The way we produce and consume goods is changing. For decades, most economies have relied on a linear model: extract resources, manufacture products, use them, and eventually discard them. While this approach fueled industrial growth, it also created waste, pollution, and resource scarcity.
Today, businesses, governments, and consumers are looking for models that deliver economic growth without exhausting the planet’s resources. One solution gaining global attention is the circular economy, an approach designed to keep products, materials, and resources in use for as long as possible, reducing both environmental impact and cost.
By rethinking design, production, and consumption, companies can create value that is sustainable, efficient, and profitable.
What Is a Circular Economy?
A circular economy is an economic system aimed at eliminating waste and continually using resources. Instead of the traditional “take–make–dispose” cycle, it focuses on closing the loop by reusing, repairing, refurbishing, and recycling products and materials.
The core idea is simple: nothing becomes waste. Every product or material is either cycled back into production or safely returned to nature. This model not only protects the environment but also creates new opportunities for innovation, cost savings, and customer engagement.
In practice, the circular economy integrates three main elements:
- Designing out waste and pollution from the start.
- Keeping products and materials in use through reuse and recycling.
- Regenerating natural systems, such as restoring ecosystems and replenishing resources.
Circular Economy vs Linear Economy
Understanding the difference between the two models is key to identifying where value can be created.
Feature |
Linear Economy |
Circular Economy |
|---|---|---|
Resource Use
|
Extract → Produce → Dispose
|
Reduce → Reuse → Recycle/Regenerate
|
Product Lifecycle
|
Shorter, ends in waste
|
Extended, materials circulate
|
Environmental Impact
|
High waste, pollution, depletion
|
Lower waste, cleaner production
|
Business Focus
|
Volume-driven sales
|
Value through services, efficiency
|
Economic Resilience
|
Vulnerable to resource shortages
|
More resilient, diversified value
|
Circular Economy Principles
The transition from linear to circular requires a new way of thinking. Leading frameworks, such as those developed by the Ellen MacArthur Foundation, identify three main principles that guide circular practices:
- Design Out Waste and Pollution
Products and processes should be designed with the end in mind by using materials that are safe, reusable, or biodegradable, and minimizing waste before it happens. - Keep Products and Materials in Use
By extending product life cycles through repair, refurbishment, remanufacturing, and recycling, businesses can maximize the value of resources already in circulation. - Regenerate Natural Systems
Beyond minimizing harm, a circular economy actively restores ecosystems. For example, by using renewable energy, improving soil health, or supporting biodiversity.
Together, these principles turn sustainability into a strategic advantage, enabling businesses to reduce risks, open new markets, and respond to growing consumer and regulatory demand for environmentally responsible products.
Opportunities in a Circular Economy
Not all industries face the same challenges or opportunities when shifting from a linear economy to a circular economy. Certain sectors stand out due to the scale of their environmental impact and therefore offer the greatest potential for value creation as circular models mature.
Plastic Packaging
The plastic packaging sector is a central focus for circular transition efforts. Currently, nearly 40% of plastics remain non-recyclable, largely due to technical, economic, and regulatory barriers. Weak collection and sorting systems, inconsistent data, and sometimes conflicting legislation make it difficult for recycled plastics to compete with virgin materials.
Despite these hurdles, the market for circular plastics is expanding. Incentive-based regulations and technological innovation are increasing demand. In France, for example, production of recycled packaging plastics is projected to rise by 17% by 2030, opening opportunities for companies that invest in sustainable materials, better recycling infrastructure, and product redesign aligned with circular economy principles.
Electrical and Electronic Equipment (EEE)
The electronics sector faces declining sales of new products while meeting stricter environmental targets. However, the second-hand and refurbishment markets are proving highly promising. Between 2019 and 2023, the resale market for electronic devices grew by 11%, with forecasts suggesting another 10% growth between 2024 and 2027.
Circular strategies such as repair, refurbishment, and parts recovery extend product lifecycles, reduce e-waste, and create new revenue streams, allowing businesses to balance regulatory compliance with consumer demand for affordable, sustainable electronics.
Batteries
Battery production relies on imported critical metals, generating high carbon emissions and exposing Europe to geopolitical and supply chain risks, particularly due to dependency on Chinese production. The good news: growth in the battery sector is estimated at +15% between 2023 and 2030, driven by the rapid adoption of electric and hybrid vehicles.
Here, recycling and reuse represent strategic levers. Recovering valuable metals can reduce environmental impact, lower costs, and strengthen European industrial autonomy, turning sustainability into a competitive advantage.
