Building back better, from Linear to Circular: Why are Circular Practices the future for Business?

1. www.circularcreatives.eu
Building back better, from
Linear to Circular: Why are
Circular Practices the future for Business?
MODULE 3
This work is licensed under a Creative Comm4.0 International
License http://creativecommons.org/licenses/by/4.0/

2. FROM THE LINEAR TO THE
CIRCULAR ECONOMY
CORE CIRCULAR ECONOMY
CONCEPTS
Building back better, from
Linear to Circular: Why
are Circular Practices the
future for Business?
The European Commission support for the production of this publication does not
constitute an endorsement of the contents which reflects the views only of the authors,
and the Commission cannot be held responsible for any use which may be made of the
information contained therein
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01
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The module is an overall introduction
to the module which is composed of
two units:
• UNIT 1: From the Linear to the
Circular Economy
• UNIT 2: Core Circular economy
concepts

3. Unit 1: From the
Linear to the
Circular Economy
01

4. CIRCULAR
CREATIVES
4
Learning
Objectives
What is Linear
Economy?
What is Circular
Economy?
Why is the transition from
liner to circular relevant?
Why should business
adopt circularity?
Moving from the
Linear Economy to
Circular Economy
Benefits of moving from
the Linear Economy to
Circular Economy

5. CIRCULAR
CREATIVES
5
Learning
Outcomes
Knowledge about
Linear Economy
Knowledge about
Circular Economy
Relationships between
the two economies
Pros and Cons of
Linear Economy
Pros and Cons of
Circular Economy
Relevance in
contemporary and future
business scenario

6. CIRCULAR
CREATIVES
6
Study Material Recommendations (Unit 1)
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7. CIRCULAR
CREATIVES
The two types of Economic Models are
• The Linear Economy
• The Circular Economy
7
What are the two types
of Economic Models
https://www.slideteam.net/linear-vs-circular-economy-
framework.html

8. CIRCULAR
CREATIVES
Linear
Economy
8

9. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
9
A linear economy is a topic which is basically
used to describe the olden traditional models
and economic systems that follow a very easy
and an uncomplicated approach to
consumption and production.
Though linear economy is a very simple and
easy to follow method, considering the
growing concerns over the social security of
the environment and the sustainability of
modern human society which also includes the
discomfort caused by the present climate
emergency. Considering this many critics and
scholars have switched to circular economic
source.
Linear Economy - Definition

10. CIRCULAR
CREATIVES
Raw materials used to make product,
after use, culminate in a landfill. In
economies based on recycling, such
waste materials are reused. Learn
more in: Circular Economy for India:
Perspectives on Stewardship
Principles, Waste Management, and
Energy Generation
10
Linear Economy
Source

11. CIRCULAR
CREATIVES
An economic model based on the
sequence take (raw material), make
(products), use (consume), dispose (of non-
recyclable waste), which has demonstrated
to be unsustainable for both its resources
consumption and its environmental
impact. Learn more in: Tourism Circular
Economy: Proposal for a Research Agenda
A traditional economic paradigm that
consists of extracting raw materials;
transforming them; producing and
consuming goods and services; and
discarding the resulting waste. Learn more
in: Guiding Principles of Design for Circular
Tourism
The economy where the environment is as
a simple natural free resource. Learn more
in: Circular Economy and Circular Business
Models in the Actual Global Ecological
Context: Various Approaches.
Linear Economy
11
Source

12. CIRCULAR
CREATIVES
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The economy where the steps are always the
same, collect materials, transform them and
use them, without reusing anything. Learn
more in: Circular Economy and Risk
Management Synergies in Disruptive
Environments. It is a traditional economic
model based on the ‘take-make-dispose’
approach to using resources. Learn more in:
Circular Economy as a New Sustainable
Development Paradigm: Some Open Questions
and Issues
Linear Economy

13. CIRCULAR
CREATIVES
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13
A system which extracts a resource, make a
product and then sell it. In the process
whatever non-required is produced and also
the final product at the end of its shell life is
disposed of as waste, disregarding the concept
of reuse or recycle.
An economic model where resources are used
to make a product and then discarded after its
useful life. Learn more in: Sustainable
Development Through the Circular Economy:
Experience From Emerging Economies
Source

14. CIRCULAR
CREATIVES
Characteristics of
LINEAR ECONOMY
14
01

15. CIRCULAR
CREATIVES
The linear economic model is generally
characterized by economic activities
that follow a take-make-dispose or
take-make-consume-throw away
pattern that transpire both at the
macroeconomic and microeconomic
levels
• Absence of Feedback
• Mass Consumer Culture
• Generation of Wastes
15
Source:

16. CIRCULAR
CREATIVES
Unlike a circular economy, a notable
characteristic of a linear economy, is that
it lacks a feedback loop.
Businesses across different industries and
sectors participate in the economy
through production with the goal of
making a profit by distributing and selling
their goods or services to the end-users.
The role of these end-users is confined to
consumption.
The entire product journey is linear
because it ends with the consumption and
disposal by the consumers. The producers
would proceed to create, distribute, and
sell goods and services further using raw
materials or other production inputs
extracted from the natural world.
Absence of Feedback
16

