- Circular economy model marks a departure from the linear course of extraction to waste
- Developing a circular economy has been increasingly regarded as an essential step in achieving environmental and climate goals
- Market opportunities exist for entrepreneurs that can develop disruptive business models and strategies
Article summary by Dirk Langeveld
Environmental sustainability has become a common goal for businesses, with numerous firms pledging everything from more fuel-efficient vehicles to carbon-neutral targets. An associated strategy, the “circular economy,” is set to experience growth this year as a key component in achieving these goals.
Rather than an extractive model, which follows a linear pattern where raw materials are extracted to create a product that later ends up as waste, the circular economy operates as a closed loop. Materials and products are constantly reused or repurposed, with renewable sources providing the necessary energy.
The circular economy has gained wider recognition as a process that must be implemented to achieve broader environmental and climate goals. The European Union has set 2050 as the target year for achieving a circular economy, noting how at the current pace global consumption of materials is set to double by that time while waste generation will increase by 70 percent. The extraction and processing of resources has also been tied to half of all greenhouse gas emissions and 90 percent of biodiversity loss and water stress.
The EU is in the process of proposing legislation to establish product standards that support a circular economy. These include standards for products to be durable, reusable, easily repairable, non-toxic, capable of being upgraded or recycled, include recycled material, and make efficient use of energy and resources.
Some trends that could support a circular economy include a move away from disposable packaging toward options like reusable containers, a reduction in plastic packaging with easier recyclability of what is still used, and encouraging businesses to be more permissive with accepting returns to be recycled or refurbished.
The World Economic Forum says the circular economy presents a market opportunity of upwards of $4.5 trillion by 2030. It suggests that technological innovations, new business models, and other strategies can easily find traction and help accelerate this trend.
