The Rise of the Circular Economy

View all blog posts under Infographics | View all blog posts under MBA

What is a Circular Economy? This term is epitomized in the “recycle” symbol of an arrow going around in a circle. In a world where resources are dwindling, circular economy is the potential answer to concerns about energy, about landfill use, and social responsibility. The term refers to eco-friendly behavior, which is potentially beneficial to everyone involved.

To learn more, checkout the infographic below created by the New Jersey Institute of Technology’s Online MBA program.


Rise of circular economy infographic

Add This Infographic to Your Site

<p style="clear:both;margin-bottom:20px;"><a href=""><img src="" alt="Rise of circular economy infographic" style="max-width:100%;" /></a></p><p style="clear:both;margin-bottom:20px;"><a href="" target="_blank">New Jersey Institute of Technology </a></p>

Global Resource Challenges

By 2050, estimates indicate there will be about 9 Billion people living on this planet. Population growth will be one of the many factors contributing to loss of resources, a problem the world has been aware of for decades. Half of corporate heads surveyed around the world believe population growth will force a change in the way they do business and their priorities within the next 3 to 5 years by which time 3 Billion new middle-class consumers will have joined the market place, placing further strain on sources of energy, food, and water. Researchers have arrived at estimated figures for these growing demands. They believe the world will need 50% more food, 45% more energy, and 30% more water, ironic since these resources will be in shorter supply if global use continues at its current pace. Enough oil remains in the world to serve the population only until around 2060 and there is adequate phosphorous for roughly 50 to 100 years of agricultural fertilizer. Companies are thinking very carefully about new resources for the future because figures from a survey by the New Jersey Institute of Technology suggest usage will be double in 2030 what it was just 20 years earlier.

What Do Companies Waste Most?

According to research, companies waste more paper than anything: this accounts for around 37% of what they throw out. Roughly 21% is organic and slightly less of their waste is made up of plastic. The other items on their list are construction and metal waste at 11% and 8%, respectively. How does the average person visualize so much garbage going into landfills? Imagine three Empire State Buildings being disposed of daily by more than 5,000 publicly traded business in the United States alone. Around 40% of solid waste in the United States is derived from demolition and construction. Add in firms which are not publicly traded and similar worldwide activity and the amount that is thrown away is difficult to fathom.

A Circular Economy Affords Alternatives to Wastefulness

All of these figures are forcing companies to think differently about their goals and objectives, especially considering pressure from concerned consumers. Thinking in new and exciting directions is considered one of the benefits of a circular economy in which there is less waste and more recycling, repurposing, or re-using of items before disposal. More than 80% of executives believe these activities are important, about twice the number who felt this way just two years ago. As a result, they are adjusting previous goals to reflect changing attitudes. These firms are forced to see the benefits and the necessity for changes to the way they regard resources, particularly when they consider substantial projected financial benefits. By 2025, estimates indicate that around $1 Trillion will be created annually by new projects with more than four times that amount by 2030 expected to be realized globally. Just in Europe, greenhouse gas emissions could be reduced by as much as 70%, and a 4% growth in the workforce will also result from this altered corporate direction. About $1 Trillion will be saved worldwide by preventing tons of waste to be sent to landfill. European businesses anticipate $630 Billion worth of savings with the extended lifespan of moderately durable products alone, particularly in the automotive industry, which will account for roughly $200 Billion of that figure.

Anticipating Possible Drawbacks

Not everything about initiating a Circular Economy is going to take place smoothly. There are still hurdles to face. Of those surveyed, 36% responded that logistical costs, inadequate leadership, and education both of businesses and consumers will create costs and possibly get in the way of this green global strategy. Slightly fewer surveyed parties believed that alternative priorities would cause setbacks to this direction worldwide; some firms simply will not buy into initiatives, which would make them greener.

On the Positive Side

But there is evidence that building a Circular Economy worldwide will be highly influential among innovators who will come up with new ways to harness energy and to reclaim resources. Their collaboration will result in even more impressive ideas. Circular Economy will promote brand building and stand for something socially positive.

Setting the Example

Already, major companies are role modeling what a successful attitude should look like in an age when climate change is no fringe idea. Big companies like CAT, Philips, Walt Disney World Florida, and Royal DSM are leading the way. At Royal DSM, they have been collecting agricultural residue to create a renewable fuel source, leading to fewer energy-related emissions, creating new jobs, and developing a potential answer to dwindling oil supplies. Waste is actually going around again, back through the resource chain. Walt Disney World in Florida takes discarded food of all kinds from restaurants and feeds this into a plant, which turns food waste into yet another source of energy. Like Royal DSM, this keeps garbage out of landfills and reclaims it for another purpose. Rotting food would have also contributed to greenhouse gas emissions. At CAT, they are making parts last longer. When components are of better quality and more durable, they remain in use far longer and do not create waste as quickly. In a Circular Economy, this is an example of Product Life Extension. Finally, Philips is increasing their service profile but reducing costs to consumers and also keeping lighting products out of landfill at the end of their lifespan by changing rules of ownership. Where they retain ownership of products, these return to Philips at the end of their life for the company to dispose of responsibly. All of these are high profile companies showing that eco-friendly work can be done in every industry: construction, tourism, entertainment, household lighting, and so on. These firms demonstrate that with the right attitude, firms are able to do the right thing while benefiting financially from their decision to buy into a Circular Economy.