An Overview of the Circular Economy and Its Strategies for Startups and Entrepreneurs
Written by Ollee Means
New organisations, despite good intentions, often misdirect energy on sustainability strategies that have a limited impact (Lower Rs). This article outlines a hierarchy of strategies (Higher Rs) for a greater positive impact in maintaining material value or reducing waste.
The current global economy is a linear ‘take, make, and dispose’ model, leading to a lack of resources long term. The circular economy aims to change this, using waste as new resources and reducing new extraction. It brings benefits like increased economic resilience and job creation. Collaboration is key to success, with partners supporting each other’s circular goals. The long-term benefits drive the move towards a circular economy, which can be both local and global. Learn more about the circular economy at The 7 Pillars of the Circular Economy.
In an ever-evolving world, businesses must stay ahead of the curve to remain relevant and successful. One way to do this is by embracing a circular economy — a concept that focuses on creating sustainable and efficient outcomes by utilising resources effectively. The goal is to reduce discarded material by maximising the utility of waste streams and maintaining or increasing the value of the material in the waste stream. Output waste can also be reduced by minimising inputs, reducing the volume of outputs, improving efficiency and reducing end-user consumption.
The 3 Rs — Reduce, Reuse, Recycle — have been common terms since their introduction in the 1970s, however, these strategies do not provide granularity for the variety of products and processes that exist. In 1979, The 3 Rs progressed into The Lansinks Ladder, a waste hierarchy that helps assess actions from the most desirable to the least desirable, based on sustainability, resource management, and consumption of energy during the waste process. The order of the ladder is Reduce, Re-use, Recycle, Energy, Incineration, Landfill. The order was proposed in the Dutch parliament in 1979 and came into effect in 1993.
However, these strategies only focused on municipal waste management and not the inputs and outputs of private or public organisations. Jacqueline Cramer’s, a former Dutch Minister of Housing, Spatial Planning, and the Environment emphasised the importance of focusing on higher steps in the circularity ladder and taking action before material entered the municipal waste stream, in 2017 she proposed the levels of circularity ladder. Cramer’s 10R ladder, which prioritises eight more sustainable options before recycling, provided the foundation for the value hill model, giving a hierarchy to circular processes.
There are 11 strategies in total. Combined they are known as the ‘Value Hill’ or ‘Higher and Lower R Strategies’. The Higher R Strategies are most effective at preserving the economic value of products and materials whilst simultaneously reducing ecological impact. The Lower R strategies are preferable to landfills but they degrade material value. Not all strategies are created equal in terms of their ability to maximise value or reduce waste. The hierarchy is:
Higher Rs:
- Refuse
- Rethink
- Reduce
- Reuse
- Repair
- Refurbish
- Remanufacture
Lower Rs:
- Repurpose
- Recycle
- Recover
The first three Rs (Refuse, Rethink, Reduce) aim to minimise material use in product design and production. The next four (Reuse, Repair, Refurbish, Remanufacture) extend product lifespan, delaying further material extraction. The last three Rs, referred to as Lower Rs (Repurpose, Recycle, Recover), recover waste at the end of life but downgrade material and have reduced circular potential.
Let’s break down what each of the circularity terms mean and why entrepreneurs should consider using them when building a business of the future.
What are the Lower R Strategies?
Repurpose — Repurposing involves taking an existing item/resource such as furniture, clothing, technology, etc., and giving it a second life by transforming it into something else entirely. For example, old furniture can be repurposed into planters, clothing can be transformed into quilts, technology can be recycled & reused in other projects, etc. This creative strategy is sometimes referred to as ‘upcycling’. While repurposing can divert some materials from the waste stream, it’s not always possible to repurpose all materials, therefore it is considered Lower R. Some materials may not be suitable for repurposing, or there may not be a market for repurposed goods. Furthermore, there is a limited scale, not all material is suitable for repurposing and quality is difficult to maintain from older materials.
