Circular Economy
and Business Opportunities for Sustainability

Today, humans use a significant amount of natural resources for personal and communal benefits, which has created impacts and damages to the world that are hard to reverse to its once plentiful state. The solution going forward must be to find ways to use the existing limited natural resources as efficiently as possible. The Circular Economy is a system designed to address this issue, and it is gaining global attention.

What is a Circular Economy?

A Circular Economy is a system designed to renew or give new life to materials throughout a product’s lifecycle, to use natural resources efficiently and cost-effectively, and to extend the lifespan of these resources as long as possible. This approach should not harm the environment and should generate the least amount of waste possible, to allow for the continual circulation of resources, such as reducing the use of toxic chemicals, using advanced product design techniques to prevent waste, and so on. It also focuses on conserving natural resources and balancing the extraction of new natural resources.

The fundamental principle of the Circular Economy is simple: to continuously extend the life of existing resources to meet production demands for consumption, without unnecessarily depleting the already dwindling new resources.

Natural resources are being depleted every day due to unchecked consumption which has impacted the environment, causing biodiversity loss and increased greenhouse gases from production processes. As the population continues to grow, so does the demand for consumption. If humans keep using resources without planning, we might quickly reach the limits of natural resources, leading to a collapse of production sectors and potential human extinction.

The Circle Economy Foundation reported in the Circular Gap report 2020 that the global economy currently operates at only 8.6% circularity, a decrease from 9.1% two years ago. The decline is due to 3 main factors:

• Increased extraction of raw materials from natural resources
• Continuous stockpiling of resources
• Low levels of resource reuse

As a result, many businesses are trying to implement Circular Economy principles to reduce environmental impact and aim for sustainability now and in the future.

How can Circular Economy be applied to businesses? 

We have 5 business model examples from the Circular Economy to consider:

• Circular Design: Focuses on designing products that last longer, are easy to upgrade and repair, possibly using a subscription model that includes rights to free upgrades and repairs, maximizing the product’s value and reducing the need for new production.
• Circular Supplies: Uses recycled materials or bio-based materials as the main raw materials in production and renewable energy in the manufacturing process. For example, choosing aluminium can packaging that can be recycled indefinitely, or adopting real-time order-based sales which reduces overproduction and potential waste. Consumers can return products for recycling to be remade into new products for the same customer.
• Product as a service: Offers rental services or pay-per-use instead of outright purchase, which can help reduce environmental impact from improperly managed waste, like various electronic devices.
• Sharing Platform: Emphasizes the use and sharing of resources to maximize the efficiency of product use, such as bike-sharing services that can be unlocked and paid for via smartphone.
• Resource Recovery: Designs a Take-Back system to make the most out of products through reuse or recycling, reintegrating them into the production process, like returning glass bottles for cleaning and refilling with drinks.

The movement towards a Circular Economy is gaining global attention from leaders around the world, for example:

European Union (EU), starting from 2012 as reported in “Towards the Circular Economy,” stated that adopting a Circular Economy could save up to $630 billion a year in material costs by 2015. In 2018, the EU announced the “Circular Economy Action Package,” aiming to reduce plastic waste, landfilling, and increase recycling, focusing on the development and reuse of plastic products, with the goal that by 2030, all plastic packaging should be reusable.