An infographic showing how a circular economy works

How the circular economy can help combat climate change

  • In a circular economy, products can be used again and again.
  • This reduces our use of precious raw materials and cuts CO2 emissions.
  • Circular economy initiatives include the Circulars Accelerator, an innovation program run in collaboration with the World Economic Forum.

The way we live now is using 60% more resources than the Earth can provide – and creating too much waste, according to experts.

Switching to a circular economy is widely considered to be the way forward.

What is the circular economy?

In a circular economy, things are made and consumed in a way that minimizes our use of the world’s resources, cuts waste and reduces carbon emissions. Products are kept in use for as long as possible, through repairing, recycling and redesign – so they can be used again and again.

At the end of a product’s life, the materials used to make it are kept in the economy and reused wherever possible, the European Parliament explains.

An infographic showing how a circular economy works

The circular economy could unlock $4.5 trillion of value by 2030.

Image: European Parliament

Why is the circular economy important?

The circular economy is an alternative to traditional linear economy, where we take resources, make things, consume them and throw them away. This way of living uses up finite raw materials and produces vast quantities of waste.

For example, the European Union produces more than 2.5 billion tons of waste a year.

Extracting and processing raw materials impacts the environment and increases energy consumption and CO2 emissions.

A circular economy could unlock $4.5 trillion of value by 2030, a report by Accenture estimated.

What changes could make the world more ‘circular’?

Consumers, businesses and politicians all need to make changes.

Examples are set out in The Circularity Gap Report, an annual document on the state of the circular economy, launched at the World Economic Forum’s Annual Meeting in Davos.

Ideas to create less emissions include adopting a plant-based diet and buying food locally, as well as flying less often and sharing vehicles.

Homes, offices and other buildings can be designed to have multiple uses. For example, an office space that is also a community center and night school.

It should also be easy and affordable to repair products, such as a mobile phone with an old battery.

Is recycling part of the circular economy?

Recycling involves converting waste materials into new materials and objects. This process itself uses energy and creates emissions, so can still contribute to global warming.

In an ideal economy, products are redesigned so they last through several life cycles – rather than being immediately circular recycled.

This can include refurbishing and redistributing products.

How can we build a circular economy?

There are a growing number of circular economy initiatives and technologies already underway.

Examples include the Circulars Accelerator, a six-month program run by UpLink, the World Economic Forum’s innovation crowdsourcing platform, to help circular economy innovators scale their ideas. In 2022, 17 start-ups are taking part in the programme.

They include Aquacycl, an American company that generates electricity from untreatable waste water; Done Properly, a company in Chile developing sustainable food ingredients and Green Mining, a company in Brazil that recycles consumer packaging.

Scale360° is another Forum circular economy initiative to help technologists, political leaders and entrepreneurs change how products are made and consumed. In Germany, for instance, a campaign is underway to educate consumers on the environmental impact of ‘white goods’ such as fridges and washing machines.

Other companies driving circular economy innovation include Swedish denim brand, Nudie. It offers a lifetime repair service on its jeans, and says it repaired more than 60,000 pairs of jeans in 2019.

The World Economic Forum has created a series of initiatives to promote circularity.

1. Scale360° Playbook was designed to build lasting ecosystems for the circular economy and help solutions scale.

Scale360° Playbook Journey

Image: Scale360° Playbook

Its unique hub-based approach – launched this September – is designed to prioritize circular innovation while fostering communities that allow innovators from around the world to share ideas and solutions. Emerging innovators from around the world can connect and work together ideas and solutions through the UpLink, the Forum’s open innovation platform.

Discover how the Scale360° Playbook can drive circular innovation in your community.

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2. A new Circular Cars Initiative (CCI) embodies an ambition for a more circular automotive industry. It represents a coalition of more than 60 automakers, suppliers, research institutions, NGOs and international organizations committed to realizing this near-term ambition.

CCI has recently released a new series of circularity “roadmaps”, developed in collaboration with the World Economic Forum, the World Business Council for Sustainable Development (WBCSD), McKinsey & Co. and Accenture Strategy. These reports explain the specifics of this new circular transition.

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3. The World Economic Forum’s Accelerating Digital Traceability for Sustainable Production initiative brings together manufacturers, suppliers, consumers and regulators to jointly solutions and provide a supporting ecosystem to increase supply chain visibility and accelerate sustainability and circularity manufacturing and production sectors.

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