Circular economy

The circular economy is a regenerative economic system that aims to keep resources in use for as long as possible, extracting the maximum value from them while in circulation. Once a product reaches the end of its life, its materials are reintroduced into the production cycle, minimising waste generation and reducing the need to extract new resources. It is the opposite of the traditional linear model of take, make and dispose.

Principles of the circular economy

The Ellen MacArthur Foundation, a leading organisation in circular economy promotion, defines three core principles:

1. Design out waste and pollution: products and services are designed from the start to minimise waste and pollution throughout their life cycle, an approach closely linked to ecodesign and cradle-to-cradle design.
2. Keep products and materials in use: prioritising reuse, repair, remanufacturing and recycling to extend the lifespan of goods and materials.
3. Regenerate natural systems: encouraging practices that restore and enhance ecosystems, such as regenerative agriculture and reforestation.

Benefits of the circular economy

Environmental benefits

• Carbon footprint reduction: by reducing raw material extraction and waste, circular practices lower greenhouse gas (GHG) emissions.
• Conservation of natural resources: decreases pressure on finite resources such as water, minerals and fossil fuels.
• Pollution reduction: limits air, water and soil pollution by avoiding waste and emissions.

Economic benefits

• Job creation: supports new employment in reuse, recycling and remanufacturing.
• Innovation and competitiveness: drives sustainable product and process innovation and reduces exposure to raw material price volatility.
• Cost savings: reusing materials and reducing waste lowers production costs.

How materials flow: recycling routes

The way materials are kept in circulation matters. Closed-loop recycling returns a material to the same product (glass into glass, aluminium into aluminium), preserving its value, while open-loop recycling turns it into a different, often lower-grade product. Both sit within the waste hierarchy, which prioritises prevention and reuse over recycling, recovery and disposal.

The circular economy and the carbon footprint

The circular economy helps reduce the carbon footprint, which measures the GHG emissions associated with an activity, product or service. It contributes to emissions reductions at several stages:

• Extraction and production: reuse and remanufacturing require less energy and raw material than making new products.
• Transport: more local production and consumption models help reduce long-distance transport emissions.
• Waste management: recycling and composting divert organic and recyclable waste from landfill, preventing methane emissions, a potent GHG.

EU policy context

In the European Union, the circular economy is driven by the Circular Economy Action Plan adopted in March 2020 under the European Green Deal. Europe's circularity rate is currently around 12%, and the EU aims to roughly double it by 2030. Key instruments include the Ecodesign for Sustainable Products Regulation (ESPR, Regulation (EU) 2024/1781), whose main obligations and Digital Product Passport requirements start to apply from July 2026, and extended producer responsibility schemes. A further Circular Economy Act, expected to be proposed in 2026, aims to build a single market for high-quality secondary raw materials.

Examples of circular economy in action

• Reusable packaging: return systems for food, beverage and cleaning product containers.
• Circular fashion: durable clothing design, rental platforms and textile recycling programmes.
• Renewable energy: use of renewable energy sources to reduce dependence on fossil fuels.

By implementing circular economy practices, businesses can reduce their environmental impact, especially their carbon footprint, and unlock new opportunities for innovation, efficiency and sustainable growth. At Manglai we help companies measure and manage their carbon emissions, making the circular economy a practical and measurable part of their sustainability strategy. Discover how Manglai can help you.