The circular economy is nature’s equivalent of ‘living within your means’

Circular Economy is a concept that is rapidly gaining momentum. At Circle Economy, our goal is to double global circularity in the next 10 years, from the current 8.6% to 17%. Making data and information accessible is one of the ways we can achieve this goal. So, please see our answers below to the frequently asked questions of our audience.

What is the circular economy?

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The circular economy is an economic system where waste is designed out, everything is used at its highest possible value for as long as possible and natural systems are regenerated. The concept of circularity closely mimics nature, where there is no waste: all materials have value and are used to sustain life in a myriad of ways. If we effectively deploy these strategies, we will ultimately require fewer materials to provide for similar societal needs.
Just as living beyond one’s economic means can be risky, living beyond the means of the planet threatens how safely it can function. The circular economy is an approach for living within the means of the planet while still providing for the global population. It does this by putting forward strategies that can be used to fulfill society’s needs with fewer materials and emissions.
Biodiversity loss, resource scarcity and warming global temperatures are driving climate breakdown. Human activity and rising consumption levels have greatly contributed to this problem.
The current dominant economy is linear in its processes: it takes resources, makes goods, and quickly wastes them. This is polluting, wasteful and causing greenhouse gas emissions to spiral upwards. Of the 100 billion tonnes of resources used by the global economy each year, only 8.6% are cycled back, reports the Circularity Gap Report. Transforming the way we use and produce goods will allow us to mitigate some of the worst impacts of climate breakdown by limiting warming to well-below 1.5 degrees.

The circular economy is an alternative framework that puts forward a way of producing and consuming more sustainably. If managed well, it offers solutions to drastically reduce material-related emissions, as well as to address other systemic flaws such as biodiversity loss, pollution and social inequality.
The circular economy provides the tools to achieve prosperity for all without exhausting Earth’s resources.
How can we transform our economy and encourage a safe and just world?
Read more about the link between resource use and greenhouse gas emissions in our Circularity Gap Report 2022.
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What is the circular flow of an economy?

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The concept of circularity closely mimics nature, where there is no waste: all materials have value and are used to sustain life in a myriad of ways. If we effectively deploy these strategies, we will ultimately require fewer materials to provide for similar societal needs.
What are the circular economy principles?
The circular economy is based on four key principles:
Narrow flows—Use less resources
If we narrow flows—use less—the amount of materials used or greenhouse gases emitted in the making of a product or in delivering a service decreases. This can be achieved through circular design (material efficiency or lightweighting, for example), circular business models (sharing and rental models, for example) or using materials and products more often, thereby reducing the need for new ones (multifunctional buildings, for example). Of course, the ultimate way to narrow flows is to stop using unnecessary goods or services, such as excess travel or fast fashion clothing.
Slow flows—Use resources for longer
If we slow flows—use longer—resource use is optimised, as the length for which we can use a product expands. Durable design and materials, and service loops that extend product lifetimes such as repair, all contribute to slowing rates of extraction and use. Ultimately, we need to make the most of what we have, be it clothing, electronics or buildings, by applying strategies such as repair, refurbishing, renovation or remodelling.
Regenerate flows—Use cleaner resources
If we regenerate flows—use cleaner resources—fossil fuels, pollutants and toxic materials are replaced with regenerative and natural sources. This helps us maintain natural ecosystems. The clean energy transition is, therefore, also a circular activity, as is regenerative agriculture. Using regenerative materials like wood over toxic or emissions-intensive plastic or cement also serves this goal.
Cycle flows—Use resources again
If we cycle flows—use again—we make the most of materials and products at their end-of-life stage by creating a circular flow of resources. This is enhanced by improved collection and reprocessing of materials, as well as getting the most out of the material by creating value in each stage of reuse—for example upcycling rather than downcycling. To achieve this, products should be designed for recyclability (both technical and biological) and for disassembly, which facilitates both reuse and recycling.

What is the circular economy model?

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At Circle Economy, we have created the Key Elements Framework, which demonstrates the full breadth of strategies that can be used to transition to a more circular world. These include, and build on, the key flows: narrow, slow, regenerate and cycle.
Key elements of the circular economy
Prioritise Regenerative Resources
Ensure renewable, reusable, non-toxic resources are utilised as materials and energy in an efficient way.
Rethink the Business Model
Consider opportunities to create greater value and align incentives through business models that build on the interaction between products and services.
Stretch the Lifetime
Maintain, repair and upgrade resources in use to maximise their lifetime and give them a second life through take-back strategies, where applicable.
Incorporate Digital Technology
Track and optimise resource use and strengthen connections between supply-chain actors through digital, online platforms and technologies.
Use Waste as a Resource
Utilise waste streams as a source of secondary resources and recover waste for reuse and recycling.
Team Up to Create Joint Value
Work together throughout the supply chain, internally within organisations and with the public sector to increase transparency and create shared value.
Design for the Future
Adopt a systemic perspective during the design process, to employ the right materials for appropriate lifetime and extended future use and optimal recovery.
Strengthen and Advance Knowledge
Develop research, encourage innovation networks, structure and disseminate information with integrity.

