Squaring the Circular Economy

Strategic Communications

August 6, 2015

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The forthcoming relaunch of the circular economy package will look to improve resource efficiency performances across manufacturing industries and along the whole value chain. The new package will move beyond recycling targets, notably requiring products to be better designed for repair and reuse.

Companies will be held accountable through new binding resource efficiency indicators or product passports. The ambition to develop a deeper and broader secondary raw materials market may have a significant impact on companies’ material sourcing policies and prices.

While the circular economy is a novel policy concept, business already recognises its economic potential. Therefore the circular economy is likely here to stay, yet the pace of Europe’s transition is unknown and will depend on the level of ambition expressed in the relaunched package.

Wasted opportunities

The premise of the circular economy is often misunderstood. There is a perception that it is an ongoing battle between environmentalists and corporations, where one side wants to see the environment preserved and protected and the other prioritises profits. But the circular economy aims to connect both, delivering economic as well as environmental gains.

A circular economy is an alternative to a traditional linear economy (make, use, dispose) in which we use as few resources as possible, keep them in use for as long as possible, extract the maximum value from them whilst in use, then recover and regenerate products and materials at the end of each service life. This means designing products for longevity with repairability in mind so that materials can be easily dismantled and recycled, not to mention the alternative business models that encompass for example the sharing economy or repair-and-maintenance services that an increasing number of manufacturers offer.

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