The circular economy: towards a new business paradigm with support from public policy

The document argues that the current linear economy, driven by a culture of consumption and planned obsolescence, is unsustainable. It proposes a circular economy based on a systemic approach to maintain resource flows through regeneration and value retention. The authors emphasize that 100% circularity is physically impossible due to thermodynamics, but an optimum can be reached through a design mindset focused on extended life cycles and 'R' activities like remanufacturing and repair. Key barriers identified include outdated waste legislation, intellectual property laws, and consumer norms favoring ownership over access. The paper advocates for the use of public procurement as a lever to create markets for circular business models, such as functional sales where users pay for performance rather than product ownership.

• The circular economy is defined as an economic system using a systemic approach to maintain a circular flow of resources by regenerating, retaining, or adding to their value to contribute to sustainable development.
• The transition to a circular economy is based on six interlinked principles: systems thinking, value creation, value sharing, resource availability focus, resource traceability, and ecosystem resilience.
• Absolute 100% circularity is impossible and environmentally undesirable because the resources required for handling, reprocessing, and transporting materials to achieve total recycling would eventually increase environmental impacts toward infinity.
• A circular design mindset requires shifting from a focus on low production costs to an extended life cycle perspective, where the design phase has a major influence on the total environmental impact.
• Current legal frameworks often act as barriers to circularity; specifically, waste legislation and shipment rules can impede reuse, repair, and remanufacturing by treating used goods as waste.
• Intellectual property laws, including patents and trademarks, can hinder the circular economy by restricting access to repair manuals or preventing the use of cheaper spare parts.
• Public procurement, which represents approximately 12% of GDP in the OECD area, can serve as a critical lever for 'market creation' by acting as the first customer for emerging circular solutions.
• Functional sales models, where the provider retains ownership and the customer pays for a service (e.g., lighting as a function), provide better incentives for durability and resource efficiency than traditional product sales.
• The Basel Convention and other international rules on hazardous waste shipment may inadvertently impede beneficial reuse activities, particularly in developing countries.

APA

Lindahl, M., & Dalhammar, C. (2022). The circular economy: towards a new business paradigm with support from public policy. Stockholm Environment Institute. https://www.sei.org/wp-content/uploads/2022/05/circular-economy-stockholm50backgroundpaper-corrected.pdf

Chicago

Lindahl, Mattias, and Carl Dalhammar. The circular economy: towards a new business paradigm with support from public policy. Stockholm Environment Institute, 2022. https://www.sei.org/wp-content/uploads/2022/05/circular-economy-stockholm50backgroundpaper-corrected.pdf.

Wikipedia

{{cite report |last1=Lindahl |first1=Mattias |last2=Dalhammar |first2=Carl |title=The circular economy: towards a new business paradigm with support from public policy |publisher=Stockholm Environment Institute |date=May 2022 |url=https://www.sei.org/wp-content/uploads/2022/05/circular-economy-stockholm50backgroundpaper-corrected.pdf |access-date=23 October 2026 |via=Climate Insights Directory}}

BibTeX

@techreport{lindahl2022circular, author = {Lindahl, Mattias and Dalhammar, Carl}, title = {{The circular economy: towards a new business paradigm with support from public policy}}, institution = {Stockholm Environment Institute}, year = {2022}, month = may, url = {https://www.sei.org/wp-content/uploads/2022/05/circular-economy-stockholm50backgroundpaper-corrected.pdf}, urldate = {2026-10-23}, note = {Indexed by Climate Insights Directory} }