What are the circular economy benefits?

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If managed well and with a just transition in mind, the circular economy can deliver a range of benefits across environmental, social and economic indicators.
Environmental benefits
The circular economy allows us to fulfill societal needs with fewer materials. This brings a range of environmental benefits, such as fewer greenhouse gas emissions, less pollution, cleaner water and air, and safeguarding biodiversity and nature. Many circular strategies—such as phasing out toxins and pollutants—also actively protect the environment. If managed well, the circular economy allows us to thrive within the healthy boundaries of the planet.
Social benefits
As environmental considerations are at the core of the circular economy, social aspects have largely been underexplored. That's because the circular economy is a resource-based framework primarily seeking to prevent further environmental degradation. However, research has found that the circular economy can also contribute to social well-being in a range of ways. The circular economy is a labour-rich model, and therefore will provide new work opportunities to populations around the globe. We must monitor these jobs to ensure the work is decent and the transition fair and just for all. The circular economy can also fulfil the needs of populations more equitably through a more equal distribution of resources.
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Economic benefits
Research has found that in the long-term, a global circular economy that bypasses risks inherent in the linear economy—such as supply chain collapse and a failure to innovate in the face of new laws or regulations—could amass more profits. Other research from the Ellen MacArthur Foundation identified that a global circular economy could offer a net annual benefit of €1.8 trillion in the EU alone. Businesses that adopt circular business models can reach sustainability and climate targets, as well as enjoy benefits such as a competitive advantage by leading the innovation curve, access to new markets, improved customer relations and increased brand value.

What is the difference between the linear and circular economy?

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The linear 'take-make-waste' economy is characterised by high levels of extraction, consumption and waste. We are currently operating under a linear economy: of the 100 billion tonnes of materials that enter our global economy, only 8.6% are cycled—the vast majority are wasted, either locked into stock like buildings or infrastructure, dissipated into our air or water, or sent to landfill.

On the flipside, the circular economy seeks to design out waste and pollution, use materials and products for as long as possible and regenerate natural systems.

A circular economy can remedy many of the risks we face if we continue on a linear trajectory. These include resource shortages, warming global temperatures and challenges for businesses that will threaten long-term profitability, such as market volatility.

What is the difference between sustainability and the circular economy?

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The Sustainable Development Goals (SDGs) direct global sustainable development with a holistic approach that covers the economy, environment and human well-being. True sustainable development requires a transformation of consumption and production processes by pivoting away from our current linear economy.

This is how the circular economy supports sustainability and sustainable development. It directly or indirectly supports a range of the 12 goals, from SDG 6, Clean water and sanitation, and SDG 12, Sustainable consumption and production to SDG 15, Life on land and SDG 7, Affordable and clean energy.
SDGs strongly directly benefiting from circular economy practices
SDGs indirectly benefiting from circular economy practices
SDGs strongly directly benefiting from circular economy practices
SDGs strongly directly benefiting from circular economy practices

What are some of the circular economy examples?

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The number of circular economy examples around the world grows day by day. See some according to our Key Elements Framework.

You can also access the largest online library of circular economy case studies on the Knowledge Hub to search for—and upload—case studies of circular action on-the-ground.

Dive into our Impact Report 2021 to see how a range of businesses, cities and nations are becoming more circular by the day.

What is the circular economy action plan?

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The circular economy emerged in mainstream policy discourse about ten years ago.

The parameters of the circular economy now feature in multiple governmental and multilateral policies and goals: from the EU Green Deal and the EU Circular Economy Action Plan, to the Sustainable Development Goals (SDGs).

The new EU-wide Circular Economy Action Plan (CEAP), launched in 2020, paves a promising road towards circular value chains and the mainstreaming of renewable, regenerative and cyclable resources.

With a focus on design, production and waste management, the plan provides a solid foundation for resource efficiency and the transition to regenerative resources, and as such, is an important catalyst for action.

Circle Economy published an article on the topic in 2020.

Interested how we help businesses, cities and nations put the circular economy into action?

FOR BUSINESSES

We help businesses understand their current state of circularity, analyse and act upon opportunities and risks, and develop a vision to become circular champions in their fields.
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FOR CITIES

We guide cities on their journey from a linear to circular economy, using data to inform multi-stakeholder decision making to accelerate the transition.
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FOR NATIONS

We provide nations with insight into the best interventions to boost circularity on a national level and the tools to monitor progress.
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