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The Circular Economy

You may have heard the phrase “circular economy” amongst the litany of sustainability buzzwords out there today. If so, you might be asking yourself what it means. The concept of a circular economy has become quite popular, and is even making its way into the mainstream economic policies of Europe and Asia - but it’s still a relatively unknown idea here in the US. In a general sense, the circular economy is an approach to distributing resources (products) in a way that closes the loop between production, consumption, recovery and reuse. In the same way that nature uses resources without creating waste, a circular economy makes, distributes and recovers products and their component parts in a way that ensures they are cycled through multiple, and ideally infinite cycles of reuse. Waste is minimized, possibly eliminated altogether because it's never created in the first place. The circular economy isn’t about making people recycle more or forcing companies to use recycled content, it’s about redefining the systems through which materials flow in a way that makes sustainable design and material recovery the status quo. But before we take a closer look, it helps to discuss the circumstances that built the system we have today, otherwise known as the linear economy.

Prior to the industrial revolution, when human labor was the engine that drove manufacturing - factories could not produce nearly to the capacity that our natural resources allowed. But the industrial revolution changed that; as technology advanced and market based economies developed - our capacity to create exploded. Bigger populations and easy access to distant markets provided the incentive for companies to produce more stuff because there were more customers to sell to. And the inauguration of machines as the primary means of manufacturing amplified their capacity to do so. The system that emerged is known as Take-Make-Waste…

  • Take virgin resources out of the natural environment

  • Make the various products we want & need with these resources

  • Waste the things we make as soon as we're finished using them.

In the 19th century the world felt like a much bigger place than the one we know today; one with seemingly unlimited resources and plenty of space to disposed them. It’s easy to see how material flows that move in only one direction (towards a landfill) didn’t raise any red flags. And the need for a system that had the capacity to distribute the goods and services required by a growing population made it easy to overlook the side effects that the system might have. Eventually the accelerated depletion of once seemingly infinite resources, and the staggering amount of waste that was beginning to accumulate in major cities began to catch the attention of concerned citizens and policy makers alike. But by this point we were far too invested into the system we had, so instead of addressing the root of the problem (the economics of it) we put band-aids on its symptoms with solutions like burying our waste in landfills; which we still do to this day. Recycling programs are a step in the right direction, but they still fail to address the root of our problem; and at best, they only divert 32% of our trash from landfills after 40 years of practice. EPA National Overview

The linear system wasn’t all bad - it created levels of prosperity never before seen in history, increased quality of life across the globe, spurred previously unimaginable technological growth and enabled the free exchange of cultures and ideas. But the world is a different place than it was when this model began to take shape. Given the planet’s shrinking supply of natural resources, and its growing supply of people that consume those resources, it’s easy to see that linear model has reached the end of the line.

In a circular economy, goods are designed to go through multiple cycles of reuse. Instead of deciding what to do with stuff after its been manufactured, distributed and consumed - reuse and recovery are designed into products & services from the very beginning. Systems of sharing, reuse, refurbishment and recycling keep man-made, technical nutrients like plastics separate from natural, biological nutrients like food. When products are designed to fit into these systems, and they're distributed in a way that continuously cycles them through; it is far less likely that resources get down-cycled, burned or buried. To find a model of circularity in action we have to look no further than our own backyards. Countless examples of circular material flows can be found in nature's approach to resource management, where waste doesn't exist because it's never created. Everything in our natural environment is provided for by another part of the environment. All of the nutrients that make up the natural world we know are cycled through systems of reuse. Their forms and uses change, but their core make-up stays the same. For example, the leaf…

The leaf is an essential “organ” of trees, flowers, shrubs etc. It’s flat and thin composition make it perfect for absorbing sunlight which it then converts to energy for its host, aka photosynthesis. (This process also happens to convert CO2 to oxygen, which makes it possible for humans to live on this planet). They also make shade, catch water and serve any number of other organisms in their ecosystem as food, shelter, camouflage and more. In the winter they act as a blanket for a tree’s roots and as they decompose, leaves become food for the life in the surrounding soil. Smaller organisms known as nature’s unsung heroes of recycling (ie beetles, earthworms, millipedes, slugs & snails) consume the leaf and convert it back into a form that can be used by surrounding vegetation to grow new leaves next spring. Think about that, a single item... that cycles through numerous different uses, then gets broken down and safely returned to a naturally occurring cycle of resources. There is no better metaphor for what it means to have a circular economy than the life cycle of a leaf from a deciduous tree.