17. CIRCULAR
CREATIVES
Mass culture refers to a concept used in
advertising & marketing in relation to
consumer behavior, although during this
first mass culture, consumers were
considered as simple recipients of the
stimuli enunciated by the predominant
brands.
Consumerism or mass consumerism is a
theory that economic benefits are
attainable through the progressive
consumption of products. In other words,
increasing consumption in the market is
always a desirable goal and the wellbeing
of an individual depends fundamentally on
obtaining consumer goods and material
possession.
Economies and businesses following a
linear economic model would excessively
produce goods while focusing
on strategies and tactics to attract the
public to these products. Some societies
end up preoccupied with the acquisition of
these products and individuals would end
up purchasing both essential and non-
essential goods excessively.
Mass Consumer Culture
17

18. CIRCULAR
CREATIVES
Wastes are materials discarded after the
completion of a process. In production,
wastes include substances or by-products
that are expended after being deemed
unusable to the current and future
production processes. Within the
consumption their outmoded state.
The generation of excessive wastes is
another characteristic of a linear economic
model because of a limited-use mindset,
as well as the propensity toward and
further promotion of excessive
consumption. Resources are extracted
while goods are designed and produced
with disposal in mind or limited
consideration about the possibilities for
recycling or upcycling.
Generation of Wastes
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19. CIRCULAR
CREATIVES
Criticism of
LINEAR ECONOMY
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02

20. CIRCULAR
CREATIVES
20
Source:

21. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
The circular economic model is a direct criticism of
linear economy. Relevant concepts such
as upcycling, regenerative design, natural capitalism,
and Cradle to Cradle provide additional foundational
arguments against a linear economic model. These
arguments or criticisms revolve around two major
concerns: environmental welfare and sustainability and
are as follows:
Criticisms of Linear Economy
21

22. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
22
A linear economic model damages the
environment in numerous ways.
• Mass production for mass consumption
requires the extraction of natural resources.
E.g. mining rare-earth materials for
consumer electronic devices, steel and
other metals for production of automotive
vehicles.
Harmful to the Environment

23. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
23
• Depending of fossil fuels to run the modern
economy takes a toll on the environment.
Burning of oil, gas, and coal for power
production has contributed significantly to
greenhouse gas emissions that have
resulted in human-induced global warming
and climate emergency.
• Plastics prevalence has resulted in plastic
pollution and persistence of microplastics in
the environment. The marketability of fast-
moving consumer goods and the need for
packaging materials have continuously
increased the demand for plastics.
Harmful to the Environment

24. CIRCULAR
CREATIVES
A linear economy follows a
straightforward approach to production
and consumption that involves extracting
raw materials from the natural
environment, processing them to produce
market-ready products or final goods,
marketing these goods for consumption,
and disposing of these goods or whatever
derivatives after the end of their product
life-cycle.
Linear economy considers final goods as
disposable materials without
acknowledging that they are created from
finite natural resources. The disposal of
these final goods is followed by the
extraction of raw materials from the
natural environment, which are limited.
Hence, one of the major criticisms of the
linear economy is its unsustainability.
An Unsustainable Model
24

25. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
25
• PLASTIC PACKAGING
There are countless purchase products
available in supermarkets that are
packaged in plastic and are part of our daily
routine, food and home: from chocolates,
to water bottles, chewing gum, cleaning
products etc. Whenever possible, prefer
cardboard or glass packaging and, in all
situations, separate waste and dispose of it
in recycling containers.
Examples of linear economy

26. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
26
• FAST-FOOD, FAST-FASHION,
FAST-EVERYTHING
Everything fast is designed to generate more and
more consumption and, therefore, is part of the
linear economy concept. The idea is to buy in
quantity and pay little at a time, but the truth is
that the life cycles of fast products are reduced,
and this is a characteristic that increases
the need for consumption. Examples: fast
food with cheap hamburgers full of packaging,
straws, etc.; most of the clothing and accessories
stores that we see in advertisements and
shopping centers; trade in products and goods for
the home at reduced prices and less durability.
Examples of linear economy

27. CIRCULAR
CREATIVES
• Some of the consumption habits that
are part of and could be good examples
of the linear structure.
• Disposable diapers: They are produced,
sold, consumed and discarded. In the
first three years of life, each baby uses
an average of six thousand diapers and
each one will need 450 years to
disappear from the environment. Not
just disposable diapers but also sanitary
towels.
• Plastic bags / wrapping items:
Indiscriminate use of plastic bags for
shopping, which until recently were not
charged to customers and were offered
without any kind of
control. Unnecessary amount of gift
wrapping material on birthdays, Easter,
Christmas. All of these are ‘Waste’.
Examples of linear economy
27

28. CIRCULAR
CREATIVES
Circular
Economy
28

29. CIRCULAR
CREATIVES
A circular economy is an economic model designed to
minimize resource input, as well as waste and emission
production. Circular economy aims to reach the
maximum efficiency in the use of finite resources, the
gradual transition to renewable resources, and
recovery of the materials and products at the end of
their useful life. Moreover, it targets to rebuild all
available types of capital, including financial, human,
social, and natural. Essentially, a circular economy
describes a regenerative economic system.
29
Definition of Circular Economy

30. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
30
• Circular economy is an alternative to a linear economy.
• Circular economy is a viable option to achieve high levels
of sustainability without diminishing the profitability of
the business or reducing the number of available
products and services.
• A circular economy provides a systematic shift that
changes the economic system completely.
What is Circular Economy?
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31. CIRCULAR
CREATIVES
31
What is Circular
Economy?
Source

32. CIRCULAR
CREATIVES
1. MINIMIZATION OF WASTE AND
POLLUTION
The concept suggests the minimization of
waste and pollution by reducing damages
from economic activities.
2. EXTENSION OF THE USEFUL LIFE OF
PRODUCTS AND MATERIALS
A circular economy aims to extend the
useful life of the products and materials by
creating the loops of the materials and
products circulating in the economy. The
goal is achieved through the active reuse,
repair, and remanufacturing of the
products and materials utilized in the
economy.
3. REGENERATION OF NATURAL SYSTEMS
The regeneration of natural systems is one
of the fundamental concepts of a (circular)
economy. It enhances natural capital and
creates the necessary conditions for the
regeneration of natural systems.
Principles of Circular Economy
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Source

33. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
33
TECHNOLOGICAL CYCLES VS. BIOLOGICAL CYCLES
A circular economy involves the important distinction between
technological and biological cycles:
• TECHNOLOGICAL CYCLES: involves managing the finite resources. The
resources are extracted and used in multiple economic cycles. This is
achieved through reuse, repair, and remanufacturing of the materials
and resources.
• BIOLOGICAL CYCLES: are concerned with managing the renewable
resources. Biologically-based materials are restored into the natural
systems and regenerated to provide renewable resources. In a circular
economy, consumption occurs only in the biological cycles.
Two Cycles in Circular Economy

34. CIRCULAR
CREATIVES
Main Differences
between LINEAR
and CIRCULAR
ECONOMY
34
03

35. CIRCULAR
CREATIVES
• Linear economy comes before
sustainability, while the circular
economy is based on sustainability.
In the circular economy
sustainability policy is part of all
layers of the economic system.
35
Main differences
between linear economy
and circular economy
Source

36. CIRCULAR
CREATIVES
36
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• Linear model encourages greater
consumption, while circular model reduces
it.
• Linear economy extracts material and
discards waste for every consumption.
Circular model extends the useful life of
materials and products by recovery, sharing,
renting, recycling.
• In linear system there is only some concern
with waste management. In the circular
system, waste is part of business and,
therefore, all layers (social, economic and
political) are attentive and work on waste
management.

37. CIRCULAR
CREATIVES
NESPRESSO: Invested heavily in measures
to transform its waste, such as the capsule
recycling centre. In it, aluminium is
recycled several times and the coffee
powder residue is transformed into
fertilizer.
IKEA: The brand that was born to create
strong stimulus to consumption at a time
when sustainability was a distant concept.
Ikea achieved extra prominence in recent
times, after announcing that it will start
buying used furniture from its customers.
GOLDENERGY: Using and providing
services through renewable energy
sources is circular. Goldenergy invests in
the future of a circular
economy. Therefore, Goldenergy has
committed to 100% green energy and
wants to spread the word about change
entirely.
An Unsustainable Model
37
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38. CIRCULAR
CREATIVES
Circular
Business
Models
38
Source: freepik

39. CIRCULAR
CREATIVES
39
Source

40. CIRCULAR
CREATIVES
A circular business model is a way of
organizing a company's operations to
increase efficiency and reduce
environmental impact. These strategies
are especially popular with companies in
the manufacturing sector. Companies may
use a variety of techniques to become
more sustainable, including reducing
waste, reusing materials, moving to a
leasing instead of sales model and
redesigning their supply chains. These
strategies are only feasible if companies
are able to implement them while
maintaining profitability, making them a
popular choice for businesses that
produce durable and high-value goods.
Defintion of Circular
Business Model
40
Source

41. CIRCULAR
CREATIVES
41
Source

42. CIRCULAR
CREATIVES
42
Creating a circular business model
can have a wide variety of
environmental, social and
operational benefits. These are some
of the primary advantages that
companies can gain by implementing
a circular business model:
• Sustainability
• Innovation
• Efficiency
• Resilience and resource security
• Improved customer relations
Benefits of a circular
business model

43. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
The primary social objective of a circular business model is to create a
more sustainable way of doing business. Many circular business models
encourage the use of renewable energy and the recycling of materials,
which can reduce emissions. Recycling can also reduce environmental
impact by preventing the disposal of used products in landfills and by
reducing the demand for new material extraction. This allows companies
to use less land in their operations and conserve natural resources.
Many circular business models also encourage the use of local suppliers.
This benefits the environment by reducing the need for long supply chains
and by reducing emissions caused by transportation operations. If a
business is looking for a way to reduce its impact on the environment,
implementing a circular business model may be a good first step.
Sustainabiliy
43

44. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
Implementing circular business model principles often requires business
leaders to rethink their approach to commerce. This gives companies more
opportunities for innovation and can help drive new ideas within corporate
leadership. Implementing a circular business model gives companies the
chance to reimagine their operations, which can lead to improvements in
sustainability but can also help them find ways to reduce their costs,
streamline their workflows and reach their strategic goals.
For example, a company may begin collecting its own products back from
customers after use. This allows the company to reduce its reliance on
new materials and suppliers, which can reduce its environmental impact.
This move also allows the enterprise to save money on sourcing raw
materials and increase its overall profitability.
Innovation
44

45. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
Another important benefit is INCREASED EFFICIENCY, or MORE REVENUE AT A LOWER
COST. Reusing materials and recycling used products allows companies to source raw
materials while reducing their procurement costs. Companies may pass these savings on
to their customers.
Companies can gain additional savings by sourcing materials locally resulting in avoiding
import costs, tariffs, high-inventory supply chain costs and transportation costs.
Many companies rely on obsolescence (the idea that old products will fail or become
unpopular). This allows companies to earn revenue by constantly developing and
introducing new products to replace them. Circular business models encourage
companies to increase the lifespan of their products and reuse old products. While this
may reduce revenue, it will also reduce the resources spent on R&D, marketing, new
manufacturing processes and procurement of new materials.
Efficiency
45

46. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
One of the most important benefits that a circular business model can offer is
INCREASED STABILITY and RESILIENCE within a corporate structure. Circular models
encourage companies to reduce their reliance on raw materials and increase the use of
recycled materials. This allows companies to build a reliable procurement system that
avoids variations in the cost of raw materials, which may occur because of conflict,
economic factors or natural disasters.
Companies can also enhance resource security by replacing high-impact materials such
as rubber and cotton with recycled or synthetic materials or with low-impact natural
replacements such as hemp. These materials are often easier to source because they
don't require the same growing conditions. This can also make the sourcing and
transportation process cheaper, more sustainable and simpler.
Resilience and resource security
46

47. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
Customers are becoming more aware of company sustainability practices
and often prefer buying from businesses that mirror their values.
Introducing a circular business model can give you a new approach to
marketing products and enhance your customer relationships. Recycling
old products, offering rental services, building sustainable practices and
offering repairs can help demonstrate that the business had the same
values as the customers, which may lead to increased sales and customer
retention.
Improved customer relations
47

48. CIRCULAR
CREATIVES
Although circular business model has a wide variety of
benefits, it often requires rebuilding operations
completely, which can cause significant challenges.
Some of the primary challenges could be:
• Lack of regulatory support
• Cost
• Risk
• Fashion and Changing tastes
48
Challenges posed by circular
business models

49. CIRCULAR
CREATIVES
LACK OF REGULATORY SUPPORT
In some cases, local governments may not
offer the necessary incentives to make
circular business models a profitable and
sustainable option. To avoid this
challenge, it's important for businesses to
research laws and regulations in their area
that might prevent them from
implementing a circular business model
successfully.
49
Let’s discuss the
challenges in detail

50. CIRCULAR
CREATIVES
COST
Implementing a circular business model
often requires companies to significantly
reorganize every aspect of their
operations, which may introduce greater
costs. When building a circular business
model, it's important for companies to
pair innovation with cost reduction
measures.
50

51. CIRCULAR
CREATIVES
RISK
While circular business models can
positively impact customer relationships,
changing operations on a large scale can
be risky and may lead to a loss of profit. In
these cases, it may be helpful for
companies to implement changes slowly
or test their initiatives in the market
before overhauling their operations.
51

52. CIRCULAR
CREATIVES
FASHION AND CHANGING TASTES
Although reducing reliance on
obsolescence can have a number of
benefits, it may also prevent companies
from adapting to current fashions and
trends. Companies that pursue greater
recycling and longer product lifespans can
maintain relevance by developing new
products that use recycled materials and
sustainable manufacturing practices.
52

53. CIRCULAR
CREATIVES
Elements of
Circular
Business Model
53

54. CIRCULAR
CREATIVES
54
Source
Elements of Circular
Economy

55. CIRCULAR
CREATIVES
Elements of a circular
business model
55
Implementing a circular business
model involves restructuring multiple
parts of a company's operations.
These are the primary elements of a
circular business model:

56. CIRCULAR
CREATIVES
Companies often procure their own used
products from customers or source
materials from other industries. This may
require businesses to organize pre-
processing workflows that separate usable
materials from old products.
56
Recycling
Source

57. CIRCULAR
CREATIVES
Companies look for ways to use fewer
resources and raw materials and view
waste from one process as feedstock for
another process. Some companies also
create partnerships that allow them to
reuse waste from different businesses or
industries.
57
Waste as a resource

58. CIRCULAR
CREATIVES
Increased reliance on renewable energy.
Companies can achieve this by sourcing
materials from local areas and reducing
pollution caused by transportation. They
may also reduce energy use and introduce
green technology in their workplaces.
Companies that are unable to greatly
reduce their energy consumption often
offset their carbon use by investing in
sustainability initiatives.
58
Renewable energy

59. CIRCULAR
CREATIVES
Increase the length of product lifecycles by
designing products to last longer and
optimizing for repair or refurbishment.
One way to pursue this is by removing
obsolescence and building more durable
products. They can also set up repair
programs and encourage their customers
to invest in refurbishment rather than
buying new products. Companies can also
offer refurbished goods to new customers
at lower rates.
59
Extended product
lifecycles

60. CIRCULAR
CREATIVES
Most companies are unable to rely
completely on recycled materials and still
require raw materials. Companies who
want to pursue a circular business model
can mitigate the effects of their
procurement activities by sourcing these
materials more responsibly. This may
include replacing high-impact agricultural
products, sourcing goods from sustainable
local producers, reducing inventory and
shortening supply chains.
60
Responsible sourcing

