What is circularity? Defining a circular economy, its principles, benefits and more

How many old smartphones do you have collecting dust at the back of a drawer at home? It’s something most of us are guilty of, but you may not have realized the impact these defunct devices have on our planet.

By keeping or chucking old phones rather than recycling them through sustainable practices like urban mining, precious minerals such as gold, copper and cobalt aren’t being reused. Given that an estimated 5 billion smartphones have become defunct in the last year, this is a big problem. In fact, electronic waste is expected to reach 82 million metric tons per year by 2030. According to the World Health Organization, electronic and electrical waste (e-waste) is the fastest-growing domestic waste stream worldwide. Policy makers hope to reverse this trend by encouraging the proper recycling of e-waste – and all other waste as well – by moving to a circular economy. Because it’s not just e-waste that is rapidly increasing. 

According to the World Bank, we generate more than 2 billion metric tons of household waste, and more than a third of that waste isn’t managed in an environmentally safe manner. By 2050, we’re projected to waste 3.4 billion tons annually. Waste takes up valuable space on our planet, expends finite resources, disrupts ecosystems and contributes to global warming. While rubbish decomposes and rots, landfills emit high levels of toxic greenhouse gases such as methane, ammonia, carbon dioxide and nitrous oxide. The solution to managing waste, including e-waste, is incorporating circularity systems into our economies.

Definition of circularity

Circularity is the process of reimagining production to eliminate waste and pollution while promoting renewable energy and materials. Circularity describes more than just recycling, although the two ideas are connected. This production model is based on three key principles, as outlined by the Ellen Macarthur Foundation: 

1. Eliminate waste and pollution.
2. Circulate products and materials
3. Regenerate nature.

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By encouraging a company to rethink how their products are made, consumed and disposed of with circularity in mind, we can extend and renew the lifecycle of materials and seek to minimize the effects of climate change while preventing the further loss of biodiversity.

What is the main definition of a circular economy?

A circular economy offers an alternative to the linear take-make­-dispose model most businesses depend on today. It’s a familiar process: a manufacturer takes resources to make a product, and the consumer disposes of the product after they’ve used it. Originally developed to produce goods on a mass scale, the linear economy relies on finite resources and results in all products being discarded once they reach the end of their lifespans. This includes single-use plastics, electrical goods, vehicles, household products, glass, metals and fibers. Most of this waste is nonbiodegradable and inorganic – and it’s growing fast. 

The shift to circularity addresses this problem at the source, replacing concern and waste with creativity and prosperity. When we commit to responsibly managing our resources and our impact on the environment, we’re inspired to develop recyclable and biodegradable products and packaging and use sustainable methods and renewable energy for manufacturing and transport. 

Circularity can help ecosystems and economies flourish side by side in the generative economy. According to a 2023 report by the Ellen MacArthur Foundation, adopting circular economy principles could generate $4.5 trillion in economic benefits by 2030.

How can businesses adopt circular economy model principles? 

Businesses can achieve meaningful change by embracing circular economy principles. The following examples show how organizations are already making the adoption of a circular economy work for them and the planet:

• Incorporate recyclable plastic: Transitioning to clear PET plastic (as opposed to green PET plastic) enhances the recyclability of drink bottles. Corporations such as Coca-Cola have pledged to shift to 100% recyclable plastic in their packaging. Over the first year after the switch, according to the Northeast Recycling Council, Coca-Cola saw a 13% increase in PET recycling, indicating the transition’s success and setting an example for corporations to follow. 
• Build sustainable architecture and construction: In CSADI’s Hubei Center of Disease Control project, the engineering and architectural powerhouse used Dassault Systèmes’ modular design approach to discover if virtual twins could be used to reimagine how large-scale infrastructure could be designed, manufactured and constructed with minimal waste. It resulted in the following circular economy and climate change wins:

• Repair rather than replace electronics: Around 62 million metric tons of electronic waste is generated each year. Policy makers hope to change that by encouraging consumers to repair rather than replace electronic goods. In France, the repairability index requires manufacturers to display whether electronic devices can be repaired and how.

Why is there urgency around transitioning to a circular economy strategy?

Despite progress, only 6.9% of the global economy is currently circular. This means that global businesses still rely almost exclusively on new materials.

