Header

Circular Economy: What It Is and What Its Principles Are

tag

The circular economy is a system that seeks to reduce and prevent waste by making better use of resources in companies’ manufacturing processes. It also promotes energy savings, helping to prevent irreversible damage to the environment caused by production activities and prioritizing the use of durable and renewable materials.

With authorities and leaders paying ever-closer attention to initiatives that benefit the environment, the circular economy has been gaining momentum in recent years and has become an essential part of various industrial projects.

How did the circular economy come about?

In 1989, the circular economy came to the forefront with the publication of the book *Economics of Natural Resources*—*Economia dos Recursos Naturais* in Portuguese—by David W. Pearce and R. Kerry Turner, British environmentalists and an economist. The term was first mentioned in this publication, which describes it as a counterpoint to the linear economic model.

What are the benefits and main impacts of the circular economy?

As a model focused on increasing supply chain efficiency, reducing the amount of materials used, and preserving product value, companies are increasingly adopting effective practices for reuse, repair, and recycling. And we already know that the impacts are significant, such as reduced air, soil, and water pollution.

According to a survey released in 2023 by the logistics company CHEP in Latin America, Brazilians are the most optimistic about the circular economy and are the most likely to adopt sustainable practices related to the topic. The survey reported that 77% of people in Brazil donate items they no longer use, such as clothing and toys; 68% regularly recycle; and 54% repair objects.

There are many short-term benefits and long-term strategic opportunities for companies that embrace this concept:

  • An improved image among consumers, employees, and society as a whole, as companies are recognized as responsible organizations that care for the well-being of the planet;
  • Promotion of best practices, increasing competitiveness compared to other companies in the same industry;
  • Cost reduction;
  • Increased operational efficiency;
  • Opportunity to generate new business;
  • Improved customer relationships.

What are the three principles of the circular economy?

The establishment of a circular economy model involves two cycles: the biological cycle and the technical cycle. The biological cycle underlies consumption and is responsible for replenishing the raw materials used in companies’ production processes, enabling them to be reintegrated into the environment after use. The technical cycle is dedicated to restoring products that have already been used through reuse, repair, and recycling.

At its core, the concept of the circular economy is based on three fundamental principles:

1

Eliminate waste and pollution at the source of production
It consists of ways of thinking about and questioning the supply chain in order to prevent the excessive generation of waste and pollution. These measures should be implemented starting with the design of the product or service, taking into account all stages of the process, to prevent waste, surplus, and pollution, and to reduce trash.

2

Keep products and raw materials in use
The circular economy is a way of “recalculating” the path, focusing on actions that do not make intensive use of finite resources; its goal is to reuse or recycle products whenever possible. Thus, this principle holds that all materials should be used for as long as possible.

3

Restoring Nature
Sustainable practices contribute to the recovery of the ecosystem. When implemented as ongoing and planned processes within companies, they strike a balance between the production of goods and the preservation of the environment. Regeneration enables organizations to restore environmental resources.

How can we implement the circular economy?

Although businesses have the greatest impact on the environment, it is very important that each individual also do their part and adopt circular economy practices.

Understanding how the concept works, recognizing the importance of renewable resources, and making the most of materials to reduce waste disposal are key to implementing the circular economy.

In companies, several factors must be considered when implementing the system:

• Prioritizing recyclable and reusable materials;
• Developing sustainable projects;
• Strengthening environmental education and awareness for everyone;
• Developing long-term solutions;

In everyday life, society can also help by taking very simple actions as part of daily routines:

Reducing meat consumption and prioritizing organic foods

Agricultural activities and extensive livestock farming are responsible for a large part of the factors leading to an increase in atmospheric carbon concentrations, primarily due to the resulting changes in land use. In addition, they contribute to the formation of greenhouse gases such as methane (CH4), which, although emitted on a smaller scale than carbon dioxide (CO2), is more than 20 times more effective at intensifying the effects of global warming.

Reduction in waste generation

By using products that generate less waste and adopting practices such as repair, reuse, and recycling, we can extend the useful life of the items we consume and, as a result, reduce our environmental impact.

Use of public transportation or electric vehicles

Choosing sustainable mobility is a good choice from an environmental, social, and economic standpoint. The use of electric cars—which are less polluting because they produce fewer greenhouse gases (GHGs)—and public transportation, particularly trains and subways, as well as bicycles and carpooling, are alternative ways to get around urban areas.

Circular Economy and Sustainability

The circular economy adapts manufacturing and consumption processes to a cyclical model, extending the useful life of products—a dynamic that is directly linked to sustainability.

As practical examples, in the circular economy, instead of throwing away a plastic container, the recommended approach is to repurpose it for a new use—such as reusing it to store another liquid or sending it for recycling—without polluting the environment. On a large scale, this type of initiative promotes significant gains in sustainability.

What is the difference between a circular economy and a linear economy?

Unlike the circular economy, which seeks to reduce environmental impact by making the most of resources and extending the useful life of products, the linear economy is based on the consumption of resources and the production of waste, following the “extract, produce, and discard” model.

The linear production and consumption model has been predominant for centuries, with mass production as its central objective. To achieve this, raw materials are extracted on a large scale, resulting in severe environmental damage.

Neoenergia: The Circular Economy as an Opportunity for a Sustainable Model

For Neoenergia, the circular economy is a key element of sustainable development and represents an opportunity in the energy transition and the fight against climate change. The company’s sustainable energy model—committed to innovation, decarbonization, and the electrification of the economy—is directly aligned with the circular economy. This is achieved through reducing emissions and raw material consumption, using renewable resources for energy production, improving efficiency, optimizing resources, and maximizing waste reuse.

The company has identified three strategic areas of sustainability: climate action, biodiversity protection, and the circular economy.

The circular economy model presents itself as a system of infinite resource utilization, as opposed to the linear model that has existed until now. Therefore, Neoenergia prioritizes reducing the use of new raw materials through process efficiency, extending the useful life of products, and a firm commitment to the reuse and recycling of materials.

To achieve this, it is necessary to act on the pillars of the circular economy:

  • Consumption
  • Waste
  • Energy Efficiency
  • CO2 Emissions