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What is the Circular Economy?

A Circular Economy is designed to benefit businesses, society, and the environment. This article explains the key principles.
Three wind turbines out in the open sea.
© University of Central Lancashire

A circular economy is a systemic approach to economic development. It is designed to benefit businesses, society, and the environment. In contrast to the ‘take-make-waste’ linear model, a circular economy is regenerative by design and aims to gradually decouple growth from the consumption of finite resources.

Economic activity within a circular economy

Economic activity within a circular economy builds and rebuilds overall system health. The economy needs to work effectively at all levels – for large and small businesses, for organisations and individuals, locally and globally.

A circular economy is based on three principles:

  1. Design out waste and pollution.
  2. Keep products and materials in use.
  3. Regenerate natural systems.

Removing the negative impacts of economic activity

In terms of designing out waste and pollution, a circular economy seeks to remove the negative impacts of economic activity that damage human health and natural systems.

Such impacts include the release of greenhouse gases and hazardous substances, the pollution of air, land and water. It also includes structural waste, such as traffic congestion.

Designing for maturity

When it comes to keeping products and materials in use, a circular economy involves designing for durability, reuse, remanufacturing and recycling to keep products, components and materials circulating in the economy.

Finally, a circular economy seeks not only to protect but actively improve the environment. It avoids the use of non-renewable resources and preserves or enhances renewable ones, for instance by using renewable energy as opposed to relying on fossil fuels.

Business and government leaders

The circular economy has caught the interest of business and government leaders due to the promises associated with gradually decoupling economic growth from virgin resource inputs, encouraging innovation, increasing growth and creating a more robust economy.

For businesses, a stronger relationship with customers would also likely follow. Importantly, shifting to a circular economy presents benefits to the natural environment. Consequently, by designing out waste and pollution, keeping products and materials in use and regenerating rather than degrading natural systems, the circular economy makes a powerful contribution to achieving global climate targets.

The circular economy will also benefit individuals in terms of increased disposable income and improved living conditions, with associated health impacts.


The Ellen MacArthur Foundation (2017). The Circular Economy in Detail. Available at:

© University of Central Lancashire
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