Some say the circular economy is a utopian concept that poses too many challenges to succeed. Others say it’s the key to the future of doing business on a warming planet with waning biodiversity and limited natural resources.

But few would argue with the defining principles of a circular economy. This approach attempts to move the business world from its predominantly linear mode of “extract, use, and discard” to one that retains the value of resources through reducing, reusing, repairing, remanufacturing, recycling, and recovering. In addition to protecting the environment, circular approaches also could enhance business performance.

It’s far from a perfect science. While the circular economy has reached megatrend status, global circularity is in decline, according to the Circle Economy Foundation in its Circularity Gap Report 2024. And while the volume of circularity discussions, debates, and articles has tripled in the past five years, the foundation says that just 7.2% of the global economy is circular, which is the same percentage as the previous year and a drop from 9.1% in 2018.

Still, adopting circular principles to produce and deliver products, services, and systems would address the 45% of emissions caused by industry, agriculture, and land use that renewable energy changes can’t touch, according to the Ellen MacArthur Foundation.

A growing number of businesses and governments are lighting the way forward by working to adopt circular economy models, from the individual product or project level to whole ports, cities, and nations. These efforts can inspire organizations to develop plans of their own.

Example #1: Adidas’s three-loop circular strategy to cut plastic waste

Plastic is a problem. Each day, 2,000 garbage trucks’ worth of the stuff (some 23 million tonnes) are dumped into waterways, polluting rivers, lakes, and oceans and hurting ecosystems. Recognizing its role in the overabundance of plastic in the world, athletic apparel giant Adidas set a goal to reduce its contribution to plastic waste through what it calls a “three-loop” strategy: recycle, reuse, and regenerate.

Adidas now uses more recycled materials, such as Parlay Ocean Plastic, which is created from upcycled plastic waste intercepted from beaches and coastal communities. To improve reuse, it designs products that can have multiple lifecycles, such as its 100% recyclable performance running shoe, whose materials can be reused to make another pair with zero waste. And to encourage regeneration, the company uses more biodegradable materials that can disintegrate naturally.

Takeaways:

• The first step is admitting the problem. Adidas recognized where it plays an outsized role: plastic waste.
• Next, define the solution. Adidas defines circularity as “maintaining the value of products and materials at their highest level for as long as possible,” which is in line with the UN Environmental Programme's report on sustainability and circularity in the textile value chain.
• A singular goal can heighten focus. By targeting plastic reduction, Adidas cemented an in-depth, multifaceted plan.

Learn more:

Adidas explains its commitment to ending plastic waste through innovation and partnerships.

This YouTube video highlights the company’s sustainable Stan Smith shoe.

The UN Environmental Programme’s Sustainability and Circularity in the Textile Value Chain - A Global Roadmap report inspired Adidas’s approach.

Example #2: Denmark brings circularity to housing

Buildings are responsible for 39% of global energy-related carbon emissions. Nearly one-third of that comes from operational emissions (heating, cooling, and power) and the rest from construction and materials. A 60-unit Circle House in Arhaus, Denmark, aims to illustrate how to reduce those emissions by becoming the first public housing project designed using circular principles.

The DKK 9.9 million Circle House project (equivalent to USD $1.46 million) will serve as a real-life demonstration of what’s possible when circularity is integrated into construction and architecture approaches. (DKK 6.9 million, or USD $1.02 million, was footed by the Danish Environmental Protection Agency.)

The primary directive for the architecture firms working on Circle House was to plan for disassembly – to build buildings designed to be unbuilt. They based their work on principles for designing for deconstruction and identifying materials as laid out in the EU’s Circular Economy Principles for Building Design. The housing units can be dismantled so that the vast majority (90%) of the materials used can be reused with limited loss of integrity.

Takeaways:

• Less does more. The buildings are assembled with just six demountable pieces: two different wall elements, two beam lengths, and two deck lengths.
• Choose less impactful materials. Cement was chosen over timber, but even its use is limited to lessen the project’s CO ₂ footprint. Facades are made of cork and old newspapers, insulation of eelgrass and granules, and flooring underlay made from used car tires.
• Reduced emissions are a circularity byproduct. Eliminating waste, sharing buildings, and reusing and recycling construction materials could reduce CO ₂ emissions from materials used in construction by 38% by 2050, according to the Ellen MacArthur Foundation.

Learn more:
Circle House was designed based on the EU’s Circular Economy Principles for Building Design. Vankunsten Architects offers a peek at the design elements.

Concrete Centre, a London-based construction advisory organization, explains how precast concrete components can be configured and reconfigured.

Example #3: Philips’s “use less, use longer, use again” principles

It may seem counterintuitive, but the healthcare industry is one of the largest producers of CO₂ emissions – even bigger than aviation or shipping. Philips, a provider of medical solutions and consumer devices, wants to accelerate the adoption of circular approaches by its customers while also mitigating the impact of its products on the environment.

In the near term, Philips set some ambitious targets for 2025: generate 25% of its revenue from products, services, and solutions that contribute to circularity; offer take-back options for all of its professional medical equipment; and embed circular practices at its sites, sending zero waste to landfills.

Creating circularity principles can pave the wave for circular business models. For Philips, those principles are “use less, use longer, use again.” The goal is to maximize the lifetime value of products and minimize materials consumption and waste. To that end, Philips is embracing circular product design, smart digital solutions, new service models, and end-of-use solutions for materials and products.

Takeaways:

• Go deep for impact. Robert Metzke, global head of sustainability at Philips, explains: “We need to design circular systems that respect the constraints on the planet’s resources. This requires collaboration across the value chain, a deep understanding of material flows, and a focus on what truly creates value for our customer.”
• Close the loop. By next year, Philips will offer responsible take-back options for all of its professional medical devices, either as a trade-in offer or an as-a-service–based customer request. When feasible, the products will be refurbished.
  The upside of returns: products can become part of the Philips Circular Edition portfolio, giving customers like-new, lower-cost options. For those that can’t be refurbished, the company recovers as many parts (to service older systems) or raw materials (which are recycled) as possible.
• Learn once, apply twice. Philips now offers refurbished preowned consumer products, such as the refurbished Shaver Series 5000, giving everyday items second lives as well.
• New business models bear circular fruit. Philips has shifted to product-as-a-service offerings for some of its solutions, using periodic, usage-based, and outcome-based contracts. This approach offers customers cost savings, risk reduction, and smart asset management.
  The company’s Lumify with Reacts portable ultrasound subscription gives users access to transducers, an app, and an online ecosystem. With the Lumea Select Try & Buy model, Philips retains ownership of the Lumea Prestige IPL hair removal product. After a customer is finished with it, the product can be returned and processed for use by another customer.

Learn more:

In this blog, the Philips global head of sustainability explains the company’s shift from linear to circular business.

Read how Philips’s first product-as-a-service – lighting – paved the way for a circular business model.

The Ellen MacArthur Foundation explains how and why Philips is “embedding circularity into the DNA of the company.”

Example #4: IKEA’s full value chain approach

While the Swedish home goods powerhouse might seem a poster child for disposable consumption, IKEA has long espoused a more-with-less ethos, introducing its first environmental policy in 1991. Today the company is integrating circular changes, which requires “a massive rebuilding of systems, processes, and operations from the ground up,” according to Connor Hill, the circular & sustainable living manager at Ingka Group, a holding company that is the largest IKEA franchisee in the world.

To date, IKEA has assessed more than 9,500 products for improved circularity, with a goal of using only renewable or recycled materials by 2030. Its well-known BILLY bookcase, for example, was redesigned to reduce plastic and to use mostly renewable materials. Snap fittings in lieu of nails make assembly, disassembly, and repair easier, extending its lifecycle.

The company also encourages customers to maintain or upgrade purchases rather than disposing of them. Its spare assembly parts service has provided more than 24 million nuts, bolts, and screws to help customers do just that.

IKEA also offers a circular product design guide and an interactive tool to assess the circularity of furniture, textiles, and home accessories. Its Buyback & Resell service gives customers the option to return used items they no longer want and receive store credit for them. These items are then resold in the company’s “second-chance” area. The program was used by 211,600 customers in 2023 – 50% more than the year before.

IKEA is also addressing food waste in its cafés (the company runs one of the biggest restaurant chains in the world). Its AI-enabled Winnow tool is used across 400 locations to identify waste and optimize food systems.

Takeaways:

• Circularity begins with product design. IKEA ensures that parts and materials can be reused, refurbished, recycled, or remanufactured.
• Consumers want businesses to take the circularity lead. Two-thirds of respondents to IKEA’s People & Planet Consumer Insights and Trends 2023 survey said they expect businesses to reduce climate change, and 83% expect businesses to protect and restore nature.
• Companies can play a big role in encouraging circular consumer behaviors, as IKEA is doing with its furniture buybacks and recycling. “It’s not enough to educate consumers to adopt circular behavior patterns,” said Marcus Engman, chief creative officer for Ingka Group, IKEA Retail, at the London Design Festival’s circular design panel. “They also need the facilities and infrastructure to actually behave with a circular mindset.”
• Circular results aren’t always linear. IKEA’s efforts to reuse more materials has decreased overall waste but has also made it difficult to improve its recycling rate (which has held steady at 76% over the past three years) in order to reach net zero emissions by 2050.

Learn more:

Dig into the details of IKEA’s circular agenda.

IKEA’s full value chain approach to circularity to Sustainability Magazine.

IKEA is a force behind creating a more unified global circular business framework as a member of PACE (Platform for Accelerating the Circular Economy) and contributor to the World Business Council for Sustainable Development’s Global Circularity Protocol.

Example #5: The Port of Antwerp Bruges takes an ecosystem approach

The Port of Antwerp Bruges is the second-largest port in Europe, with more than 300 liner services and 800 destinations. Its goal of being a climate-neutral port by 2050 hinges on a circular business model for the port area. But its ambitions are much greater as it works with port customers, research institutions, and others to broaden the impact.

Port leaders are working with companies in the port to make more sustainable use of natural resources. One focus is working with industry to reuse raw materials as the basis for new chemical processes and products – a.k.a. “circular chemistry.” One such application involves turning oil into plastic granules that can be used in the medical and energy industries or for packaging.

The port is also working with large chemical companies to develop carbon capture in empty North Sea gas fields, with an aim to capture half of the 18 million tonnes of CO2 the port emits per year and to potentially reuse those gases for manufacturing production in the future. And a two-hectare innovation zone will host pilots related to energy transition and circularity.

Takeaways:

• Partner with customers to multiply the impact. The port is not only introducing circular concepts itself but also offering circular opportunities to its user base. “As a world port, we want to play a pioneering role in the transition to a circular economy, both within our own organization, on the port platform, and beyond,” says CEO Jacques Vandermeiren.
• Tap external expertise. The port is working with the University of Antwerp on its water exchange mapping project to determine which companies in the port can reuse or exchange water during dry months.
• Apply circularity to less obvious opportunities. The port created an 800-meter circular bike path that involves innovative water absorption and resistance features and the reuse of recycled plastic to cut CO₂ emissions.

Learn more:

The Port of Antwerp Bruges outlines its array of circular efforts.

Look at some of the newest companies taking up residence in the port’s NextGen District.

The UN describes the Belgian port as a pioneer among sustainable ports.

Example #6: The Netherlands looks to reduce the entire country’s environmental footprint

The government of the Netherlands is working toward a circular economy for the entire country; it introduced its “Circular Economy in the Netherlands by 2050” program back in 2016. The aim is to reduce the material footprint of the Dutch economy in large part by using products and raw materials more sparingly.

The most recent updates to the country’s program focuses on four areas of action: reducing raw materials usage; using more sustainably produced, renewable, or widely available raw materials; extending product life; and implementing high-grade processing for recycling materials.

Takeaways:

• National circularity is an audacious aim, but smaller steps make it possible. While the overarching plan is to create a waste-free economy by 2050, a near-term goal is to use 50% fewer minerals, metals, and fossil carbon resources by 2030.
• Circular economy models are always evolving. The Dutch government updates its program every year in line with the latest developments and advances.
• Recycling is not enough. Circular design is a force multiplier to address waste, pollution, and energy usage. The Dutch plan aims to reduce and substitute primary raw materials through “circular flows” of reusable primary, secondary, and sustainable bio-based raw materials.

Learn more:

The Netherlands government has issued the National Circular Economy Programme 2023-2030 report.

The London-based advisory firm Products of Change explains how the plan will help the country transition away from linear resource use.

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