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Questions and answers

What is wrong with the linear economy?

The linear economy is often paraphrased as the take-make-use-waste economic model. Linear consumption and production processes lead to the waste of natural resources. Some of these resources are not renewable and those that are, cannot keep up with the rate of human consumption.

Climate and biodiversity impacts from material extraction and processing greatly exceed targets based on staying within 1.5 degrees of climate change and avoiding biodiversity loss. Material use has increased more than three times over the last fifty years. It continues to grow on average over 2.3% per year.

Global consumption of materials such as biomass, fossil fuels, metals and minerals are expected to double in the next forty years, while annual waste generation is projected to increase by 70% by 2050. According to the international Circularity Gap Report 2023, by combining the agendas of circular economy and climate mitigation we can double the current global circularity rate of 7.2% and thereby cut 39% of total global emissions and 28% of virgin resource use.

Global Resources Outlook 2024 by IRP

Circularity Gap Report 2023 by Circle Economy Foundation

What is the circular economy?

The answer to this question depends very much on who you ask. Sitra, the Finnish Innovation Fund, provides the following definition and description:

“The Finnish Innovation Fund Sitra defines the circular economy as an economic model that aims to optimise the system as a whole and tackle the root causes of biodiversity loss, climate change and 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.

Despite the increasing interest in the circular economy, there does not exist a single, widely accepted definition of it. However, there are clear overlaps between conceptions of the main principles, which emphasise a shift from linear use of materi­als to circular flows by maximising both the value and utility of resources across the value chain. Of the 114 studied circular economy definitions, 38% included aspects of environmental quality in their definition, compared to 46% and 20% for economic prosperity and social equity, respectively (Kirchherr et al. 2017). For many, the concept is closely associated with the Ellen MacArthur Foundation’s ‘butterfly diagram’, which through different tiers illus­trates the continuous flow of both biological and technical materials that underpin the circular economy (Ellen MacArthur Foun­dation 2022a).

Source: Tackling root causes – Sitra

What are the economic benefits of a circular economy?

According to research from Accenture, the circular economy could generate 4.5 trillion dollars of additional economic output by 2030. The research identifies circular business models that will help decouple economic growth from natural resource consumption while driving greater competitiveness and creating jobs.

According to the Ellen MacArthur Foundation, the circular economy “can scale fast across industries to create value and jobs, while increasing the resilience of supply chains and delivering massive economic growth potential, estimated at 1.8 trillion euros a year in Europe alone”.

What are the environmental benefits of a circular economy?

The circular economy protects the environment and biodiversity, reduces greenhouse gas emissions, increases resource efficiency and reduces waste. More details on individual benefits can be found below.

Circle Economy Foundation says that mainstreaming circular solutions is essential to living within the safe limits of the planet.

What is the role of recycling in a circular economy?

Recycling is often referred to as “the last resort” in a circular economy. This is because recycling is an activity at the very end of a product’s life cycle, the so-called end-of-life. In most recycling processes, products and materials loose some of their value and are therefore referred to as downcycling. Upcycling, on the other hand, is when value is added to a product.

One can therefore state that recycling is part of a circular economy while it usually results in the loss of value and should be avoided. Other Value Retention Options are preferable, such as redesigning or entirely reimagining products so that they can be repaired or repurposed in a way that recycling does not become necessary. 

What is the role of the circular economy in achieving the Sustainable Development Goals (SDGs)?

Mainstreaming circular solutions is essential to living within the safe limits of the planet. Effectively adopting the circular economy across key global systems could allow us to fulfil people’s needs equitably, with only 70% of the materials we now use. (Circularity Gap Report 2023)

Bold policy action is critical to phase out unsustainable activities, speed up responsible and innovative ways of meeting human needs, and promote social acceptance of the necessary transitions. (Global Resources Outlook 2024 by IRP – to be published)

The UK-based think-tank Chatham House writes:

“The circular economy, a model for eliminating waste and maximising the value of resources, has the potential to contribute to achieving the Sustainable Development Goals (SDGs) … The circular economy is a holistic approach which cuts across a range of sectors including agriculture, energy, climate change, water and sanitation. Indeed, utilising circular economy practices across these areas, combined with social justice considerations, provides a unique framework for achieving the SDGs.

Circular economy practices such as reduce, redesign, reuse, repair, remanufacturing and recycling are directly aligned with achieving SDG 12 (Sustainable Production and Consumption) by employing new technologies and business models, reducing the amount of unsustainable products that is produced and bought, sharing and repairing, designing out waste and safely managing toxic substances. As a result, resource efficiency can be improved and pressure reduced on the natural environment…”

Source: How the circular economy can help realize the Sustainable Development Goals

How can a circular economy help reduce greenhouse gas emissions?

Half of global emissions come from the extraction and processing of materials. Circular economy strategies reduce the demand for raw materials and new products, reducing emissions from production. Shifting consumption patterns and material-efficient product design will deliver the highest emission reduction potential. The built environment, transport and food offer the highest potential to reduce emissions through circular economy strategies.


Platform for accelerating the circular economy (

How can a circular economy help avert the climate crisis?

Climate and biodiversity impacts from material extraction and processing greatly exceed targets based on staying within 1.5 degrees of climate change and avoiding biodiversity loss, says upcoming Global Resources Outlook 2024.

The UN’s Climate Change Conference COP28 outcome in 2023 notes “the importance of transitioning to sustainable lifestyles and sustainable patterns of consumption and production in efforts to address climate change, including through circular economy approaches, and encourages efforts in this regard.”

A paper launched at COP27 in 2022, Circular economy as a climate strategy, outlines nine calls-to-action that decision-makers and researchers must take to maximise the potential of the circular economy to help limit warming to 1.5 degrees Celsius and avoid the worst impacts of climate breakdown:

  1. Shift consumption patterns.
  2. Stimulate product circularity from the design phase.
  3. Incorporate circularity across clean energy value chains.
  4. Integrate circular economy strategies into national climate policies and plans.
  5. Incentivise cross-border greenhouse gas emission reduction.
  6. Connect circular economy metrics with climate change impacts.
  7. Increase transparency and comparability in modelling methodologies.
  8. Apply systemic and context-specific impact assessment to inform decision-making.
  9. Investigate the role of the circular economy in climate change adaptation.

Source: 9 ways the circular economy can help avert the climate crisis

How can a circular economy help protect biodiversity?


Biodiversity refers to the diversity and abundance of life on Earth. The Convention on Biological Diversity (CBD) defines biodiversity as: “the variability among living organisms from all sources including, inter alia, terrestrial, marine and other aquatic ecosystems and the ecological complexes of which they are part; this includes diversity within species, between species and of ecosystems” (CBD 2006).

The terms “biodiversity” and “nature” are often used interchangeably, although they differ in that biodiversity refers to a characteristic of life, its diversity, rather than to the life itself, which can be called nature or wildlife.

Global biodiversity is in decline and is projected to continue to decline in the absence of efforts to reduce pressures from human activities. Species extinction is currently estimated to be occurring at up to 1,000 times the “natural” background rate (Pimm et al. 1996).

Possible approach and solutions

The circular economy redefines how we produce, consume and manage materials and products. It gives us more value from what we have and leaves room for nature.

The circular economy can halt and partly reverse biodiversity loss by 2035, through policy- and business-led interventions in the food and agriculture, buildings and construction, fibres and textiles, and forest (forestry and the forest industry) sectors. These interventions are focused on regenerative production principles, as well as on business models that extend product lifetimes, increase use rates and cut waste to reduce our extraction of resources, and in turn tackle the key drivers of biodiversity loss: land-use change, climate change, pollution, direct exploitation and invasive alien species.

The Facts & Figures section presents more concrete data and figures on the circular economy and biodiversity.

Source: Tackling root causes – Halting biodiversity loss through the circular economy – Sitra

What makes a company “circular” and what kind of circular business models exist?

The Finnish Innovation Fund Sitra identifies five circular economy business models: 

  1. Circular inputs: Using recycled, bio-based materials and renewable energy in production. Creating sustainable, repairable and recyclable products. 
  2. Sharing platforms: Digital platforms make it possible to increase the use rates of goods and resources through, for example, renting and sharing. 
  3. Product as a service: Offering clients access to products instead of owning products, through services such as leasing and renting.  
  4. Product life extension: Making products last longer such as through repair, maintenance, upgrade and resale services. 
  5. Resource recovery: Recovering materials and resources from products that are no longer functional in their current application. 

The use of circular strategies can give companies competitive benefits.

Sitra has compiled a list of the most interesting companies in Finland applying circular economy business models: Most interesting companies in the circular economy in Finland 2.1 – Sitra

What is economic decoupling, and what does it have to do with a circular economy?

Decoupling refers to the idea of an economy that can grow without increasing pressure on the environment. In many economies, increasing production (measured by GDP) currently raises pressure on the environment. An economy that would be able to grow while reducing the use of resources and environmental deterioration would be said to be decoupled.

When it comes to the circular economy, two groups of proponents can be distinguished: those who believe that economic growth can be decoupled from environmental pressure, and those who believe that economic growth cannot be decoupled from environmental pressure. Both groups may be advocates for a circular economy, while they advance different preferences and objectives.    

The Global Resources Outlook 2024 by IRP says that delivering on the SDGs requires decoupling, so that the environmental impacts of resource use fall while the well-being contributions from resource use increase. Compared to continuing with historical trends, it is possible to reduce resource use while growing the economy, reducing inequality, improving well-being and dramatically reducing environmental impacts. The prevailing approach of focusing almost exclusively on supply-side (production) measures must be supplemented with a much stronger focus on demand-side (consumption) measures.

IRP’s co-chairs wrote 2023 that human well-being must be decoupled from resource use to address the triple planetary crisis of climate change, biodiversity loss and pollution. Unchecked material extraction and processing are resulting in severe biodiversity loss and water stress, driving GHG emissions and causing pollution-related health impacts.

Decoupling will also accelerate and facilitate the energy transition. However, the energy transition depends on key materials including lithium, copper, cobalt and nickel. Without systemic efficiency measures, demand for copper, cobalt and nickel could rise by 350% in the next decade, while demand for lithium could soar by 1,200% by 2050.

What is Sitra, the Finnish Innovation Fund?

Owned by the Republic of Finland, Sitra is an independent future fund that collaborates with partners from different sectors to research, trial and implement bold new ideas that shape the future. It is a nationally and internationally influential think-do-and-connect tank, a promoter of experimentation and new operating models, and a facilitator of collaboration. Sitra was founded in 1967 and is operating directly under the supervision of the Finnish Parliament.

Sitra’s aim is a Finland that succeeds as a pioneer in sustainable well-being. The organisation was named the number one public-sector circular economy accelerator in the world by the World Economic Forum when Sitra won the public-sector category of the Circulars Awards 2018 for its pioneering work to accelerate the world’s transition to a circular economy.

More: Facts about Sitra

What is International Resource Panel?

The International Resource Panel (IRP) was launched by the United Nations Environment Programme (UNEP) in 2007 to build and share the knowledge needed to improve our use of resources worldwide.

The Panel consists of eminent scientists with expertise in resource management issues. It studies key questions around global resource use and produces assessment reports that distil the latest scientific, technical and socio-economic findings to inform decision-making.

The Panel provides advice and connections between policymakers, industry and the community on ways to improve global and local resource management. The Panel includes scientists and governments from both developed and developing regions, civil society, industrial and international organisations.

Its goal is to steer us away from overconsumption, waste and ecological harm to a more prosperous and sustainable future.

More about IRP

What is Circle Economy Foundation?

Circle Economy Foundation is a global impact organisation with an international team of passionate experts based in Amsterdam. They empower industries, cities and nations with practical and scalable solutions to put the circular economy into action. Their vision is an economic system that ensures the planet and all people can thrive. To avoid climate breakdown, their goal is to double global circularity by 2032.

Circle Economy Foundation aims to drive a circular transition that delivers environmental, economic and social benefits. In doing so, the foundation works to actively improve the link between the circular economy and wider global issues. These include greenhouse gas emissions, resource scarcity, resilient business models, labour and social equality. The global circular transition must be people-centric, resource-safe and climate-smart.

More about Circle Economy Foundation