Circular economy policies are failing to make full use of bio-based materials such as timber, cotton, rubber, leather and natural fibres, according to a new report from the Ellen MacArthur Foundation.
The foundation said many national circular economy strategies focus on finite materials, while treating bio-based materials mainly as substitutes for fossil-based or non-renewable resources.
However, its report, Circular by Nature, argues this approach risks missing the wider economic and environmental benefits of keeping bio-based materials in productive use for longer.
The report analyses 13 national circular economy strategies and 18 bio-based materials policy frameworks from countries around the world.
It found that circular economy and bio-based material policies often operate separately, despite both being linked to climate action, biodiversity, waste prevention and resource security.
According to the foundation, bio-based materials should not simply be seen as renewable commodities to be grown, extracted, processed and then sent to energy recovery or disposal.
Instead, it argues they should be designed for repair, reuse, refurbishment, recycling and safe return to biological systems where appropriate.
The report says bio-based materials are only truly renewable if the ecosystems that produce them have enough time and space to regenerate.
The report says bio-based materials are only truly renewable if the ecosystems that produce them have enough time and space to regenerate.
It warns that when extraction outpaces recovery, and where soil health, biodiversity or land use are damaged, materials that appear renewable can become effectively finite.
The foundation said better policy alignment could help countries capture more value from bio-based materials by supporting regenerative production, local processing, recirculation systems and secondary material markets.
It also said this could reduce pressure on virgin resources, strengthen supply chain resilience and create skilled jobs across agriculture, manufacturing, repair, recycling and biorefining.
The report sets out five policy pillars for governments, including circular design standards for bio-based materials, safer and more effective material circulation, financial incentives for regenerative production, investment in infrastructure and cross-border collaboration.
These measures could include reviewing waste classifications that prevent biomass and residues from being used as secondary feedstocks, reducing VAT on repair and secondary applications, and using eco-modulated extended producer responsibility schemes.
The foundation said stronger traceability and transparency will also be needed to ensure bio-based products are not linked to land conversion, biodiversity loss or poor working conditions.
The report comes as more than 100 countries have adopted national circular economy roadmaps or action plans.
However, the foundation warned that many of these policies still do not fully address how bio-based materials are sourced, used across multiple applications and eventually returned safely to natural systems.
It said aligning circular economy and bioeconomy policies would help shift the focus from replacing one material with another to designing systems that preserve value, reduce waste and regenerate nature.