61. CIRCULAR
CREATIVES
Types of
Circular
Business Model
61

62. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
1) RETAIN PRODUCT OWNERSHIP (RPO)
• Involves leasing products instead of selling them. This can be a good way
to preserve resources and reduce waste while maintaining revenue.
• Not possible with customer goods, such as hygiene supplies, food and
paper products.
• Works best with durable products with high value, like office and home
appliances, furniture, specialized machinery and some electronics.
• Especially true if a product is expensive and may only be used a few
times.
• Allows earning revenue from a product that they might not sell
otherwise.
• May need investing in repair and refurbishment services and may collect
less revenue from each transaction than in a sales model.
Types of circular business models
62

63. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
2) DESIGN FOR RECYCLING (DFR)
• Companies design their products to be reused or create products that
they can easily mine for reusable resources in the future.
• Helps reduce reliance on raw materials, significantly reduces the amount
of waste in its operations and increases efficiency.
Ways to implement DFR strategies into their business model:
• Encouraging their customers to return old products so that they can be
refurbished or transformed into new goods.
• Seeking partners and create symbiotic relationships that encourage
recycling. For example, a company might contribute its waste products
to another enterprise that has the expertise to recover materials and
integrate them into their own products.
63

64. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
2) PRODUCT LIFE EXTENSION (PLE)
• Involves creating durable, high-value products with long lifecycles.
• Reduces reliance on raw materials, lowers energy use, reduces
development and manufacturing costs, and creates a culture of
sustainability.
• Provides opportunities for a secondary market of used and refurbished
goods.
• Enhances the relationship between a business and its customers.
Companies may make fewer sales to each customer, but the reliability
and quality of their products can improve customer retention.
• Shows the customers that they mirror the company’s values, creating a
stronger bond, greater brand loyalty and more referrals.
64

65. CIRCULAR
CREATIVES
The Role of
Business in
CIRCULAR
ECONOMY
65
04

66. CIRCULAR
CREATIVES
• Narrowing principle works well in
linear economy. It is about ‘resource
efficiency’, or ‘doing more with less’.
• Narrowing loops is an essential strategy
in a Circular Economy. But it does not
take into account what happens with the
product after it has been used.
• In the linear economy, many efficiently
manufactured products are thrown away
after only being used once.
• Circular economy tries to retain the value
of products and materials for as long as
possible.
66
Role of Business in
Circular Economy
Source

67. CIRCULAR
CREATIVES
• Circular Economy allows focusing on
issues of resources and how they are
used and managed in a business context.
• There are many resource strategies in the
business context that can address this.
• The aim here is to keep resources and
products at their highest value for as long
as possible and to extend their lifetime.
• One strategy is ‘narrowing loops’. This is
about reducing the amount of materials
needed per product or service.
67
Role of Business in
Circular Economy
Source

68. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
• Products need to be created that have a long life span, and people should be made to
want WANT to keep these products for a long time.
• Building more durable products can increase resources consumption for production,
so there is a trade-off between durability and resource efficiency.
• If products are designed for ease of repair, maintenance, upgradation, refurbishment
and remanufacturing, the extra resource used in production can be offset by the
longer use-cycle of the product.
• Business models need to be developed and value chains to support continuous reuse
over time should be created.
• This is called slowing loops: through the design of long-life goods, product-life
extension and service loops of repair and remanufacturing, the use of products can
be extended or intensified, resulting in a slow-down of resources used.
Slowing loops
68

