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Introduction to Circular Economy

So, what is the circular economy? What are the benefits and how can we get there? These are questions which many journalists and others often ask. The answers often depend on who replies.

That is because the “circular economy” is an umbrella term which is formed by various existing concepts and schools of thought including cradle-to-cradle, biomimicry, industrial symbiosis and others; and there is no standard definition accepted by all. Different stakeholders describe the emerging paradigm of a circular economy by using their respective preferences.

Let us therefore reflect and explain what the circular economy is not. For this purpose, we will first look at our current linear economic model.

According to the Circularity Gap Reports by Circle Economy Foundation, we live in a world which is roughly over 90% linear and less than 8% circular. By combining the agendas of circular economy and climate mitigation we can double the current global circularity rate and thereby cut 39% of total global emissions and 28% of virgin resource use.

In other words, over 90% of all materials ever extracted and used around the globe are wasted, and less than 10% of those materials make it back into and are kept in the global economy. To a large extent, the linear economy, paraphrased as the “take-make-use-waste” economy, is at the origin of this situation as it dominates how we run our companies, supply chains and production systems. It does not sufficiently consider the value of the different kinds of used materials (erroneously called “waste”) embedded in our system.

It is estimated that our global economy already consumes 100 billion tonnes of materials a year, a level of extraction of resources and raw materials which continues to grow due to global production and consumption patterns.

This is where the circular economy comes in: this emerging paradigm addresses these linear challenges and proposes an alternative model. It does so with the intention of maintaining the value of resources and products at the highest possible level, reducing waste and keeping materials in a loop.

Sitra, the Finnish Innovation Fund summarises the idea of the circular economy by describing it as “an economic model that aims to optimise the system as a whole and tackle the root causes of biodiversity loss, climate change and the depletion of natural resources. Rather than producing more and more goods, in a circular economy we get more value from what we have, and we keep that value in the economy for as long as possible through smarter design, digital solutions and a shift from owning products to using services.”

The Ellen MacArthur Foundation says that “the circular economy tackles climate change and other global challenges like biodiversity loss, waste, and pollution, by decoupling economic activity from the consumption of finite resources. The circular economy is based on three principles, driven by design: 1) Eliminate waste and pollution, 2) Circulate products and materials (at their highest value), and 3) Regenerate nature.”

R strategies or circular economy how-tos

A further way of describing the circular economy is by looking at what companies, consumers and product designers should do to act in a circular manner. This is done by the “how-tos” of a circular economy, also referred to as “R strategies” because they all start with an R: Reduce, Reuse and Recycle might be the three most prominent amongst them while Rethink, Redesign, Repurpose and many other such terms are also part of them. Various organisations have already started using 10 agreed R’s – starting with Refuse and ending with Recycle – while researchers have identified well over 35 R words that are used in the literature to describe the circular economy.