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Everything you need to know about the circular economy
Reading 8 min
June 18, 2025
Summary
The circular economy is a sustainable economic model that aims to limit waste and reduce environmental impact by promoting reuse, repair, and recycling. Unlike the linear economy, it is based on a closed-loop logic, valuing waste as a resource. It contributes to reducing greenhouse gas emissions and strengthens business resilience.
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What is the circular economy?
Circular Economy: Definition
The circular economy is an economic model that aims to limit resource waste and environmental impact by rethinking how goods are produced, consumed, and disposed of at the end of their life. Unlike the traditional linear model, the circular economy is based on a closed loop logic, where waste from one process becomes a resource for another.
It encourages sustainability from the design stage, promoting reuse, repair, recycling, and the optimization of natural resources. By integrating these principles, the circular economy creates value while reducing pressure on the environment and limiting greenhouse gas emissions. This new economic model is in line with the objectives of ecological transition and carbon neutrality, and represents a strategic lever for companies committed to a responsible approach.
Differences between the circular economy and the linear economy
The linear economy is based on a traditional model: extract, produce, consume, discard. This model, dominant since the industrial revolution, relies on the intensive exploitation of natural resources and generates a significant amount of waste, often unrecovered. It does not consider the end-of-life of products or their long-term environmental impact.
Conversely, the circular economy is part of a sustainable approach. It aims to preserve resources, extend product lifespans, and reduce waste by promoting the reuse, repair, recycling, and recovery of materials. In a circular economy, each product is designed from the outset to be reintegrated into a production or usage cycle, thus limiting losses.
The circular economy is a concrete response to planetary boundaries, the scarcity of raw materials, and climate challenges. For companies, moving from a linear to a circular model means anticipating regulatory changes while strengthening their economic and environmental resilience.
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The 3 main pillars: reduce, reuse, recycle
The circular economy is composed of three fundamental pillars: reduce, reuse, and recycle. These principles guide all actions aimed at optimizing the use of resources and limiting environmental impact.
Reducing means taking action from the product design stage to limit the consumption of raw materials, the energy required for production, and the generation of waste. This principle involves eco-design, energy efficiency, and the reduction of packaging and single-use products.
Reuse means extending the lifespan of products and preventing premature disposal. This includes repair, reconditioning, second-hand sales, and the functional economy (favoring use over ownership).
Recycling involves transforming waste into new resources. At the end of their life, products are collected, sorted, and processed to recover materials (paper, plastic, metal, glass, etc.) that can be used in new production cycles.
By combining these three levers, companies can significantly reduce their environmental footprint while creating new economic opportunities. These pillars are complementary and must be coherently integrated into any circular transition strategy.
Why adopt the circular economy?
Adopting the circular economy addresses major environmental, economic, and societal challenges. Faced with the scarcity of natural resources, increasing waste, and the climate crisis, the circular model offers a sustainable alternative to the traditional linear system.
From an environmental perspective, the circular economy reduces raw material consumption and greenhouse gas emissions. By limiting extraction, extending product lifespans, and recovering waste, it directly contributes to the fight against climate change.
Economically, it fosters innovation, resilience, and competitiveness. Companies that integrate circular strategies anticipate future regulations, optimize their costs (materials, energy, logistics), and create new revenue models (leasing, remanufacturing, functional economy).
Finally, societal-wise, the circular economy encourages the creation of local jobs, particularly in the reuse, repair, and recycling sectors. It also promotes more responsible consumption and raises citizens’ awareness of the impact of their choices.
Which sectors are affected by the circular economy?
The circular economy concerns all sectors of activity, as each sector produces, consumes, and generates waste at different levels. However, certain sectors are particularly strategic in the implementation of circular models.
In industry, eco-design, maintenance, parts reuse, and materials recycling initiatives can significantly reduce environmental impact while generating savings.
The construction and public works (C&P) sector, a major consumer of resources, is also undergoing a transformation. Reusing materials, selective deconstruction, and using recycled materials are at the heart of new practices.
Fashion and textiles are increasingly incorporating circular economy approaches through upcycling, clothing rental, second-hand goods, and the production of recycled fibers. The food industry is focusing on reducing waste, recovering biowaste, and optimizing packaging to minimize its footprint.
