What is circular economy?

What is circular economy?

A new study performed by The Ellen MacArthur Foundation, the McKinsey Center for Business and Environment, and SUN (Stiftungsfonds für Umweltökonomie und Nachhaltigkeit) has just been released and points to major benefits of a circular economy adoption in Europe (you can access the brand new study here). Fore-worded by Frans van Houten, CEO of Philips, the study blaze the trails for quantifying the value that can be unlocked through the transition to the so-called circular economy.

Before fully understanding its potential benefits, we have to clearly state what the circular economy is all about. And here we will equip you with a brief definition and some tokens of characteristics.

But what is exactly circular economy (CE)? According to the Ellen MacArthur Foundation, the foremost organisation supporting CE, it is a economy that “is restorative by design, and which aims to keep products, components and materials at their highest utility and value, at all times”.  This approach is inspired on the insights taken from the actual living systems, which main outcome is argued to be the idea of optimizing systems rather than its very specificities – or the systems thinking view of the world.

Circular Economy relies on important concepts, which ranges from decoupling economic growth from the consumption of Earth’s finite resources to unlocking innovation opportunities in product and service design. It is a long-term approach to solve pressing issues that are increasingly being presented by humanity. The principles that back this entire new thinking is based on: designing out waste, building resilience through diversity, working towards the use of renewable source’s energy and thinking in systems and cascades, which is basically assigning materials and components different end-of-life uses.

Above all, it is a new way of thinking and doing business, which leads to a mindset shift from the linear reasoning of “take, make, dispose” to the closed loop models, in which we are able to re-(use, manufacture, furbish, cycle etc). A good way of capturing the overall idea behind this concept is by analyzing the interactive system diagram, prepared by the Foundation and which could be accessed here. By navigating the diagram, you will be provided with relevant information regarding each one of the main components of a generic circular system on the click of your mouse!

The Circular Economy model goes in the direction of stimulating manufacturers and retailers to increasingly retain the ownership of their products to act as service providers, in a of product/service systems setting. This paves the path towards innovative and efficient products and business models.

To get an even more exciting introduction to Circular Economy, essensus deeply recommend this 3-minute animation by The Ellen MacArthur Foundation:

How can essensus help your company to move to a Circular Economy model?  

One of the most important aspects of adopting Circular Economy is the correct focus on design, which will guarantee the fitness of product and/or service into a world of finite resources and a rampant need for new business models. This means that in order to achieve a harmonized, steady and powerful transition to the a Circular Economy, your product development and related processes (such as purchasing and logistics) must be well grounded for the changes to come.

Our structured, step-by-step approach can successfully support your company in the transition towards Circular Economy. By understanding your current maturity profile and ambition levels, we support you to establish the best path towards circular economy, step-by-step for the creation of a strong foundation. We equip your organisation with the right action plan, management practices, methods and tools to effectively integrate sustainability into the core processes and thus realize all the potential that can be unlocked from the shift to the Circular Economy.

If you want to know more about how we can actually help your company, please drop us a message and we will be extremely glad to join the journey with you!