Training kit

Circular economy

Module 1 - About Circular Economy

In this chapter, the objective is to present the fundamental aspects of the Circular Economy, explore its definition, key concepts, and more effective strategies. By understanding these essential components, it is possible to gain a simple and clear understanding of Circular Economy principles.

A) The challenge

Since the Industrial “revolution”, mass production of products has had a huge impact on the environment and people. The economy started to be based on a linear model, characterized by a “take-make-dispose” approach: extracting natural resources and producing a variety of goods, most of which eventually turned into waste.

The linear economy causes several environmental problems, as it needs to take into account the limits of the planet, while the natural resources (on which we depend) are finite. The massive extraction of materials and associated production of waste causes immense pollution and creates significant pressure on ecosystems. This puts the provision of essential ecosystem services at risk, such as the quality of soil, air and water.

The circular economy model is a sustainable alternative to the linear economy and intends to solve the associated environmental problems.


Linear Economy model


Different economic models and their paths


Circular Economy and its stages in relation to raw materials by Circular Economy Portugal.

B) Goal and Definition of Circular Economy

The goal of a Circular Economy is to decouple economic activity from natural resource extraction and to maintain economic development while respecting planetary boundaries. Another key objective of a CE is to improve environmental quality and thus contribute to ecological regeneration (incl. biodiversity protection), which is essential for healthy ecosystem services that our societies depend on. This requires a zero-pollution approach and designing out any harmful substances from products and processes.

Circular Economy is a broad concept and there are several definitions. “An economic model in which resource input and waste, emission, and energy leakage are minimized by slowing, closing, and narrowing material and energy loops” (Geissdoerfer et al, 2017).

In other words: in a CE, the extraction of raw materials is reduced, resources are kept in use longer and waste is prevented and valued as much as possible.

The transition to an EC requires a structural change in all sectors of society. Some of them have an important role, such as rethinking product design, better-structured business models for sustainability and more efficient public policies are some examples. Important agents in this transition are, therefore, not only companies and organizations but also policymakers, educators, social innovation agents, financial institutions, investors, academia and consumers.

Key Circular Principles

Minimize resource use and extraction

Organizations should aim to reduce unnecessary resource use and extraction by optimizing material inputs in production processes. This involves refusing, rethinking, and reducing resource inputs, focusing on performance-based, product-service systems, sharing models, and dematerialization.

Keep products in use as long as possible

Organizations should prioritize keeping products in use for as long as possible, maintaining their value. This involves circular design principles, such as durability and the ability to reuse and repair. Implementing product-service systems for refurbishing, remanufacturing, or repurposing also contributes to extending the useful life of products.

Close material loops

All products should be designed to take into account the possibility of recycling. When repair, reuse, or other circular strategies are no longer feasible, the materials used in products/components should be recovered through circular recycling. This process ensures that the quality of materials is maintained or improved, allowing them to replace virgin materials instead of being downcycled into lower-quality products. However, for recycling to be effective, the use of dangerous and environmentally harmful substances must be avoided from the start.

Management of the ecosystem

The circular economy, as a part of sustainable resource management, aims to prevent pollution resulting from production and consumption activities to ensure the preservation of environmental quality. In a circular economy, organizations have a responsibility to actively safeguard ecosystems and invest in ecological regeneration, improving biodiversity, and restoring ecosystem services to undo any damage and promote overall environmental improvement.

5. Create lasting and shared value

Circular strategies provide economic benefits through cost savings and the valorization of residues, while also delivering environmental and social advantages such as job creation. However, a circular economy differs from conventional economic growth models, aiming for long-term and widespread societal benefits. Instead of just focusing on the economic flow, it measures societal wealth, including natural, cultural, human, and manufactured resources, with growth reflecting the improvement and increase in the quality and quantity of these actions.

The Butterfly Diagram of the Circular Economy, presented below, provides a concise summary of how resources are managed within the circular economy model. It visualizes two interconnected loops: the biological cycle and the technical cycle. The biological cycle involves returning organic materials back to the environment through natural processes such as composting. The technical cycle focuses on reusing, repairing, remanufacturing, or recycling materials and products to minimize waste and conserve resources. The Butterfly Diagram highlights the significance of closing these loops and creating a continuous flow of resources, leading to a more sustainable and circular economy.


Butterfly diagram by Ellen Mcarthur Foundation

C) Circular Economy Strategies

The circular economy is a system of production and consumption that promotes the sustainable use of resources, in closed cycles energised by renewable sources, regenerating ecosystems and ensuring social progress.

There are some “R”s of circular strategies that help organizations make their processes more sustainable, rethink their business model, avoid excessive resource consumption, and be more effective at maintaining value. These strategies often complement each other and form an approach to achieve circularity and unleash the full potential of a sustainable, regenerative economy.

In the following table we can identify the different strategies, their meanings and the stages they fall into when considering a more circular or more linear economy, depending on the raw material.


R´s strategies by Circular Economy Portugal


R´s strategies by Circular Economy Portugal