Circular Economy 101

Published on: April 4, 2023 Author: Gene Ho

“A good life is no longer achieved by simply producing more and more goods”. “How do we move to a circular economy, in which consumption is based on using services – sharing, renting and recycling?” So what is circular economy?

Circular economy is an economic model which does not focus on producing more and more goods, but in which consumption is based on using services – sharing, renting and recycling – instead of owning. Materials are not destroyed in the end, but are used to make new products over and over again. Circular economy solutions are needed to safeguard biodiversity and solve the climate crisis. It is about turning the inefficiencies in the companies’ linear value chains into new sustainable business value.

This video explains shortly but concretely what circular economy is all about. Start by watching it before reading the next:

  • The circular economy is an economy in which stakeholders (companies, authorities, others)  collaborate efficiently in order to maximize the value of products and materials, and as such contribute to minimizing the depletion of natural resources and create positive societal and environmental impact.
  • Looking beyond the standard of “take-make-waste” industrial and consumption models, the circular economy aims to re-define growth, focusing on positive society-wide benefits. It brings along gradually decoupling economic activity from the consumption of scarce resources, and designing waste out of the system.
  • In circular economy, economic activity builds and re-builds overall health to the business. The concept recognizes the importance of the economy needing to work effectively at all places – for large and small businesses, for organisations and individuals, globally and locally.

Ellen Mac Arthur Foundation. Explaining the circular economy and how society can re-think progress – animated video essay. 2011.

We are shifting to a system where we

  • design new products out of waste and pollution
  • keep products and materials in use indefinitely
  • regenerate natural systems

Transitioning to a circular economy (from the linear economy) does not only amount to adjustments aimed at reducing the negative impacts of the linear economy. Rather, it represents a systemic shift that builds long-term resilience, generates business and economic opportunities, and provides environmental and societal benefits. 1

The circular economy responds to the largest global challenges such as climate change, depletion of natural resources, and loss of diversity. Achieving circular economy objectives requires new kinds of thinking and operating models, diverse expertise and a reorientation of business activities. In particular, different kinds of professionals are needed who can solve the difficult problems related to circular economy implementation.

Please extend your knowledge of the circular economy by reading this two sub-pages of Ellen Macarthur Foundation Learning Hub: