The Concept of Circular Economy
Circular Economy Strategy
The concept of the circular economy represents a sustainable alternative to the traditional linear economic model. While in the linear model, products become waste from the extraction of raw materials through production, use and disposal, the circular economy aims to keep resources in the economic cycle for as long as possible. The aim is to minimize waste and wastefulness and to extend the lifespan of products and materials.
Although the concept of the circular economy has been around for several decades, it has gained considerable attention in recent years. Earth Overshoot Day marks the point in the year when humanity has consumed more natural resources than the Earth can regenerate in that year. From this day onwards, humanity is effectively living on “credit” – the resources consumed for the rest of the year must be met from future stocks or by depleting natural capital stocks (e.g. forests, soils). The principles of the circular economy are based on the need for sustainable and responsible use of mostly finite resources.
The circular economy is a resilient and regenerative system that tackles global challenges such as climate change, biodiversity loss, waste and pollution. The circular economy decouples economic success from the consumption of finite resources. It is based on three principles:
- Eliminating waste and pollution
- Recycling products and materials (to their highest value, see also waste hierarchy)
- Regenerating nature
- Whitepaper: Closed-loop Value Chains
- Blogpost: Circular Economy: What can go wrong
- Blogpost: ISO Norm for Circular Economy
- ESRS E5
- European Commision: CE Action Plan
Circular Economy Approaches
The Strategies of the Circular Economy
The circular economy strategies – narrow, slow, close and regenerate – describe different approaches to how companies and societies can manage resources to promote the transition to a more sustainable and circular economy. These strategies aim to minimize resource consumption, avoid waste and reduce environmental impact.
Goal: Minimize resource consumption and make the material flow efficient
Strategy: The aim here is to reduce the use of resources by using less material and energy in production processes. It is not about producing fewer products, but about optimizing the consumption of resources and reducing waste.
Goal: Extending the product’s service life
Strategy: This strategy emphasizes that products should be used and maintained over the long term. Instead of replacing products quickly (planned obsolescence), the aim is to extend the service life of products through repair, maintenance and servicing.
Goal: Close material loops and maximize reuse
Strategy: This strategy focuses on the recycling and reuse of materials. The aim is not to treat materials as waste at the end of their life cycle, but to reintroduce them into the production cycle. In this way, raw materials are recovered from old products and used for new products.
Goal: Regenerate natural systems and renew resources.
Strategy: This strategy is based on the approach of regenerating ecological systems and managing the use of natural resources in harmony with the environment. It aims to promote soil fertility, biodiversity and water quality and to manage natural resources in a sustainable way so that they can renew themselves.
The four circular economy strategies offer different approaches to reducing resource consumption, extending the life of products and protecting the environment. They help companies and societies to operate in a sustainable and resource-conserving way and contribute to establishing the circular economy as a practicable and effective model.
Source: Konietzko, J., Bocken, N., & Hultink, E. J. (2020). Circular ecosystem innovation: An initial set of principles. Journal of Cleaner Production, 253.
Reasons for a Circular Economy
Not only for Nature
Awareness of the negative environmental impact of the traditional linear economy is growing – which means that the circular economy is also increasingly being taken into account in companies’ sustainability strategies.
Many companies are setting ambitious goals to reduce their environmental footprint. The introduction of circular economy practices can help to achieve these goals. Not only nature, but also companies can benefit from the circular economy in various ways:
Companies can use resources more efficiently by switching to a circular economy model. By reducing waste, minimizing the use of raw materials and extending product life, costs can be saved, competitiveness increased and resilience to disruptions in the supply chain improved.
A circular economy model can also open up new business opportunities for companies. Companies can develop innovative business models that generate new revenue streams and open up new markets.
Many countries issue regulations that oblige companies to reduce waste and apply circular economy practices. The EU’s sustainability reporting obligation (CSRD) also obliges companies to report on circular economy strategies, measures and targets. In particular, the ESRS E5 standard relates to reporting on resource use and circular economy. The aim is to increase resource efficiency, reduce waste and create closed material loops in order to promote a more sustainable economy.
How can DFGE help?
Together with our customer, we take one step at a time:
Your Advantages
Why DFGE on the topic of Circular Economy Strategy?
- LCA and carbon footprint expertise for evaluating impacts on the circular economy
- Preferred Partner status with rating organizations such as CDP and EcoVadis – we show you the data gaps
- We help you to understand the interactions between Circular Economy and other environmental topics and to place the topic Circular Economy in your organization and to implement measures
