How Circularity Helps Businesses Reduce Their Carbon Footprint—and Cut Costs
Reducing carbon emissions isn't just about switching to renewable energy or improving energy efficiency. While these are important and tend to be amongst the first steps that companies undertake, a significant portion of a company's emissions comes from how it uses materials—from raw material extraction to product disposal. That's where circularity comes in.
The circular economy aims to keep materials and products in use for as long as possible by reducing the amount of materials used, reusing, repairing, remanufacturing, refurbishing and recycling. All these strategies minimise waste and demand for virgin materials and lower carbon emissions across the supply chain. For businesses, it's not just a sustainability strategy to reduce their carbon footprint—it's a way to cut costs, improve supply chain resilience, and meet growing customer expectations.
Let's explore how circularity can help businesses reduce their carbon footprint with real-world examples of companies already making it work.
1. The Link Between Circularity and Carbon Emissions
Most traditional business models follow a linear economy: take-make-waste. Companies extract raw materials, manufacture products, sell them, and eventually discard them. This system is resource-intensive, generates high emissions from production and waste, and leaves businesses vulnerable to material shortages and price fluctuations.
In contrast, the circular economy extends the life of products and materials, reducing emissions at every stage:
Using recycled materials avoids emissions from mining and processing virgin resources.
Reusing and remanufacturing products mean fewer new items need to be produced, cutting energy and emissions.
Recycling waste prevents end-of-life processing emissions and keeps materials in circulation.
Example: The aluminium industry is a perfect case study. Producing recycled aluminium requires 95% less energy than making new aluminium from raw bauxite. This massive energy savings translates to lower carbon emissions and significant cost reductions for businesses using recycled content.
2. Circular Strategies That Reduce Carbon Footprint
Adopting circular practices doesn't require an immediate overhaul of your business model. Many companies are making small but impactful changes that reduce emissions and improve efficiency.
1. Extending Product Lifespan
Instead of making, selling, and discarding products, businesses can design to last, repair, refurbish, or remanufacture them to extend their lifespan. This reduces the demand for new production, lowering manufacturing and material extraction emissions.
Example: Caterpillar operates a remanufacturing program in which old components (like engines and hydraulic systems) are returned, restored, and resold. This saves materials, cuts production emissions, and offers customers high-quality products at reduced prices.
2. Closing the Loop with Recycling & Reuse
Using recycled materials instead of virgin materials drastically reduces emissions by avoiding the extraction and preparation of virgin raw materials. It also keeps valuable resources in circulation, avoiding waste and processing.
Example: Patagonia uses recycled polyester from old garments and plastic bottles, cutting its carbon footprint significantly. Compared to virgin polyester, recycled polyester can drastically reduce CO₂ emissions while reducing reliance on fossil fuels.
Beyond recycling, reuse is a critical strategy in circularity. Unlike recycling, which requires breaking materials down to create something new, reuse keeps products and components in their original form for as long as possible—which is even more carbon-efficient.
Industrial reuse: Many companies are adopting reuse in their supply chains. For example, construction firms are now reclaiming and reusing bricks, steel, and timber from old buildings rather than sourcing new materials.
Reusable packaging: Some manufacturers are switching to reusable transit packaging, such as plastic pallets and crates instead of cardboard boxes. This reduces waste and lowers emissions associated with producing single-use packaging.
By prioritising reuse alongside recycling, businesses can dramatically cut waste and emissions while saving money on raw materials and disposal costs.
3. Circularity in Logistics & Packaging
Packaging and logistics often contribute significant emissions—especially when single-use materials and inefficient transport are involved. Switching to returnable packaging and smarter logistics reduces waste and emissions.
Examples:
Loop's reusable packaging model helps brands like Unilever and Nestlé replace single-use plastic with durable, returnable packaging. This eliminates waste and reduces emissions from plastic production.
IKEA's flat-pack design reduces transport emissions by optimising space, allowing more products to be shipped with fewer trucks.
3. Business Benefits of Circularity Beyond Carbon Reduction
Embracing circularity isn't just about sustainability—it's a smart business move. Companies adopting circular practices often see:
Lower Costs – Using fewer raw materials, reducing waste disposal fees, and optimising energy use all cut costs.
Regulatory Compliance – Many governments are introducing carbon taxes, extended producer responsibility (EPR), and stricter environmental regulations. Circularity helps businesses stay ahead of these changes.
Stronger Supply Chains – Relying on recycled or locally reused materials reduces exposure to supply chain disruptions (like raw material shortages and price spikes).
Increased Customer and Investor Appeal—Consumers and investors increasingly favour businesses that prioritise sustainability. A circular approach can boost brand reputation and open doors to new market opportunities.
Moving toward a circular economy is a practical, profitable, and responsible business shift. By rethinking how materials and products are used, companies can reduce their carbo