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The Circular Economy: Why It's Important And How It Works

Updated: Oct 12, 2023

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In the past few years, we've witnessed a whole lot of talk about circularity and sustainability. The concept of "conserve, reuse, recycle" is standard today.

The circular economy is a new economic paradigm that aims to solve the environmental crisis and maximise human well-being and economic prosperity.

What is the circular economy?

In simple terms, a circular economy is a production system that produces and reuses resources throughout their entire life cycle. Such an approach protects the natural environment and minimises the number of natural resources required to make products.

The circular economy is based on three key principles:

- Reduce and get back: Reduce the number of resources required by using less.

- Reuse and recycle: Reuse materials to create new products that serve the same or a similar function.

- Respect the planet: Consider the environmental consequences of every action

This paradigm can solve the ecological crisis, but it can also improve people's lives and increase prosperity.

In practice, it implies being cost-effective in reducing waste. As a product comes to the end of its life, its materials are used up and repurposed. These can be reused and recycled, thereby creating more value and saving precious resources from going to landfill, making a departure from the traditional, linear economic model based on a take-make-consume pattern. This model relies on large quantities of resources consumed and discarded, where these additional resources could've been better utilised.

Where does this leave your organisation? Businesses that implement the circular economy will be better able to operate sustainably while competing in the market. To take a circular economy approach, your organisation must consider the entire material cycle from extraction to disposal.

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The circular economy is the next big trend in business!

In this new era, we can use circular efficiency across the board. The rise of connected devices and data availability will prompt brands to focus on waste reduction and investigation of existing waste streams. Such initiatives will uncover key areas of waste and give insight into the most effective ways to address them.

The benefits of the circular economy

Circular economy thinking supports businesses in their efforts to improve productivity and reduce the environmental impact.

Circular-economy businesses go a step further than ecological business models. Instead of merely treating products as resources, companies facilitate remanufacture, repair, upgrading and retrofitting. That means customers become the fabricators, financiers, users and in some cases, even owners of products they had only purchased one or two years earlier.

By investing in products or services made from sustainable or recycled materials, business operations can reduce the amount of materials consumed and waste generation. Reduce your business's carbon footprint.

Environmental impact has become one of the biggest challenges facing business operations today. Every single resource can be utilised to produce more goods and services if companies operate efficiently and effectively.

How does it work?

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In a circular economy, products or services are produced to extend the period during which they are useful, recyclable and reusable. It's not enough to refer to products as being sustainable; we must, as well, "circularise" their production to truly reap the rewards of this concept.

In an ideal, circular economy, waste and minimally used resources are continuously appropriated by:

  • Producing items from renewable and/or recycled resources

  • Using materials and products as long as they are useful

  • Refurbishing and repair items and regenerating their use

  • Recycling items to extend their life cycles

  • Reusing waste materials as a resource

By collecting and analysing data, technology such as interconnected devices can pinpoint areas where wastage occurs, and businesses can address them by developing more efficient approaches to waste. Data collection & analysis can help companies identify where they can save money by reducing waste and eliminating unnecessary material.


Moving from a linear to a circular economy transforms an economy based on products consumed and discarded to an economy based on products used and reused. A circular economy is a profound change that stems from the ability to continuously regenerate resources — from material and energy inputs to outputs — without generating waste.

If your business is still using old-fashioned means to create, design, process, build and sell your products, you need to make some changes.

As organisations make their way towards a sustainable business model, they leave an immense impact on our global economy.

If you're looking to become more sustainable, the first step is to evaluate your current practices and impact. Start with waste. Take a look at all the materials in your recycling bins.

By taking a circular economy approach, you can extract the most value from resources by optimising and digitalising this process. Through data collection, interconnected digital technology such as IoT can demonstrate key areas of waste and inform more effective decision-making on addressing these issues.


Nassia Skoulikariti

Founder/CEO Apiro Data Ltd

Get in touch and let’s build something great together!

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