A Beginner’s Guide to the Circular Economy
At HappyPorch, we talk a lot about the circular economy and how it provides a solution to so many of the problems we face as a society.
But for those who are new to the term and these ideas, we wanted to take some time to define the term and dig into some of the basic concepts.
Let’s dive in!
What is the Circular Economy?
Since 2010, the Ellen MacArthur Foundation has been a major thought leader in the circular economy space.
The Ellen MacArthur Foundation defines the circular economy as an economy that pursues three main goals:
- Eliminate waste and pollution
- Circular products and materials at their highest value
- Regenerate nature
The Ellen MacArthur Foundation also popularised the butterfly diagram, which is a helpful tool for illustrating how we as a society can accomplish these three tasks at a macro level.
To put it in simple and human terms, we love how our podcast co-host Emily Swaddle summed up the idea of the circular economy:
“The circular economy for me is an economic system, a global economic system in which we care about what comes out of our production system as well as what goes into it.”
Circular vs. Linear Economy
We can also describe what the circular economy is by explaining what it’s not: a linear economy.
Our current system is linear, a take-make-waste system. We extract materials from nature, use these materials to make stuff, then produce waste without much of a thought to how this impacts people and the planet.
By contrast, in the circular economy, we want to “circulate” a product for as long as possible through quality design, reuse, sharing, and every other means.
When a product has reached its end-of-life, the individual materials that make up the product should continue to circulate within the system.
The whole circular system is designed to eliminate waste as much as possible, and minimise “leakage” into the environment.
Staying Within Planetary Boundaries
Another key goal of the circular economy is staying within our “planetary boundaries” and using resources only up to a safe point.
If we overshoot these boundaries (as humanity has already done in some tragic cases) we risk even more biodiversity loss, instability due to climate change, and other major consequences.
The Doughnut Economics model shows us how we can operate a just and equitable society for everyone without overshooting these boundaries. This is another way of visualising the goal of a circular economy.
There is no Planet B. We have to transition to an economy that stays within these planetary boundaries, regenerates nature, and ensures all humans have access to critical resources.
Circular Economy and Recycling
Many people think of recycling when they think of the circular economy. And while it’s true that an optimised recycling system is one aspect of circularity, the circular economy is so much more than that.
Think of clothing you might wear occasionally — like ski gear or a tuxedo. Instead of buying the item, using it, and then donating it or recycling it at its end-of-life, you could rent or share the item instead.
Depending on how well the product is designed and maintained, that one item could serve hundreds or thousands of people before it wears out. When the product reaches its end-of-life, the manufacturer would then be responsible for recycling and reusing the individual materials.
Recycling is certainly an important part of the picture, and on the podcast we’ve talked with entrepreneurs doing really exciting work in this area. TerraCycle, for instance, works in more than 20 markets around the world to recycle previously non-recyclable waste.
Their ecommerce platform for household goods, Loop, takes it a step further, as they sell products in packaging designed to be reused and refilled many times. Ideally, there’s no need to recycle at all.
We had Stephen Clarke from TerraCycle on the podcast to talk about the Loop concept and how it shifts the ownership of the packaging back to the retailer. “When you buy a single-use product, you own [the packaging],” Stephen shared with us.
In contrast, shifting the ownership back to the retailer or the brand means the brand will be incentivised to reuse it. “It’s in their interest to make that as reusable as many times as possible, to make the economy scale better for them,” he adds.
Another aspect that our founder Barry O’Kane likes to emphasise is how the value of products and materials is preserved within the circular economy.
In our current system, an item loses its value quickly because it’s not well maintained, it’s used once, and then it becomes waste.
The circular economy provides us a way to preserve the value of that item — and our effort and resources along the way.
As Barry says in season five of the podcast, “If you're going to all the effort, digging something up from the ground or growing it or making it, and then going through complex supply chains and companies and businesses, to make a thing at that point that early in the stage there’s value … in those things. So what do we do then? Do we just use it once and throw it away and start again at the top of the chain? Or do we try and keep that value there?”
By circulating materials and products within the economy, we preserve the value of those resources instead of just devaluing them as waste.
While much of the circular economy is about minimising damage to the environment, there’s an exciting regenerative aspect as well.
Instead of just extracting materials and degrading nature, the circular economy uses regenerative practices in agriculture and forestry to improve soil health, biodiversity, carbon sequestration, and so much else.
On the podcast, we also spoke to Audrey S-Darko from Sabon Sake, who’s doing fantastic work in this space by partnering with agro-waste generating communities in Ghana.
“Our focus lies on even how we can move on from a circular economy and even dive head-on straight into a regenerative economy as well. We're trying to put one foot in the circular economy, and then jump onto regenerative,” Audrey told us.
“That necessarily would take a holistic approach. Not just composting … how are we making use of resources that have been depleted as a result of the conventional ways, and then build upon that to better the agriculture system?”
As humans, we’ve already depleted natural resources and damaged the environment. The circular economy shows us a way forward, one in which we repair the damage we’ve done and create a better future.
Dive Deeper Into the Meaning of the Circular Economy
This brief guide just scratches the surface of the circular economy — there are so many other exciting aspects and opportunities to explore!
The bottom line is that the circular economy provides businesses with so many possibilities to create a healthier and more equitable world.
On the HappyPorch Radio podcast, we explore these concepts in depth with leaders and experts from the circular space.
We also bring our own spin and area of expertise to the conversation, looking at how to design software and technology systems to support companies’ circular goals.
To continue exploring the circular economy, we invite you to listen to season five, episode one. In this episode, we discuss these concepts and talk about some of the many implications and opportunities to adopt a circular model in business.
Check out the podcast — and enjoy your circular journey!