Progress in addressing the environmental crisis and achieving the Sustainable Development Goals (SDGs) is largely insufficient. Resource extraction and processing currently account for more than 90% of global biodiversity and water stress impacts, and approximately half of greenhouse gas (GHG) emissions. Since around 2000, global material productivity has declined due to a significant shift in economic activity from highly material-efficient economies like Japan, the Republic of Korea, and Europe to the less material-efficient economies of China, India, and Southeast Asia.

Meanwhile, terrestrial ecosystems and biodiversity in developing countries are degrading at alarming rates, leading to a loss of nature’s contributions to livelihoods and socio-economic development. Investments in Sustainable Consumption and Production (SCP) practices, including circular economy models and sustainable management and efficient use of natural resources, are crucial. Greener practices are increasingly recognized as drivers of sustainable growth and jobs rather than economic costs. This is reflected in new government policies, with over 70 countries globally pursuing green growth or green economy strategies, according to the United Nations Environment Programme (UNEP), and in private sector initiatives to green supply chains in sectors such as food and textiles.

The importance of SCP is integrated into the new European Consensus on Development adopted in 2017, in line with the 2030 Agenda for Sustainable Development. SCP practices and the circular economy are identified as priorities not only for the planet but also for prosperity. The EU's ambitions to promote the global circular economy transition are reflected in its external actions, promoting initiatives like the Partnership for Action on Green Economy (PAGE) and the SWITCH regional programs. These initiatives require commitments from partner countries and receive continuous cooperation requests. Despite positive outcomes, the progress towards adopting greener business practices, contributing to the circular economy transition, and the sustainable management of natural resources is still insufficient. Barriers include gaps or incoherence in policy frameworks, lack of awareness and capacities of business operators, protection of vested interests benefiting from unsustainable models, insufficient market demand for certified products, and prohibitive access to finance.

The European Commission decided to address several of these challenges by providing services to private sector operators and mobilizing investments in selected value chains, while emphasizing the documentation and dissemination of results and partnerships between value chain leaders and producers to promote upscaling and replication. The Intervention under ROM review is part of this effort, funded under the EU’s Development Cooperation Instrument (DCI). The European Commission awarded a Grant Contract through a Contribution Agreement to the United Nations Industrial Development Organization (UNIDO), which partnered with three other institutions: the policy institute Chatham House, the not-for-profit social enterprise Circle Economy, and the European Investment Bank (EIB).