69. CIRCULAR
CREATIVES
CIRCULAR
CREATIVES
• Out of narrowing, slowing and closing loops, slowing is actually the most important
and hardest strategy to implement.
• This is because it requires not only changing the way the products are designed and
manufactured, but also how these products are used in our everyday life.
• If loops are slowed down, the amount of resources that are put into the loop can be
decreased, and the amount of waste that has to be processed and recycled at the end
can be reduced!
• After many cycles of reuse the loop needs to be closed and recycled.
• Braungart and McDonough in their work on the Cradle to Cradle concept, referred to
separating technical materials from biological materials. When materials are not
mixed, they are much easier to recycle. Most of the clothes we wear are mixes or
blends of different materials, which makes them difficult to recycle.
Waste reduction
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• The start up Re Blend spins new yarn out of these discarded mixed
materials that they then use for new furniture and clothing.
• The need is to be able to separate these materials and reuse them in
their original form.
• Separating materials means, that flows are not contaminated, and
products can easily be dismantled and re manufactured or recycled.
• These strategies of disassembly and reassembly will be instrumental in
closing the loops.
Dismantling and recycling
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71. CIRCULAR
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How to narrow, slow, and close resource loops as distinct Circular
Economy strategies?
• Narrowing loops can be achieved through using fewer resources per
product, and this strategy is aimed at reducing the resource use
related to the product and production process. E.g ‘lean
manufacturing’, where the efficiency of production processes is
constantly optimized, which saves money and environmental impact.
• Another example is lightweighting cars, which saves materials in the
production phase as well as saving on fuel in the use phase.
Distinct strategies
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Instead of focusing on product life extension, businesses can also focus directly on
slowing consumption of products or resources.
A part government funded spin-off from TU Delft experiments with business models to
slow consumption.
• Customers should be incentivized to reduce the impact of home appliances, starting
with washing machines. Consumers pay per wash rather than buying the washing
machine by providing quality washing machines that last a long time and are built to
be reused and recycled.
• By stimulating fewer and lower temperature washes, customers only pay when they
use the washing machine and they pay less if they wash at cold temperatures. The
aspiration is to prove such radical circular business strategies work in the real
economy!
Slowing consumption of products
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73. CIRCULAR
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CIRCULAR
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REMANUFACTURING
This is already being done a lot for medical devices. Used devices are thoroughly
checked and tested for compliance, worn parts are replaced and software is updated to
current standards. This way the life cycle of the product can be extended, which saves
costs for medical facilities, and decreases waste.
CHALLENGING CURRENT CONSUMPTION MODELS
Patagonia launched the Common Threads Initiative to encourage people to consume
less, and instead repair, reuse and recycle clothing. With their ad “Don’t buy this jacket”,
the company was trying to create awareness for ‘slow consumption’. Many people still
did buy that jacket, highlighting the complexity of slowing loops in practice.
Extension of product lifecycle
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74. CIRCULAR
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Can be achieved through recycling, by closing the loop between disposal and production,
for circular flow of resources. In major industries like paper, metals, plastics, recycling
rates are already high.
Value chains and business models should be designed so that the products do not
become a ‘waste’ in the first place, and are instead recovered or recycled.
Can help to reduce the amount of waste that goes to landfills, save on costs for raw
materials, as recycled materials can be used in new products.
• Nike Grind for example makes new sports fields out of old trainers.
• G-Star’s “Raw for the Oceans” turns ocean plastic into new garments, and Interface
• Networks makes new carpets out of old fishing nets. They also work with local
communities to prevent future disposal of fishing nets into the sea.
Closing resource loops
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75. CIRCULAR
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CIRCULAR
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• Some ‘waste to value’ business
models, especially relating to
materials which been landfilled
or dumped in the sea, would not
be necessary.
• Prevent the waste in the first
place, and create continuous
loops of reuse of products and
recycling of materials.
Waste to value
75

