Nature and Biodiversity

How can we shift to the circular economy?

Tom Szaky
Founder and Chief Executive Officer, TerraCycle
Our Impact
What's the World Economic Forum doing to accelerate action on Nature and Biodiversity?
The Big Picture
Explore and monitor how Future of the Environment is affecting economies, industries and global issues
A hand holding a looking glass by a lake
Crowdsource Innovation
Get involved with our crowdsourced digital platform to deliver impact at scale
Stay up to date:

Future of the Environment

Last month, many Europeans (and those of us in the field of sustainability) were in an uproar over the withdrawal of a popular waste reduction proposal from the European Commission’s 2015 work program. The proposed plan would have established new recycling standards across the EU, pressuring all member-states to divert all recyclables from landfills by 2025 and hit a 70 percent solid waste recovery rate by 2030. Dubbed the “circular economy” package, it could have been one of the first substantial systematic shifts by a government entity to end waste generation and improve a huge region’s recycling infrastructure.

News of the plan’s withdrawal is certainly disappointing, but the media frenzy roused by this announcement gives us the opportunity to revisit a concept that was once familiar only to the most ardent environmentalists and sustainability experts (and evidently members of the European Parliament) — the circular economy. It’s a concept that’s slowly been receiving more attention as of late, but most consumers still seem to be unaware of what it is or its significance.

What is the circular economy exactly, and why should we be trying to make the transition?

What is the circular economy?

While the origins of the term “circular economy” aren’t entirely clear, Swiss architect Walter Stahel is often credited as being a forefather of the concept. In the 1970s, he coined the idea of a “cradle-to-cradle” production structure — simply put, a framework of industry where inputs and outputs of production are valued as raw materials that can be cyclically reused. In this cyclical model, manufacturing waste is valued as a nutrient to production, not a useless output with a negative value.

Stahel’s idea was a reaction to the “cradle-to-grave” production and consumption model that still dominates, which predestines the vast majority of products and resources to landfills and incinerators.

In the linear model, materials are extracted from the environment, processed, and refined, then turned into consumer products that are inevitably disposed of in a landfill or incinerator. This ultimate form of disposal completely abandons the energy spent extracting raw materials and manufacturing products, while simultaneously wasting the refined outputs of the manufacturing process (for example, producing a highly refined plastic only to have it wasted in a landfill). The result is a consumer products industry focused on cheap, endlessly replaceable products, and a dwindling supply of finite resources.

A circular system rejects the linear model outright, favoring quality products and materials that can be reused rather than thrown away. Useless outputs are eradicated, as products would be designed with the intention of being reused in the supply chain and refurbished again for consumer use. Cradle-to-cradle production is just a component of the circular economy, the ultimate goal of which is for products themselves to be reused cyclically. Companies would be responsible for reacquiring post-consumer products, refurbishing them for reuse so no waste is generated and the high-quality materials in the product are maintained. The biggest advantage is that this model systematically eliminates waste altogether — post-consumer and production waste alike.

A sense of urgency, and barriers to entry

The need for such a circular system is more urgent than it might seem. We have a limited bank account of raw materials on this planet, and around the world we’ll be seeing the rise of close to 3 billion additional product-hungry middle-class individuals within the next 15 years. By the middle of the twenty-first century, there will be 9 billion people on the planet.

Without any serious systemic changes, we can’t hope to maintain enough supply to meet that kind of demand.

Besides, we don’t even recycle what would be necessary to start seriously offsetting virgin material dependencies. The U.S. recovers about 35 percent of solid waste generated annually. China’s rate hovers around there as well. Some European countries have recovery rates of around 50 or 60 percent (Austria, Germany, Switzerland, the Netherlands), while others are in the single digits. Many developing regions, especially in parts of South America and Africa, don’t even have a recycling infrastructure to speak of. Making more circular practices feasible starts with collecting the recyclable material we are already generating.

Consumerism and socially ingrained materialism have also been roadblocks to progress, prompting many consumers to develop incredibly wasteful attitudes towards products and otherwise useful materials. The average American, for instance, throws away more than 60 pounds of clothes each year, most of which is not recycled. Products like plastic utensils are even manufactured with disposal as one of its functions. Incredibly cheap products can just be replaced, after all, so there is no real incentive for most consumers to change their habits.

