The circular economy as an unavoidable business
The current economic model, based on extraction, production and disposal, is exhausted in the face of a truth as simple as it is implacable: natural resources are finite. But on the horizon a new logic emerges, capable not only of offering environmental sustainability, but also economic profitability: the circular economy. In this regenerative spiral, waste is transformed into resources and opportunities multiply, creating fertile ground for tomorrow’s businesses.
“What we throw away today, tomorrow will be worth gold”
By: Gabriel E. Levy B.
Since the mid-twentieth century, the global economy has operated under a principle of accelerated consumption that found its apogee in the industrial revolution and, later, in globalization. The linear model—extract, manufacture, use, and discard—proved functional as long as resources seemed inexhaustible. However, towards the end of the seventies, critical voices began to warn that this logic contained its own limit.
It was in 1966 when Kenneth Boulding, a British economist, introduced the concept of “space economy” in his essay The Economics of the Coming Spaceship Earth, where he proposed that the Earth should be managed as a closed ship with limited resources. His thinking anticipated, in a visionary way, the principles that decades later would shape the circular economy.
In the 1990s, Walter R. Stahel and Geneviève Reday-Mulvey formally proposed the idea of a closed-loop economy to reduce waste and extend the shelf life of products. This approach, taken up by the Ellen MacArthur Foundation, laid the foundations of the contemporary movement. What began as an environmental concern was gradually transformed into an economic strategy with tangible benefits.
“Redesign the economic system so that nothing is wasted”
The circular economy is not simply a green fad. It is a profound reconfiguration of production systems. This model proposes to extend the life cycle of products, reduce the consumption of virgin raw materials, reuse materials and promote eco-design. But, above all, it is an economy that transforms the concept of “waste” into that of “resource”.
In Europe, this paradigm took normative shape with the European Commission’s Circular Economy Action Plan, launched in 2015 and reinforced in 2020 as part of the European Green Deal. The goal is ambitious: to decouple economic growth from the use of natural resources, while promoting quality jobs and sustainable growth. According to the European Commission, this transition could generate more than 700,000 jobs on the continent by 2030.
Latin America, although with uneven rhythms, also began to walk this path. Countries such as Colombia, Chile and Mexico incorporated public policies to promote circular production models. In 2021, ECLAC published a report that highlighted the potential of the circular economy in the region as a driver of innovation and competitiveness.
The Ellen MacArthur Foundation argues that applying circular principles in key sectors such as plastics, textiles or food can mean savings of 700,000 million dollars per year globally. This figure not only reflects a direct economic impact, but also a promise: whoever invests in circularity will not only do the right thing, but also the profitable thing.
“Invest where others only see garbage”
The circular economy is not only an environmental solution; it is, above all, a new frontier of economic opportunities. According to a 2023 World Economic Forum study, the global market for circular solutions already exceeds $4.5 trillion and continues to expand. This includes everything from advanced recycling to biomimicry, product reuse, modular design, repair and shared rental.
Start-ups – such as Loop Industries, which recycles low-quality, energy-efficient plastics, or Fairphone, which designs modular and repairable mobile phones – capture the attention of investors looking for profitability without sacrificing responsibility.
Even traditional investment funds are adapting. The BlackRock Circular Economy Fund, launched in 2019, invests exclusively in companies that promote circular models, and its profitability outperformed the S&P 500 in some tranches. “Change is no longer an option, but a condition of competing,” Larry Fink, CEO of BlackRock, stated in his 2022 annual letter.
The rise of eco-design, production based on industrial waste, the second-hand market or repair platforms, opens doors to new business models in sectors ranging from fashion to construction, including technology. Even the financial market is beginning to measure “linear risk”, that is, the exposure of a company to obsolete and environmentally unsustainable production models.
“Cities that transform waste into innovation”
In Amsterdam, the circular economy became public policy and strategic plan. The city projects a 50% reduction in the use of raw materials by 2030, and to reach a 100% circular system by 2050. Among its initiatives is Circl, a bank building that can be completely dismantled to be reused in new projects. Its construction was made with recycled materials, and its furniture is completely second-hand.
In Latin America, the case of Reciclarg in Argentina is paradigmatic. This company is dedicated to the management of electronic waste, reusing up to 97% of the components it receives. In addition to reducing tons of technological waste, it generates employment and social inclusion, by incorporating workers previously excluded from the formal market.
Chile, for its part, launched the Roadmap for the Circular Economy to 2040, which seeks to eliminate illegal landfills, encourage eco-design and formalize recycling, which today falls mostly on informal recyclers.
Spain has also shown significant progress with the Circular Economy Action Plan promoted by the Ministry for Ecological Transition. There, projects such as Ecoembes or Too Good To Go not only fight against waste, but also generate scalable business models.
Even in sectors such as construction, which are traditionally resource-intensive, circular solutions are beginning to emerge. Recycled concrete, the reuse of structures or the digitization of materials through BIM (Building Information Modeling), allow reducing environmental impacts and at the same time saving costs.
In conclusion, the circular economy is not just an ecological alternative: it is a structural necessity and a real investment opportunity. Far from being a luxury for rich countries or an unattainable ideal, it is emerging as the basis of a new economic rationality: regenerative, inclusive and profitable. Committing to circularity today is, perhaps, the most sensible – and strategic – way to design tomorrow.
References:
- Boulding, K. E. (1966). The Economics of the Coming Spaceship Earth.
- Ellen MacArthur Foundation. Completing the Picture: How the Circular Economy Tackles Climate Change (2019).
- European Commission. Circular Economy Action Plan (2020).
- ECLAC. Circular Economy in Latin America and the Caribbean (2021).
- World Economic Forum. Circular Economy: What’s Next? (2023).
- Letter from Larry Fink to CEOs (BlackRock, 2022).
