How The Circular Economy Could Reshape Society And The Environment

A circular economy presents an inclusive and less environmentally destructive alternative to our planet.

How often do you upgrade your smartphone? Every year? Two years?

Smartphone makers know how to get you to buy a new phone far more often than you really need to. Sure, bad luck - an untimely drop or a major glitch - sometimes forces your hand. But they tend to use clever tactics to make more money off of you, their loyal customer.

Some parts of your smartphone degrade no matter how they’re designed or made. Batteries are the most notable example; through normal use, every battery gets worse, whether it’s in a phone or another device. But other components are designed to deteriorate, and some are often made to prevent you from replacing them on your own.

This so-called planned obsolescence is common in the smartphone industry. Phone makers will intentionally shorten battery life, prevent you from replacing the battery (or other components), or reduce processing speeds with software updates. They also rely on the perceived obsolescence that occurs when you feel like your smartphone isn’t as good as it used to be because you perceive newer phones to have irresistible features, from improved camera technology to higher processing speeds.

The idea of obsolescence isn’t new; an infamous example is the collusion light bulb makers engaged in a century ago to force customers to buy light bulbs more frequently than needed. It’s one of a few core elements of the linear economy that the world has fostered for centuries. In a linear economy, businesses extract raw materials and then turn them into products which are then wasted. This model can be highly profitable, but it’s environmentally devastating.

Lately, a different way of thinking has gained traction as the climate crisis intensifies. As opposed to a linear economy, which prioritizes profitability, a circular economy prioritizes sustainability.

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How a Circular Economy Differs From The Current Paradigm

A circular economy aims to separate economic growth from a dependence on finite resource use. For centuries, the global economy has grown because we’ve extracted natural resources under the assumption that we can keep doing this forever. Of course, nature has limits, so endless resource extraction is impossible.

In nature, nothing is wasted, and everything is reused. Nutrients circulate throughout ecosystems and are reused over and over. If animals or plants constantly needed to find new materials or nutrients to survive or reproduce, they wouldn’t last in the long run because they can’t find anything new under the sun.

Humans have some special skills, but we can’t get around these limits. The amount of stuff on this planet is finite no matter what we do. As such, we cannot indefinitely sustain a linear economy that takes resources from nature and creates endless waste. Thus, a circular economy isn’t a choice; it’s inevitable.

We must foster a circular economy based on three principles: eliminate waste and pollution, circulate products and materials, and regenerate nature. Let’s tackle each of those principles to gain a holistic understanding of what a circular economy is and how it may transform society going forward.

Eliminate Waste And Pollution

The modern global economy operates on a take-make-waste basis. We take resources, make useful things out of them, and then waste those things. Far too many things we produce are inherently wasteful, like plastic bottles or the smartphone in your pocket. We make great products but seldom consider what will happen to them when their useful life ends.

The result is a world full of waste, with polluting landfills piling high and plastic floating throughout our oceans (and in our bodies). This exploitative paradigm cannot persist in a world with limits.

In a linear economy, materials become useless when the products they’re used to make are no longer useful. In a circular economy, materials are designed to re-enter the economy and be used repeatedly. This is circularity at its finest, and it comes in many forms, from sharing to refurbishment to repair to plain old reuse.

In a linear economy, materials become useless when the products they used to make are no longer useful.

And for more natural products like food, their biological materials can return to the land and regenerate nature to maintain ecological balance. Through this prism, you can see waste not as an inevitable byproduct of economic activity but as a harmful design flaw that can be curbed with ingenuity and simplicity.

For instance, popular footwear brand Allbirds recently launched a new resale platform as it looks to halve the carbon footprint of its products and double product lifespan by 2025. The platform, called ‘ReRun,’ will empower customers to return their gently used shoes to Allbirds stores and receive a modest store credit. Allbirds will then sell those shoes at a lower price than new shoes while still profiting from the resale. Seeing as the fashion industry is one of the world’s most wasteful, these kinds of simple business model shifts geared toward a circular economy will balance profits with sustainability in sorely needed ways.

