What is the circular economy and why does it matter?

20. June 2022


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.


Why is the circular economy important?

The circular economy is an alternative to traditional linear economies, 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 tonnes of waste a year.

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

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 centre and night school.

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