What is Circular Economy?

08/09/2020

Studio Victoria

3 minutes

If you always keep up to date with the latest news and trends across your sector, you might have come across the term Circular Economy. In this article, we are going to talk about Circular Economy and answer the following questions: what is Linear Economy? what is Circular Economy? What are the advantages of Circular Economy? And what services we provide for the Circular Economy? Keep reading and find out how Circular Economy can help you to #ONEUPYOURBUSINESS!

WHAT IS LINEAR ECONOMY?

Our economy has been linear for years providing a traditional model based on a make-use-dispose approach to using resources. This means that raw materials are collected and turned into products then after the products have been used, they are thrown away as waste.

To ensure the world can sustain itself due to the vastly growing population, the model needs to be replaced to make sure that in the future we have enough raw materials for basic needs such as shelter, food, heating and other necessities. For this to happen the economy must become circular. This means avoiding any waste and being more sustainable with raw materials so less damage is caused to the environment.

WHAT IS CIRCULAR ECONOMY?

In a Circular Economy, products are designed to be reusable. Compared to the Linear Economy where the approach followed a make-use-dispose method, a Circular Economy follows the 3R approach: reduce, reuse, and recycle. This means that the resources used are reduced, the reuse of products are increased and the raw materials, instead of being disposed of as waste, can be recycled to be reused again. Value is then created by concentrating on value preservation rather than created by producing and selling as many products as possible. Therefore, the objective of Circular Economy is to prevent waste. It is a more profitable method and less harmful to the natural and human environment helping to improve sustainable economic growth, increased competitiveness, and new jobs.

WHAT ARE THE ADVANTAGES OF CIRCULAR ECONOMY?

Circular Economy offers many advantages that can translate into opportunities. Here is a list of advantages that Circular Economy can have on your business:

Rise in demand for services: Circular Economy can provide a demand for new services and can create new job opportunities. According to the Ellen MacArthur Foundation employment opportunities will be created not just within large corporate companies and remanufacturing but also across many sectors across the advancement of local reverse logistics, in small and medium businesses, and through enhanced innovation and entrepreneurship, and a new service-based economy
Increased profitability: as Circular Economy provides a demand for services, your business can grow its services and potentially add new offerings such as: repairs, remanufacturing, sharing, and reselling. Expanding your services can help to create new streams of revenue increasing your profits
Reduce costs: Circular Economy can help companies save money and reduce costs. It could allow companies to save on landfill costs that will in turn help the soil restoration and specialty chemicals by keeping natural waste out of landfills. It would also help to reduce running costs and manufacturing, benefiting manufactures as it allows them access to local raw materials needed to produce their products
Stronger customer relationships: the Circular Economy enables new business models and opportunities to maintain customers due to the further communication between supplier and customer during the transition from product delivery to services. The communication and service you provide e.g. delivery, repair, maintenance as a few examples can result to customer satisfaction which can increase customer loyalty, helping you build stronger relationships with you customers
Increased stability on raw material supplies: a Circular Economy aims to recycle raw materials reducing the uses of new raw materials with the value of materials increasing in their life cycle. This means you will be able to sustain lower material costs than labour costs resulting in the availability and costs of the materials having less of an impact on the stability of the business model. This allows companies stability and confidence in long-term investments