Recycle — Recycling requires breaking down materials such as plastics, metals, paper, glass, etc., into smaller pieces so they can then be remade into workable material. Often recycled materials create a composition with virgin materials so manufacturers can ensure consistent quality. Whilst virgin material is still required, the quantity is significantly reduced. Recycling is considered a lower R as there are inefficiencies in the system which make it significantly more difficult than other circular processes, such as contamination — where recycling only works if all material is sorted and clean. Recycling can be energy intensive and has a limited demand due to the quality of output materials.
Recover — Recovering is collecting waste material. This can be any waste material, such as offcuts from manufacturing processes or discarded objects. Often the incentive to recover the material through a process has been developed to make the material valuable again; e.g. extracting gold from mobile phones to make jewelry. Companies who recover these materials benefit from reduced costs associated with acquiring raw materials since most recovered material costs much less than their virgin counterparts while also helping protect our environment against further pollution caused by resource extraction activities associated with manufacturing virgin products from scratch. Recover strategies are becoming more prevalent as waste becomes more useful, however, the strategy is still considered Lower R because recovery as an individual strategy does not retain material value it must be combined with another Higher R.
What are the Higher Rs?
Refuse
Refusing means rejecting material outright to prevent it from becoming waste or being used inefficiently, for example asking whether packaging is necessary on your products and if it is, to what extent. If a company refuses something that could be used but is not needed for its operations or production process, it prevents future waste.
Examples
Notpla
https://www.notpla.com
Notpla has built the strategy of refuse into their name: Not Plastic. Refusing plastic packaging, Notpla has created packaging made from seaweed for when packaging is a necessity. “Globally abundant and fast-growing, seaweed doesn’t require freshwater, land or fertiliser” thus making it an ideal packaging material. Notpla’s packaging is also fully biodegradable in 4–6 weeks and home-compostable. Notpla are using their material for short-life disposable packaging, such as food sachets, takeaway boxes, and film bags for clothing.
Circle Closet
https://www.circlecloset.nl
Circle closet allows customers to rent or lend designer clothing, rather than buying pieces to wear occasionally. You can look through the online shared wardrobe, rent the items you wish for a selected period, and then return the clothes at the end of your rental period. Circle Closet covers shipping, clothing insurance, and dry-cleaning at the end of the rental.
Rethink
Rethinking involves rethinking existing practices and systems to make them more efficient while reducing waste. This can involve anything from changing how something is produced or delivered, to finding new ways of packaging products or rethinking how services operate to lower their resource consumption.
Examples
Niaga is a Netherlands-based home goods material manufacturer that makes carpets, furniture boards, and mattresses for larger suppliers and retailers. These products are typically hard to recycle and incorporate into circular economy strategies due to irreversible connections between components, like glue. Niaga tackles this by using mono-materials or a reversible adhesive that allows for easy separation at the end of a product’s life. As a supplier, Niaga has the potential for a large impact on the value chain and offers its innovative technology to customers through a product passport QR tag that informs the consumer about the product and how to return it for renewal.
Amber
https://driveamber.com/en/
A car-sharing platform in the Netherlands aims to reduce the number of cars on the road through a shared ownership model. With 6 million cars unused 96% of the time, Amber claims that 1 Amber car takes 20 cars off the road. Their model aims to increase circularity and reduce material consumption but also reducing the number of cars also leads to a lower need for parking spaces and reduced traffic, contributing to improved public health, faster travel times and the ability to rethink public space that is currently used for parking.
Reduce
Reducing means decreasing the amount of material used when producing goods or providing services in order to lower costs and minimise environmental impacts. This can involve things like using recyclable materials instead of non-recyclable materials or sourcing secondhand materials instead of buying new ones.
