6 things you need to know about the circular economy

By Fiona Stephenson

A radical redesign of our economic system is underway. It’s better for business, society and the environment. It’s called the circular economy, and last week we hosted the head of the world’s leading organisation on the topic. Here’s what he had to say.

Andrew Morlet is chief executive of the Ellen MacArthur Foundation, based in the UK. He’s on a mission to accelerate the transition to a circular economy and last week he visited New Zealand to meet with businesses and government. He shared his insights at public events and in turn learnt about the initiatives underway in Aotearoa.

You can watch a recording of his public talk here or view our video below.

Here are our top six takeaways from his visit.

  1. The circular economy is accelerating fast.

The Ellen MacArthur Foundation was founded only eight years ago. It has grown in that time to have a staff of 130 and global partners including Google, Nike, H&M, Unilever, Philips, Danone and Renault. More and more businesses, cities, universities and governments around the world are getting involved. The Foundation is the world’s leading organisation on the circular economy and the concept is gaining traction rapidly.

So, if you’re unfamiliar with the concept, now’s the time to get up to speed. A circular economy is one where the lifecycles of materials are maximised, usage optimised and at the end of life all materials are reutilised. It is a sustainable and viable alternative to the dominant ‘take-make-waste’ linear model. A circular economy brings prosperity that is restorative and regenerative by design.

The circular economy is based on three simple principles:

  • Design out waste and pollution.
  • Keep products and materials in use.
  • Regenerate natural systems.


  1. The existing economic system is ripe for disruption.

Our existing economic system involves extracting raw materials to make new products. Recycling takes place at the end of the pipe. It is a massively wasteful system. Products aren’t designed to be recycled and few designers consider how materials can be reinserted into a value chain. With growing awareness of our finite natural resources, it is becoming increasingly apparent we need to change the system – and fast.

  1. The circular economy is giving purpose to the digital revolution.

Digital technology is enabling the circular economy at pace and scale. An example is Airbnb, a worldwide accommodation leader that doesn’t own a single bed. Digital tools enable people to participate in the economy very differently. They also allow small communities, previously excluded, to get involved.

  1. Plastics could be the tipping point.

The Ellen MacArthur Foundation’s work on plastics has been ground-breaking. Plastics are part of our everyday life, yet one of the most wasteful examples of our economic system. At current rates, by 2050 there will be more plastics in the ocean by weight than fish. Yet until recently, the only known solution was beach clean-ups.

The Ellen MacArthur Foundation applied systems thinking to the plastics problem, working with hundreds of organisations over three years. The resulting report, the New Plastics Economy, was a breakthrough in finding a way forward that would benefit the economy as well as the environment. Released at the World Economic Forum, the report received greater media coverage than any report released at the Forum.

The focus was plastic packaging. The report found that only 14% is collected for recycling and just 2% returned into the value chain. 40% goes to landfill and 32% is leaked to the ocean or environment. The initiative focused on solutions: we need to select materials and design packaging so there is value in plastics after initial use.

Following release of the report, Unilever pledged to make all plastic packaging reusable, recyclable or compostable by 2025. In itself this is a bold move, but the global corporate is setting the standard for other companies to follow suit.

  1. Change is already happening.

There are examples of the circular economy emerging all around the world. Renault is collaborating with other companies to create a new vehicle where 36% of the total mass is made from recycled materials. It’s one of Renault’s most profitable business units. Splosh sells dissolvable slugs that can be added to water bottles to make liquid detergent. It’s based on a reusable plastic container and a service model that’s low cost, convenient and innovative.

You can view more case studies from the Ellen MacArthur Foundation here. Meanwhile, good New Zealand case studies include finalists of the new Going Circular category of the NZI Sustainable Business Network Awards.

  1. There is an opportunity for New Zealand.

New Zealand, a small island nation, with an entrepreneurial ethos and unique cultural perspective, can be a leader in the circular economy.

Since 2014, the Sustainable Business Network has been leading the effort to accelerate New Zealand to a circular economy. In 2017 we created the Circular Economy Accelerator to amplify our efforts to achieve our vision. Momentum is building rapidly. New initiatives include working with the Ellen MacArthur Foundation to lead the New Plastics Economy in the Pacific region in collaboration with the Ministry for the Environment.

Find out more.

Check out these resources for further reading:

Ellen MacArthur Foundation

Circular Economy Accelerator

Rod Oram: A radical reinvention of our economy (Newsroom, 4 March 2018)

Can a circular economy save us from ourselves? The Ellen MacArthur Foundation’s Andrew Morlet thinks so (Idealog, 27 February 2018)

Thank you to all our project partners.