What is the Circular Economy?
Learn the ins and outs of the circular economy and how it is shaping our future. Discover the benefits of this sustainable approach to resource management.
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What is the Circular Economy?
Learn the ins and outs of the circular economy and how it is shaping our future. Discover the benefits of this sustainable approach to resource management.
Loading reading time...
What is the Circular Economy?
Learn the ins and outs of the circular economy and how it is shaping our future. Discover the benefits of this sustainable approach to resource management.
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What is a circular economy? And how can we ‘close the loop’?

Let me break down the circular economy concept with a simple analogy.

Think about your favourite board game.

  1. You start with a set of natural resources and a goal in mind.
  2. As you play, you use those resources to achieve your goal.
  3. Eventually, you run out of resources, and the game is over.

This is what we call a linear economy. We take resources, use them, and then dispose of them.

Now, imagine playing that same game, but instead of running out of resources, you find ways to reuse and recycle them. You create a closed loop where resources are continuously cycled back into the game. This is the circular economy.

In essence, circular economy approaches build a sustainable system. Resources are used for as long as possible, reducing waste and minimising the impact on our planet. It’s a concept gaining momentum worldwide, and I’m thrilled to explore it with you. So, let’s dive in and discover the circular economy together!

Circular economy principles

Resource efficiency is a crucial element of the circular economy. It promotes the sustainable management of resources and minimises environmental impacts.

A circular economic model aims to

  • Eliminate waste and pollution
  • Keep products and materials in use
  • Regenerate natural systems

This alternative approach helps minimise the consumption of finite resources and reduce our carbon footprint. We must reduce waste. We can only achieve 55% of emission reductions through renewable energy. The remaining 45% comes from the products we consume.


One of the main principles is reducing the use of raw materials and energy throughout the product’s life cycle. This includes designing and manufacturing products that require fewer resources and waste generation.


Repair, maintenance, and refurbishment help extend the lifespan of products. This minimises the need for producing new items. Reuse also prevents products from being discarded prematurely, reducing waste and pollution. One effective way to do this is through upcycling.


Effective recycling maximises value extraction by giving products and materials new life. However, recycling has some downsides. The ultimate goal of a circular economy should be efficiency and zero waste principles.

Benefits of the circular economy

The circular economy offers a range of environmental, economic, and social advantages.

By adopting a circular economic model, we tackle global challenges like:

  • Climate change
  • Biodiversity loss
  • Waste
  • Pollution
  • Resource scarcity

At the same time, we can provide economic opportunities and promote social well-being.

Environmental impact

If food waste were a country, it would be the third largest emitter. This is a concerning statistic. We must reduce unnecessary consumption, food mileage and waste to address climate change.

Other environmental benefits of a closed-loop model include the following:

  • Reduced greenhouse gas emissions. Resources are used efficiently, and waste is minimised, contributing to sustainable climate goals.
  • Decreased biodiversity loss. Ecosystems are conserved, and environmental degradation, like soil erosion, is minimised.
  • Better land use management and reduced deforestation.
  • Reduced waste generation. Waste materials are utilised and integrated into new production cycles.
  • Limited pollution. The circular economy model incentivises cleaner energy solutions and materials.

Economic impact

A circular economy can bring significant economic advantages, including:

  • A $4.5 trillion economic opportunity that stimulates innovation and improves resource efficiency.
  • Increased value recovery. Resources are reused or repurposed, which can improve performance and reduce costs.
  • Job creation. New industries and markets emerge to address the shift towards a more sustainable economic model.

Social impact

The circular model also brings social benefits, such as:

  • Promoting sustainable consumption patterns. Products are designed for durability and increased lifespan. This the need for frequent replacement.
  • Ensuring a healthier quality of life by reducing waste, pollution associated environmental hazards.
  • Encouraging localised production, fostering greater community resilience and self-sufficiency.

Circular business models and strategies

Businesses and society adopt a sustainable approach to production and consumption. This involves rethinking processes, reducing resource use, and embracing a systems perspective. This section covers three critical circular economy strategies:

Product life extension

Extending the life of products ensures that their value is retained for as long as possible. This strategy involves:

  • Renting or leasing products to encourage proper maintenance and maximise usage.
  • Designing products for durability, easy repair, and upgradability.
  • Providing services for product maintenance, repair, and refurbishment.

Creating value from ‘waste’

Recasting waste into valuable resources reduces corporate environmental impact and generates extra revenue. This strategy includes:

  • Using by-products and waste materials from one process as inputs for another function.
  • Recycling end-of-life products to create new raw materials and reduce demand for virgin resources.
  • Employing innovative technologies to recover valuable materials from waste streams.

Sustainable supply chains

Creating sustainable supply chains involves adopting eco-friendly and socially responsible practices. This includes:

  • Reducing hazardous materials and selecting raw materials with a lower environmental footprint.
  • Collaborating with suppliers on eco-design and resource efficiency.
  • Implementing traceability and transparency mechanisms, ensuring ethical labour practices and responsible resource management.

These strategies represent a holistic approach towards a resource-efficient and resilient economy.

Challenges and barriers

Regulatory hurdles

Government policies play a crucial role in shaping the legal and financial landscape. Outdated regulations can inhibit innovation and the development of circular business models.

Technological limitations

Developing countries may lack the proper waste infrastructure or access to advanced resource recovery and processing technologies. Moreover, technological advancements often face challenges in scaling up and ensuring inclusion across different sectors and geographies.

Consumer behaviour and attitudes

Many consumers are accustomed to disposable and single-use products. This can make it difficult to shift towards reusable or refurbished alternatives. For example, the furore from McDonald’s customers when they switched to paper straws.

Additionally, there can be scepticism towards the quality of recycled and remanufactured goods. In a circular economy, it is essential to drive changes in consumer behaviour and encourage more sustainable choices.

Real-world examples and case studies

Philips has implemented circular economy principles in its lighting division. Customers can sign up for their “light-as-a-service“. Rather than selling lightbulbs, Philips retains ownership of the lighting equipment and provides ongoing maintenance. This ensures that products are designed for longevity, remanufacturing, and recycling.

Many cities worldwide embrace circular economics to create sustainable urban environments. For instance, Amsterdam has adopted a comprehensive strategy to become fully circular by 2050. The system focuses on three value chains: food and organic waste, consumer goods and the built environment.

Renault Group have implemented several circular initiatives, including developing a closed-loop recycling system for end-of-life vehicles. Their factories are encouraged to remanufacture and increase the life of vehicle parts.

State of Green, a Danish platform for sustainable practices, has compiled a list of 10 circular economy solutions. It showcases innovative approaches to resource management, waste reduction, and value creation. The list includes diverse examples like building green roofs, converting waste into biogas, and reusing construction materials in new buildings.

Examples of companies that have embraced the circular economy
Examples of companies adopting circular economy principles. Source: Genuine Impact

Industry and society can maximise raw material use and resource efficiency

The circular economy aims to reduce waste, pollution, and resource depletion. It differs from the traditional linear economy and promotes a closed-loop system. Reusability, recycling, and regeneration of resources are vital principles.

A circular economy action plan can bring numerous environmental, social, and economic benefits. These advantages include lower emissions, increased biodiversity, and job creation.

Adopting a circular economy model is a shared responsibility among governments, businesses, and individuals. The European Council conclusions on the circular economy encourage using economic instruments such as green taxes and extended producer responsibility to foster this transition.

Moreover, educational initiatives and public awareness campaigns can help create a mindset shift. Technological innovations can further advance the circular economy. Working towards this vision can pave the way for a more sustainable and resilient future.

Photo of author


Rob Boyle
Rob built Emission Index to collect and share data, trends and opportunities to reduce our greenhouse gas emissions and expedite the energy transition.

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