Circular Economy: Definition, Principles, Examples, & More

In the guide below, we discuss the circular economy model.

We outline what it is (i.e. a general definition), principles, practices, examples, and provide other relevant information.


What Is A Circular Economy? (A Definition)

The ‘Circular Economy’ is a concept, and, there is no one uniform definition for what a circular economy is.

Different groups define it and describe it in slightly different ways.

However, a general description of the concept might be that it’s a model of production and consumption, which generally aims to keep materials and resources circulating within the economy i.e. after being used, they end up being circulated back to the manufacturing or usage stages via recycling, reuse and other practices

This is as opposed to discarding/disposing waste, where it ends up outside of the economy and no longer being used (in landfills for example), or degrading the environment (as waste pollution or emissions for example)

Some of the major goals in operating a circular economy might be to address specific sustainability and environmental issues, with resource depletion, emissions, pollution, and environmental degradation being just a few examples.

Some reports indicate that some of the ultimate goals might be to decouple economic growth from it’s impact on the environment, although, in some cases this might be unrealistic.

Another overarching goal might be to decrease society’s dependence on finite resources. 


Principles Of A Circular Economy

Three of the main principles of a circular economy might be:

1. Eliminating the generation of waste (i.e. similar to zero waste principles), and also the environmental pollution that can come from waste disposal


2. Ensuring products and materials stay in circulation 

This is as opposed to products and materials becoming waste and being discarded


3. Regenerating, restoring, or at least conserving nature

By minimizing environmental pollution and degradation, and discharging outputs to the environment in a natural or non harmful form that will help conserve the environment


Practices In A Circular Economy

There’s a range of practices that can be used in order to operate a more circular economy.

Some of those practices might include, but aren’t limited to:


– Designing or re-designing products and materials, and also systems

Changes in design of products and materials might lead to them using less resources, being more durable and lasting longer, being easier to repair or maintain (by being easier to take apart and replace parts, or to upgrade), being easier to recycle (i.e. designed with ease of recycling, or compatibility with recycling in mind), or being easier to recover materials from

Changes in system design might lead to minimizing waste, re-using waste, or to minimizing pollution


– Sharing


– Extending the lifespan of materials and products

Using the product or material for longer before it’s reused or discarded as waste. This is classified as extending the item or material’s primary use lifespan



Can involve repairing, refurbishing, and even repurposing at the consumer level

Leasing and renting of products can also encourage reuse at the consumer level.

At the producer level, it may involve treating and reusing waste water, or, capturing and reusing certain chemicals


Upcycling and downcycling 


– Recycling

Specifically, a circular economy may use closed loop recycling more than open loop recycling


– Utilizing by-products

For example, the by-product of composting organic waste can be used as a soil amendment


– Other practices

Might include but aren’t limited to being efficient with resource use, using clean and renewable energy sources, considering how new technologies like blockchain and AI can help with sustainability throughout the supply chain and production, 


Circular Economy Examples

The broad practices outlined in the section above might be applied to different sectors and industries within an economy.

Some specific examples of those practices might include:

– Zero Waste Practices

Zero waste includes preventing or reducing waste, and it can take various forms or include various practices.

A very simple example of a zero waste practice is a producer or supplier finding ways to use less packaging, or even reuse packaging, when delivering their product to market and to the consumer.

Using more sustainable packaging might be another option.


– Design & Re-Design

For example, some electronic products like some smartphones are made to be more modular so they are easier to repair, update, replace parts in, and generally easier to continue to use

Some suggest that standards should be brought in for certain products, so that they are designed from the start to make make them easier to recycle or recover materials from, or to be more compatible with repairing and updating to keep in circulation


– Reusing & Repurposing

There’s a range of ways to reuse products and materials

One example of reuse is that some products are designed and manufactured to be reusable, such as reusable bottles, containers, bags, and so on.

Another example might be selling or donating clothing and textiles to be used again.

There’s also a range of products and materials that can be repurposed.

One example is repurposing glass food or condiment containers to store household items after they have finished their original use.


– Upcycling & Downcycling

Many items and materials can be upcycled, but, one example of upcycling is salvaging wood or timber from demolished buildings and other structures or projects, and using it for other uses such as for furniture.

There’s a range of ways to downcycle. But, an example of downcycling might include turning plastic bottles into carpeting or fleece fibres


– Recycling

A wide range of materials can be recycled, with steel and aluminum being two common examples of metals that can be recycled.

Even water might be recycled in the future at higher rates


– Other Examples

In their guide, runs through examples of the circular economy concept being adopted and applied by industries such as the textile industry, construction industry, automotive industry, logistics industry, agriculture, furniture industry, oil and gas industry, renewable energy industry, education industry, in plastic waste management, in rare earth elements recovery, and in chemistry.

They also give examples of circular economy developments around the world, such as frameworks, regulations, programs, and more.


Circular Business Models

Part of what might make up a more circular economy is more circular business models

Circular business models may have a model, organizational structure, or lifecycle flow that aligns with circular sustainability principles. discusses the concept of ‘circular business models’ in their report

(Paraphrased) They describe how businesses might be more circular with their the different stages of their overall business model, by creating a loop that involves recycling, increasing efficiency, extending lifespans and slowing consumption rates, intensifying the usage stage, and substitution or dematerialization of product utility (with either service or software solutions)

The end result is less resource inputs, and less waste or emissions outputs/leakage


Potential Pros & Cons Of A Circular Economy

You can read about the potential pros and cons of a circular economy in this guide.


Circular Economies vs Linear Economies

We’ve put together a separate comparison guide of circular vs linear economies.

We also put together a separate guide outlining what a linear economy is, examples of how it works, and some of it’s potential pros and cons.


A Circular Economy vs A Green Economy

We put together a separate guide on what a green economy is, which also includes other relevant information.

It might be accurate to say that the main difference between these two types of economic concepts is that:

– A circular economy may have a a more specific focus on waste reduction and waste management compared to a green economy

– A green economy may have a more specific focus on minimizing the use of fossil fuels and reducing their impact on emissions, along with some other key focusses and goals.




1. Various ‘Better Meets Reality’ guides





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