Construction
The construction industry generates more waste than any other sector. In France alone, it accounted for 70% of total waste in 2021. New eco-contributions have been introduced to fund waste management, but the variability, sometimes reaching 25% of the sale price, highlights the complexity of establishing fair incentives across a diverse and competitive market.
Circular approaches, including reuse of building materials, modular design, and more efficient recycling systems, can reduce waste, cut costs, and improve sector-wide sustainability while maintaining fair competition and rewarding companies that adopt environmentally friendly practices.
Textiles
Fashion and textiles face increasing scrutiny for their role in environmental degradation. Combatting fast fashion and extending the lifespan of garments are critical steps. For example, extending the life of a pair of jeans by 30% can reduce its environmental footprint by 23%.
In response, brands are experimenting with innovative models such as repair services, rental, subscription models, resale platforms, and upcycling. Beyond cost savings, these strategies also build loyalty among consumers who value sustainability. In this way, the circular economy transforms environmental responsibility into a driver of growth and customer engagement.
Circular Economy Examples in Practice
Vestiaire Collective – Championing Circular Fashion
Vestiaire Collective is a standout example in the textile and fashion industry, showcasing how circular economy models can transform the sector:
- Second-hand Luxury Marketplace: Founded in 2009 in France, this platform enables users to buy and sell authenticated pre-owned fashion, promoting reuse over new consumption. Today, it operates in around 70–80 countries with over 5 million items available.
- Environmental Impact & Circular Benefits: As per Verstiare Collective’s report of 2023, purchasing via Vestiaire Collective reduces environmental impact by up to 90% compared to buying new items.
- Extended Product Lifecycles: According to the same report, each item sold adds an average of 2.2 years to its lifespan, reducing waste, water, and carbon footprints by approximately 73%.
- Educational and Community Engagement: The platform’s “Think First, Buy Second” campaign encouraged over 22 million people to purchase thoughtfully, shifting over 79% of buyers away from new items towards pre-owned ones. (UN Department of Economic and Social Affairs, 2024)
Renault: Scaling Remanufacturing Through the Future is NEUTRAL
Renault has been a pioneer in automotive remanufacturing since 1949, applying circular economy principles long before they became a global focus. This process allows vehicle parts to be repaired, refurbished, and remanufactured, extending their lifespan and reducing waste.
Through its subsidiary The Future is NEUTRAL, Renault is expanding its Flins Refactory operations to become a European leader in parts reconditioning. The initiative focuses on:
- Broadening the product portfolio — including more hybrid and electric vehicle components alongside parts for ageing combustion fleets.
- Strengthening partnerships with other automotive industry players to reach new markets.
- Improving operations — accelerating time-to-market, optimizing material recovery, and investing in digital solutions.
With increased investment, new recruitment, and a target to boost revenues by over 50% by 2030, Renault is positioning remanufacturing as a key growth area while reducing environmental impact and supporting the shift to electrified mobility.
IKEA – Furniture Take-Back and Resale
IKEA has set a bold ambition: to become a fully circular economy company by 2030. Achieving this goal means redesigning products, supply chains, and services to keep materials in use for as long as possible. One of the company’s most visible initiatives is its furniture buy-back and resale program.
Through this service, customers can return used IKEA furniture in good condition. Instead of ending up in landfills, these items are refurbished, repaired if needed, and resold at discounted prices in dedicated areas of IKEA stores. This approach creates a win–win: customers get value for items they no longer need, new buyers access affordable, quality furniture, and IKEA keeps valuable resources circulating within its ecosystem.
The program also helps IKEA meet growing regulatory and consumer demands for more sustainable retail practices. By extending product lifespans, reducing waste, and lowering demand for virgin materials, IKEA demonstrates how large-scale retailers can turn circular economy principles into profitable, customer-focused business models, without compromising on accessibility or style.
The transition from a linear economy to a circular economy is more than an environmental necessity, it is an economic opportunity. By rethinking how products are designed, used, and recovered, businesses can unlock new sources of value while reducing waste and preserving natural resources.
For businesses, adopting circular economy principles means future-proofing operations, strengthening customer loyalty, and aligning with stricter environmental standards. For society, it means cleaner production, longer-lasting products, and a sustainable path to growth.
Additionally, as sustainability reporting becomes a regulatory expectation in many regions, it serves as a powerful driver for businesses to adopt circular-economy strategies. Learn more in our sustainability reporting blog posts – EU, Singapore, Australia, New Zealand.
In the end, the question is no longer if industries will change, but how fast. Those who act now will lead the way, creating value that benefits both the planet and the economy.