Ethical Investing 101: Understanding The Basics of a Circular Economy

The world of business is changing at a rapid pace. People are becoming increasingly aware of the impact that businesses have on the world around them and are demanding more from companies. 

Customers now understand that their purchases directly result in the actions that a company takes, and they’re willing to spend their money accordingly. This has led to a new movement focused on consuming responsibly and a principle called the circular economy. 

What Is The Circular Economy

The circular economy is essentially a framework for designing business processes in order to reuse materials and effectively dispose of waste. It is also known as the closed-loop economy, which refers to a system that closes the conversion process by recapturing raw materials and reusing them again in production, rather than sending them to landfill or an incinerator after initial use.

An increasingly common view among experts today is that we are facing a “third industrial revolution” — one that will see us move away from the linear “take-make-dispose” model of production that has been with us for over 200 years and towards something more sustainable. 

The question is: what exactly does this look like? How can businesses adopt principles of a circular economy to protect our planet? Let’s take a closer look at what the circular economy means, its principles, benefits, examples, and why it matters to you.

Key principles of a Circular Economy

There are many elements to a circular economy, but the following key principles are essential: 

Designing Out Waste

Designing out waste is the most fundamental principle of the circular economy. Waste is seen not as a byproduct of production but as a resource in itself (which can be regenerated or repurposed). 

Source Reduction

Reduction at the source of materials and the use of renewable feedstocks (raw materials) are key. Raw materials are treated as a valuable asset and not an expense. 

Using Closed Loop Production

Production takes place within a closed loop, with all byproducts/wastes being reused or repurposed within the same production cycle. 

However, the circular economy concept is about more than just recycling, although that is a key part of it. It is about designing products, production processes, and distribution chains, with the goal of minimizing the “net” impact on the natural environment — taking into account both the emissions and the amount of resources it takes to produce a product.

Why Does a Circular Economy Matter?

A circular economy is a vision of a future in which we have both sustainable production and consumption practices, and a closed loop for the materials we use. As such, a transition towards a more circular economy will help to secure basic materials and energy supplies, promote innovation, and create jobs and growth. 

It will also contribute to the fight against climate change, reduce the pressure on natural ecosystems, and improve resource equity.

Productivity would increase as a result of a shift to more efficient resource use, greater use of automation, and the use of new technologies. This will eventually lead to the creation of more jobs and growth in green industries. 

Better resource management from a circular economy would help to ensure current and future generations have access to a sufficient quantity and quality of natural resources. With more efficient resource utilization comes reduced pressure on natural ecosystems

To Sum It Up

The transition towards a circular economy is already underway, with businesses and governments recognizing the importance of this new model of production and consumption. 

Achieving a circular economy is not a simple matter of applying “green” principles to business as usual. It requires fundamental changes to the way we think about the production and consumption of goods.