Sustainability is key to our survival, so we must transition to a system that uses environmental and societal improvements as critical measures of success and growth.

The circular economy can be defined by what it strives not to be. The economy we know as “the economy” is linear and exploitative. The circular economy aims to be renewable and waste-free. The seed of the circular economy comes from old ideas about cycles and feedback from an observation of nature itself. Nature equally gives and takes a process that sustains it. The circular economy idea does not have a single origin but rather several complementary schools of thought. All aim for the same primary results through the elimination of waste and the improvement of natural systems.

Mark Esposito, Professor of Business and Economics at the Grenoble School of Management and Harvard, describes it briefly as “a waste-free industrial chain that promotes economic growth using the least possible amount of non-renewable natural resources.” The examples that on a sectoral basis can source food brands and ingredients from sustainable and local farms. Shoemakers can produce long-lasting and repairable shoes from renewable and biodegradable resources. Transport companies can offset their carbon emissions and invest in renewable logistics solutions (such as solar-powered vans). Small businesses can move towards a circular economy by overseeing their sourcing and waste processes and finding ways to transform this resource-to-waste path into something more circular.

Critical Elements of the Circular Economy

The circular economy has three main principles: removing waste and pollution from the system, keeping materials and resulting products in use, and recreating natural systems. These three principles encompass a broader set of elements that can define the goals of the circular economy.

Instead of burning limited natural resources, we should initiate global incentives to use renewable energy and resources regularly. The ultimate goal will be to move to a fully renewable-based system, eliminating the need for non-biodegradable raw materials and strategic reserves. In the transition to a greener future, the technical cycle extracts as much value as possible from limited raw materials. Incremental reuse cycles will replace wasting valuable resources.

This circular system is not possible without a complete redefinition of economic value. Aligning capital growth in parallel with the deterioration of biological systems creates incentives for harmful business environments.

Benefits of the Circular Economy

We can realize many benefits across boards of directors of high-volume companies by moving from a ‘buy-build-throw economy’ to a ‘build-use-give back’ economy. The impact of the circular economy will be enormous in this sense.

From a biodiversity perspective, an everyday awareness can be created by warning or boycotting people, companies, and brands that see nature as their garbage.

Thanks to the development of products that emphasize the use and recycling of sustainable materials, non-biodegradable waste (and stinky, carbon-emitting landfills) may be a thing of the past.

Fossil fuels, toxic plastics, and hazardous chemicals are obsolete, and the resulting pollution can become history we can ignore.

Improved environmental conditions and reduced pollution (and pesticide use) will enhance human health and reduce healthcare costs.

As the cost of creating products decreases, the cost of using these products will similarly decrease, resulting in more disposable income for households.

Instead of constantly buying more raw materials, businesses can keep materials free for continuous recycling.

Moving towards a product model that emphasizes repairability, material reuse, and modularity, rather than our current buying habits, using it until it breaks and throwing it away for a new model, encourages companies to produce more robust rentable products.

These new forms of production and manufacturing create new industries and a considerable employment boom with them. Also, with an emphasis on locally sourced materials, previously outsourced positions will return to the local economy.

With the circular economy, national economies would benefit significantly from massive savings in raw materials, the increased value of resources through reuse, increased valuable local workforces, and reduced costs associated with waste management (among other factors). Five years ago, McKinsey estimated that Europe could generate 1.8 trillion euros in economic benefits per year by adopting circular economy principles.