What does ‘circular economy’ mean? A quick guide for e-commerce sellers 

You may have started to hear more about the term ‘circular economy’ – but what does it mean for your business?  

We operate in a linear economy following a ‘take, make, dispose’ model. Meanwhile, the circular economy focuses on reusing, repairing, remanufacturing, and recycling products and materials – which fits into the context of Extended Producer Responsibility compliance, which you’ll be familiar with. 

What’s the circular economy, and why does it matter? 

As a quick definition: the circular economy is an innovative economic system designed to eliminate waste and ensure the continual use of resources.

It operates on three key principles: 

1. Eliminating waste and pollution by design from the start involves creating durable, easy-to-repair, and recyclable products and rethinking production processes to minimise waste and emissions. 

2. Circulating products and materials through reuse, refurbishment, remanufacture, and recycling. Innovative business models, such as product-as-a-service, where consumers lease products instead of buying them, support this principle. 

3. Regenerating natural systems by returning valuable nutrients to the soil and other ecosystems, by composting organic waste and using regenerative agricultural methods. 

Shifting to a circular economy is essential for tackling global challenges like climate change, resource depletion, and waste management. Keeping materials in use for longer can significantly reduce environmental impact and foster sustainable economic growth. 

The 3 main benefits of the circular economy 

1. Environmental: By reducing waste and pollution, the circular economy could help lower greenhouse gas emissions, conserve natural resources, and decrease environmental degradation. It could also support biodiversity by reducing habitat destruction. 

2. Economic: The circular economy could create new business opportunities and jobs in areas such as recycling, repair, and remanufacturing. It could also enhance economic resilience by reducing dependency on finite resources and mitigating supply chain risks. 

3. Social: It’s argued that a circular economy can improve health and well-being by reducing pollution and waste-related health issues. It may also promote social equity by creating inclusive job opportunities and supporting local communities. 

The 5 countries leading the way on the circular economy

• The Netherlands has emerged as a global leader in the circular economy. Known for its comprehensive approach, the country has ambitious goals to become fully circular by 2050.
• Finland led on creating a national circular economy roadmap, and focuses on sustainable resource management and circular business models.
• Denmark leads on waste management and recycling; its integrated circular economy principles into various sectors.
• Japan has made significant strides in promoting circular economy practices, particularly in electronics and automotive industries.
• Germany’s approach to the circular economy is closely linked to resource efficiency. The country has long been involved in sustainable practices and continues to innovate.
• Sweden is another leader, with strong policies supporting recycling, renewable energy, and sustainable product design.

How do EPR policies support the circular economy? 

What is EPR? we hear you ask. Extended Producer Responsibility policies compel producers to design products with their end of life in mind. It spans various categories of products, including electronics, packaging, batteries, and textiles, each with distinct considerations and challenges.

Every country that requires EPR compliance places a different emphasis on the categories you need to be compliant for.

EPR compliance supports circular economy principles by making reusing, recycling, or remanufacturing products easier. Producers are incentivised to innovate in product design to meet EPR requirements. We’ve previously outlined, in more detail:

• what the legislation is and why it matters
• who needs to register for EPR
• and how to implement EPR in your business

Both the circular economy and EPR share the goals of reducing waste and promoting sustainability. They encourage practices that keep materials in use for longer and minimise environmental impact, but they come with their challenges. 

What are the challenges in implementing the circular economy? 

We’re talking about a fundamental shift in how things are done – which isn’t without its critiques.

Potential trade-offs must be made: Will job creation in this sector lead to losses in others? Will the cost and energy involved in increased recycling make the shift viable? How will the social and environmental impact be quantified, and how can policies support it?

In our current way of working, implementing circular economy practices and complying with EPR regulations can already be challenging in the countries that require it (which AVASK can help with). We also need to consider the cost, technological barriers, and the need for innovation in product design – all things that can impact smaller businesses.

On the plus side, adopting circular economy practices offers meaningful ways to enhance your brand reputation, such as by demonstrating a commitment to sustainability. Companies can gain consumer trust by offering eco-friendly products and services.  

Fashion and textiles retailers may already be aware of sorting out their Digital Product Passports, which are an EU-wide requirement. They allow you to use this clever marketing tool to show customers how sustainable your products are.  

The main takeaways

The circular economy can create a sustainable future by reducing waste, conserving resources, and promoting economic resilience. However, it will take time, cost money, and require legislation to support it – but some countries are leading the way in sustainable practices.

In the meantime, we have EPR. As it evolves, compliance supports these bigger goals by holding producers accountable for their products’ lifecycle. Businesses can contribute to greener, brighter future.