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What is Circular Economy?
So, when we talk about the economy, it means that we are talking about activities related to production, consumption and management of natural resources.
In traditional economic system it goes like
Natural resources/raw materials à production à consumption à disposal
As we can see this is a linear pattern and open loop, so it is called linear economy. This was the way of economics since the industrial revolution. But now we realize that this linear economy is not a sustainable way to do business.
Linear economy uses virgin raw materials, makes products out of it, the product used by the customers and finally disposed of when it no longer serves its intended function.
This whole process uses virgin raw materials in a very unsustainable fashion, and after use the discarded product either consumes space (in landfills) or pollutes the environment (incineration – air; effluent – water; leachate - soil).
In this entire system, the remaining value of the product and the natural resources (energy, water, raw materials) utilized in its production remains inefficiently utilized and goes into waste. In addition to that, we need more space and resources to treat the vast amount of waste generated.
In order to solve this problem, a new approach has been developed which is known as a circular economy or closed loop system. It is an economic system which tries to
- eliminate or reduce the generation of waste,
- recover and recycle the generated waste
- reduce the input of raw materials,
- increase the resource efficiency,
- enhance the processes involved,
- eliminate the environmental pollution,
- increase the life of products, equipment and infrastructure which means increasing their productivity,
- use of renewable energy.
The World Economic Forum has defined circular economy as “an industrial system that is restorative or regenerative by intention and design.”
Circular economy (also known as Circularity) is a more sustainable approach of doing business. This shift from linear economy to circular economy requires a shift in mindset of each and every stakeholder involved in the entire system.
Some basic principles which provide a framework for circular economy include various concepts such as cradle-to-cradle approach, performance economy, natural capitalism, bio-mimicry, industrial ecology, blue economy, regenerative design, and, both established and new methods of recovery and recycling of waste.
To guide organizations implementing circular economy (CE) strategies in their business, the British Standards Institution (BSI) developed the first circular economy standard "BS 8001:2017 Framework for implementing the principles of the circular economy in organizations” in 2017. It contains a list of CE terms and definitions, core CE principles, and a flexible management framework for implementing CE strategies in organizations.