What environmental benefits can we expect from ‘circular business models’?

The concept of the circular economy is becoming better known and more widely accepted as a business, regional and national goal. At its purest, it is a vision of how the global economy can operate in a regenerative and restorative way through reframing how we use resources. The circular economy takes a systems thinking approach to design out waste and other negative externalities, to preserve and enhance natural capital and to circulate products, components, and materials at their highest level of utility and value.

With growing populations and economies demanding more resources, the world is grappling with unsustainable resource use, with catastrophic environmental repercussions. Humanity aspires to, indeed needs, a vibrant economy – but this cannot be at the expense of the planet. A new type of business is needed which is decoupled from resource use and the negative associate impacts this has on climate change and biodiversity. The Green Alliance has stated that the UK needs to cut resource use by half by 2050 to tackle the climate and nature crisis. The Circular Economy could offer a roadmap to achieving a change of this scale and is now seen as a critical lever for achieving a sustainable future and creating a resilient economy. If sustainability is the end goal, a circular economy is crucial to achieving that goal.

This paper explores examples of circular business models and pulls together evidence to assess how effective these approaches are in achieving positive environmental impacts. We found a mixed picture on the benefits that arise from what might be considered as circular business models, and have identified challenges inherent in how we currently assess the environmental performance of circular business models. This is an area which needs greater evidence and analysis to give confidence that ‘circular business models’ deliver what our planet and societies need urgently from them.