What is the circular economy, a cycle back to nature and roots

The circular economy is a holistic economic model that embraces sustainability and a systemic approach, resulting in a new way of designing and using products and services.

The circular economy is a rather hot topic nowadays, so it’s important to shed light on what the fundamentals are behind this new approach to business.

What is the circular economy

Before the Industrial Revolution, agricultural economies reused or recycled anything that could be repurposed. Imagine grandmothers reusing old clothing to make new things, useful for the household, or old olive oil to make soap and old wine to make vinegar. Wood was employed to make coal, to cover barbecue and heating needs, and animal waste was used to fertilise fields. But as the modern economy prevailed, the life cycle of goods became shorter and more linear.

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Recycling of plastic © Spencer Platt/Getty Images

The modern economy is based on a linear approach of “take-make-dispose”. New products are designed for covering one need and diversification seems to prevail over covering that need. Goods are bought, used and disposed of constantly, instead of being reused or repaired. This is rather unsustainable. Not only environmentally because of finite resources and energy, but economically as well because of the volatility of resource pricing and the increased management risks involved.

Through its systemic and holistic nature, the circular economy is addressing these issues. It is a new business model and a holistic way of viewing products and even services, mimicking the biological life cycle, where every end is a new beginning. In nature, death signifies the chance for a new birth. Thus, in the circular economy products are designed in order to extend their life through repair or remanufacture. They can even be turned into new things or used as new resources for other products. Last but not least, circularity means being mindful of the water and energy consumption required in production.

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Recycling used tires © Pablo Blazquez Dominguez/Getty images

EU legislation paves the way

Understanding the importance of the circular economy to sustainability, the European Union is shaping its circular economy agenda through proposed legislation regarding five revised directives about waste, packaging waste, landfills, electronic waste and end of life vehicle batteries, the latest about the use of organic and waste-based fertilisers and through the circular economy action plan. For example, the EU has set waste targets for 2030. These include: recycling 65 per cent of municipal waste, as well as 75 per cent of packaging waste and a binding target to reduce the waste that ends up in landfills to a maximum of 10 per cent.

Klimis: from theory to practice

Klimis, a small company in the Greek city of Kalamata offers a model for how to use waste to make a new product and protect the environment at the same time. Barbecue briquettes are created from the waste of olive pips. An innovative, eco-friendly, European Eco-Management and Audit Scheme (EMAS)-awarded product and a successful example of circular economy in practice.

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Barbeque briquetts with olives © Klimis

Consumers as users

Another way to view circularity is through change of ownership: consumers become users rather than owners. They “lease” a product, such as a washing machine, mobile phone or car and a company provides the services related to it, whether it be washing, communications or mobility. Thus, costs are cut for both parties, the recycling of the materials is secured and a high level of efficiency is achieved. A successful example of a service-based approach is the agreement between Philips and Schiphol airport to provide lighting as a service to the airport’s terminal.

Investigating electronic waste © Sascha Schuermann Getty Images

A new way of doing things

The shift from agricultural economies to modern capitalism has been a journey of growth and technological innovation but also unsustainability. Externalities such as waste and pollution have been ignored by the conventional business paradigm, but embraced and addressed in the circular economy. It is a learning cycle that is achieved through re-evaluating the ideas of recycling and reuse from being a way to cover needs in agricultural economies to embracing sustainability at the economy’s core.

The circular economy is a different way of seeing things, but in reality, it is a reminder of how natural cycles function. These are complete, efficient and interconnected: the ultimate paradigm of sustainability.

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