Fabian Holly
From a Throwaway Society to a Circularity
What is a circular economy?
The Ellen MacArthur Foundation defines the circular economy or circularity as a system in which materials are not turned into waste, while nature is simultaneously regenerated. In a circular economy, products and materials remain in circulation through processes such as maintenance, reuse, refurbishment, remanufacturing, recycling, andcomposting. Furthermore, the circular economy addresses global challenges such as climate change, biodiversity loss, waste, and pollution by decoupling economic activities from the use of finite resources. A look at the historical background reveals how this concept has evolved over time.
To visualize the concept of the circularity, the Butterfly Model, also known as the Circular Economy System Diagram, was developed. This model illustrates how products and materials flow continuously within a circular economy and encompasses two main cycles: the biological cycle and the technical cycle.
In the technical cycle, the value of products is preserved for as long as possible by keeping them within the economy. This is achieved through strategies such as reuse, repair, remanufacturing and recycling. In contrast, the biological cycle focuses on returning biodegradable materials to nature after their use. Processes such as composting or anaerobic digestion reintegrate these materials into the ecological circular economy. This approach replenishes nutrients in the soil, allowing nature to regenerate and produce new raw materials.
Historical background and the development of circularity
Circularity is not a new concept, but has historical roots: centuries ago, people operated within a circular system. Energy and resources were sourced directly from nature, and waste such as kitchen scraps or ash was reintegrated into production.
In the 1990s, British economist David W. Pearce introduced and defined the term “circular economy,” emphasizing the efficient use of resources and the minimization of waste. Towards the end of the decade, the “Cradle-to-Cradle” principle was developed by Michael Braungart and William McDonough, advocating for closed-loop recycling.
With policy milestones such as the Circular Economy Act of 1994 and the EU Green Deal of 2019, the concept gained additional significance. The circular economy has become an essential foundation for sustainable and future-proof economic models that address both ecological and economic challenges.
Difference and connection: Sustainability & circular economy
To develop a deeper understanding, it is worthwhile to first briefly examine the differences between sustainability and the circular economy. Sustainability is a holistic concept that focuses on the ecological, economic, and social dimensions of our economic activities. Its goal is to meet the needs of the present generation without compromising the resources and livelihoods of future generations. The circular economy plays a key role in this by offering approaches and solutions to make economic activities more resource-efficient and sustainable. The circular economy is an economic model aimed at conserving resources, minimizing waste, and keeping materials in continuous circulation. In contrast to the traditional linear economy, which follows the “take, make, dispose” principle, the circular economy focuses on the reuse and regeneration of materials and products.
While sustainability is a broader concept focused on preserving resources for future generations, the circular economy emphasizes maximizing resource efficiency through closed-loop systems.
The key principles of the circularity
- Waste prevention through circular product design
Products are designed to prevent waste from being generated in the first place. Materials remain in circulation through reuse, recycling, or repair, enabling the efficient use of resources. - Diversity for more resilience
A diversified system is more stable and adaptable to disruptions. Diversity in processes, materials and strategies strengthens the robustness of the circular economy. - Use of renewable energy
Renewable energies drive the circular economy by replacing fossil resources. This reduces emissions and supports sustainable development. - Systemic thinking
The circular economy views the economy, environment, and society as interconnected systems. Solutions are designed to be sustainable and effective in the long term, taking a holistic approach. - Cascading use of resources
Resources are used several times by using them in different processes one after the other. This maximizes their value and minimizes losses. - Extension of product life
Products are used for longer through repair, maintenance or reconditioning. This reduces the need for new resources and avoids waste.
Why is a circular economy necessary?
Since 1862, copper yields have steadily declined, despite the continuous rise in demand for this resource. At the same time, the volume of electronic waste is increasing globally and is projected to reach nearly 75 million tons by 2030 (Statista GmbH). Additionally, many essential raw materials critical for key technologies such as energy storage or magnet production are geographically concentrated in a few regions. This dependency on a limited number of countries poses significant risks to global supply chains. Meanwhile, global carbon dioxide emissions continue to rise, accelerating global warming and leading to far-reaching ecological consequences.