Nature can easily breakdown anything it created, like a leaf or an organism - but something created by humans, like a sneaker or a computer is more difficult. Most things will eventually decompose and return to serve a component of natural systems, just not on a timescale that will do any good for the next 50-60 generations of human beings. Especially when materials are sealed up in a landfill, which actually prevents the natural process of decomposition. So a basic fundamental of the circular economy is the separation of technical and biological “nutrients.”

  • Technical nutrients are inorganic or synthetic materials manufactured by humans - such as plastics and synthetic fibers. They are crucial to our way of life but their artificial composition means they cannot be broken down by nature or returned to one of the natural biological systems of Earth. Technical nutrients must be designed and managed in a way that allows them to be used over and over again - without loss of quality but within a techno-sphere of synthetic materials.

  • Biological nutrients are naturally occurring, organic materials provided by nature. Examples include trees, water, animals, soil and minerals; they are used to make things like food, clothing and shelter. They are considered renewable resources because Earth naturally cycles them for us. If they are utilized effectively, biological nutrients can be safely returned to natural biological systems of Earth after they have served their purpose in the composition of a product or service.

The idea is beautifully illustrated in the Ellen MacArthur Foundation’s "Outline Of A Circular Economy:”

The Circular Economy isn't a blueprint for sustainability or a set of regulations. It’s more of a philosophy, or strategy that can be interpreted in a number of ways, depending on the type of business or industry to which it’s being applied. A single article can't articulate the entire concept of a circular economy, but it's fundamental framework can be summarized in 3 principles:

Design Waste Out Of the Economy

Waste is largely a result of poorly designed products. One of the major challenges facing the recycling industry today is the ultimate un-recyclable nature of the materials it tries to recover. Designing things to be reused, recycled and/or refurbished instead of wasted or down-cycled is crucial to the implementation of a circular economy.

Keep Products and Materials In Use

Think in terms of "using things" instead of "using them up." We need to determine where our "used" products and resources are going to end up before we manufacture and distribute them. Not every product can be recycled, refurbished or reused. But if they're designed the right way, their component materials can be separated and managed into a cycle that ensures their usefulness remains intact.

Regenerate Natural Systems

The pretext of a zero sum game, where environmental stewardship comes only at the expense of economic progress, is outdated and false. By working in conjunction with the systems of nature instead of against them, we can not only prevent the destruction of the natural environment, we can improve and repair the damage that has already been done.

And of course there's a video or two out there that do a really great job summing it up. This was one of the first of said videos, it comes to us by way of the Ellen MacArthur Foundation.

The wide-ranging scope of ideas behind the circular economy; and the size of the challenge we face in eliminating waste means there are a limitless number of practical applications to the business community. Old business models are being adapted to incorporate circularity while new ones are being tested. A few examples include:

  • Product As A Service - Instead of selling a product - you're selling the service a product provides through a lease or "pay for use" arrangement. For example, selling light instead of light bulbs like Philips Managed Services Program.

  • The Sharing Model - Resource sharing models allow businesses to capitalize a resource's full capacity by creating a platform to share individually owned resources, like Lyft. Or by holding an inventory of shared resources, like Zip Car.

  • Extended Product Life - Whether companies recover their own products (like Nike Grind) or they lay claim to products on the back end of the market (like Gazelle) businesses are finding new ways to generate revenue by extending the life of their products.

A circular economy isn’t about adding a percentage of recycled content to your manufacturing process - it’s about rethinking entire systems in a way that makes them truly sustainable. The transition will take time, but evidence shows that it's well underway at major companies like Google, Nike & Unilever and among new startups popping up every day. Today’s world is brimming with examples of take-make-waste business models that are primed to be upgraded to circular models. And those positioned to transform these examples into opportunities will not only play a big part in creating a sustainable planet, but reap the economic rewards of doing so.


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