As climate change’s impact intensifies, the Circularity Gap Report, powered by Deloitte, estimates that more than half of global greenhouse gas emissions, most biodiversity loss and water stress are driven by material extraction and use. A shift to more circular solutions will play an important role in reversing negative environmental impacts. 

The European Union (EU) has introduced measures to close the circularity gap. For example, the circular economy action plan encourages sustainable product design and waste reduction. New right-to-repair legislation backs this up by making it easier and more cost-effective for consumers to repair goods, such as by extending product guarantees, making repair manuals available and connecting consumers with repairers and refurbished goods sellers in their local area. 

Additionally, the Digital Product Passport (DPP) – an initiative of the EU’s Ecodesign for Sustainable Products Regulation (ESPR) – is enabling a circular economy by acting as a digital record of every product’s journey, including its environmental impact, origin of raw materials, material composition, durability, repairability, hazardous substances and end-of-life disposal options. With this very powerful data accessible to the public, businesses and consumers are empowered to make more informed, sustainable choices about the products they create and consume.

What are the benefits of a circular economy approach for businesses and the environment?

Circularity in the economy is widely recognized as a pathway to building a sustainable future and combating global warming. Here are some key benefits of adopting a circular economy.

• Protecting the environment from waste impacts: A circular economy protects our environment from further damage caused by excess waste, which contributes directly to global warming and climate change.
• Reducing dependence on raw materials: By recycling and repurposing existing materials already in circulation, businesses can reduce the number of raw materials they extract from the earth.
• Stimulating innovation: A circular economy encourages innovative new ways for companies to manufacture products, packaging and modes of transport. The result will hopefully mean we have more items that are fully recyclable, more durable, higher quality, better performing and will generally last the consumer longer. 
• Improving brand reputation: Consumers increasingly prefer eco-friendly approaches to products and are more likely to engage with brands they perceive as environmentally responsible.
• Creating a positive environmental impact: The circular economy aims to reverse biodiversity loss and prevent waste from entering landfills or oceans. This reduces pollution and greenhouse gas emissions, helping to mitigate the effects of climate change.  

How can Dassault Systèmes provide support for businesses transitioning to circular business models?

For businesses to successfully implement a circular economy strategy, they must have full visibility of their entire value chain. Dassault Systèmes’ 3D UNIV+RSES – a new class of virtual representation that combines modeling, simulation, AI and data science – which links virtual twins across entire lifecycles for complete traceability, was created with circularity and sustainability in mind.

This concept is brought to life on the 3DEXPERIENCE platform by centralizing all operations in a single environment. The result: company leaders have the information they need to make better decisions, both for their business and the planet.

Businesses can begin the transition to the circular economy by taking advantage of the latest digital capabilities to:

• Connect the value chain: The 3DEXPERIENCE platform brings together all stakeholders in the value chain, providing end-to-end visibility that enables them to make informed decisions on how best to use resources, reduce waste and support circular flows.
• Simulate products virtually: The 3DEXPERIENCE platform’s virtual twin and simulation capabilities support eco-design principles and allow designers to test the most sustainable and cost-effective materials while reducing the need for physical prototypes and maintaining performance and quality.
• Make intelligent predictions: By incorporating predictive analytics, companies can use the 3DEXPERIENCE platform to continuously improve product quality, optimize processes and detect issues such as product defects early on in the process.
• Support sustainable design initiatives: The 3DEXPERIENCE platform’s built-in Life Cycle Assessment (LCA) functionality allows companies to monitor and measure a product’s environmental impact throughout its lifecycle. This includes identifying the most sustainable materials and measuring energy consumption at each production stage. CATIA’s lightweight engineering solution enables sustainable design by helping designers optimize material use and reduce energy consumption from the start. 

Related resources 

• How AI and virtual twins are redefining the consumer packaged goods and retail industry
• Sim City: Utilizing virtual twins to build sustainable, smart cities
• Why companies should care about biodiversity
• Redesigning machinery for a circular economy
• 6 examples of the circular economy in action
• Consumer Goods Manufacturers Apply Circular Practices to Improve Sustainability

***Originally published on August 7, 2023 and updated on June 23, 2026.