7 pillars of the circular economy

The circular economy may be the way of the future, but some major hurdles still must be overcome before we get there.

The circular economy is a term that has gained a great deal of popularity amongst businesses in the last few years. And with its growth in usage, the number of ways in which the term is defined have proliferated. 

Many groups define the circular economy in terms of the types of activities and concepts associated with it: the use of new business models, such as leasing; collaboration across supply chains, or using waste as a resource. However, these characterizations ultimately don’t tell us what the circular economy actually is because they don’t describe its end state: what will the world actually look like when it is "circular"?

Without answering this fundamental question, we lack a common understanding of what we’re actually trying to achieve, which makes it impossible to measure progress. To define what the performance characteristics of a fully circular economy might be, we began by taking the principle of a closed cycle to its ultimate conclusion: In a circular economy, all materials should be used in such a way that they can be cycled indefinitely (just as they theoretically can in nature). 

This statement, however, implies some additional complexities: We don’t just want these materials to be theoretically possible to recover — it has to happen on a timescale that’s relevant to people, and we must preserve value and complexity. Looking further, we find many adjacent issues, such as how to conserve energy and how to more broadly upload human ideals.

In the end, we came up with seven characteristics to describe the end state of the circular economy. These are idealized features that never may be possible to achieve, but they provide a specific set of targets we can aim for collectively. Taking all of these insights together, we have formulated this working definition:

The circular economy is a new economic model for addressing human needs and fairly distributing resources without undermining the functioning of the biosphere or crossing any planetary boundaries.

The pillars can support the evolution of economic rules and incentive structures that actually fulfill these end results. Technologies and business models that ultimately support not just one but all seven of these goals will be the ones that rise to the top as the most successful. An important note, though, is that in making decisions not all of these outcomes should be equally prioritized. Some impacts that need to be prioritized over others include:

  • Those that are long-term and irreversible 
  • Those that undermine the ability of the earth to provide a safe operating space for humans
  • Those for which the outcomes for people or environment have a high degree of uncertainty

For us at Metabolic, these seven pillars are an essential tool. They help us approach problems in a systemic manner and not just by passing the burden through focused actions that produce unintended consequences elsewhere. Perhaps even more important, as we have refined these seven pillars over the years, we have been able to translate them into quantitative tools — metrics and indicators — that we can use for evaluating the circularity of products, projects, businesses and investment portfolios.

The circular economy is our greatest opportunity to repair the functioning of the global system. These pillars offer clear signposts for how to make genuine strides towards that — and there’s no time to lose. We invite everyone working in the circular economy field to make use of this framework, as well as offer feedback to help its continued development.


The seven pillars

1. Materials are cycled at continuous high value.

A priority is placed on preserving material complexity, by cascading materials in their most complex form for as long as possible. Material cycles are designed to be of lengths that are relevant on a human timescale, appropriate to the natural cycles to which they’re connected, matched to material scarcity and as geographically short as possible. Materials are not mixed in ways such that they no longer can be separated and purely recovered, unless they can continue to cycle infinitely at high value in their mixed form. Materials are used only when necessary.

2. All energy is based on renewable sources.

The system is designed for maximum energy efficiency without compromising performance and service output. The materials required for energy generation and storage technologies are designed for recovery into the system. Energy is intelligently preserved and cascaded when lower values of energy are available for use. Density of energy consumption is matched to density of local energy availability (energy transport is avoided). Conversion between energy types is avoided.

3. Biodiversity is supported and enhanced through all human activities.

A core principle of acting within a circular economy is to preserve complexity: preservation of ecological diversity is a core source of resilience for the planet. Material and energetic losses are tolerated for the sake of preservation of biodiversity; it is a much higher priority. Habitats, especially rare habitats, are not encroached upon or structurally damaged through human activities.

4. Human society and culture are preserved.

As another form of complexity and diversity (and therefore resilience), human cultures and social cohesion are important to maintain. Processes and organizations reflect the needs of affected stakeholders. Activities that structurally undermine the well-being or existence of unique human cultures are avoided.

5. The health and wellbeing of humans and other species is supported.

Toxic and hazardous substances will be eliminated, and in the transition phases towards this economy, minimized and kept in highly controlled cycles. Economic activities never threaten human health or well-being. (For example, successfully recycling e-waste by having people burn it over open fires is not considered a "circular" activity despite the fact that it results in material recovery.)

6. Human activities generate value in measures beyond just financial.

Materials and energy are not available in infinite measure, so their use should be intentional and make a meaningful contribution to the creation of societal value. Forms of value beyond financial include aesthetic, emotional, ecological. These cannot be brought down to a common measure and must be recognized as value categories in their own right. The choice to use resources maximizes value generation across as many categories as possible.

7. The economic system is inherently adaptable and resilient.

The economic system has governance systems, incentives and mechanisms in place that allow it to respond to systemic shocks and crises. This refers to the distribution of power, the structure of information networks and ensuring that back-ups exist in the case of failure of parts of the system. The same principles of resilience apply on small as well as large scales.