The concept of circularity has been around since the 1970s, but it’s recently gained popularity amongst policymakers, academics, companies, and everyday sustainable decision-makers. We often hear the phrase “circular economy” alongside conversations about sustainability. Circularity and sustainability often inhabit similar spaces, but there are many important differences. Using them interchangeably can cause confusion, so let’s quickly break those differences down.
In economics, circularity means a product, service, or resource is renewed or regenerated, rather than wasted. In a circular economy, when a product or resource is used, it's then recycled, composted, or re-used in a way that allows it to go back into a new lifecycle or supply chain. It's a closed-loop usage model, rather than one that produces discarded waste
For example, many beverages like coffee, tea, and beer leave behind organic materials when they're produced and brewed. Instead of throwing those materials out at their end-of-life, circularity takes what's left over and re-integrates it back into nature. A brewery's waste output can be used by local farmers for animal feed. Used coffee grounds can be composted back into the soil and used as agricultural fertiler.
Circularity uses creativity and systems-thinking to eliminate waste and extend the life of important natural resources.
But wait, isn't that sustainability?
Sort of, but not entirely. Let us try to explain:
There are many definitions of sustainablity. Most are centered around themes of balance, life, longevity, and the surrounding environment. According to Forum for the Future:
Sustainability is a dynamic process which enables all people to realize their potential and to improve their quality of life in ways that simultaneously protect and enhance the Earth's life support systems
Former Norwegian Prime Minister Gro Harlem Brundtland defined sustainability as:
Meet[ing] the needs of the present without compromising the ability of future generations to meet their own needs."
Indigenous communities, who have lived sustainability on Earth for centuries, typically define sustainability around principles of relationality, community-based governance, quality of life and health, and communal recognition of nature and external, non-human entities as life-givers and enablers.
Sustainability clearly exists to find balance between economic, societal, and environmental needs, both now and in the future. It's also a form of systems thinking which recognizes everything is connected, actions cannot be compartmentalized, and no individual, organization, or nation operates by itself.
As we can see, circularity is a sustainable model, process, or economic system focused on re-use and waste elimination. It's a method of achieving sustainability, or a representation of a sustainable ecosystem.
In this sense, a circular product or supply chain is likely to be more sustainable than a linear, non-circular one - but circularity alone isn't the only way to define something as sustainable.
They're similar, but not quite the same thing.
According to a 2019 European Union (EU) study, only around 9% of the global economy is circular. That means we primarily live and work in a linear economy characterized by unsustainable production and consumption. We take raw materials from the Earth, process them into products we consume (usually generating additional waste along the way), and then throw them away after use.
From a sustainability perspective, the goal (broadly) in a linear economy is to minimize impact on the environment and our communities while getting the same output. As a result, the focus is usually on efficiency. How do we use the least amount of inputs, resources, and energy to get an output?
But, as we know, consumption and waste have significant environmental impacts, and so 'efficiency' alone is only part of the full sustainability equation. Circularity requires that processes are regenerative and restorative by design and intention.
According to the Ellen MacArthur Foundation, a leading resource in transitioning the globe towards a circular economy, circularity is defined by three guiding principles:
Although sustainability has an array of meanings and definitions, we think of sustainability as a systems-based approach that tries to make sense of the interconnectedness between environmental, social, and economic factors. From an impact lens, sustainability focuses on how a company (or investment) impacts the world.
Circularity can be seen as one approach or tool to tackle the transition towards a sustainable future. This means that a circular model must address the economic, social, and environmental impacts a company or its supply chain has.
What’s important to note here is that sustainability does not necessarily enable circularity, and a circular business model does not promise the improvement of social, environmental, and economic factors that a company must take into consideration.
How can you design waste and pollution out of a business model? Some forward-thinking corporations are doing just that by focusing on how to prolong the lifecycle of their products and raw materials.
For example, IKEA has set forth a plan to become a fully circular business by 2030. The proposal includes a buy-back system for customers who want to exchange their used furniture for vouchers, building products only with recycled or renewable materials, and standardizing parts.
Making new furniture from discarded furniture and recycled materials. Source: IKEA
The strategy falls within the company’s broader sustainability ambitions, which tells us IKEA's decision to transition to a circular business model to is designed to achieve a better future for themselves as a business, and for society at large.
Circularity offers companies new pathways for innovation, savings, operational efficiency, and reducing environmental impacts. As a business, it's crucial to understand the relationship between the circular economy and sustainability as a practice. And, as a consumer, it's equally important to support authentically circular organizations and adopt more circular living practices in your day-to-day.
As both circularity and sustainability gain more economic attention and cultural traction, companies need to make sure they have a sustainability strategy that meets tomorrow's needs. Better sustainability and circularity understanding - both internally among employees and externally with customers and stakeholders - is essential.
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