The future of the circular economy

The benefits of circular production models and circular solutions to waste are far too attractive to ignore. Manufacturers would benefit from greater supply chain security, as they would have direct control over their raw material inputs and outputs. Unsustainable raw materials like fossil fuels would be abandoned in favor of renewable ones. With a system in place to properly collect and reprocess a company’s pre- and post-consumer waste, manufacturing costs could also plummet, the savings from which would then be passed on to consumers. Manufacturers would be more mindful the quality of a product as it will ultimately end up being remanufactured or refurbished, favoring the use of highly refined materials with fewer toxins and greater durability. It’s a win for consumers, producers, and the environment.

Still, all of this wishful thinking begs the question, how do we make a circular economy viable? First, we need to seriously reduce our levels of consumption and our demand for disposable products. Nondurable plastics are one of the biggest concerns — the 5 trillion pieces of plastic floating in all of the earth’s oceans should be example enough of that. Lowering demand for disposables in favor of durable alternatives could drastically increase the average lifespan of our products and strength the durable product market.

We also need to begin improving our current recycling infrastructure and developing new circular strategies for waste. One way to facilitate this is through government action; extended producer responsibility legislation, landfill taxes, and state-funded waste management programs are all viable ways to incentivize alternatives to absolute disposal in landfills and incinerators. This could empower and bring jobs to the recycling sector and lead to greater innovation in the industry as a whole.

Circular solutions to waste are also critically important, no matter how limited they may initially be. As an example, my company, TerraCycle, can develop recycling programs for post-consumer waste not typically accepted by municipal recycling programs. In our partnership with 3M, for instance, old tape dispensers and related waste (tape cores, packaging, etc.) are collected and sent back to 3M for reprocessing into new products. It starts with the consumers, who join the recycling program for free and start collecting their tape dispenser waste and packaging at home. Once they have accumulated enough waste, they ship it for repurposing. The program is sponsored by 3M, so shipping is even free for consumers. It’s a small-scale strategy for the time being but shows that there is indeed a method and incentive for companies to start closing the loop.

There are other examples today that show we’re taking steps in the right direction. Renault, the French car manufacturer, already refurbishes and reuses car parts like engines and gearboxes. Most electronics manufacturers already offer take-back programs for their devices, which usually contain valuable metals and electrical components. In San Jose, California, anaerobic digesters are turning the organic waste from local businesses into a form of renewable energy. Imagine if every business had the opportunity to turn their organic waste in energy.

The examples above are relatively small and limited in scope, but they show where the cracks in the current linear system are starting to show. And if the failed EU circular economy package has anything positive to tell us, it’s that political and industrial actors are finally starting to take note of the urgency that we are (and have been) facing on this planet.

This article is published in collaboration with Medium. Publication does not imply endorsement of views by the World Economic Forum. 

To keep up with Forum:Agenda subscribe to our weekly newsletter.

Author: Tom Szaky is the Founder and CEO of TerraCycle

Image: A worker welds steel bars at a construction site in Hefei, Anhui province. REUTERS/Stringer 

Don't miss any update on this topic

Create a free account and access your personalized content collection with our latest publications and analyses.

Sign up for free

License and Republishing

World Economic Forum articles may be republished in accordance with the Creative Commons Attribution-NonCommercial-NoDerivatives 4.0 International Public License, and in accordance with our Terms of Use.

The views expressed in this article are those of the author alone and not the World Economic Forum.

Related topics:
Nature and BiodiversityGeo-Economics and PoliticsEconomic Growth
World Economic Forum logo
Global Agenda

The Agenda Weekly

A weekly update of the most important issues driving the global agenda

Subscribe today

You can unsubscribe at any time using the link in our emails. For more details, review our privacy policy.

Critical minerals demand has doubled in the past five years – here are some solutions to the supply crunch

Emma Charlton

May 16, 2024


About Us



Partners & Members

  • Join Us

Language Editions

Privacy Policy & Terms of Service

© 2024 World Economic Forum