The circular economy embraces sustainability through a systemic, holistic approach. The result is a new way of designing and using products and services.
The circular economy is an increasingly topical subject, which is why we are trying to understand exactly what it involves. What are the basic principles of this new approach to the market?
Before the industrial revolution, agricultural economies reused or recycled anything that could be repurposed. Think of grandmothers who used old clothes to make new useful things for the home, or olive oil to make soap, or wine to make vinegar. Wood was used to make charcoal for heating, and animal waste was used to fertilise the fields. But with the advent of an economic system based on immediate exploitation, the lifecycle of goods shortened and became linear.
Today's economy is based on a linear approach whose keywords are "take, make, use and dispose." New products are designed to meet a single need, and diversification seems to prevail over addressing that need itself. Goods are continually bought, used and thrown away instead of being reused or repaired. And this is unsustainable — not only at an environmental level due to limited resources and energy, but also at an economic level because of the volatility of resource prices and the greater risks involved.
Thanks to its systemic and holistic nature, the circular economy is addressing these problems. It is a new business model and a new way of looking at products and services that replicates the natural life cycle: every end is a new beginning. In nature, death represents the possibility of rebirth. In the circular economy, therefore, products are designed to have a new life through repair and remanufacturing. They can even be transformed into new things or used as new resources for other products. Furthermore, circularity means being aware of the water and energy consumption required in production.
Recognising its importance for sustainability, the European Union (EU) is shaping its circular economy agenda through the proposed revision of five directives (relating to waste, packaging waste, landfill, electronic waste and battery waste and the use of biological fertilisers) and through the EU circular economy action plan. For example, it has set waste targets for 2030, namely recycling 65 per cent of municipal waste and 75 per cent of packaging waste, alongside the binding target of reducing the production of waste sent to landfill to a maximum cap of 10 per cent.
Klimis, a small company in the Greek city of Kalamata, offers a model for how to use waste to create a new product while at the same time protecting the environment: barbecue briquettes made from olive stone waste. It is an innovative, eco-friendly product — recognised by the Eco-Management and Audit Scheme (Emas) — and a successful example of the circular economy in practice.
Another way of viewing circularity is the shift in ownership: consumers become users, not owners. Users "rent" a product — such as a washing machine, a mobile phone or a car — and a company provides the associated services. As a result, costs are reduced for both parties, the recycling of materials is ensured, and a high level of efficiency is achieved. A successful example of the service-based approach is the agreement between Philips and Schiphol Airport to provide lighting at the airport terminal as a service.
The transition from agricultural economies to modern capitalism was indeed a journey of growth and technological innovation, but also of waste and exploitation. Externalities such as waste and pollution were ignored by the classical business paradigm, but have instead been included and addressed by the circular economy. It is a learning cycle achieved through a reassessment of the ideas of recycling and reuse, evolving from being a way of meeting needs in agricultural economies to conceiving sustainability as the core of the economy.
The circular economy is a different way of looking at things but, in reality, it simply reminds us how natural cycles work: they are complete, efficient and interconnected — the ultimate paradigm of sustainability.
Translated by Camilla Soldati