76. CIRCULAR
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CIRCULAR
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What might be considered waste in one process can often be a resource
for another. In a perfect world, companies would combine strategies of
narrowing, slowing and closing resource loops in a circular business
model.
• In the food industry, Gunter Pauli’s work on the “Blue Economy”
and creating multiple ‘value cycles’. For instance, mushrooms can be
grown using coffee waste, and in this way coffee waste becomes
‘food’. Salad crops can be fertilized with fish poo through an
aquaponics process, connecting fish tanks to salad beds.
• MUD Jeans that are the first in the world to ‘lease jeans’ to end-
consumers, and their aim is to stimulate a sustainable lifestyle through
clothing reuse and recycling.
Business examples
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77. CIRCULAR
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CIRCULAR
ECONOMIES
Business Model
Strategies
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78. CIRCULAR
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78
To help companies adopt circular strategies that can narrow,
slow and close resource loop, business model innovation is
essential. Business model
• Is a management tool that is used to present the
company’s organizational structure and value creation
processes.
• Describes the organisational and financial architecture
that defines how an organisation converts resources and
capabilities into economic value.
• Describes the core “value creation logic” of a business.
• Consists of different elements that can be innovated to
enable and integrate more circularity, and these elements
can be structured into three value dimensions.
Circular Economies Business
Model Strategies
Click to
WATCH
Click to
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79. CIRCULAR
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• Describes ‘Which value is provided and to who’.
• Describes ‘How value is created and delivered’.
• Describes ‘How value is captured and how this value can be turned into a profit’.
Each of these value dimensions consists of a number of business model elements. Taking
a fictional backpack company ‘Waterproof Bags Incorporated’ as an example, go through
these elements together.
The value proposition dimension consists of three elements, the ACTUAL VALUE
PROPOSITION, the CUSTOMER SEGMENTS and CUSTOMER RELATIONSHIPS. For the
backpack company the main value proposition is that the bags are a 100% waterproof.
The target customer segment is ‘Adventurous Outdoors People’. For customer
relationship the main strategy is co-creation powered by social media, where the
customers are involved in the development of upcoming models.
Value Proposition Dimension
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80. CIRCULAR
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Consists of four elements: KEY RESOURCES AND CAPABILITIES, CHANNELS, KEY PARTNERS,
and KEY ACTIVITIES. So, for the backpack company:
• The key resources and capabilities include the development of new lightweight
waterproof materials.
• Establishing channels with and focus on online sales to support the online community.
• The main partner is a big cycling parcel delivery company to promote the backpacks.
• Their key activities are lean manufacturing and sales.
• The value consists of two elements: revenue flows and costs. The revenue is, income is
from selling the bags. The costs consists of manufacturing, retail, and managing the online
community.
• The value proposition can be a long-life product with low maintenance and costs. This can
be appealing to customers with a high environmental awareness or those who are
bothered by obsolete products. The relationship with customer segments more closer,
and service-oriented by offering a financial reward upon return.
Elements of value creation and delivery
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81. CIRCULAR
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CIRCULAR
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• Value creation & delivery elements can be devised to create and deliver circular offer.
• Operating a circular strategy, requires specific activities, resources, technologies,
capabilities, and partner networks to successfully prolong the life of products and close
material loops.
• Company should aim to shape these elements in a way that it has everything in place it
needs to embed circular practices in their business model. This can include finding
partners with the required capabilities.
• For e.g. partners that can test, certify quality of repaired products, provide discarded
products to be upgraded or reused.
• Value capture elements in a circular business model can be adjusted to generate
additional revenue from selling the same product several times or by capitalizing on the
associated environmental benefits.
• There is also potential to reduce production costs by using cheaper secondary materials
or by avoiding costs for end-of-life disposal.
Value creation and delivery elements
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82. CIRCULAR
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Innovating the elements of a business model can align the core value
creation logic of a company with a circular strategy in a more systematic
way. For every business model, depending on the circular strategies
operated, or the type of product, the business model elements will be
shaped differently. But by paying close attention to how these
elements are shaped and by making sure that they support
implementation of the specific circular strategy, circularity can become a
part of a company’s value creation logic and the barriers can be gradually
removed.
Generally, people associate circular business with “recycling companies or
“reuse shops”, or “car sharing platforms”.
Circular Economies Business Model
Strategies
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83. CIRCULAR
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There are 3 key ingredients that any circular business model should
ideally have.
1. A CIRCULAR COMPANY SHOULD ENGAGE IN SOME FORM OF
CIRCULAR VALUE CREATION
This is at the heart of a circular business model. Circular value creation
means that the business model should include one or more ways to
close, slow or narrow resource loops. Several strategies exist to create
circular value, like recycling, repairing, remanufacturing and reusing, we
can also optimize the utility rate of goods, make products more
resource efficient, or avoiding the use of toxic substances.
So what makes a circular business circular?
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84. CIRCULAR
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CIRCULAR
CREATIVES
2. IT SHOULD MAKE USE OF VALUE PROPOSITIONS THAT ENABLE
CIRCULARITY
A solid value proposition is the second key requirement for a circular
business model, circularity is important, but it also has to be a business,
and without customers there’s no business. And which value proposition
is best really depends on the needs and motivations of your customers. If
customers are interested in a product made from waste materials, then
you could use a circular branding strategy.
Value propositions to enable circularity
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85. CIRCULAR
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This is what FlagBag does for their leisure bags and purses: in the design
they clearly emphasize the origins of the waste materials they use. For
other customers, a premium brand strategy may be more suited. Vitsoe,
for example, produces furniture products that last a lifetime, and they put
the product quality at the center of their value proposition.
Another value proposition strategy that can enable circularity is product-
service offering, where a company delivers the product as a service
instead of selling it directly. The company then still owns the product and
it’s now in their best interest to make sure that it lasts as long as possible,
which makes repairing, reusing, or remanufacturing more important.
Examples of value proposition in circular
business
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86. CIRCULAR
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This strategy is used in “pay-per-copy” models, that allow companies like
Ricoh to manage their copy machines like assets. Other useful value
proposition strategies focus on reducing costs with the customer, like
offering a cheaper product or service than the linear alternative, providing
a platform to share under utilised capacity, or eliminating product stocks
by production on demand. Some companies have also showed that you
can use circular business models to increase business without necessarily
branding yourself as a circular business. Nearly New Office Facilities, for
example, focuses on its customers’ need for affordable office furniture
and a healthy work environment. The fact that they use materials from
old furniture in the manufacturing of new furniture is something many
people may not even notice.
Examples of value proposition in circular
business
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87. Unit 2: Core Circular
Economy Concepts
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88. CIRCULAR
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88
Learning
Objectives
Role of Business in Circular Economy
Circular Economy Business Model Strategies
Path to Circular Economy
Principles of Circularity
Closing the Loop on the Circular Economy

89. CIRCULAR
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Learning
Outcomes
Understanding the Benefits of Circular Economy
Social Impact on Circular Economy
Challenges to the implementation of Circular Economy

90. CIRCULAR
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90
Further Study Material Recommendations
(Unit 2)
Scan the QR code to read
through the reference material

91. CIRCULAR
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Further Study Material Recommendations
(Unit 2)
American Chemistry Council. 2019. “Economic Potential of Advanced Recycling
Technologies in the U.S.” American Chemistry Council. Available online
Benyus, J. 1997. Biomimicry: Innovation Inspired by Nature. Harper Perennial. ISBN: 0-06-
053322-6
Boulding, K. E. 1966. The Economics of the Coming Spaceship Earth. Available via PDF
Ellen MacArthur Foundation. n.d. “What is the Circular Economy.” Ellen MacArthur
Foundation. Available online
European Academies’ Science Advisory Council. 2015. Circular Economy: A Commentary
from the Perspectives of the Natural and Social Sciences.