Examples
Winnow Solutions
https://www.winnowsolutions.com
London-based Winnow has been helping food service companies, including Ikea, and restaurants cut food waste since 2013. Instead of recycling, they offer innovative systems to measure food waste in kitchens and from customer plates, aiming to prevent waste. In the past five years, Winnow has expanded to multiple Asian, Middle Eastern, and European markets and their systems are now used in 30 countries. The results are impressive: food waste has been reduced by half in hundreds of kitchens, leading to 10 million saved meals, a minimum of 18,500 tonnes of CO2 emissions saved, and £11.5 million in savings for their customers.
Young Planet
https://www.youngplanet.com
YoungPlanet was created due to the realisation that children’s items have a short lifespan and could serve many children before becoming unusable. The founders created a UK-based app that enables parents to put no-longer-used children’s things to good use with new families and away from landfill, for free. They promote feeling the joy of knowing what you give will go on to create new memories elsewhere and that parents can reduce waste and pass cost savings on to other families.
Reuse
Reusing means using items multiple times before they become waste or are discarded as they are still functional enough to be used again. This could involve anything from repurposing old furniture into something new to donating unused items so someone else can use them instead of throwing them away.
Examples
Biyu is a Dutch company that provides access to a local pool of objects through a subscription model. These objects include household items that are not frequently used, such as vacuum cleaners and toolsets. Biyu covers repair and maintenance and offers click-and-collect or delivery services. The company invests in durable and repairable products because, with a range of users and consistent use, the likelihood of damage is higher, so Biyu focuses on offering premium, durable brands with repair services — therefore connecting to other Circular Economy players.
Vinted
https://www.vinted.com
Vinted is an online marketplace for secondhand clothing and fashion items. It provides a sustainable alternative to fast fashion, as buying secondhand clothing extends the life cycle of existing items and reduces the need for new clothing production. Additionally, Vinted also encourages users to reduce their carbon footprint by reducing their clothing waste and simultaneously make money by selling items they no longer need. Vinted has grown in popularity as it has made sustainable commerce convenient, cost-effective, user-friendly, and provides the consumer with a variety of options.
Repair
Repairing items that no longer work properly but can still be fixed helps extend their lifecycle, potentially saving the consumer money as well as resources that would have been wasted if the broken object was thrown away instead of repaired. Internally, it reduces the need for companies to buy new items every time something breaks down, instead, they can fix it if possible. A repair usually saves money and resources since new items require energy and raw material inputs whilst repairs just require part replacement. A common challenge with repair is the cost and availability of skilled labour.
Examples
United Repair Centre
https://unitedrepaircentre.com
United Repair Centre aims to support leading European apparel brands to reach their circular economy objectives by providing exceptional clothing repair services. These services extend the lifecycle of clothing, thus reducing the environmental impact while creating new job opportunities. The company trains and employs newcomers with refugee backgrounds, young adults, and job seekers facing employment challenges. United Repair Centre aims to meet social objectives as well as ecological ones.
Signify at Schipol
https://www.signify.com/global
Signify is an example of how including Repair in the value proposition can lead to an alternative outcome. Signify and Philips worked with Schipol Airport Amsterdam to create a leasing model to emphasise durability and ease of repair lighting that benefits the lessor’s productivity and sustainability goals. Thus, Signify sells lumens instead of light bulbs and manages installation, maintenance, and end-of-life disposal. Signify’s lamps connect to IoT (Internet of Things) and they are responsible for maintenance, so Signify is interested in providing durable hardware to reduce call-out frequency. Subscription ownership is common in businesses, like coffee shops renting coffee machines, builders renting vehicles, and kitchens renting equipment, with maintenance contracts insuring against time loss or failure.
Refurbish
Refurbishing involves restoring an item to its original condition. Commonly done by replacing parts that no longer work correctly or are worn out with newer versions of parts that perform that same function (repair) but also uplift aesthetics or overhaul and maintain without replacing parts. Refurbishing requires less material than manufacturing a whole new item thus making it more cost-effective while also reducing environmental impact due to reduced resource consumption.
