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Key Principles of a circular economy

Humanity is grappling with intricate challenges arising from population growth, climate change, and the need to increase raw materials such as steel, oil and grain for production, all against the backdrop of dwindling natural resources. This predicament calls for a paradigm shift towards a more sustainable approach to conducting business—a transition to a circular economy. 

The world economic forum defines a circular economy as an industrial system that is restorative or regenerative by intention and design. Unlike the Linear economy, it replaces the end-of-life concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse and return to the biosphere, and aims for the elimination of waste through the superior design of materials, products, systems, and business models. 

Nature operates without generating waste, waste is a human-introduced concept. From tiny, short-lived products, like sweet wrappings, all the way up to permanent structures like buildings, the economy is filled with creations that have been designed without considering what happens to them at the end of their life. The first principle of the circular economy – eliminating waste and pollution aims to address this. 

Eliminating waste and pollution is rooted in product design. It requires manufacturers to find new and innovative ways to design things without negative impacts. Unlike the Traditional model where when newer products enter the market, they replace their older counterparts and are classified as waste, this principle encourages manufacturers to design products that can be maintained, shared, reused, repaired, refurbished, remanufactured, and, as a last resort, recycled. Food and other biological materials that are safe to return to nature can regenerate the land, fueling the production of new food and materials.  

DyeCoo a textile company, has embraced this principle by developing technology for dying textiles without the use of water, thereby eliminating toxic wastewater. DyeCoo employs carbon dioxide as a solvent within a closed-loop system, replacing the conventional use of water. Through this innovative system, DyeCoo saves 32 million litres of water annually, avoids the use of 160 tons of chemicals and completely eliminates the discharge of water into the environment. Notably, the company has managed to reduce its operating costs by optimizing dye utilization and circumventing the need for wastewater treatments. 

The second principle of the circular economy is circulating products and materials at their highest value. This means keeping materials in use, either as a product or, when that can no longer be used, as components or raw materials. This way, nothing is relegated to waste, and the intrinsic value of products and materials is retained. Businesses can accomplish this through two primary cycles: the technical cycle and the biological cycle. In the technical cycle, products made of wood, plastics and metals are reused, repaired, remanufactured and recycled. On the other hand, the biological cycle involves the return of biodegradable materials, such as compostable food take-away packaging, to the earth through processes like composting and anaerobic digestion.  


Ecovative is an example of a company designing for circulation by making compostable packaging from agricultural byproducts (the non-edible parts of crops) and mycelium (mushroom roots). Mycelium is a fungal network of threadlike cells that acts like a natural, self-assembling glue. It grows in 5-7 days without needing any light or water, digesting agricultural by-products and binding into any desired shape. At the end of the process, the material undergoes dehydration and heat treatment to halt further development and ensure the absence of spores or allergens. Once utilized, the packaging can be safely composted and returned to the soil.  

The third principle of the circular economy is regenerating nature. It focuses on shifting from extraction to regeneration instead of continuously degrading nature. It encourages Regenerative farming practices that allow nature to rebuild soils and increase biodiversity and return biological materials to the earth. Currently, most of these materials are lost after use and the land used to grow them is depleted of nutrients. This is because food production is heavily reliant on synthetic fertilizers, pesticides, fossil fuels, fresh water, and other finite resources. Regenerative farming practices such as agroecology and agroforestry can significantly reduce greenhouse gas emissions from food production by reducing reliance on synthetic inputs and by building healthy soils that absorb rather than release carbon.  

Natura, the world’s fifth-largest cosmetic company, has effectively contributed to the regeneration of nature through its initiative in the Amazon Forest, built on the principle that a standing tree holds greater value than a fallen one. Initially, the native community relied on logging the Murumuru tree for their livelihood. However, with Natura’s commitment to procuring Murumuru fruits for its products, the community has come to realize that they can derive greater benefits from nature without resorting to its destruction. Through the initiative, the company has preserved over 2 million hectares of the Amazon rainforest, with the goal of increasing this to 3 million hectares by 2030. 

Shifting towards a circular business model may pose challenges for companies, given the substantial initial investments needed for new technologies, processes, and training. Nevertheless, businesses should not be discouraged, as they can now tap into green loans to finance circular economy projects. To enhance their prospects of securing funding, companies should communicate their sustainability efforts and develop a comprehensive sustainability strategy. Fortunately, they can collaborate with sustainability consultants to effectively articulate their ESG initiatives. 

Governments should enhance Extended Producer Responsibility (EPR) regulations, compelling producers to assume responsibility for the entire life cycle of their products and drive manufacturers to design products with circularity in mind. To catalyze the circular transition, governments can offer financial incentives like tax reductions, subsidies, and low-interest loans to businesses embracing circular practices. 

The principles of a circular economy offer a transformative approach to resource management and environmental sustainability. By redesigning our production and consumption systems, businesses, governments, and individuals can contribute to a more resilient and environmentally friendly economic system.