92. CIRCULAR
CREATIVES
3. THE COMPANY SHOULD BE EMBEDDED
IN A CIRCULAR VALUE NETWORK:
The third key ingredient for a circular
business model, is the value network
surrounding the company.
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Embedding in a Circular
Value Network

93. CIRCULAR
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• Closing, slowing or narrowing resource loops is only possible to achieve
when all the stages of a product life cycle are connected in such a way
that the product and its resources can be kept inside the economy.
• And this requires collaboration between the company and other actors
in the value network. Such collaboration can be set up with customers
or suppliers in the value chain, or with companies, governments, or
civil society in a wider value network.
• Value networks can be set up for many different purposes. A deposit
refund scheme improves the return of goods to the producer.
Value Networks
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94. CIRCULAR
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CREATIVES
• Online platforms can be used to manage the movement of goods in a
network.
• And setting up a value network at a local scale can help avoid the loss
of resources in complex global value chains.
• So, a successful circular business model can be identified by the fact
that it uses a combination of the three ingredients, strategies that
create circular value, strategies that deliver the value to the customer,
and strategies that maximize the value within a circular value network.
Setting up a value network
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95. CIRCULAR
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CIRCULAR
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HOW DOES THE SUCCESS OF A CIRCULAR BUSINESS MODEL DEPEND ON MAKING SMART
COMBINATIONS OF CIRCULAR VALUE CREATION STRATEGIES, VALUE PROPOSITION
STRATEGIES, AND VALUE NETWORK STRATEGIES?
For e.g., a company that produces repairable and recyclable smartphones. While the design
for repair and recycling of the smartphone is a key condition to create circular value, that
circular value is actually only created in the repair shop or recycling facility. Therefore, the
producer needs to find ways to incentivise their customers, to work together with repairers
and recycling companies to make sure the smartphones are repaired when broken, and
recycled when repair is no longer possible. Here are explore some combinations of circular
strategies that make this possible.
The Importance of a Circular Value Network –
An Example
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96. CIRCULAR
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CREATIVES
SETTING UP AN EXTENDED PRODUCER RESPONSIBILITY (EPR) SCHEME IN EUROPE
This is a collective, government controlled mechanism in which producers finance the
collection and recycling of end-of-life smartphones. Although this value network strategy
has been shown to support increased recycling, many smartphones still end up in
consumers drawers at home, as there is no real incentive for them to have their phones
repaired or collected. Also, the producer of the smartphone has no direct benefit of its
design-for-circularity efforts, as there is no direct link between producers and recyclers.
The value of the design efforts, in other words, gets lost.
The Importance of a Circular Value Network –
An Example
Source
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97. CIRCULAR
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Better circular business models can be
designed to solve this problem. For
example, the producer can directly
cooperate with its customers by offering a
discount on new products when an old
smartphone is sent back. The producer can
then re-market the collected smartphones
in other markets or can capture residual
material value by sending the phones to a
recycler.
The Importance of a Circular Value Network –
An Example
Source
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98. CIRCULAR
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CREATIVES
An effective combination of circular strategies to capture all circular value of
smartphones designed for circularity, is introducing “smartphone-as-a-service” as a
value proposition. This allows the producer to keep control over its product during and
after the use phase, and it creates leverage to maximize the reuse, repair and recycling
value of their products. As owner of the products, the smartphone company can engage
in partnerships with repairers and recyclers as key partners in its business model.
Providing information such as product disassembly guidelines or the bill of material, or
jointly organizing reverse logistics, can help these partners to improve their own
activities.
The Importance of a Circular Value Network –
An Example
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99. CIRCULAR
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Through designing ‘circular’ business models,
specific changes in the resource flows should be
seen in our economy. We want to move away from
linear patterns by slowing and closing resource
loops. There is one important characteristic of
business models that slow and close resource
loops. Their value creation logic is designed to create
and capture value from maintaining and utilizing the
embedded value in resources for as long as possible.
One tool that helps in designing business models
that maintain and capitalize on resource value for as
long as possible is the circular business model canvas
which incorporates, value proposition, value
creation and delivery, and value capture.
Circular Business Models
Source
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100. CIRCULAR
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CIRCULAR
CREATIVES
The Closed-loop economy is a process where every
product is fully utilized even after its final use by the
consumer. This economy supports the environment
by fully making use of every product and its
packaging by least wastage and recycling these
products. Reusing recycled products and supporting
sustainability is the main intent of this Circular
Economy or Closed-loop economy.
A closed-loop economy is an economic model in
which no waste is generated; everything is shared,
repaired, reused, or recycled. What would
traditionally be considered “waste” is instead turned
into a valuable resource for the creation of
something new.
Circular Business Models
Source
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101. CIRCULAR
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A closed-loop economy is essentially the result of multiple companies operating on a
closed-loop supply chain. This requires an intelligent re imagining of how products (and
packaging) are designed, manufactured, sold, refurbished, and recycled. At Quincy
Recycle, we have a large nationwide recycling and reuse network, so we are constantly
buying and selling recycled materials for businesses across the nation. When more
businesses join the network loop, more material is saved, and costs are reduced even
further.
Right now, most companies operate according to the linear economy model. Raw
materials are extracted and then supplied to manufacturers for the design and creation
of products. These products are then consumed and disposed of by other companies or
individuals. Most material is wasted, little is saved. Then, this finite process starts over
from square one (as long as there is access to more raw materials).
How the closed-loop economy works
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102. CIRCULAR
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On the other hand, the closed-loop circular
economy is, well, a circle. It has no end, and
therefore it has no waste. After
consumption, the materials are collected
and reprocessed into raw materials that are
ready for manufacturing.
How the closed-loop
economy works
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103. www.circularcreatives.eu
Any questions?
Thank you