The 6 Principles of the Circular Economy

Published in

Disruptive Design

8 min readDec 5, 2024

This year we saw several advancements in the formalization and activation of the circular economy, including the release of the 3 main ISO Circular Economy 59000 series of standards. One of the key additions presented in the standards is the framing and articulation of 6 key Circular Economy (CE) principles that form the foundations of Circular Economy implementation and activation, and they are central to all aspects of the ISO CE approach.

In this article, I’m going to run through each of the 6 principles and provide some practices that can be used to apply them.

These 6 CE principles are not to be confused with the 3 main goals of the circular economy, which have been widely published as being:

To eliminate waste
Make things last longer
Regenerate natural systems

The ISO outlines the 6 Circular Economy Principles first in ISO 59004, and then the other current published CE standards, ISO 59010 & ISO 59020, both refer back to them. These principles are:

Systems Thinking
Value Creation
Value Sharing
Resource Management
Resource Tracking
Ecosystem Resilience

Circular Economy Principle 1: Systems Thinking

Systems thinking is about understanding how things connect together; it requires a broader perspective than just the isolated aspects of your own product, service, or business. In the context of CE activation, it’s a foundation for framing the product as part of the system it exists within, such as the supply chain, consumer value and ecosystem requirements.

Starting with the system enables the context to be set and then to see how the things you do affect other parts of the systems at play. For example, this could include exploring the interconnections between material types and business model decisions and/or customer behaviors and the flow of resources through your business system. In turn, leveraging systems thinking enables better, more informed decision-making and provides the foundation for communicating your part of the broader value system you are a part of.

A key requirement of the ISO standards is to develop and define your ‘system in focus’, which is a way of articulating and visually mapping the things that you are seeking to transform and that exist presently in your system. This could be a stand-alone product, or it could be a product as a service, a product as part of a business, an entire business, an aspect of your business, a set of businesses working together to cycle resources or even entire cities.

Applying systems thinking is critical to effective circular economy transformation, as it enables you to start with the big picture at play and then drill down into specific levels or aspects of how things move through your system and ultimately interact with the broader social, economic and environmental systems you are reliant upon and feeding into.

Aside from applying systems thinking to all that you do in CE, there is also the need to be familiar with stocks and flows — these are the things in your system (stocks) and the way they move through your system (flows). Stocks and flows help to define the inflows and outflows to your system and form the foundation for measurement in ISO 590020.

I have developed a few courses on systems thinking:

You can engage in several activities to apply systems thinking to CE:

Systems Mapping
Supply Chain Mapping
Causal Loop Diagrams
Material Flow Analysis
System Boundaries Exploration & Identification of Inflows and Outflows to your System
Developing a ‘System in Focus’ diagram

Circular Economy Principle 2: Value Creation

The circular economy is all about redefining value, especially when it comes to internalizing and accounting for the present externalities that perpetuate a collective exploitation of nature.

In the context of the ISO standards, the value creation principle is about ensuring that you a) understand the values your company has and b) ensure that decisions are being made to recover, add or retain value to specific social and environmental impacts (S/E).

This can be done by assessing your S/E impacts and then making decisions that reduce, mitigate and reverse these. Furthermore, the economic rationalization of your product or service should be considered in relation to the primary categories of a business model canvas to ensure that any circular solution is financially viable and adds value to the economy (this is what’s outlined in ISO 59010).

As the circular economy is about changing the way we value resources, both natural and human, this principle is rooted in the need to shift value perspectives within business decision-making and models.

Activities to assess and transform value creation are:

Impact Assessment
Life Cycle Thinking
Social Impact
Ecological Footprint
Business Model Canvas

Circular Economy Principle 3: Value Sharing

Value Sharing is about moving from the present linear model of extraction and production to a circular one and bringing your value network along with you. This is inherently about collaboration and ensuring that the values created are equitable and inclusive.

Within the circular economy, there are no isolated agents operating; everything is interconnected, which means that the changes made by one affect many others. Furthermore, in order to successfully achieve CE, you need to work in a broader value network and exchange resources and design solutions that are often about creating new ways of doing things.

Values shared between companies, such as the waste product from one, becoming the inflow resources of another, or the sharing of laundry services to achieve a set of services that require this, for example, are all ways that this principle activates CE at a broader scale than just your business system boundaries.

These are then mapped and the value sharing is attributed to the different networked agents in the system.

Activities to help with identifying value sharing:

Ecosystem Mapping
Material Flow Analysis
Inputs and Outputs or Stocks and Flow Diagrams
Network Analysis

Circular Economy Principle 4: Resource Management

Identifying what resources are flowing into your system and what flows out as a result of the actions you take in your business or product development is part of the core assessment of the ISO CE standards. This involves knowing what stocks and flows you have, what those affect and what types of impacts these have on the broader system — especially in relation to the social, economic and environmental impacts.

By understanding this, you can more efficiently and effectively manage the flow of resources through your system and maximize the goals of waste reduction, ecosystem regeneration and efficient use of natural resources. This principle calls on organizations to actively close, slow and narrow resource flows to achieve S/E sustainability outcomes.

Activities that support resource management

Stock and Flow Diagrams
Systems Mapping
Impact Assessment

Circular Economy Principle 5: Resource Tracking

Resources and assets need to be tracked and accounted for in a circular system, as they are the way in which value is transformed and CE goals are met. This is about information sharing and ensuring that each party along a value chain has done their own research and due diligence to provide up and down information that enables all parties to assess, manage and report on their performance.

This can extend to CE solutions such as asset management to bring resources back into your system for reuse or remanufacturing. Once can assume this is also going to be actioned via the Digital Product Passport (DPP) system that is mandatory under the new EU Ecodesign Regulation. This principle really activates full actionability for assets that companies bring into the world.

Tools used to enable this:

Digital Product Passports
Asset Management
Reverse Supply Chain Logistics
Life Cycle Thinking

Circular Economy Principle 6: Ecosystem Resilience

Ecosystems are one of the main stakeholders in the establishment of CE. As such, this principle is all about understanding the impacts that your actions in the economy have on nature and ecosystem services. It also includes being able to adjust actions to dramatically reduce negative impacts to natural systems, whilst maximizing the actions that restore and regenerate nature.

By assessing resources flowing into your system and changing from virgin non-renewable to virgin renewable, recycled, reused, rescued and regenerative resources, then you are moving away from linear and into the sphere of circular. The need to operate within planetary boundaries is also evoked via this principle.

Activities that enable this:

Ecosystem Impact Assessment
Life Cycle Assessments
Natural Capital Assessments
Nature-Based Solutions
Regenerative Practices

Perhaps there are some aspects that are missing from those, like the social impacts and the effects that CE has on the economy. The standard certainly ensures that the full spectrum of sustainable development (the social, economic and environmental) is assessed, articulated and accounted for when following their guidance, but a principle that ensures this consideration would be perhaps beneficial.

The standards also provide specifications on what indicators you should be assessing, the method of defining a system in focus and the way in which resources flow through the system as inputs from nature to the economic outputs as well as the potential pollutants and then resource flows back into the system.

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If you want to learn more about this, consider joining my upcoming training program tailored for the AU/Pacific timezone. This live online workshop takes an advanced-level look at the ISO Circular Economy standards, it includes practical guidance and activities that assist in the implementation of the standards and support consultants and in-house practitioners in delivering advice and adoption of the CE ISO 59000 series. Find out more here.