Transition to Circular Economy – Here is All You Need to Know!

By Mattias Jönsson

22 June, 2021

Transition to Circular Economy

What is a circular economy?

It is the latest and most trending term in the language of sustainable development which guarantees global prosperity, but how to transition to a circular economy?

The definition of the circular economy continues to be a controversy insofar as no official and specific definition exists. It opens up for different interpretations. We can say that:

”The circular economy is an economy that aims at reducing waste and destruction to the environment. It operates on principles of maintaining, prolonging, reusing, sharing, repair, refurbishment, remanufacturing, and recycling.”

It builds a strong interrelationship between the three dimensions of sustainability – Environmental, Social, and Economic to create a circular system.

The over-utilization of natural resources necessary for economic growth and production has had a detrimental effect on the ecosystem and made these resources rarer and expensive. It’s easy to see why the circular economy, which provides innovative approaches to build a more competitive urban development paradigm, is gaining traction globally. 

A circular economy is among the essential aspects of a strategy to reduce greenhouse emissions for several nations, businesses, and conservation groups. The resource is continually being used again in the circular economy, which means that extraction, landfill, and pollution are no longer possible. Natural resources, commodities, elements, and materials sacrifice as little value as possible, renewables are used. The processes, structure, technology and systems are the Centre of thought.

A circular economy offers a dilemma to the ‘linear economy,’ a concept invented by circular advocates. It´s referring to the fact that capitalist economies transform wealth creation, private assets, capital goods and natural resources into pollution, garbage and landfill.

What is a linear economy?

The “take-make-dispose” economy is known as the linear economy. The linear economy strategy entails the procurement of raw materials for processing and distributing finished products until the consumer has abandoned them as trash. It is a traditional economic paradigm that has been the essence of our economy for the longest time.

Linear Economy vs. Circular Economy:

The linear economy uses, develops into commodities and disposes of raw materials. In contrast, a circular economy concept aims to bridge the distance between development and natural ecosystem cycles.

The circular economy varies from the linear economy in principle. Put bluntly – we extract raw materials in a linear economy that we transform into a commodity discarded after use. On the other hand, a circular economy is an economic structure that intentionally and designedly restores or regenerates. It substitutes restoration for the end-of-life concept, transfers renewable energy usage, prevents the use of dangerous substances which impair the reuse or return to the biosphere and aims for waste disposal through the advanced development of materials, goods, management and organizational models. In a way, the generation and retention of value concern the circular system and the linear system contrast. 

The elements of circular economy:

It takes into account these main elements – Closed-loop, Renewable resources, Systems thinking.

  1. Closed-loop: There is no waste since it uses any remaining flow to produce a new commodity. It eliminates toxic compounds and divides the remaining circulation into a biological and a technological loop. Manufacturers take their goods back and rebuild for a new existence. Good quality resources and materials utilization is essential for a circular economy to encourage a proper circular flow.
  2. Renewable resources: Non-renewable energy resources are well non-renewable after all. So circular economy promotes the expenditure and use of renewable energy resources to manufacture goods so that all of the energy stays in the loop and lasts longer.
  3. Systems Thinking: Circular economy operates on a devised plan which holds all the participants taking part in the process responsible. Mind mapping all the details and putting forward a solid plan makes a circular economy work at the best level possible. The network of humans and machinery altogether leads to sustainable economic development.

Transition to Circular economy:

The circular economy is gathering traction by addressing waste as a resource and contributing to environmental sustainability. More and more regions and cities make an economic and social proposal for the circular economy with challenging factors, such as exponential growth and development. New circular market frameworks focused on resource management and waste reduction save money, boost sales and create local employment in different industries. 

How do you keep everything in the loop?

