- While traditional, linear economies offer a one-way route to economic inefficiency and ecological failure, the circular economy keeps materials, products, and services in circulation as long as possible and supports regenerative agriculture and renewable power.
- Research argues that the circular economy benefits ecological restoration and environmental protection while doing no net economic harm. The International Labor Organization predicts that circular economic practices will cost the world 71 million jobs by 2030, but will more than make up for it by creating 78 million jobs over the same time period.
- Companies can begin following this philosophy most importantly by designing for less waste. An oft-cited statistic notes that 70% of a product’s lifecycle costs are determined at the design stage.
- A combination of cultural education and policy prioritization can help firms and buyers latch on to the concept—and help build up the political consensus needed to invest in more material reuse and recycling infrastructure.
What Is a Circular Economy?
Economic evolution constantly searches for new ways to engineer, redefine, and monetize value. The problem is that this traditional linear economy model offers a one-way route to economic inefficiency and ecological failure. In contrast, the circular economy—a holistic approach to human endeavors, actions, and experiences focused on sustainability—seeks to engineer, redefine, and monetize “waste” not as refuse, but as resources.
The circular economy seeks to keep materials, products, and services in circulation as long as possible, seeing waste as the start of a profitable journey, not as an offramp from the highway of economic productivity. According to the EPA, this means that from a product’s outset, circular economic strategy retains materials in the value chain as long as possible, rethinking material extraction and manufacturing, transportation, and packaging, and even abolishing the idea of “convenient,” single-use anything.
Fifty-three years after the recycling symbol was introduced on the first Earth Day, it’s clear the current system of resource management has fallen short. According to the United Nations, continuing on this current destructive course means reaching 190 billion tons of material extraction by 2060, well beyond what the planet can support.
Principles of Circular Economy
The circular economy is a systems solution framework for tackling some of today’s most pressing challenges, including a looming resource shortage, environmental degradation, climate change, and economic and social justice. At its simplest, it's centered on four elements: reduce, reuse, recycle, and recover. Economies, which range in scale from a household to a company to an entire city or country, need to be reconfigured around eliminating waste and pollution wherever possible; designing out waste; circulating products and materials at their highest value for the longest period of time possible; and investing in processes that regenerate nature—especially in agriculture and material extraction.
The concept of circularity grew out of systems thinking, social justice constructs, and the burgeoning environmental movement of the 1960s. A number of thinkers and economists contributed to the concept’s emergence, including Kenneth Boulding, an American economist, educator, peace activist, and interdisciplinary philosopher, who wrote of a “cyclical” system of production in 1966. The term “circular economy” first appeared in 1988 in environmental economist Allen Kneese’s article “The Economics of Natural Resources.”
Benefits of Circular Economy
The circular economy concept might seem like a lofty, radical shift. But initial research and small-scale examples show the benefits of this systems-focused philosophy.
Restoring Wildlife and Native Habitats
The circular approach focuses on sustainable materials selection, extraction, and design, offering substantial benefits to the environment, especially the scourge of plastics pollution. The EPA estimates greenhouse gas emissions from plastics alone are predicted to nearly double by 2060, based on current rates of growth. More than 14 million tons of plastic end up in the oceans every year, harming marine life and clogging fragile coastal ecosystems.
Regenerative ocean farming can help by boosting marine ecosystems and biodiversity. GreenWave’s 3D ocean farming method mimics the vertical structure of an ocean reef, providing layers of different habitats for diverse marine species, including shellfish and seaweeds. This approach can be used for regenerative farming of products used for food, fertilizer, animal feed, and bioplastics.
Increasing Revenue, Resilience, and Economic Activity for Businesses and Nations
Reusing materials and natural resources provides more than an environmental boost: Extensive economic research shows it can help a company’s, and country’s, bottom line. A study by Sitra found that Finland’s circular economy plan is projected to boost the nation’s economic impact by 3 billion euros by 2030. While the International Labor Organization predicts that circular economic practices will cost the world 71 million jobs by 2030, it also will make up for it by creating 78 million jobs over the same time period.
Cutting Material Costs
Reusing existing products can offer significant cost savings across industries. Research from architectural firm Gensler found that clients could save 30–50% on renovation projects by being more judicious about repurposing existing materials. A Goldman Sachs analysis of circular economy benefits estimated roughly $1 trillion in annual material costs could be saved by a wholesale change.
Helping Avert the Climate Crisis
The circular model can make a significant impact on sectors of the economy responsible for excessive emissions, including transportation and construction. The focus on regenerative agriculture and protecting habitat and biodiversity can also help make the landscape more resilient and able to withstand rising temperatures and changing weather patterns.
Improving Social and Economic Justice
Much of the traditional, linear model of manufacturing relies on low material costs, lax environmental regulations, low wages, and nonexistent worker protections. Creating more sustainable models of production eliminated race-to-the-bottom manufacturing practices that often leave the poorest workers saddled with low wages and the impacts of toxic pollution. The Lowell Center Framework for Sustainable Products is a tool that outlines these impacts and adds a social justice lens to circular economic thinking. Truly sustainable products will take into account workplace safety and practices, as well as offer a living wage and benefits to local communities.
How to Achieve Circularity
Companies, from large multinationals to ambitious startups, can all start to shift toward circularity. Making smaller, incremental changes in operations can help pave the way toward a wholesale change.
One of the most important transformations is designing for less waste. An oft-cited statistic postulates that 70% of a product’s lifecycle costs are determined at the design stage. Using generative design technologies and additive manufacturing reduces mass and excess material, which also reduces cost and environmental impact. Companies can also swap out existing materials for low-carbon options, design products for longer lifecycles, or redesign the product experience so items are rented or leased instead of purchased and thrown away.
Better data management and material control can also cut down on unnecessary waste. A key example is using digital twins in construction, which helps stakeholders assess materials and labor costs accurately. Firms can focus on sustainable supply chain management, which addresses everything from sourcing goods to how they’re stored and shipped; emissions from the supply chain are typically over 11 times higher than operational emissions.