What is the circular economy?

Circular Economy representation

The circular economy offers us a new way to design, make, and consume products that won’t drain the Earth’s resources, aligning with the principles of environmental sustainability. Just as the concept of waste does not exist in nature, circularity aims to mimic this by keeping materials and products in use for as long as possible. In this article, we discuss the question: what is the circular economy?

Essentially, it looks to optimise every aspect of a product’s lifespan from the early stages of raw material extraction to when it lands in the hands of the customer. The circular economy plan is intertwined with the zero-carbon agenda. We have been urged to transition from our current economic model to a circular one.

Doing so will benefit the planet, businesses, and society. Continue reading to learn about this regenerative and restorative model and some examples within business. 

What is the circular economy?

In order to understand the circular economy, you first need to comprehend our current economy, the linear economy. Currently, we extract materials from the planet and create products. From this point, we use them and eventually discard them as waste. By contrast, in the circular economy, we stop waste from being created in the first instance. 

In other words, we design products that are built to last and be circulated. Essentially, the circular economy is an economic model that moves away from our current dispose-of mentality and looks at how we can remake products so they can continue to be used. The circular economy is driven by design principles and resource efficiency, eliminating waste and pollution elements. 

Materials are reused, and products are created that enhance value while considering the environment. If we are to transition to a circular economy, we will address many of the environmental challenges we are currently facing. Namely, pollution, waste, climate change, and biodiversity loss. Some circular economy practices are already present in our everyday lives. 

For example, using a reusable water bottle or KeepCup, and repairing clothing instead of purchasing new clothes. In addition, donating used furniture and clothing to charity shops instead of discarding them. These are all prime examples of how we can give products a new lease of life by reusing or repairing them. 

Benefits of the Circular Economy

There are many benefits to switching our current linear economic model to a circular one. A circular economy is entirely feasible, but massive systemic effort is needed. Below are some of the significant advantages of circularity. 

Reducing carbon emissions

A circular economy can contribute massively to fighting climate change by reducing carbon emissions. According to the UNDP, materials management, including the manufacturing, consumption, and disposal of products, materials, and infrastructure, contributes to a significant share of worldwide greenhouse gas emissions. 

Therefore, by making material flows much more efficient and maintaining the value of products and materials for longer, we can reduce carbon emissions. Transitioning to a circular economy involves reducing material loss, recirculating products and materials, substituting greenhouse gas-intensive materials for ones with lower emissions, and extending product lifespans. 

Fighting waste and pollution

The circular economy model also encourages reusing products and resources, which are the cornerstones of a zero-waste lifestyle. Circularity goes beyond simply managing waste more efficiently; it focuses on lessening the number of raw materials we utilise. In addition, maximising the value of materials throughout the consumption and production chain. 

Where there is waste, it is recycled and put back into production. Alternatively, it is utilised to create energy rather than being sent to decompose in landfills. Therefore, the circular economy model allows for very little waste compared to our current waste-heavy linear model. 

Protecting limited resources

Another significant benefit of the circular economic model is that it ensures we are protecting and not overusing our limited resources. Scientists have warned us for decades about the dangers of doing precisely this. Moreover, today we are overusing these nonrenewable resources and behaving like we have an endless supply.

By contrast, the circular economy is about reusing and refurbishing old products and resources. Therefore, the zero waste model is encouraged, and nonrenewable resources are better protected. All in all, this model enables us to use the resources we have in a smarter way that is more considerate of the planet’s needs. 

More opportunities for businesses

Besides the environmental benefits, businesses can also benefit if we go circular. Transitioning to this model means there will be more job availability. However, businesses can also enjoy a much more secure supply of resources thanks to the model focusing heavily on reusing the resources we currently have. 

This means we are not focusing so heavily on those finite resources. Businesses that adopt circular economy practices can expect to see their material costs decrease, and as a result, they will run much more efficiently. This is also likely to have a knock-on effect by enhancing customer loyalty. 

Consumers today are increasingly interested in aligning themselves with businesses that care about the planet. Therefore, any green initiatives will likely attract new customers and encourage your current customer base to become more loyal. 

Customers get better products and opportunities, too

It’s not only businesses that will benefit if we switch to a circular economic model. The circular economy also has a lot of benefits for customers. For instance, because it is all about reusing materials, practices such as planned obsolescence are discouraged. 

This means customers will ultimately be delivered better, more high-quality products that are made to last. Essentially, they will get more value for their money. This will also help to enhance your brand’s image because you will be associated with the high-quality, long-lasting products you offer.

Business Examples

Now that you have read about the benefits of going circular, you are probably wondering how you can implement this into your business strategy. Lots of big corporations have already begun actioning circular economy initiatives. 

These examples range from Burger King to Adidas and Ikea. Getting involved couldn’t be easier, whether you are a large business or a small SME. Below are some examples of the circular economy in action.

Selling secondhand goods instead of creating new

Each year, millions of furniture pieces go to landfill. This is precisely why IKEA is bringing them back to give them a new lease of life. Customers can sell their old furniture for in-store credit with their buyback and resell programme. 

Then, other customers buy their old secondhand pieces to extend the product’s lifespan. The company recognises the importance of keeping products in circularity and how doing so will help them reach their 2030 climate targets.

Reusable takeaway food packaging

Takeaway food and drink waste is a significant part of the waste in our oceans, according to the University of Cadiz. This is why the global fast food company Burger King has found a solution to single-use takeaway waste.

They have been trialing reusable packaging for their drinks and burgers in the UK. People order their food as usual but pay a small deposit for their reusable packaging. Then, when they return the packaging, they get their deposit refunded. 

When returned, the packaging is taken away to be cleaned and processed through a zero-waste e-commerce system called Loop. The packaging will help them reduce their carbon emissions by around 41 percent. 

Renting instead of buying new

Another prime example of the circular economy in action is Rent the Runway. The business is built around the idea of renting clothing items instead of purchasing them brand new. It is a premier subscription fashion service that was founded to disrupt the fashion industry’s exclusive and pollutive norms through shared access. Their model enables them to displace the need for new production, minimise waste, and offset carbon emissions. 

Zero-waste dining

More than one-third of food worldwide is wasted. The Scandinavian start-up Too Good To Go aims to put an end to that. Too Good To Go is an app built on the idea of eliminating food waste. Their mission is to make sure food is not wasted but gets eaten. Through their app, they let customers purchase and collect surprise bags of food directly from businesses at lower prices. Their impact means that 172,000 businesses are working on reducing their food waste. 

Repurposing old bricks to create greener buildings

REBRICK/Gamle Mursten is a Danish business upcycling bricks to build more planet-friendly buildings. Doing so means reducing CO2 emissions that would otherwise be released into the atmosphere for producing new bricks. Each time a new brick is replaced with a reused brick, 0.5 kg of CO2 is saved. Reusing bricks can also significantly reduce the amount of waste generated. Essentially what REBRICK does is ensures demolition waste can be cleaned so that bricks can be reused for buildings. 


The circular economy model has many benefits for businesses, individuals, and society as a whole. The linear economy is no longer working, particularly because it is not sustainable. However, going circular does still require system change. 

It essentially means transitioning to a waste-free world which is something we have never done before. While it is a challenge, it is one we absolutely need to step up to reduce pressure on the planet. 

If you want to find out more about the circular economy and how you can move your business to a more circular process, then consider taking the Diploma in Business Sustainability course.

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