Other sectors such as electronics, mobility, distribution, and renewable energy are also affected, with specific challenges related to product sustainability and resource management.
Principles and Strategies of the Circular Economy
The circular economy is based on a set of complementary principles and strategies aimed at transforming production and consumption patterns. It operates at every stage of a product or service’s life cycle.
The fundamental principles are:
- Eco-design: considering a product from the outset to minimize its environmental impact and facilitate its repair, recycling, or reuse.
- The functional economy: prioritizing use over ownership (e.g., rental, sharing), which encourages the design of durable and repairable goods.
- Extending lifespan: through maintenance, repair, reconditioning, or software updates.
- Waste recovery: recycling or transforming waste into secondary resources that can be integrated into new production cycles.
- Local circularity: relocalizing value chains to reduce transportation, boost the local economy, and strengthen resilience.
These strategies rely on tools and indicators such as life cycle assessments (LCA), carbon footprints, and material diagnostics. The goal is to identify concrete levers for action to reduce the environmental footprint while creating value. Thus, the circular economy is not limited to waste management: it invites a complete rethinking of economic models, promoting sobriety, resilience, and innovation. For businesses, these strategies offer an opportunity for sustainable transformation and alignment with new societal and regulatory expectations.
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How to implement a circular economy approach in your company?
- Conduct an initial assessment
The company must begin by analyzing its material, energy, and waste flows to identify sources of waste, opportunities for recovery, and reduction levers. Tools such as life cycle assessment (LCA) or carbon footprints are useful for quantifying impacts.
- Define objectives and priorities
An effective circular economy strategy is based on specific objectives: waste reduction, eco-design, increasing the reuse or recycling rate, etc. These priorities must be integrated into decision-making processes at all levels of the organization.
- Rethink offerings and business models
This may involve implementing new services (rental, repair), modifying product design, or using recycled or bio-sourced materials. The functional economy is an avenue to explore to diversify revenues.
- Mobilize stakeholders
Suppliers, customers, employees, partners: everyone must be involved in the transition. Internal training is essential to raise team awareness and instill new habits.
- Monitor, measure, and adjust
The implementation of specific indicators makes it possible to assess progress, identify bottlenecks, and adjust actions. Continuous improvement is a key principle in a circular approach.
Circular economy and greenhouse gas emission reduction
The circular economy plays a key role in reducing greenhouse gas (GHG) emissions, particularly as part of low-carbon transition strategies. By rethinking how resources are extracted, transformed, used, and recovered, it enables action across all emission scopes defined by the GHG Protocol.
In Scope 1, waste reduction or energy optimization actions can limit the company’s direct emissions. In Scope 2, more energy-efficient choices (renewable energy, reduced consumption) are often integrated into a circular approach. But it is especially in Scope 3, the indirect emissions linked to the entire product life cycle (raw materials, transportation, end-of-life, etc.), that the circular economy reveals its full potential.
By prioritizing eco-design, reuse, repair, and the use of recycled materials, companies reduce their dependence on virgin raw materials, which often emit significant amounts of GHGs. This limits the extraction, transportation, and processing of resources, three highly emitting steps.
Furthermore, by extending product lifespans and reducing the volume of waste sent to landfills or incineration, the circular economy avoids additional emissions while promoting local and short supply chains.
Thus, integrated into a climate strategy, the circular economy becomes a powerful lever for achieving carbon neutrality objectives and effectively contributing to the fight against climate change.
The Limits and Challenges of the Circular Economy
Although promising, the circular economy faces several limitations that hinder its large-scale implementation. The first obstacle lies in the initial costs: redesigning products, adapting production lines, or creating reuse channels can require significant investments, particularly for SMEs.
The lack of structure in collection, sorting, and recovery sectors also limits the effective circularity of certain materials, such as complex plastics or technical textiles. On the regulatory front, legal frameworks are not always adapted to encourage or facilitate circular models, particularly in certain sectors that are still very linear.
Finally, cultural change remains a major challenge. To successfully implement this transition, it is essential to involve all stakeholders: businesses, communities, consumers, and public authorities. The circular economy must not be seen as a simple technical solution, but as a profound transformation of production and consumption patterns. Removing these obstacles is essential for it to become a concrete pillar of the ecological transition.
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