This article looks into the principles that would characterise a circular economy.

I recently finished reading A New Dynamic: Effective Business in a Circular Economy by Amory Lovins, et al. I thought the whole book was excellent, but there was one chapter that really stood out. This was a chapter by Walter Stahel called The Business Angle of a Circular Economy.

In this chapter Walter begins by highlighting the principles that characterise a circular economy.

I have anther series on this same subject, which you can find here.

In that series titled Circular Economy Principles I ran through the principles identified by David Cheshire in his book Building Revolutions. On reflection, that series should probably be titled Circular Economy Principles for the Built Environment as David’s book is primarily concerned with that field.

This article and the principles from Walter Stahel concern the economy as a whole and the principles that would have to underpin a fully circular economy.

The principles include the following.

Principle 1

The smaller the loop (activity-wise and geographically) the more profitable and resource efficient it is.

Principle 2

Loops have no beginning and no end; value maintained replaces value added.

Principle 3

The speed of the circular flows is crucial; the efficiency of managing stock in the circular economy increases with a decreasing flow speed.

Principle 4

Continued ownership is cost efficient: reuse, repair and remanufacture without a change of ownership saves double transaction costs.

Principle 5

A circular economy needs functioning markets.

Some of these might seem obvious at first but are important in highlighting what is required to create a circular economy.

What you need to know

This article looked into the principles that would characterise a circular economy.

It is based on the principles outlined by Walter Stahel in A new Dynamic. I thought the book was excellent and it comes highly recommended from me.

The principles are remarkably simple, yet their translation into reality has been slow.

There has been talk of creating a circular economy for some time, but I believe we are now beginning to turn a corner.

Principle 2 stood out to me. At times the circular economy felt too abstract and academic to be turned into a reality. But with the realisation that loops have no beginning or end. Any effort that bends wasteful processes towards circularity is welcome.

I am minded to quote the old Chinese proverb that: “The best time to plant a tree was 20 years ago. The second best time is now.”

The same holds true for the circular economy. There is a lot of waste that has been allowed to build up over a long period of time. Ideally this would not have been allowed to happen, but it has. The best time to start embedding these circular economy principles would have been some time ago. But the second best time is now.

It doesn’t matter where you start, the important thing is that you do.

Thank you for reading,

By Barnaby Nash

Please share your thoughts in the comments section below or reach out to me on social media. What do you think needs to be done to advance circular economy principles.

Let’s stay connected

I can be reached on LinkedIn and on Twitter @FollowBarnaby