Examples
Reztorer
https://www.reztorer.com
Reztorer offers a convenient solution for extending the life of furniture through restoration and repair. The company was founded in early 2021 in London to make it easy for customers to connect with professionals in the sofa and home interior restoration industry. With a focus on promoting a circular economy, Reztorer aims to make restoration and repair just as simple as purchasing new items. As an online marketplace, the company provides an accessible platform for customers to find and book restoration and repair services for their furniture.
ReBuy
https://www.rebuy.nl
Rebuy provides a fast, safe, and easy solution for customers to buy and sell used electronics. With over 10 years of experience in the refurbishment market, rebuy offers a vast range of products including smartphones, tablets, consoles, and cameras. The company’s process involves repairing and refurbishing the purchased products, revaluing them, and then offering them for resale. With over 5 million satisfied customers, rebuy has paid out over 200 million to its customers and processes over 100,000 products per day. The company, founded in 2005, currently employs 500 individuals and has a stock of over 2.5 million products.
Remanufacture
Remanufacturing involves taking an older product that has reached its end-of-life (EOL) stage and rebuilding it with either refurbished or completely new components so that it functions like a brand-new version without impacting performance negatively. This strategy combines repair and reuse as multiple broken objects can be remanufactured into a single working one.
Examples
Circuform
https://circuform.com
Circuform offers a deposit scheme for their REX model chair, made from recycled polymers, to encourage the collection and reuse of materials. The €20 deposit, 7% of the sale price, is meaningful when chairs are bought in bulk. This scheme becomes effective over time for the business, because as the value of money decreases over time and the price of virgin material is likely to increase, the deposit may provide a low-cost supply of materials for the business who have already integrated all the correct processes for remanufacture ahead of time. However, relying on this concept for a long-term sustainability strategy is uncertain.
Furnify
https://furnify.nl
Furnify, based in Amsterdam, sees discarded interior objects as a missed opportunity rather than waste. They believe that the growing demand for reclaimed and repurposed furniture can be met by the oversupply of used interior materials and industrial items that are typically thrown away during business renovations. Furnify’s goal is to transform these discarded materials into unique, functional, and visually appealing designs, while also playing an active role in promoting the circular economy. By preventing materials from reaching landfills, Furnify actively reduces the depletion of global resources and creates one-of-a-kind pieces with a backstory in the process.
Conclusion
The “R Strategies” are a set of methods aimed at reducing waste and promoting sustainability in the production of goods and services. Refusing, rethinking, reducing, reusing, repairing, refurbishing, remanufacturing, repurposing, recycling, and recovering are all methods that can be employed to minimise waste and maximise the life cycle of products and resources.
Focusing on the Higher Rs is important as the most effective options within the R strategies can help businesses reduce their overall waste, reduce their footprint, and conserve natural resources. By prioritising options such as Refuse and Rethink, businesses can avoid generating waste and reduce their reliance on unsustainable materials in the first place. By prioritising options such as Reuse and Repair, businesses can extend the life of products and materials, reducing the need for new production. By prioritising Refurbish and Remanufacture, businesses can give new life to materials that would otherwise be wasted or devalued through lower R strategies.
On a broader scope, operating a circular business leads to increased resilience, including ecological balance and improved human health, reduced reliance on scarce materials, and growth in areas such as supply chain stability, competitive advantage, job creation, and employee satisfaction. A circular business also creates new job opportunities in fields such as design, reverse logistics, investment, and customer service, alongside promoting diverse knowledge.
Therefore, the circular economy is an essential concept for any business looking towards sustainability in their operations and success in the long term — especially start-ups and entrepreneurs who need innovative strategies to access future capital. By utilising each strategy outlined here — refuse, rethink, reduce, reuse, repair, refurbish, remanufacture, repurpose, recycle, recover — companies will reduce their dependence on raw materials while simultaneously reducing the environmental impact of our economic system.
