A Circular Economy Strategy for Scotland – Business and Regulatory Impact Assessment (BRIA)

Executive summary

Issue and why it needs to be addressed

The Scottish Government is committed to transitioning to a circular economy as a means of addressing the climate and nature crises while delivering sustainable economic and social benefits. A circular economy keeps materials and products in use for as long as possible, thereby reducing demand for virgin resources, minimising waste, and maximising the value retained within the economy.

Around four-fifths of Scotland’s carbon footprint comes from the products and services we manufacture, use and throw away^[2] and 90% of global biodiversity loss and water stress is caused by extraction and processing of these products.^[3] The Scottish Government is committed to delivering a different approach to our economy, one where we move from a "take, make and dispose" model to one where we value materials and keep them in use for as long as possible.

The Scottish Government has set climate change ambitions to become a net zero greenhouse gas emitting nation by 2045. Although the waste management sector now only directly accounts for around 4% of total Scottish greenhouse gas emissions,^[4] sustainable resource use is key to tackling climate change and will be vital for our efforts to reduce Scotland’s global carbon footprint, and for other sectors to deliver their own net zero goals. To achieve this Scotland needs to fundamentally change how it produces, consumes and manages our resources.

Intended outcomes

The Circular Economy (Scotland) Act 2024 places a statutory duty on Scottish Ministers to publish or revise a Circular Economy Strategy every five years.^[5] This Strategy is intended to provide a high-level framework for Scotland’s transition to a circular economy, setting out a broad vision and outcomes as well as priorities across policy mechanisms, priority sectors, and product stewardship. It also sets out plans for monitoring and evaluating the Strategy itself and the growth of Scotland’s circular economy via the Circular Economy Monitoring and Impact Framework (CEMIF).

The Strategy will help to set a clear policy direction for the transition to a circular economy in Scotland for business, people and wider society. The Strategy itself and all associated impact assessments have been revised following public consultation. It is important to note that actions resulting from the priorities set out in the Strategy may also be subject to their own impact assessment as they are developed in the future. The publication of the Strategy includes the potential for:

• Embedding circular economy principles across policy as Ministers will be required to have regards to the Circular Economy Strategy when developing other policy, including new legislation.
• Economic development opportunities within specific sectors such as those highlighted as priority sectors and systems.
• New evidence and data to be used in a timely manner.
• Improvements in uptake of reuse and repair and improved recycling quality to drive new business models.
• Further development of opportunities for both jobs and skills, which includes wider benefits such as the building of a skilled labour force for a Just Transition.^[6]
• Ensuring that metrics are monitored and measured to allow for holistic tracking of Scotland’s circularity.

Options

Two options were considered in the development of the Strategy. These options were:

• Option 1: The position taken in the draft Circular Economy Strategy.
• Option 2: Doing “more and sooner”. This option would be more ambitious and intend to meet the aims much sooner than those set out in the draft Strategy.

Option 1 was chosen, given the system-wide changes needed to move towards a more circular economy and the need to consider and avoid unintended consequences. Following the conclusion of the public consultation, Scottish Government Ministers have considered the views expressed and have decided on the next steps and the options taken in the published Strategy.

Sectors affected

The Strategy applies across the whole of Scotland and all sectors of the economy are potentially affected. Some of the Strategy priorities are specifically for the identified priority sectors (see below) but the overall intention is to drive a wide range of benefits across the economy. It is recognised that the priorities described in the Strategy, and the cumulative impact of future interventions resulting from them, may bring both benefits and some potential impacts and costs to businesses.

The priority sectors identified in the Strategy are:

• Built Environment
• Energy Infrastructure
• Textiles
• Transport
• The Food System

Engagement completed, ongoing and planned

A wide range of teams within the Scottish Government have contributed to the development of the Strategy, along with other key agencies and organisations. Engagement with businesses and business groups regarding the Strategy was undertaken during the development of the Circular Economy (Scotland) Act 2024 (‘the Act’) and both Circular Economy and Waste Route Map (CEWRM) public consultations, which this Strategy builds on. Further engagement has taken place with business stakeholders, industry representatives and international environmental NGOs. The information provided has helped inform this Strategy.

A wide range of responses were sought via public consultation on the Strategy which ran from 21^st October 2025 to 13^th January 2026 including responses from the public sector, private sector, charitable and international organisations, as required by the Act.

Anticipated impacts (intended and unintended, positive and negative) and mitigating actions

To achieve the vision of the Strategy, there will need to be significant change across our economy and society. The Strategy presents priorities for a transition to a more circular economy that supports economic growth and will help Scotland in tackling nature loss, climate change and pollution.

While some priorities apply to priority sectors, the anticipated impacts of all the priorities set out in the Strategy should be positive across society and the economy, including the creation of opportunities for business and investment. However, there could be some potential impacts and costs to businesses from the priorities and through cumulative impact of their interventions resulting from the Strategy priorities.

The publication of the Strategy by itself will not place additional financial costs or burdens on local authorities and enforcement bodies in Scotland, nor change the existing cost of waste and its environmental externalities currently borne by public bodies, businesses and communities. However, implementing interventions that result from the priorities set out in the Strategy may generate costs and benefits.

This BRIA sets out the potential type and scale of costs and benefits that will be considered as interventions that may result from the implementation of the Strategy’s priorities. Any costs are used to give examples and suggestion of scale but will be subject to change as policy development moves forward. While these cannot be robustly determined at this stage, they will be assessed for individual interventions in their respective specific impact assessments in future as appropriate.

Overall, society can benefit from a reduction in the volume of waste generated through preventative measures, such as an overall reduction in consumption of resources and higher resource productivity. This will help support change in how we treat and manage materials, for example consideration of the available markets and reprocessing capacity for collected materials, and opportunities to facilitate this, to maximise higher value return from reprocessing routes and keeping materials in use. It will also improve local environments and neighbourhoods by reducing the negative impacts of waste entering the terrestrial and marine environments.

As well as environmental benefits, there are likely to be economic benefits in terms of job creation, skills development and retraining as the Strategy drives investment to meet circular economy priorities. Research from the Green Alliance suggests that a more circular economy could create 470,000 jobs and add £25bn to UK GDP by 2035.^[7]

Costs associated with the implementation of interventions resulting from Strategy priorities may include additional enforcement costs for public bodies, administrative costs for businesses and infrastructure and operational costs of amending services or ensuring compliance across public and private sectors.

Enforcement/compliance

Obligations on the Scottish Government regarding the Strategy are set out in the Circular Economy (Scotland) Act 2024 and state that Scottish Ministers will have a duty to have due regard to the Strategy, once adopted, when developing any subsequent policies (including legislation).

The Strategy does not impose new enforcement or compliance duties on businesses, but engagement with businesses will be undertaken during development of interventions. It will be for relevant policy areas to consider the impacts and engage with businesses on enforcement or compliance issues when developing interventions that respond to the priorities set out in the Strategy.

Recommendations/ implementation plans

Following the consultation on the Strategy, the comments received have been analysed and reviewed. Amendments have been made while finalising the Strategy and this BRIA document. Implementation routes will vary for each of the priority areas.

Revisions to the Strategy have taken account of points raised about the potential impacts, including cumulative impacts, on business and investment of the policy priorities set out in the Strategy. The roadmaps and their interventions for the identified priority sectors will be co-developed, co-delivered and co-owned with industry stakeholders from those relevant sectors.

Evaluation and monitoring of implementation/ review of BRIA

As above, comments received on the Strategy during the consultation have been reviewed. Any feedback received during the consultation was considered as part of the final Strategy and, where appropriate, reflected in this BRIA.