Change your default mode.

Every leader has a default mode. It is the set of assumptions that kicks in before a conscious thought is formed. When someone says “sustainability,” your default mode produces an instant reaction: cost, compliance, CSR, sacrifice, marketing, or something else. That reaction happens in milliseconds, and it shapes every decision that follows.

Most default modes were formed twenty years ago, when environmental action was optional, regulation was light and the circular economy was a conference topic. That has changed. Leaders still working from the old default mode are not resisting change. They are late, because they trained their reflexes on a different game.

Sustainability is a loaded word

Ask a room of executives what they hear when someone says “sustainability” and the answers split. Some hear a reporting burden, some brand risk, some an attack on growth, some something noble but vague. Very few hear the economics of keeping resources productive for longer.

The associations are not random. They come from years of poorly defined targets, green-tinted advertising, and sustainability reports that landed in investor relations but never reached the board in a decision-ready form. The word accumulated baggage. For many CEOs and CFOs, it became something the communications team managed while the business carried on as usual.

That baggage is now expensive. Leaders treat circular regulation as an externality to minimise instead of a signal about how value will be created and destroyed in the next decade, and they read resource efficiency as cost cutting when it is margin protection. Meanwhile material scarcity, producer fees and data disclosure requirements are rewriting the rules of competition faster than they expect.

What it really means

Strip the associations away and sustainability, in a business context, is a resource operating model. It is the discipline of generating value while degrading less of the material base that value depends on. Circularity is the sharper version of the same idea: keep products, components and materials in use at their highest value for as long as possible.

This is not a moral position. A linear economy (take, make, throw) destroys wealth at every stage. Someone buys virgin materials, shapes them, ships them, uses them briefly and discards them. The money spent on extraction, processing and logistics is written off, the embedded energy, labour and capital go with it, and the customer pays once while the value chain captures the margin once.

A circular model changes that arithmetic. It designs out waste, keeps materials in flow and turns end-of-life into a recovery opportunity, which makes durability, repairability, recyclability and traceability commercially useful. The companies doing this are not doing it to be liked. They are doing it because the numbers now work.

Understanding changes the decisions

Once the definition shifts, the decisions shift with it. A CEO who sees sustainability as resource productivity stops asking the sustainability team to make the company look good and starts asking procurement how much fee exposure is hidden in the product mix, R&D which designs keep the most value in circulation, and finance whether the capex case for a reverse logistics network beats the case for more virgin capacity.

A CFO who understands the circular economy will not treat circular investment as a discretionary ESG line. He will model it against material price volatility, producer responsibility fees, supply concentration risk and stranded asset exposure. The numbers will either support the investment or they will not, but they will be the right numbers.

An investor who updates her default mode asks whether a company has a resource strategy, not just a sustainability strategy. She looks at how exposed the portfolio is to linear material models, how well the data supports circular claims, and whether management treats regulation as a repricing of risk.

Changing your default mode is a process

The mistake is to treat this as an insight that lands in one moment. Default modes do not update because someone read a convincing article. They update through repeated exposure to evidence, through new language that becomes normal, and through decisions that reward the new way of thinking. It is a process with steps.

What the EU has already decided

The EU has made it clear that circularity is no longer a luxury. The Ecodesign for Sustainable Products Regulation, the Digital Product Passport, extended producer responsibility with modulated fees, the Corporate Sustainability Reporting Directive and the critical raw materials agenda are all moving in the same direction. They are forcing companies to account for the full material life cycle, and they are punishing the default mode that treats resources as disposable.

This is a competitive story more than a compliance one. Firms that update early will have better data, lower fee exposure and supply chains that hold, and their products will be easier to finance, insure and sell in a market that pays attention to materials. Firms that wait will spend the next decade defending old assumptions with new reports.

What this means for different roles

For CEOs

Your organisation is already operating from a default mode about resources, waste and value. Your job is to make that mode explicit, test it against the emerging economics, and replace it with one that produces better decisions. The language you use in board meetings and investor calls is what sets the standard.

For CFOs

The circular transition is a capital allocation and risk management problem. Start by quantifying what linearity actually costs: fee exposure, material loss, supply risk and stranded asset exposure. Those numbers are usually enough to settle the investment question either way.

For investors

Resource productivity is becoming a proxy for management quality and portfolio resilience. Ask whether a company’s circular narrative is backed by data, governance and capital allocation, or whether it is a slide in the annual report. The difference between those two answers is what you are pricing.

What changes

Changing your default mode does not mean becoming an advocate. It means being accurate about what “sustainability” and “circularity” describe: economic forces that are already moving costs, risks and returns. Once that is the starting assumption, decisions that looked difficult get easier to make.

Updating the reflex matters more than learning another framework.