The concept of the circular economy has been gaining a great deal of attention in both business and political discussions lately. This is unsurprising because since the industrial revolution, we have been able to depend on natural resources to achieve economic growth and development and raise the standard of living. But as these resources become scarcer and more expensive, and the over utilisation of these resources is having negative impact on the environment we need to find new ways to create a more sustainable economic growth model that generates more employment and improve competitiveness.
The current 'linear' growth models that both companies and countries have adopted are heavily based on using up resources. For instance, it has been argued and is estimated that in Europe 90 per cent of raw materials used in manufacturing become waste before the product leaves the factory, while 80 per cent of products made get thrown away in the first six months of their existence.
By contrast, the circular model requires firms to come up with disruptive technology and business models that are based on longevity, renewability, reuse, repair, upgrade, refurbishment, servitisation, capacity sharing and dematerialisation. This means that businesses have to not just focus on cost-cutting but instead start focusing on rethinking products and services as well as customer propositions. Consumers and producers need to extract as much value from those resources in the most effective way possible, and then recover and regenerate those materials and products at the end of that particular useful life if possible, and the idea is to create a circular economic structure in terms of production and consumption.