Content of this unit
Potential benefits for enterprises adopting a circular business model
In terms of environmental benefits, becoming more circular would help avoid emissions, reduce the loss of resources, and ease the burden on global ecosystems. For example, it has been estimated that the transition to a circular economy in the mobility, food, and built environment sectors could lead to emissions reductions of48% by 2030 and 83% by 2050, compared with 2012 level. (Ellen MacArthur Foundation)

As far as the economic benefits and business relevance of the circular economy are concerned the Ellen MacArthur Foundation estimates that the potential net material cost savings in a more circular economy in medium-lived complex products industries (in particular for motorvehicles, machinery, and equipment, as well as electrical machinery) at EU-level could be as high as $630 billion annually, while in the fast-moving consumer goods sector (mainly packaged food, apparel, and beverages) net materials savings at global level could exceed $700 billion annually. Furthermore, technological and organisational innovations underpinning a circular economy would allow Europe’s resource productivity to grow by 3% by 2030, equating to€1.8 trillion total benefits in three areas: mobility, food, and the built environment, including savings in primary resource costs and in costs linked to externalities, such as health impacts from air pollution.

Eliminating waste from the industrial chain by reusing materials to the maximum extent possible promises production cost savings and less resource dependence. Economies will benefit from substantial net material savings, mitigation of volatility and supply risks, positive multipliers, potential employment benefits, reduced externalities, and long-term resilience of the economy.
The business benefits of resource recovery: reduced costs of waste management, increased revenue streams from selling unwanted outputs - diminished environmental impact with lower demand for virgin resources and energy, convenient options for customers to dispose of unwanted products, new interaction points between companies and customers where disposal and new purchases can be combined, deeper insights into how products are disposed.
Beyond cost savings, closing production-to-waste loops and increasing the re-use and recycling of materials would reduce demand for virgin materials and help to mitigate both demand-driven price volatility on raw material markets (e.g., for iron ore) and supply risks. In addition, the uptake of circular business models is found to be associated with great employment potential.

Circular business advantage is where organisations use the idea of the circular economy to create value. Beyond resource efficiency alone, businesses can also create economically-important outputs, not waste therefore, but ‘food’ for other players in the economy, or as deliberately-designed flows for their own business.

In general circular business models can present the following benefits for enterpises:
  • Offer new commercial opportunities
  • Contribute to business growth and sustainability
  • Generate new revenue
  • Transform a business’s relationship with its customers
  • Protect businesses against resource shortages and the rising cost of materials

Adopting circular business models can lead to:

Economic benefits:
  • stronger local market, where you can build stronger partnerships;
  • money flows back in the local community;
  • small communities can be more independent from the external actors;
  • as a small company you can make significantly higher positive impacts on the local economy than just an employee at a big company;
  • lower prices: your main resources are the waste and materials, which others cannot use again, so you can buy them with lower prices;
  • you can create new market for your product or service.

Social benefits:
  • more jobs for the local community members;
  • fair trade jobs 
  • cooperation within local communities;
  • value creation - to give possibility to people to live in a sustainable way;
  • zero-waste and healthier lifestyle.

Environmental benefits:
  • better conditions for the nature;
  • elimination of waste;
  • protection of ecosystems;
  • environmental resilience – reproduction of natural resources;
  • better soil and water quality;
  • less pollution.