What is a Circular Economy?

In our current economy, we take materials from the Earth, make products from them, and eventually throw them away as waste – the process is linear. In a circular economy, by contrast, we stop waste being produced in the first place.

The circular economy is based on three principles, driven by design:

It is underpinned by a transition to renewable energy and materials. A circular economy decouples economic activity from the consumption of finite resources. It is a resilient system that is good for business, people and the environment.

The circular economy is a systems solution framework that tackles global challenges like climate change, biodiversity loss, waste, and pollution.

We must transform every element of our take-make-waste system: how we manage resources, how we make and use products, and what we do with the materials afterwards. Only then can we create a thriving circular economy that can benefit everyone within the limits of our planet.

A way to transform our system

What will it take to transform our throwaway economy into one where waste is eliminated, resources are circulated, and nature is regenerated?

The circular economy gives us the tools to tackle climate change and biodiversity loss together, while addressing important social needs. It gives us the power to grow prosperity, jobs, and resilience while cutting greenhouse gas emissions, waste, and pollution.

How the circular economy works #

Get the basics or explore the circular economy in detail.

The butterfly diagram: visualising the circular economy

Explaining the circular economy: re-thinking process

Recycling and the circular economy: what’s the difference?

Circular economy principles #

Eliminate waste and pollution

Circulate products and materials

Regenerate nature

Natura is South America’s largest cosmetic company and the fifth largest beauty company in the world. Natura has helped conserve 2 million hectares of rainforest.

Circular economy examples #

See the circular economy in action with these case studies from brands, businesses and policy makers.


Working with nature to make food last longer.

Apeel is a company that has come up with an innovative way to eliminate single-use shrink wrap plastic packaging on fresh fruit and veg, while at the same time tackling food waste.

Apeel is a layer of edible, plant-based coating applied to fresh products that mimics and enhances the natural defences of fruit and vegetables. This slows down the two main things that cause spoilage – water loss and oxidation.


Keeping clothing in use to save us money and reduce waste

Through its managed marketplace, thredUP has created a smarter and easier way to buy and sell secondhand clothes.

Natura Brazil

Creating a regenerative economy in the Amazon Forest

“Helping to protect the Amazon is not just about principles or ideals. We’re talking about economic value.” – João Paulo Ferreira, Natura’s chief executive

Natura is South America’s largest cosmetic company. The brand became global when it purchased Aesop in 2012, the Body Shop in 2017, and most recently Avon products, making it the fifth largest beauty company in the world.

Dig deeper #

Circular economy examples

The Circular Economy Show

Podcast: What is the circular economy?

Video series: What is the circular economy? #

Building a Regenerative, Restorative Economy
Basics of a circular economy
Discussing Circular Economy and What It Means
What If We Don’t Buy Products and We Buy Service? Circular Economy Explained

Explore the circular economy by topic #

Biodiversity and the circular economy

This topic area examines how the circular economy can help shape a nature positive future.

Cities and the circular economy

This topic area looks at the role cities play in the transition to a circular economy.

Climate and the circular ecomomy

This topic area looks how fixing the economy can help fix climate change.

Fashion and the circular economy

This topic area explores how the circular economy works for the fashion industry.

Finance and the circular economy

This topic area looks at the role of the financial sector in the shift to a circular economy.

Food and the circular economy

This topic area shows how moving to a circular economy for food will help people and nature thrive.

Plastic and the circular economy

This topic area shows how the circular economy can help keep plastic in the economy.

Source #

What is circular economy?, Ellen Macarthur Foundation