What is the circular economy definition and what are its benefits?

Circular and linear economy have different models. The linear economy is based on a “take-make-waste” model that has brought us to where we are now: our oceans choking in plastic detritus, our city air filthy, and facing a climate emergency that threatens to sweep away our way of life.

Instead, the circular economy seeks to compensate for our impact right from the start of the process of making goods or selling services, rather than at the end, when it is probably too late to act. In other words, the circular economy tries to reuse and repurpose items whenever possible, with sustainability built into a product or process from its design phase.

These sustainability differences between a linear and circular economy are inspiring individuals, companies and governments to move from a linear to a circular economy model. 

These five principles of a circular economy are becoming more and more common as companies and individuals respond to the challenges of climate change, like the need to rescue carbon emissions.

The growing awareness of the problems of plastics disposal has been another big driver of adopting circular economy principles and practices.

These principles are guided by the three Rs: Reduce, Reuse, Recycle:

• Reducing the amount of natural resources or raw materials used to make a product calls for innovation in production processes to squeeze out waste.
• Reusing a product by extending its useful life avoids having to send it to landfills or, worse, being dumped into the environment. The reused object can also be transformed into something totally different
• Recycling, which means turning waste and discarded materials into new goods and providing them with a new life, saves energy, prevents pollution, reduces the amount of waste that ends up in incinerators and landfills. This in turn provides economic benefits by creating jobs, and safeguards natural resources.

For businesses, circular economy business models are an opportunity to improve competitiveness, innovation and employment, creating value for the business and its customers. In a world where more and more consumers base their buying decisions on how a product is manufactured, packaged, transported, consumed and disposed of, companies that adopt circular economy models perform better than traditional ones.

Circular economy companies consume a small amount of virgin raw materials (or maybe even none), their inputs are fully recyclable and waste is transformed into materials that can be fed back into the value chain, generating additional revenue streams. 

With their high concentration of resources, capital and people, cities are uniquely positioned to lead the way on introducing circular business models. To assess the degree of circularity of a city, Enel X offers Public Administrations a specific Circular Economy Report, which measures the level of maturity and diffusion of sustainability and circular economy principles within an urban area, assessing key aspects such as transportation, emissions, waste disposal and energy efficiency, and defines a roadmap of steps to improve it.