The Economic Benefits of a Circular Economy

Around the world, production processes tend to operate under a “linear economy” model. This means that we design, create, and send out products with the expectation that their life cycles will end in the landfill. This is sometimes referred to as the “take, make, waste,” model, and it relies on the assumption that the world has access to infinite resources. The linear economy thrives on the consumption of materials, and economic growth is typically tied to the consumption of virgin materials.

As demand rises and natural resources begin to shrink, this linear way of thinking is under threat. In facing this issue, consumers and businesses have to switch their thinking towards renewal and regeneration. Specifically, we must change business models, innovate with new technologies and solutions, and work across industries and sectors.

In fact, as I will show, even more economic prosperity can result from a new kind of economy: a circular economy.

What is a Circular Economy?

The circular economy works to eradicate the need for waste or resource depletion through the intentional redesign of processes and products. Designers must consider the system versus the user in order to understand what happens to the product once it is no longer valuable, and they must continually redesign. This includes reusing materials in production cycles as well as decreasing the need for waste in the product’s natural use.

A circular economy believes that all elements of production have a part to play and can eventually reach a place where they are continuously reused. Core principles of a circular economy include:

Design: Eighty percent of environmental impacts are determined in the design stage. Circular economies demand sustainable design principles and intentionally opting into the use of recyclable, compostable, or consumable materials.
Durability: Creating long-lasting products is crucial to delaying potential waste or energy use that occurs at the end of a product’s life cycle.
Regeneration: It’s important that we source all energy from sustainable sources and work to create and support regenerative systems.
In particular, 80 percent of a company’s greenhouse-gas emissions come from its supply chains, so targeting this process specifically can result in enormous benefits for our environment. In addition, supply chains are the source of 90 percent of a business’s direct impact on our air, land, and water supplies.

Not only does a circular economy model protect our earth’s natural resources and reduce the amount of greenhouse gas in the environment, but it has also been shown to boost economies and profit margins of businesses that adopt the practice.

Economic Benefits of a Circular Economy

Widespread adoption of the circular economy results in increased Gross Domestic Product (GDP) — with a reported $4.5 trillion in economic benefits until 2030. But this does not only provide a general economic boost. Individual businesses that practice a circular economy can also reap the monetary benefits.

Take the consumer goods industry: There is $3.2 trillion worth of materials used in this sector alone each year, yet only 20 percent of those materials are recovered.

The ability to reuse materials in the production of new products instead of sourcing new materials can, in the long run, reduce operational costs. Reusing existing materials also takes away from an industry’s dependency on resources that are otherwise volatile, whether in price or availability.

In a more relational sense, a company can also find themselves in deep trouble if their processes rely on a certain material that can only be sourced from a singular place. This entire company would be jeopardized if any geopolitical or environmental crises made that resource unavailable to them. By gaining control over their resource supply and cycles, companies can become more independent and sustainable.

Finally, the economic benefit of a circular economy extends to the workforce. According to McKinsey & Company, jobs in the recycling and remanufacturing sectors already employ over one million people across the United States and Europe alone.

As the circular economy spurs greater sustainable innovations and production processes, there needs to be jobs to maintain them. The potential for growth in this sector — for both capital and jobs — can only go up.

Examples of Circular Economies

Many sectors are embracing circular economy principles or models. Here are a few examples that are taking Rubicon’s mission to end waste to heart.

Cell Phone Recycling

In the mobile phone market, many manufacturers offer customers refurbished models at lower prices, as well as cell phone swap programs where users can gain credit towards a new device by returning an old one. This facilitates and rewards the direct return of resources back into the manufacturers’ hands and improves brand loyalty and perception. With these recycled materials, companies can then work to either fix old devices or recycle their parts towards new production.

Sustainable Fashion

Over $500 billion worth of value is lost due to clothing underutilization or lack of textile recycling. Sustainable fashion is a movement in response to the harmful ethical and environmental practices in fast-fashion markets. Fast-fashion clothing has a cheap price tag that does not reflect the expensive negative externalities, estimated to be about $192 billion dollars worth annually. Sustainable fashion works to lengthen clothing life-cycles in both consumer use and product quality and reusability through redesign, repair, or innovative business models that rethink ownership. Sustainable fashion promotes longer wear cycles and sources materials from scrapped clothing or fabric.

Cross-Industry Partnerships

When one company’s waste can become another company’s raw material, the circular economy really gets going! One example I have personal experience with is The Plant in Chicago. The Plant is a research and production facility housing a variety of businesses — from a brewery, to a chocolaterie, to a local grocery store — that use each other’s byproducts to create a zero waste facility. The goal of The Plant is to create replicable models for efficiencies that close loops of waste and energy to show zero waste businesses can be profitable and to encourage others to implement these techniques.

Circular Economy Business Models and Solutions

To truly engage with a circular economy model, you must reexamine the current systems your business has in place. Appraise where and when waste is happening, and how you can stop any “leakage.” By redesigning processes to ensure a closed circle of production, you position your business for long-term sustainability success.

To learn more about Rubicon’s work transforming the entire category of waste and recycling, be sure to download our inaugural Environmental, Social, and Governance (ESG) Report.

If you have any questions, or you’re interested in learning more about Rubicon’s sustainability and circular economy offerings, please reach out to Rubicon’s Sustainability team directly at or contact our sales team.

Alyson Wright is a Sustainability Analyst at Rubicon. To stay ahead of Rubicon’s announcements of new partnerships and collaborations around the world, be sure to follow us on LinkedIn, Facebook, and Twitter, or contact us today.

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