Content of this unit
Reasons and benefits why enterprises should consider adopting a circular business model
Watch the documentary Closing the loop below!

The film ranges across three continents and includes commentary from global experts and centres of excellence like the World Economic Forum and the University of Cambridge. Several innovative circular economy cases are featured in it in detail.

Reflect on generic economic, social and environmental benefits of circular economy!

Scarcer resources, increased greenhouse gas emissions, and plastic polluting oceans, etc. These environmental concerns are no longer compatible with our so-called "linear" economy based on extract - make - use - throw. The circular economy, on the contrary, turns waste into new resources to create an extract – make - use – reuse loop. A paradigm shift that is encouraging businesses to completely rethink both their strategies and their production processes. The issue is not only environmental, it is also economic.

The circular economy provides economic benefits for the system. The most important economic benefits in the circular economy are substantial resource savings, economic growth, employment growth, more room for innovation and a change in the demand for products.

Raw material savings
According to recent studies, due to resource recovery, the circular economy has the potential to lead to material savings of more than 70 percent when compared to the extraction of raw materials in business-as-usual models.

Employment growth
A large study by the Ellen MacArthur Foundation, SUN and McKinsey into the effects of the transition to the circular economy on employment, concluded that employment will grow in a circular economy and will be created by an increase in
  • expenses due to lower prices;
  • high-quality labor-intensive recycling and repair work;
  • jobs in the logistics sector by locally taking back products;
  • new businesses through innovations, service economy and new business models.

Encouraging innovation
Circular economy challenges innovative solutions based on a new way of thinking. That means thinking about circular rather than linear value chains and striving for optimizations for the entire system. This results in new insights, interdisciplinary cooperation between designers, producers and recyclers and therefore also in sustainable innovations.

Influencing demand
A final important factor in the economic benefits of a circular economy is the change in and a better understanding of the demand side. How companies deal with their customers and the role they play during their entire life cycle ultimately leads to less use of raw materials, less waste production and changing production.