The raw materials, resources, energy and products stay intact in a circular flow by working on these six principles:

  1. Maintain and Prolong: The key to making materials and products continue in the cycle is by prolonging their lifespan through stable designing and timely maintenance.
  1. Reusing and Redistributing: Commodities and goods, especially technological products, can be reused multiple times and redistributed among various individuals to help transition to a circular economy. 
  1. Sharing: Sharing goods and products with fellows and peers reduce energy consumption, cost, production number, and carbon emissions. For example, you and a member of your family can share a car to drive to the workplace or school. It can help you save the cost of buying a new car, the company produces one less product and low carbon emission, use a single transport which generates less smoke and is less harmful to the environment.
  1. Repairing: The transition to a circular economy is also possible by repairing products after any error or failure to keep them in use. It is both cost-effective and also decreases the production of waste and landfills.
  1. Refurbishment and remanufacturing: The two methods with striking resemblance yet one core difference can also be used to transition to a circular economy. Remanufacturing is essentially dissembling the whole product and manufacturing it again from the base level. However, refurbishment is, let’s say, somewhat of a repairing process that modifies the existing product to a greater extent without dissembling.
  1. Recycling: The method of waste material conversion into new products and items is recycling. This approach also enables the recycling of energy from waste materials. All of it depends on the capacity of the product to procure its characteristic state.

It is a sensible strategy to move into a more circular economy by utilizing less renewable energy, reducing emissions, tackling climate change, improving user loyalty and making a huge difference overall.

However, the logical path is not necessarily very resilient. We live in an economy in which the availability and linear output of the system prevail. It would require administration, teamwork, modification and the determination to break the status quo.

The transformation into a circular economy demands changes for companies, customers and society at large. For businesses to follow safer and more efficient manufacturing structures, how they operate will change. These updates can include enhancements to product architecture, facilities and procedures, implementation of emerging technology, product revisions, or intrinsic and extrinsic waste management.

Following are also the factors in the transition to a circular economy:

  • Private enterprise and civil organization projects positively influence a circular economy transformation.
  • In regions and counties, national and supranational policies are showing a significant boost to the circular economy.
  • Some global initiatives and plans also encourage the transition to a circular economy.
  • There are close associations of foreign trading with a transition to a resource sustainable and circular economy. It occurs at various steps in the commodity supply chain, such as second-hand trading, end-of-life products, secondary materials or waste, and associated services.
  • Tracking progress will be good to see if the transformation is on track or if further steps are needed. Also digital technologies are opening up new opportunities for circular economy monitoring.

Benefits of transition to circular economy:

The benefits of the transition to a circular economy are widespread. It enables environmental compensations to social advantages and numerous economic gains. Some benefits are:

  • Economic growth: When we enlist the gains, this has to be at the top. Well, of course, the main priority of any company is its exponential growth. Every owner and individual in its interest wants the company to strive. By transition to a circular economy, we attain economic growth. It happens through the more economical cost of manufacture and increasing yield or income by a circular flow.
  • Saving expense on materials: The circular economy is overall cost-effective in terms of the expenditure on materials and resources. It happens since you recycle and reuse most of the materials.
  • Increasing employment: The whole process running in a circular flow requires extensive labor work. Hence it leads to more available jobs and even entrepreneurship. 
  • Revolution: The society, company and world overall thrive with innovation in labor, technology, products, energy and efficiency by implementing principles of a circular economy.
  • Organizational development: The Company also receives numerous gains by the transition to a circular economy. It not only hosts profit opportunities and new business proposals but also gets customer loyalty. It is achieved by providing the customers with good quality and eco-friendly products and promoting sustainable development.
  • Individual benefits: Greater convenience and the wide choice of products, elevated savings, reduced antiquation and datedness are personal and household gains, with the health benefits being on top.
  • Eco-friendly: The environmental benefits from the transition to a circular economy promote sustainable development. A circular economy aims to:
    • Reduce carbon emissions.
    • Decrease primary material consumption. 
    • Increase land productivity and soil health.

The circular economy has gone a long way in the last decade. Many leading companies globally have effectively adopted circular corporate strategies and used revolutionary technology to prove their business case for circularity. There have been significant circular advances, but we have yet to reach the bottom line!

If you would like to initiate a dialogue with us regarding the topic or would like to take part of the presentation after the master class, please contact us.