Why a circular economy could boost Australia’s industrial competitiveness

In December 2024, the Australian Government launched a pioneering initiative to transform how resources are reused across industries. The proposal aims to double the circularity of the national economy by 2035 by repurposing existing structures and end-of-life products across industries, using low-carbon, recycled materials.

Globally too, there is a clear shift from traditional, linear 'take-make-dispose' models to more circular approaches, reducing waste and transforming by-products into valuable resources. Some brands have offered repair services for many years and others are now adopting this as part of their business programme.

More countries are seeing the value in sustainable solutions across different industry sectors. For instance, New York introduced the circular city initiative, the European Union has started implementing the new circular economy action plan (CEAP) as part of the European Green Deal, and France has implemented the anti-waste law for circular economy (AGEC).

This expansion is fuelled by various factors, such as rising consumer awareness of sustainability and a move towards more resource-efficient, circular production. For supply chains, this means products are designed to have a second or even third life – whether through refurbishment, resale, or component reuse.

Advanced manufacturing companies are already relying on modular design, reverse logistics and inverse supply chains to systematically bring used goods back into the cycle. However, transparency and traceability remain crucial for success, particularly as more Australian industries transition to a circular economy.

Envisioning a circular economy in Australia

Technologies such as digital twins, AI-powered inventory management, and IoT sensors are becoming indispensable for efficiently recovering, reusing and reintegrating materials. More recently, Australian manufacturers have had to reckon with these new technologies to be part of a true circular economy and stay competitive.

Many are considering how the principles of the circular economy can be integrated into supply chains. When implemented correctly, everyone benefits – manufacturers reduce their material costs and open up new revenue streams through reprocessing, retailers strengthen brand loyalty and customer retention with repair and exchange services, and logistics providers manage returns in addition to deliveries.

This means consumers enjoy access to better prices, less waste, and more durable products. Furthermore, circular models also make supply chains more resilient to crises such as geopolitical tensions, climate disruptions and raw material shortages.

How technology can accelerate sustainability in a circular economy

Packaging is the simplest lever for visible sustainability. A growing number of Australian companies are rethinking their material choices, switching to mono-materials or compostable materials, and investing in reusable systems.

Crucial, however, is access to data – companies must not only know which packaging they use, but also where it ends up. Intelligent labelling and track-and-trace technologies such as Radio Frequency Identification (RFID) or QR-linked digital passports help companies better understand and precisely map return rates, disposal routes, and even consumer behaviour.

The combination of artificial intelligence (AI), Process Mining and the Internet of Things (IoT) enables the simulation of closed-loop cycles on a large scale. Companies can test where waste can be reduced and materials reused, and which measures bring the greatest ecological and financial benefits. While IoT provides real-time data on product use and condition for end-of-life decisions, AI predicts returns, identifies material bottlenecks and optimises reverse logistics routes. Process Mining shows where delays, waste and inefficiencies occur.

Greenwashing versus sustainable innovation

The best results are achieved when sustainability and efficiency are not seen as opposites, but as part of the same approach. Companies that view the circular economy as a performance innovation, and not just an eco-project, routinely realise cost savings of between 5 and 15 per cent while simultaneously achieving their climate goals.

The key to this success is integrating the entire circular economy – including the value of recovered materials and avoided CO₂ costs – as well as digital transparency and incentive-based collaboration among all stakeholders. In this way, efficiency, costs and sustainability can reinforce each other instead of competing.

Utilising accessible and up-to-date data along with optimised processes can be effective when powered by industry-specific software that provides a single source of accurate and reliable data. This is vital not only for circularity initiatives, but for any business initiative.

Equally, establishing a data management strategy and policy is crucial. Being in control of data sources, access, security and integration ensures that data is accurate and easily accessible. This will help in making informed decisions on new business goals and strategies.