The rise of the circular economy as a sustainable resource management model aligns with growing global concerns about microplastic pollution, an issue that underscores a market failure due to significant negative externalities. This paper argues that the current circular economy model for plastic is insufficient unless it incorporates effective strategies to prevent and mitigate the release of microplastics through the material lifecycle. To achieve a truly sustainable and economically viable circular economy for plastics, it is essential to internalise costs associated with microplastic pollution.