How to Use a Circular Economy Mindset as a Competitive Advantage in Business

As global resource demand increases, businesses are rethinking growth by adopting a circular economy. This approach is designed to eliminate waste, keep materials in use and regenerate natural systems. In many ways, it is a potential response to the question, “How can we grow smarter, not just bigger?”

The need for a shift to adopt this growth mindset is clear. According to the World Economic Forum, only 9% of extracted raw materials for electronics, fashion, food and plastics are reused, and 62% of global greenhouse gases comes from the extraction, processing and production of these goods, putting a significant strain on the planet’s resources. Additionally, in the 2015 book Waste to Wealth, Peter Lacy and Jakob Rutqvist indicated that without a shift in the economy, lost economic growth by 2030 would be around $4.5 trillion. 

Circularity is a closed-loop business model where nothing goes to waste. Unlike the “take, make and dispose” model, circular economic strategies build value from what was once discarded. So reuse, repair, refurbish, remanufacture and recycle are all reinvented as sustainable value regeneration engines of innovation and profit. This corporate circularity strategy also has the potential to tackle climate change and other global challenges, like biodiversity loss, waste and pollution, by separating economic activity from the consumption of limited resources. 

What is circularity?

According to the Ellen MacArthur Foundation, in a traditional economy, manufacturing is linear. Raw materials are extracted and made into parts. Parts are then sent for product development, then to service providers and finally in the hands of the consumer. But in a closed-loop business model, the flow reverts from consumer to either of the three parties to be reintroduced into the manufacturing process. And this is not just for physical products. It also applies to the service industry. 

Three powerful shifts are fueling the move toward circularity.

  • Resource pressure: Circular business systems help companies reduce dependence on raw materials and minimize exposure to price volatility.
  • Customer demand: As customers become increasingly savvy about their consumption, circular business transformation programs, like resale and repair, build loyalty and credibility.
  • Regulation and risk: Governments around the world are tightening rules around waste and product life cycles through various protocols and amendments. 

Who is it for?

Globally, companies both large and small are proving that corporate circularity strategies deliver measurable returns. 

Here are some examples:

  • Patagonia: The outdoor brand’s Worn Wear program invites customers to repair, resell or trade in used gear. It not only keeps products out of landfills, but also drives brand loyalty because customers see that Patagonia stands by its values.
  • Ikea: The Swedish giant aims to become fully circular by 2030. That means designing furniture that is easy to disassemble, reuse or recycle and launching take-back and resale programs to keep materials in circulation.
  • Signify (formerly Philips Lighting): In a move that redefines ownership, Signify has shifted to a “lighting-as-a-service” model, where businesses pay for light, not lightbulbs. The company retains ownership, maintains the equipment and recycles components, turning a product into a recurring revenue stream.
  • LKQonline.com: This online retailer houses millions of used auto parts for consumer and commercial use, thereby reducing auto waste in junkyards and landfills.

Having a circular economy mindset can become a competitive advantage in business

So, why should every entrepreneur, founder or executive adopt a circular economy mindset? Because sustainable value generation doesn’t just protect the planet, it can strengthen the bottom line, too, by creating:

  • New revenue opportunities: Resale, leasing and refurbishment models can extend a product’s life cycle and generate repeat income. The National Retail Federation reports that resale markets are growing five times faster than traditional retail. Cotopaxi, another well-known outdoor brand, created a dedicated product line, Del Dia, made from deadstock fabrics that would have otherwise gone to waste.
  • Operational resilience: When materials circulate within the business instead of being discarded, it reduces exposure to supply chain shocks and rising input costs. According to its 2023 impact report, Cotopaxi estimates it kept over 2,745,000 yards of fabric from going to waste.
  • Stronger brand equity: Customers are more loyal to companies that help them make responsible choices. Allbirds created the world’s first carbon neutral shoe without relying on offsets and built trust through this innovation.

How can businesses adopt circularity?

Transitioning to a circular business strategy doesn’t happen overnight. In the old economy, growth often meant depletion. In the new one, growth means regeneration where companies and consumers move away from a mindset of “ownership” to one of “access.” Once access is no longer needed, it is passed to another or passed back to the source. 

Here’s how companies can begin the circularity process:

  • Map material flows: Conduct a “waste audit” to understand where materials come from, how long they are being used and where they end up. The Ellen MacArthur Foundation’s Circulytics tool can help benchmark progress.
  • Design for longevity: Ask questions like, “Can this product be repaired, reused or recycled easily?” early in the ideation and design phase. Even small changes like modular parts or recyclable packaging could make a huge impact.
  • Pilot circular models: Try a resale, refill or subscription-based service to test customer demand and use their feedback to fine-tune production and fulfillment processes.
  • Collaborate across ecosystems: Circular business models work best when everyone, from suppliers and distributors to customers, is aligned to a common goal. So build partnerships that help close the loop.
  • Measure and communicate progress: Set clear performance measurement matrices, track performance and showcase results transparently. 

As John Muir once noted, “When we try to pick out anything by itself, we find it hitched to everything else in the Universe.” That idea is the core principle of circularity, and adopting the strategy isn’t just a feel-good movement for the planet—it’s also economically beneficial for a company’s bottom line.

Photo by dodotone/Shutterstock

The post How to Use a Circular Economy Mindset as a Competitive Advantage in Business appeared first on SUCCESS.



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