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Circulate Products And Materials

Another key circular economy principle is to circulate products and materials, in particular at their highest value. Sometimes, the integrity of a product can be maintained repeatedly. Other times, the underlying components or raw materials can be separated and thereby re-enter the economy.

It’s helpful to think about circularity in this respect along two dimensions: the technical cycle and the biological cycle. The technical cycle is just what it sounds like: technical. Technical products - from your phone to your car - can be reused, repaired, refurbished, remanufactured, and/or recycled but cannot re-enter the environment.

Reuse is the best way to maintain a product at its highest value; a car is much more valuable as a car than as a pile of thousands of components and materials.

As such, the first step of the technical cycle is to maintain as much product integrity as possible. This might involve repair; instead of tossing your laptop when a component breaks, you can get the issue fixed and make your laptop usable again. It might involve sharing; instead of owning dozens (if not hundreds) of different tools, you might organize a neighborhood toolkit and only use specific tools when you need them.

This isn’t always feasible; things can break or lose their utility. Sometimes, components can be remanufactured. If this can’t happen, parts can be broken down into useful pieces and recycled. While recycling is a last resort in a circular economy, it’s critical because it beats the dreaded alternative: waste and pollution.

Companies can even leverage circular economy principles to create new business opportunities. Philips N.V., a multinational technology conglomerate, operates an innovative circular lighting model that installs lighting for customers while providing required maintenance. Instead of seeing lighting as hardware to be sold, Philips sees lighting products as a service to be provided, otherwise known as Product as a Service (PaaS).

Just as you pay Spotify to use their software rather than to download music once, Philips lighting customers pay for their use while Philips takes care of the rest - manufacturing the light bulbs, providing lighting, and repairing hardware when needed. If a customer ditches Philips, their hardware can be reused, and Philips can decide when to retire damaged products as one example of how to optimize the flow of materials through the product cycle.

Unlike technical materials, biological materials can re-enter the environment.

The biological cycle is similar, except it involves living things. You can’t reuse (i.e., eat) a rotten apple but you can toss it in a compost pile and return its organic components (like nitrogen and phosphorus) to nature, where they can help grow more food or other renewable materials. Unlike technical materials, biological materials can re-enter the environment.

Some products are both biological and technical, meaning they’re made from organic material with a dose of human ingenuity. Take a piece of clothing or some furniture. Your jeans can return to the economy in the same way your laptop can - reuse, repair, etc. - or it can be returned to nature to help grow new cotton that can be used to make another pair of jeans.

Just as Philips can provide lighting as a service rather than selling light bulbs, MUD Jeans leases jeans rather than selling them. Customers pay for use rather than ownership. Just as Philips can control the flow of light bulb materials through its product cycle, MUD Jeans can decide whether to reuse jeans or turn them into yarn. Among other environmental benefits, MUD Jeans uses less harmful dyes and recycles 95% of their wastewater. Jeans are just one example of how the sharing economy can shift the prevailing economic paradigm from one focused on exclusivity and ownership toward one that’s more inclusive and less environmentally destructive.

As with the first principle, design is instrumental in our ability to circulate products and materials. We must consider a product’s entire life cycle before we make it, from production to use to end of life. Lots of products are designed without considering their end of life, which means they can’t be circulated back into the economy and will end up as polluting waste.

Instead, designers should prioritize certain attributes in the design process - durability to ensure a product can be used for a long time and withstand wear and tear; ease of use to ensure products can be circulated easily (via maintenance, refurbishment, repair, or other means); and made of easily reused materials and components.

Regenerate Nature

The last core circular economy principle is perhaps the most essential: regenerate nature. The modern industrial economy has done a number on nature. Most of the materials we use - biological and technical - are lost after use while the land where they’re grown and stored is depleted. We’ve deforested vast swaths of rainforest, removed huge chunks of topsoil from the world’s fertile regions, and increased ocean acidification, to name just a few examples of our ecological damage.

In just a few hundred years, we’ve exacted a terrible toll on our collective home. But this was a choice that stands in stark contrast to the billions of years long before humans ever walked the Earth in which natural systems were completely in balance. Before us, waste didn’t exist. Waste is a purely human invention; we brought it into this world, and we can choose to take it out.

