What is the circular economy?
Get an overview of the circular economy, its principles, importance, and guidance for your organisation when moving towards a more circular economy.
What is the circular economy?
In sustainability, the circular economy is a model of production and consumption that aims to keep materials in use for as long as possible. The idea is to extract the maximum value from them while in use, and then recover and regenerate them at the end of their life.
A traditional linear economy is based on a take-make-waste model, whereas in a circular economy, products are designed with reuse and recycling in mind. Businesses can also develop new business models that focus on providing services and renting products rather than selling them.
Circular economy vs linear economy
Consumers play a role by making more sustainable choices, including:
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Buying recycled products - for example, Back Market is a global marketplace for refurbished mobile phones and other devices
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Repairing items instead of replacing them - for example, the Community Repair Network is a network of voluntary, community based repair groups where you can take your items to be fixed
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Sharing products and services - for example, Liftshare is a car pooling platform where users can find others travelling in the same direction as them
Importance of the circular economy
1. Achieving sustainability
The circular economy can help to achieve sustainability in a number of ways, including:
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Reducing pollution and waste: The aim is to eliminate waste and pollution altogether.
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Conserving natural resources: It helps to conserve natural resources by reducing the need for virgin materials (materials that have never been used or processed before).
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Increasing resilience to climate change and other challenges: It also helps to build resilience to climate change and other challenges by reducing our reliance on fossil fuels and other finite resources.
2. Economic benefits
The circular economy also offers a number of economic benefits. A study by the Ellen MacArthur Foundation found that it could generate up to $4.5 trillion in economic benefits by 2030. Some of those benefits include:
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Reduced costs: Businesses can reduce their costs by using recycled materials and by designing products for reuse and repair. This can lead to lower prices for consumers.
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New jobs and economic opportunities: It creates new jobs in areas such as product design, repair, and recycling. It is reported that the EU circular economy could create two million jobs by 2030.
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Increased competitiveness: Businesses that adopt circular economy practices can be more competitive in the global marketplace. This is because they are more efficient and use fewer resources.
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Enhanced innovation: It also drives innovation in the development of new products, materials, and processes. This is because businesses are constantly looking for ways to reduce their environmental impact and improve their resource efficiency.
Principles of the circular economy
The three principles of the circular economy are:
01
Eliminate waste
and pollution
This principle means designing products and services to minimise their environmental impact and to avoid creating waste and pollution in the first place. You can do this by:
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using renewable resources,
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designing products for durability and reuse,
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and eliminating unnecessary packaging.
02
Circulate products and materials
This principle means keeping products and materials in use for as long as possible and extracting the maximum value from them while in use. You can do this by:
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designing products for repair and remanufacturing
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developing take-back programs, and
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creating markets for recycled materials.
03
Regenerate nature
This principle means designing products and services in a way that supports the regeneration of natural systems, such as forests and oceans, to support biodiversity. It also means using renewable resources and avoiding the depletion of non-renewable resources.
Impact of the EU Circular Economy Action Plan
The EU Circular Economy Action Plan (CEAP) is a set of policy initiatives adopted by the European Commission in 2015 with the goal of transitioning the European economy to a circular economy.
The CEAP is a key part of the European Green Deal, the EU's new strategy for sustainable growth. The European Green Deal sets out a roadmap for achieving climate neutrality by 2050 and making Europe a more sustainable continent.
The CEAP is being implemented by the European Commission in cooperation with member states, businesses, and other stakeholders.
While still in the early stages of implementation, it is already having a positive impact. For example, the EU's recycling rate has increased from 25% in 2010 to 48% in 2021.
The CEAP includes a number of measures that will have an impact on businesses, such as:
Eco-design requirements
Eco-design requirements are mandatory requirements for the design of certain products, such as household appliances and electronics. The aim of eco-design requirements is to reduce the environmental impact of products throughout their life cycle, from production to disposal.
Extended producer responsibility (EPR) schemes
EPR schemes require producers to take responsibility for the management of their products at the end of their life cycle. This may involve collecting and recycling old products, or paying a contribution to the costs of waste management.
Waste targets
The CEAP sets targets for reducing waste and increasing recycling. These targets will require businesses to take steps to reduce the waste generated by their products and operations.
Examples of the circular economy in action
Don’t make exaggerated or vague claims about your environmental or social impact. Use accurate and specific language in your marketing materials and avoid terms like "green," "eco-friendly," or "sustainable" unless you can substantiate them.
Dell Take back and recycling service
Dell has adopted an EPR scheme for its products in Europe. Under the Dell EPR scheme, Dell is responsible for the collection and recycling of its products at the end of their life cycle. Since 2007, Dell has recovered more than 1.1B kg of used electronics for reuse or recycling.
Phillips EcoDesign
Philips EcoDesigned products offer a significant environmental improvement in one or more of the four Focal Areas:
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Energy efficiency
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Hazardousness of materials
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Packaging
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Circularity
Unilever waste targets
Unilever has adopted a number of waste targets as part of its commitment to the circular economy. One of Unilever's waste targets is to reduce waste by 50% by 2030; another is to ensure that all of its plastic packaging is reusable, recyclable, or compostable by 2025.
Unilever is making progress towards its waste targets. In 2022, for example, 55% of the company’s plastic packaging was reusable, recyclable, or compostable.
Challenges in moving towards a circular economy
While there are extensive benefits to the circular economy,
there are likely to be some initial challenges to overcome.
Lack of awareness and understanding
Many organisations are not aware of the circular economy or its benefits. Even those organisations that are aware of the circular economy may not fully understand what it means for their business or how to implement it.
Cost
Transitioning to a circular economy can be expensive, as it may require new technologies, processes, and infrastructure.
Complexity
The circular economy is a complex system that involves many different stakeholders. This can make it difficult for organisations to know where to start and how to coordinate their efforts with others.
Recommendations in moving towards
a circular economy
Assess current operations
The first step is to assess current operations and identify opportunities to reduce waste, improve resource efficiency, and design products for durability and recyclability.
Develop a circular economy plan
Once the organisation has identified opportunities for improvement, it can develop a circular economy plan. This plan should outline the specific steps that the organisation will take to transition to a circular economy.
Partner with others
The organisation should partner with other stakeholders, such as suppliers, customers, and government agencies, to implement its circular economy plan. This will help the organisation to overcome the challenges of the transition and achieve its goals.