy by using Scope, our advanced carbon and circularity modeling tool. Scope evaluates materials across every stage of their lifecycle, from raw material sourcing to disposal. With this, we provide businesses with tailored insights into their packaging’s carbon footprint and circularity potential.

This approach generates a personalized, visual, and informed indicator of the best packaging solution for your business. With these insights, you can make smarter, more sustainable decisions without the overwhelm.

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Our solutions include:

• Customized solutions: We work closely with you to find the best sustainable packaging options that meet your specific requirements and environmental goals.
• Future-proofed materials: Our products align with emerging legislation trends, ensuring your packaging remains compliant and sustainable in the face of evolving regulations.
• High-Performance PCR Packaging: Leading the industry with top-tier recycled content in flexible packaging.
  • We source certified food-safe, recyclable LDPE with up to 80% post-consumer recycled content - the highest percentage available in the market.
  • We can also source 100% post consumer recycled PET, 100% ocean bound recycled PET, and 95% recycled lidding films for food applications.
  • We provide 100% recycled ocean-bound films and 100% post-consumer recycled films for e-commerce packaging.
• Certified Compostable Options: A perfect fit for businesses minimizing landfill waste.

By combining cutting-edge tools with deep industry expertise, Grounded helps you close the loop and lead the way in circular packaging.

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Looking Ahead: Why the Time to Act Is Now

Circularity in packaging represents both a challenge and an opportunity. Businesses that embrace these principles today don’t just contribute to solving a global problem—they gain a competitive edge.

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Regulations will evolve, consumer expectations will grow, and sustainable practices will increasingly define market leaders. By adapting now, you can reduce costs, boost efficiency, and position your brand as a forward-thinking leader in a rapidly changing world.

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