The Drive for a Circular Economy

Technology is at the forefront of the economy as we progress through the 21st century. The circular economy is fueled by advancing technology geared toward making the world more efficient and less resource dependent. The basic principle of a circular economy strays away from a linear economy focused on making and disposing of resources. The circular economy focuses on rethinking a product’s life cycle by creating value from waste, efficient resource extraction, manufacturing, innovative design and recycling.

The drive for a circular economy derives from the implications of a linear economy. The linear economy relies on a finite amount of resources that are cheap and readily available. Furthermore, by 2050 an estimated 10 billion people will rely on finite resources, which reinforces the importance of improved business plans and operations today. Businesses focused on the circular economy aim to eliminate waste generated from their business model. Specifically, materials typically thrown into landfills are brought back into the economy by reusing, refurbishing or recycling them.

Several positive economic benefits will result from the circular economy. Reduction in resource spending and dependency for certain countries is a primary benefit. Thus, reduced resource spending leads to higher disposable income. With the circular economy comes a decline in certain jobs such as metal extraction or manufacturing. However, these low wage and unskilled job losses create a demand for skilled labor to focus on closed-loop recycling and biorefining. Keith Knutsson from Integrale Advisors, reiterates that “the transition into a circular economy will bring winners and losers which is essential for investors to consider.”

Overall, the circular economy differentiates between finite and renewable resources. Businesses across the world are expected to evolve their business plans and models based upon a ‘closed-loop’ system. The circular economy brings benefits of increased spending from lower prices and an increase in highly skilled jobs.