• Jana Vrzel

The Circular Economy Basics Series - What is a Circular Economy?



What is a linear economy?


A circular economy is the opposite of a linear economy, which represents today's typical economic model. A linear economy is defined by the take-make-dispose approach. This means that the model relies on large quantities of cheap, easily accessible materials and energy to manufacture products designed to last for a limited time span. This encourages consumers to dispose of products at the end of their lifespan and purchase new ones again.



What is a circular economy?


A circular economy is an economic system solution framework. It revolves around the notion of establishing a circular flow of resources so that products, components, and materials are maintained at their highest utility and value level at all times. This approach essentially eliminates waste. Materials that are no longer needed are reintroduced into the cycle as new resources to manufacture new products or materials. This approach greatly contributes to tackling global challenges such as climate change, waste, pollution, and biodiversity loss. In simple words, it is a model of production and consumption that focuses on reducing waste to a minimum by reusing resources that reach the end of their lifespan for new products or materials, thereby creating new value. This is achieved by combining diverse ideas such as the closed-loop economy and a ‘restorative’ design approach.



What are the 3 principles of a circular economy?


The circular economy is based on three principles driven by design:

  • Eliminate waste and pollution

Currently, our economy functions according to the take-make-dispose system. This means that we take raw materials to make a product, which is then discarded as waste after a limited lifespan. In this approach, value is created by the economic system by producing and selling as many products as possible to increase profit. Much of the generated waste ends up either in waste landfills or incinerators. Both practices are highly toxic and pollute land, groundwater, and waterways. Furthermore, the product’s full value is not optimally utilised until the end of its lifespan. Such a systemic approach is unsustainable in the long run as the earth’s resources are finite.


The generation of waste may seem inevitable but, in reality, waste is a concept created by humans and is the result of choices made at the very beginning of a product's design. By shifting our mindsets, we can begin to view the waste we generate as a design flaw. We must work towards extending the lifecycle of products by maintaining, repairing, remanufacturing or recycling them and the materials they contain.


Unilever is a successful example of efforts toward zero waste. Not only has the company created numerous jobs and saved itself over $225 million, but it has also pledged to use only 100% recyclable, reusable, or compostable packaging by 2025. Some of their efforts include transforming tea waste into textile dyes and reusing sludge to feed earthworms.


  • Circulate products and materials (at their highest value)

The second principle of a circular economy is to circulate products and materials at their highest value. This means keeping products in use for as long as possible and converting them into new components or raw materials when they are no longer needed or used. This ensures that existing value is retained rather than wasted.


The biological and technical cycles constitute a fundamental element of the circular economy and enable products to remain in circulation for as long as possible. According to the technical cycle, the most effective way of rethinking the value of products is to maintain and reuse them, and when this is no longer possible, to recycle their components. Since 2017, Ikea has been designing products meant to be repurposed, repaired, reused, resold, or recycled at the end of their lifespan. The company’s goal is to make all its products circular by 2030. This will further make it more convenient for customers to take care of, adapt and pass their products on to others.


Within the biological cycle, in turn, materials can’t be reused. They are rather returned to the earth through processes including composting and anaerobic digestion. Bio-Bean has developed a scalable business for recycling spent coffee grounds into a broad spectrum of efficient and sustainable products for a range of markets, both consumer and industrial markets.


  • Regenerate nature

The last main element shifts focus from extracting materials from nature to regenerating them and restoring nature. Over 90% of the current biodiversity loss is due to the excessive extraction and processing of natural resources. The current food industry, for example, has significant effects on climate change and biodiversity loss, as it relies significantly on synthetic fertilizers and pesticides. Such substances deplete the soil of its natural nutrients, which are needed to grow new food. In contrast, by producing our food regeneratively, the focus lies on improving the health of the soil and, consequently, that of the ecosystem. This ensures sustainable agriculture of food in the long term.


Serenity Kids is a baby food production company that packages its products in shelf-stable squeeze pouches. All the food is organic certified and sourced only from family farms that employ regenerative agriculture. The company thus promotes children’s health as well as the improvement of the microbial health of the soil while reducing water runoff and squelching carbon development.



Transitioning the economic system

The circular economy is a system solution framework that helps tackle current global challenges, such as climate change, biodiversity loss, pollution, and waste. To create a thriving economy we must transition away from the current take-make-dispose system and towards a sustainable, circular economy. This requires involving actors in rethinking current practices and products’ entire lifecycles, from their design to their reintroduction in the production cycle.