Our current economy is hardly sustainable and follows a linear model. The core tenets of the linear economy include the wasteful take of resources – make use of said resources, which further generates waste that is then disposed. This vicious practice is detrimental to the environment, which cannot supply the growing populace of our planet with essential services, and naturally leads to strained profitability. 


staircase, window, ceiling


The core ideas of the Circular Economy are the elimination of waste by respect for the social, economic, and natural environment, design, and resource-conscious business conduct. Built on the backbone of these principles, the circular economy has demonstrated to deliver tangible benefits and viability to address the economic, environmental, and social challenges of our days. Sustainability and circular economy (CE) are of growing interest for governments, investors, companies, and civil society. Sustainability envisions a balanced integration of economic performance, social inclusiveness, and environmental resilience, to benefit current and future generations.

characteristics of circular economy

  • Proficiency in the reverse material flow cycle.
  • Elimination of waste from the value chain diminishing resource dependence.
  • Incorporating the attributes of Circular Economy in the R&D phase.
  • Production of higher quality and more durable components.
  • More efficient use of resources in terms of both value and volume.
  • Less exposure to the externalities.


A circular economy is an industrial system that is restorative or regenerative by intention and design. It replaces the end-of life concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse and return to the biosphere, and aims for the elimination of waste through the superior design of materials, products, systems and business models.

Such an economy is based on a few simple principles, as shown in the butterfly diagram. First, at its core, a circular economy aims to design out waste. Waste does not exist, products are designed and optimized for a cycle of disassembly and reuse. These tight component and product cycles define the circular economy and set it apart from disposal and even recycling, where large amounts of embedded energy and labor are lost. Second, circularity introduces a strict differentiation between consumable and durable components of a product. Unlike today, consumables in the circular economy are largely made of biological ingredients or ‘nutrients’ that are at least non-toxic and possibly even beneficial, and can safely be returned to the biosphere, either directly or in a cascade of consecutive uses. Durables such as engines or computers, on the other hand, are made of technical nutrients unsuitable for the biosphere, such as metals and most plastics. These are designed from the start for reuse, and products subject to rapid technological advance are designed for upgrade. Third, the energy required to fuel this cycle should be renewable by nature, again to decrease resource dependence and increase systems resilience (to oil shocks, for example).

For technical nutrients, the circular economy largely replaces the concept of a consumer with that of a user. This calls for a new contract between businesses and their customers based on product performance. Unlike in today’s buy-and-consume economy, durable products are leased, rented or shared wherever possible. If they are sold, there are incentives or agreements in place to ensure the return and thereafter the reuse of the product or its components and materials at the end of its period of primary use.

The famous butterfly diagram of Circular Economy by Ellen Mac Arthur foundation describes Circular Economy as follows: