What is the circular economy?

In the current context, companies face environmental challenges. For many decades a linear economic model consisting of excessive consumption of natural resources and uncontrolled waste generation has prevailed. As a result, alternatives have emerged to deal with the after-effects. This is why the circular economy has emerged. This approach seeks to curb this traditional paradigm and promotes more environmentally friendly practices.

Companies have found an opportunity to strengthen their competitiveness in this circular model. This transition is portrayed as a shift towards innovation. Social and environmental responsibility are becoming essential pillars for business success.

Here is more information on what the circular economy is and what examples of practice exist.

Circular economy

The circular economy is a model of production and consumption that aims to reduce both the use of virgin materials and the waste produced by them.

Extending the life cycle of products requires that they are reused, repaired, shared, rented, renewed and recycled as many times as possible. In other words, it is the opposite system to the linear economy we have been pursuing so far.

Why is this being done? The aim of this change is to achieve better management of the waste that is produced and the pollution it causes, to combat climate change and the loss of biodiversity.

Differences between linear and circular economy

Among the current production and consumption models, there are different reasons for a transition from one system to another. Their differences are quite marked. Here are some of them:

  • New use of natural resources: the circular economy minimises the use of raw materials, preserving natural resources more efficiently, and the linear economy has no clear focus on their optimisation.
  • Opposing economic models: the circular economy is based on resource utility and sustainability, whereas the linear economy is a more traditional system based on economic growth without taking into account environmental impacts.
  • Principles of the economy: the development of the circular economy establishes the awareness of consumption and production as new ways of extending the life cycle. These are: redesign, reduce, reuse, repair, revalue, renew, remanufacture, reconvert and recycle. In contrast, the linear economy is based on mass production and consumption without regard for sustainability.
  • Reducing emissions and environmental impacts: the circular economy promotes more sustainable practices like using natural sources such as wind or sun to generate energy. The linear economy takes little account of this and demands energy and resources, increasing emissions that contribute to climate change.

Changes in the life cycle of products: the circular economy seeks to extend the useful life of products for subsequent recycling. In contrast, the linear economy discards the products after their single use. As a result, it generates more waste.

Benefits and advantages of the circular economy

Although there are many benefits to be found in the differences between the circular economy and the linear economy, there are other points to note about this environmentally friendly economic system:

It reduces environmental problems

How does the circular economy contribute to protecting the environment? It does so in several ways.

By recycling, reusing and repairing products, less waste is produced, so there is less impact on nature and pollution is reduced. This contributes to protecting the environment and combating climate change.

The aim is for a product to have a longer useful life in order to reduce the demand on its natural resources. As a result, these resources will not be depleted, thus respecting the diversity of plant and animal species living on our planet.

It benefits the local economy and boosts employment

The principles mentioned above and the promotion of the local economy mean it is possible to generate business opportunities that focus on circularity and maintain a sustainable system over time.

The relocation of local areas of activities focused on production and consumption helps to boost regions and communities economically. As a result, it improves the quality of life of its inhabitants.

It decreases consumption of raw materials

We are used to the current linear model, i.e. discarding raw materials after only one or a few uses, which harms the planet.

In contrast, the process of the circular model starts from the beginning. In other words, previously recycled materials are integrated into the production cycle. This means the circular economy is much less dependent on virgin natural resources. This is a very smart way to optimise and continue production without harming, extracting or overexploiting natural resources.

This means we can continue to make products available while being more efficient and respectful.

It makes your resources independent

This is related to the above. This economic model creates more autonomous and resilient systems to be less dependent on volatile and external resources.

By implementing local recycled materials, communities and businesses are less vulnerable to changes in the global market and disruption in the supply of raw materials.

This will contribute to economic and social stability by minimising risks of resource scarcity and price changes.

It benefits the local economy and boosts employment

The principles mentioned above and the promotion of the local economy mean it is possible to generate business opportunities that focus on circularity and maintain a sustainable system over time.

The relocation of local areas of activities focused on production and consumption helps to boost regions and communities economically. As a result, it improves the quality of life of its inhabitants.

Examples of circular economy

The circular economy is demonstrating that it can generate long-term benefits. It is difficult to change an entire linear economic system that we are used to, but it is possible with good planning and patience in the strategic steps.

There are many internationally renowned companies that have been introducing this new economic model into their production system. There are many practices related to this economic model:

  • Recycling and reuse programmes for products and materials: For example, technology companies collect obsolete devices in order to reuse their components and recycle them.
  • Designing sustainable products: An example of a practice in a technology company would be to use recycled materials and to make their designs upgradeable and repairable. This would extend the useful life of a product and also reduce electronic waste.
  • Exchange and resale of products: this would be, for example, to establish an online platform for the exchange or buy-back of second-hand devices, thus encouraging the reuse and prolongation of the useful life of products.
  • Renewable energy management: In order for operations to have a low carbon footprint, solar panels or wind energy would be used as renewable energy sources.
  • Move to an economy of functionality: this refers to a new approach whereby, instead of selling products, services are sold. For example, instead of selling software, subscription services are offered for upgrades and ongoing technical support. This means that the products will last longer and so will the relationship with the customers. Resources will also be used more efficiently.
  • Collaborative economy: this is the exchange and rental of goods and services between individuals. An example of this could be to create a platform where tools or devices can be shared or rented among individuals.
  • Agriculture and more circular cities: this could be the use of public transport, the creation of green spaces, promoting recycling. A technology company could contribute a lot in this new context: developing apps for organic waste recycling management, implementing a community composting system or an app to exchange or donate organic matter.

Change takes time, perseverance and awareness. It is a process that requires a lot of cooperation and a very strong strategy. In order to achieve the result, the objectives set must be met.

What is the EU doing to achieve this?

In 2020, the European Commission presented an action plan for the circular economy. It aims to promote more sustainable products, reduce waste and empower citizens, thus including the “right to repair” and focusing on sectors such as electronics, ICT, plastics, textiles and construction.

In 2021, the European Parliament voted on the action plan and called for measures to achieve a carbon-neutral, sustainable, toxics-free and fully circular economy by 2050. Stricter recycling laws and 2030 targets were presented.

In 2022, the European Commission presented the first package of measures. Proposals included promoting sustainable products, revising building product standards and establishing a strategy on textiles.

In 2022, the European Commission proposed new EU-wide packaging standards. Their aim was to improve their design with clear labelling to encourage reuse and recycling.

Measures to achieve the sustainable goals are still underway and work remains to be done. The population needs to be made aware of these rules and measures and it is important that citizens respect and comply with them. In order to live in a sustainable world, it is necessary to care for it and to strive for it in a communal way.

What does ANOVO do for sustainability and the circular economy?