7 March 2021

What is Circular Economy


You might have heard of the term ‘circular economy’ thrown around a lot recently, especially in blogs like ours. But to many of us, it is not clear what a circular economy actually is, and what one might look like. Rest assured the term is far from just another buzzword for recycling and it may well hold some of the key ideas needed to help us create a more environmentally equitable and resilient future.


Overall a ‘circular economy’ refers to a fundamental change in the way in which we use our planet’s resources to make things and generate value in our economy. Conventional ‘value generating’ activities in the economy include the extraction of resources from the earth, the manufacturing of physical goods and the provision of services.

The starting point for a circular economy is accepting that materials and resources are finite on our planet and that extracting them, using them, and disposing of them comes at an environmental cost. The ‘circular’ part comes from the recognition that activities in our economy should mirror the cyclical flows and processes found in the natural world. These natural flows, from the carbon cycle to the nitrogen cycle, are regenerative ‘closed loop’ systems that ensure the precious building blocks of our living world are recycled over and over again.

So, by striving for a ‘closed loop’ model a circular economy demands that we minimize waste, disrepair, pollution, and the significant environmental (and economic) costs of disposing of precious finite materials. Crucially this means finding technological, social, and political means of turning what are now considered ‘waste streams’ into inputs for future productive activities. By doing this we are making the most of the resources that already exist within our economy and ensuring that newly obtained resources follow a cyclical path with their use maximized and waste minimized.


Take – Make – Waste!

If you think about the typical life cycle of a product, you can see how today’s economy works. A new phone bought for Christmas may be used for a handful of years (2.5 average) and might even see multiple owners if it is lucky (137 million phones were second hand refurbished phones in 2020) yet within 3 years it is likely this phone will be thrown away and replaced with a newer model. Consequently, very few of the precious metals, polymers and other complex materials used in the making of the phone are able to be reclaimed or reused.

Adding to this, today’s world economy is heavily dependent upon fossil fuels, ancient stores of carbon-based energy which are extracted, and spent once with costly consequences for the composition of our atmosphere. Observing this system, we see that materials and resources move from extraction → production → consumption →  waste. This is the linear system of the world’s economy today, it is shockingly wasteful and a fundamentally unsustainable way to design our society, both from an environmental and from a value-generation perspective.

How can we move from a linear to a circular economy – how can we close the loop?

‘Closing the loop’ sounds a bit like the recent mantra ‘flatten the curve’ but, looking beyond the immediate challenges we face with the pandemic, closing the loop should be our utmost priority if we are to safeguard our future environment and prosperity. The challenge of making linear processes circular may seem daunting, but there are many stages and points of focus which are already in full flow in various places around the world. Let’s take a look at some of these…

Renewable Energy transition: For most of you, it may not be surprising that the first large component is the transition of our energy systems. Clearly, it is vital for us to move away from fossil fuel dependency, but this is not something that will happen overnight or without a determined effort from everyone with a voice, a vote, and a wallet. Let us support and encourage the journey to renewable energy that many communities and countries, including France, have started in some form or another. This will ensure that the energy we use is part of a regenerative system that is built to last.

Regenerative food systems: As many of our readers are aware, the majority of today’s mass agricultural practices are both unsustainable and unsuitable for the challenges of tomorrow. Not only does heavy rotation mono-crop farming lead to long term soil degradation that will make vast swathes of arable land non-viable for food production in the coming decades, but up to 30% of food is thrown away in its journey from farm to fork. This colossal amount of food waste is estimated to account for ¼ of commercial water usage and to 8% of total greenhouse emissions. Many innovative agro-economists are finding ways to push more efficient and environmentally compatible systems. To name a few, these include biodiverse agricultural practices, permaculture, and ai/machine learning supply chain analysis to minimize food waste. The short documentary below highlights some great examples, and is also beautifully shot

Return and renew, changing ideas of ownership: Whilst we are already so used to subscription-based models for digital products, like Netflix and Spotify, the subscription platform allows for huge circular potential in the use of physical goods. Just like how we rely upon our rental shops to help people access the mountains on quality equipment without the cost or burden of full ownership, we can extend this notion of subscription to a whole host of goods and services. These are products that many of us want to access but do not need to own outright. By expanding subscription-based services we can limit the resources that are locked up, either sitting idle or occupying landfill, and increase accessibility and affordability. Used correctly, today’s technology ensures that effective systems of subscription can work. Just check out companies like Grover, a subscription-based business specializing in consumer electronics.

Refurbish, repair and reuse: One of the most proactive ways to ‘close the loop’ is to refurbish and repair rather than throw away. Touched upon in our article discussing how we can make things last longer, reusing products that have been repaired and refurbished is the most effective way to achieve circularity within key product areas from clothes to electronics. In addition, learning, and taking the time to repair products on a community level not only decreases our demand upon new resources, but it can enable us to become more self-sufficient and independent by developing important practical skills. An example of such a space is the Montagne Verte and One Tree Fix It shop in Morzine and Bozel. Not only are they selling second-hand clothes which would otherwise end up in landfill or at the back of wardrobes, they are a place to get clothes repaired and repurposed. By employing seamstresses to cover up the company logos, jobs are being created for local people and a new product is created from what would otherwise become waste.

Re-designing the productive economy: From updating our approaches in product design to exploring business models that normalize the circular use of raw materials, there is lots to be done in the manufacturing sector to help close the loop. Many companies are making huge strides in this area, from zero waste textile companies to circular heavy machinery plants. Fundamentally, it’s important that businesses that produce goods consider that the circular use of materials, components and technologies allows for a huge increased value opportunity. 

Re-thinking finance: For some, it is easy to be dismissive of the global financial system but robust financial practices with environmental priorities are essential to creating a circular economy. The need for green finance becomes more apparent every day, such a system should ensure that the power of credit creation should be focused upon making the expensive projects and technologies of a circular economy financially viable.

Refining recycling: Whilst recycling has quickly become the new norm, the currently recycling system is in trouble. Sadly, much of our recycling ends up being exported without being properly processed. Most of what we recycle ends up polluting developing countries like Indonesia and the Philippines. Increasingly, staggering amounts of this ‘recycling’ aggregate is being returned to sender and is especially true for mixed products that include plastic. We need to be more ambitious and demand a highly effective recycling system that attempts to solve some of the key problems with recycling today. Whilst recycling is key to a circular economy, it must be seen as backstop, reduction and reuse is much more sustainable than recycling which always comes at an environmental cost. 

This list only scratches the surface on what a circular economy could look like. In order to help ‘flesh out’ some of these ideas, we will be taking a closer look in subsequent blog posts, further explaining circular systems, and exploring examples – sit tight!

One thing is clear, the traditional political narrative suggests that we can have either prosperity or environmentalism, not both. However, the circular economy model shows that achieving both is not only very possible, but a fundamentally better way to run the world that safeguards everyone’s future.

Author: Seb Zuninga

More useful resources from Montagne Verte: