Empowering the Circular Economy

At a basic level a circular economy is said to be one that reduces consumption of virgin materials and repurposes the end product, rather than disposing of it. While a more comprehensive definition is clearly needed, this basic formula has been stretched and variously interpreted—some definitions include waste management while others are even synonymous with sustainable development—so that it is no longer entirely clear what the term really means.

In a recent short paper, Definitions of the Circular Economy: Circularity Matters, Professor Frank Figge, of ESCP Business School, and Andrea Stevenson Thorpe and Melissa Gutberlet, of Kedge Business School, consider this problem and come up with a new definition of their own. The value of a good definition of the circular economy, beyond fully explaining the concept, is that it can help differentiate the concept from other related concepts. This is important because to understand how the circular economy can help in achieving environmental sustainability it is important to not only know what it is, but also to see how it can work with other initiatives aimed at sustainability.

Loosely defined as it currently is the authors say “the circular economy is seen as a ‘jack of all trades’ by many businesses, policy makers, and even researchers. It is seen as an ‘opportunity worth billions’ that will bring down resource use to a sustainable level while providing the basis for future economic growth.” They argue that these views are overly optimistic and come from definitions that lack precision and are often too broad or sometimes too narrow.

They also point out that in the real world the ideal perfect circular economy is too impractical to exist in reality; and that sustainability goals are more likely to be achieved by the combined deployment of several concepts of sustainable resource use—of which the circular economy is one. A good definition can promote the circular use of resources by clarifying what the circular economy really is and how it can interact with related sustainability initiatives.

In their paper the authors explain why previous definitions have been deficient and argue that a true definition must meet these four conditions:

1. It should refer to closing resource loops, negating the need for virgin resource use.
2. It needs to mention optimizing rather than minimizing resource flows. In a fully circular system, the outputs and inputs of resources must be the same. Some resource flows might therefore need to be reduced while others might need to be increased to ensure the supply and demand for pre-used resources match.
3. It should consider at least two levels. Resource circularity itself manifests at a higher level (e.g. across a cluster of firms or industries). Supporting such circularity are activities (e.g. recycling, remanufacturing, etc.) which firms engage at a lower level. The circular economy is therefore a multi-level concept.
4. It must distinguish between the circular economy as a perfect ideal type and a realistic imperfect circular economy that delivers sustainability in combination with other approaches.

The authors propose this definition, which is one that meets all four conditions:

“The circular economy is a multi-level resource use system that stipulates the complete closure of all resource loops. Recycling and other means that optimise the scale and direction of resource flows, contribute to the circular economy as supporting practices and activities. In its conceptual perfect form, all resource loops will be fully closed. In its realistic imperfect form, some use of virgin resources is inevitable.”

They say that: “We see the definition we propose neither as the start nor as the end of the discussion on how to define the circular economy. We see it as a mid-way point and as an invitation to researchers to join a discussion that we believe is necessary to leverage the potential that the circular economy can have for the sustainable development of all.”

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Access the full paper: Definitions of the Circular Economy: Circularity Matters, Frank Figge, Andrea Stevenson Thorpe, Melissa Gutberlet. March 2023, Ecological Economics 208:1-2.