#TIL : Going in Circles: What is the Circular Economy?

By Sreelakshmi R.

Climate change is a recurrent theme at the Annual World Economic Forum (WEF) Summit in Davos. This culminated in 2019 with the WEF Annual Meeting promulgating a “Circular Economy” agenda to mitigate the effects of climate change, thus prompting the question on many people’s minds: What is the Circular Economy?

The Circular Economy (CE) is a concept long in the making. Many scientists and philosophers have expounded the notion of a closed economic system which would espouse a “cradle-to-cradle” product lifecycle, in order to prevent the environment from becoming a waste reservoir. Over the past five decades, similar views have been pioneered through concepts like, “closed economy”, “performance economy” or “looped economy”. The specific usage “circular economy” simply evolved from these schools of thought.

According to the WEF, CE is “an industrial system that is restorative or regenerative by intention and design”. This means that at every step of the value chain, instead of extracting fresh perishable resources from nature or producing/ processing anew in factories, every effort is made to reuse, repurpose or refurbish, and at worst recycle, already existing resources. The goal is to use wisely and eliminate waste. By designing out waste from the process, the CE forms a loop of disassembly and reuse. This closed design, eponymous to the “circular” economy, moves away from the linear economy of produce, use and dispose.

The 2012 Ellen MacArthur Foundation’s report “Towards a Circular Economy” shows how the circular economy could spur economic activity in other industries such as product development, refurbishment of components and restorative recycling. It estimated that the EU manufacturing sector alone could attain net materials saving above USD 630 billion annually, proving that CE can indeed promote growth, rather than impede. This is already being adopted by companies in the chemical industry, food services, garments, computer chips manufacturing and automotive batteries.

Therefore, by radically redesigning existing production processes to incorporate reuse and to eliminate waste, the circular economy envisions an industrial economy that promotes responsible consumption. This is especially important as mindful consumption becomes an exercise of citizenship, a fraternity forged globally. CE is also part of a continuum of pan-industry efforts in the direction of sustainability, of which, the ubiquitous sharing economy is a marked presence. In many ways, the sharing economy espouses circular economy principles, and it would be interesting to explore how they manifest in practice.

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