Georgia’s Advantages for Circular Economy Business Models

The circular economy is a modern approach that aims to maximize resource efficiency, minimize waste, and support sustainable development. In the traditional “linear” model, products are manufactured, used, and discarded. The circular model, however, keeps resources in a cycle—materials are reused, recycled, or regenerated, reducing environmental impact and creating additional economic value.

Circular economy business models take different forms. The recycling model transforms waste into secondary raw materials for new products, such as turning recycled plastic bottles into new packaging or textiles. The product life extension model focuses on making products durable and repairable to reduce waste. The sharing economy model enables multiple users to share the same resource, reducing the need for overproduction—for example, shared car or bicycle rental services. The product-as-a-service model shifts ownership structures, where companies lease products instead of selling them outright, maintaining responsibility for their maintenance and recycling, such as office equipment leasing instead of one-time purchases.

Georgia has several key advantages in developing a circular economy. In recent years, the government has taken significant steps to strengthen environmental regulations. In 2019, the Extended Producer Responsibility (EPR) system was introduced, requiring companies to manage the waste generated by their products. In 2018, Georgia banned single-use plastic bags, a major step in reducing plastic pollution. Currently, the government is working on a National Circular Economy Strategy, expected to be approved with the support of UNDP and Sweden. These regulations signal to businesses that adopting sustainable practices will become increasingly profitable.

Georgia’s economy is small but flexible, allowing the country to quickly adapt to new trends and policy shifts. A business-friendly environment and low bureaucratic barriers make Georgia an attractive destination for circular economy enterprises. Investors find the country appealing due to its fast business registration process and relatively low operational costs. Several donor-supported programs promote green business financing. For example, an EU- and UNDP-backed packaging cluster assists local manufacturers in adopting eco-friendly solutions.

Small and medium-sized businesses in Georgia have traditionally been active, and in recent years, circular business models have started gaining traction. In Tbilisi, a multi-use packaging system is being piloted to help businesses reduce single-use containers. Social enterprises are also emerging, utilizing recycled materials to create new products, thereby strengthening the circular economy.

Compared to other countries, Georgia holds certain advantages. In the Caucasus region, Georgia was the first to implement circular economy regulations, business incentives, and international partnerships. Armenia and Azerbaijan are only now beginning similar reforms and remain heavily reliant on international grants. Compared to Eastern European countries, Georgia has fewer infrastructure resources, but its strength lies in its adaptability and ability to implement reforms quickly.

Technologically, Georgia still lags behind more advanced nations but increasing investment and international support are improving the situation. The country has several recycling plants processing plastic, metal, and glass waste. However, the use of advanced recycling technologies remains limited, posing a challenge to further progress.

In the coming years, Georgia’s circular economy development will be supported by closer ties with the European market. The Deep and Comprehensive Free Trade Area (DCFTA) agreement with the EU means that Georgian companies implementing circular business models gain competitive advantages in accessing the European market. This not only benefits environmental sustainability but also opens new business opportunities.