The best place to start is in the way we produce food, which is an unsustainable mess. We use far too much fertilizer, freshwater, and fossil fuel to feed eight billion mouths. The global food system is a major source of pollution and a massive threat to human and ecosystem health.

Of course, it doesn’t have to be this way. Circularity can turn the food system from a drain on our natural systems into a regenerative asset - for us and for nature. Regenerative farming practices put soil health front and center, foregoing the synthetic inputs that sadly dominate the global economy in lieu of natural alternatives that restore soil health and help soil absorb rather than release carbon. Healthy soils bring a host of benefits, from improved water purification and retention to higher food yields to biodiversity support.

In Connecticut, a fast-growing company called Greenwave replicates and scales regenerative ocean farms that produce shellfish and seaweeds in a nature-positive way. Greenwave’s innovative 3D lattices of ropes and baskets are suspended just below the ocean surface, allowing different species to grow at different depths. The ocean contains enough nutrients to support healthy growth, and regenerative ocean farms like Greenwave’s can even absorb excess nutrients like nitrogen and phosphorus that cause algal eutrophication and create large dead zones like the infamous one in the Gulf of Mexico.

These farms replicate natural oceanic habitats by supporting layers of biodiversity at different depths and providing essential ecosystem services like absorbing carbon dioxide from the atmosphere. Shellfish and seaweed are particularly beneficial, reducing ocean acidification, absorbing storm surge energy and thereby protecting coastal areas, and supporting other marine species while providing healthy food for humans.

The World Economic Forum is especially bullish on seaweed’s potential to unlock economic value while healing nature, estimating that farming seaweed in just 0.1% of the world’s oceans could create tens of millions, if not hundreds of millions, of jobs over the coming decades. Many of these jobs would likely be in economically depressed areas that will also bear the brunt of the climate crisis.

As opposed to the wasteful and inefficient monocultural farms that dominate the world, regenerative farming looks and acts a lot more like where we get our food from in the first place: nature. It supports healthy soil and healthy and diverse populations of all the living things we depend on, from tiny microbes in the soil to the birds and bees that pollinate our favorite crops.

This is the circular economy at its finest, a shining example of how we can support ourselves economically while maintaining natural balance and keeping our ecosystems healthy. A circular economy requires less land, allowing more land to be returned to nature via rewilding.  

We can apply this model to the other main engine of the global economy - our energy system - by transitioning to renewable energy. Fossil fuels are harmful in oh-so-many ways, but even if they weren’t so harmful, their supply is finite. Irrespective of the climate crisis, we must power our civilization with renewable energy, chiefly from the sun (which directly provides solar energy and indirectly produces wind energy).

With renewable energy sourced from infrastructure that’s designed to be reused, we can create as much energy as we need forever with minimal impact on nature. We can say goodbye to barren mountaintops torn apart to mine coal and thousands of holes drilled around the world to extract oil.

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We must move beyond the linear and wasteful ways of thinking that have caused the climate crisis and others borne from the flaws of our current economic paradigm. This requires rethinking how we organize ourselves culturally and how we operate economically. Circular economy principles can advance that process and set us on a new path that aligns human civilization with nature while recognizing the scientific limits of our planet.

Implementing a circular economy globally can empower us to collectively move beyond the extractive, exploitative economy of today while creating new, more inclusive economic opportunities and addressing critical social needs that are often underserved in the modern world. It replaces waste and pollution with ecological balance in a way that mimics natural processes and allows us to live within the natural limits of our planet.

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Business Takeaways
  • In a linear economy, materials become useless when the products they’re used to make are no longer useful. In a circular economy, materials are designed to re-enter the economy and be used repeatedly.
  • Through the prism of a circular economy, you can see waste not as an inevitable byproduct of economic activity but as a harmful design flaw that can be curbed with ingenuity and simplicity.
  • Companies can even leverage circular economy principles to create new business opportunities, particularly by making money from repeated use of a given good or service rather than outright ownership.
  • We must move beyond the linear and wasteful ways of thinking that have caused the climate crisis and others borne from the flaws of our current economic paradigm.