The Paris Agreement, the UN Sustainable Development Goals, and the EU Green Deal underscore the urgency of rethinking current practices to establish a foundation for a sustainable future. The circular economy provides a sustainable response to these challenges. It focuses on using resources more efficiently, minimizing waste, and replacing primary materials with recycled or reusable components. In this way, waste is transformed into a valuable resource, reentering the continuous material cycle.
Implementation challenges
The establishment of a circular business model presents a range of significant challenges. In product development, key hurdles include the selection of suitable materials and the design of the products themselves. Utilizing recyclable materials is fundamental to closing the product lifecycle and fostering sustainable circular systems.
Another significant challenge in transitioning to a circular economy lies in technology. Access to and utilization of product data are fundamental for effective recycling and optimized reverse logistics. A technical solution is essential to address this issue. One promising approach is the introduction of a digital product passport, which facilitates comprehensive data exchange. This enables efficient returns by providing complete information about the product’s condition, repair history, or recycling potential, ensuring streamlined processes and enhanced resource recovery.
Redesigning supply chains and establishing reverse logistics pose complex challenges in implementing a circular economy within a company. The entire supply chain plays a critical role and is one of the central focus areas of this transformation. A supportive approach involves return centers, which facilitate the flow of products and materials back into the system.
Another significant challenge on the path to a circular business model is the financial barrier. The higher costs of circular raw materials, which are often more expensive than primary raw materials, create additional pricing pressure. This is compounded by a lack of funding and subsidies necessary to support investments in circular strategies. Despite these challenges, it is crucial to recognize and leverage the economic potential of the circular economy to drive a successful transformation toward a circular business model. For companies, embracing this shift will be essential to remain sustainable and competitive in the long term.
Specific examples of the circular economy
A compelling example of how companies are leveraging the potential of the circular economy despite existing challenges can be found in the automotive industry with innovative concepts like the BMW i Vision Circular. This visionary vehicle, developed by BMW, showcases how a car can be manufactured entirely from recycled materials and designed to be 100% recyclable.
Aaditionally, BMW focuses on the use of renewable energy in production and the comprehensive electrification of its vehicle fleet to minimize CO₂ emissions during both the manufacturing process and the usage phase.
Promotion and implementation of the circular economy in businesses
A key priority is raising employees’ awareness of the importance and benefits of the circular economy. Implementing this approach within a company requires not only technical expertise but also a deep understanding of its underlying principles.
Businesses should proactively familiarize themselves with relevant policies and requirements to not only prepare for changes but also actively capitalize on them. For small and medium-sized manufacturing enterprises, it is advisable to start by closing resource loops. An efficient transformation can be achieved by focusing on business models that optimize the usage phase of products. These models help to slow down, dematerialize, and intensify resource cycles, thereby creating sustainable added value.
5 tips for businesses and business owner:
- Raise awareness and engage employees
- Proactively understand and align with relevant requirements and regulations
- Close resource loops
- Adapt business models to circular principles
- Leverage innovations to drive efficiency and sustainability
Conclusion
The circular economy is a necessity and provides solutions to global challenges such as resource scarcity, environmental pollution, and climate change. Key drivers include circular product design, innovative business models, and technological solutions. These enable comprehensive reverse logistics and a sustainable value chain. At the same time, businesses and society face challenges such as higher costs, technical barriers, and the need for cultural and organizational change.
In the long term, the circular economy will become not only an ecological imperative but also an economic necessity, aligning competitiveness with sustainability. With targeted support and innovative approaches, the transition can succeed, paving the way for a sustainable future. Contact EFS Consulting to learn more about the circular economy as a critical step toward creating a sustainable future!
