Circular economy explained

What is the meaning of a circular economy and what are the main principles?

The circular economy is a system where materials never become waste and nature is regenerated. In a circular economy, products and materials are kept in circulation through processes like maintenance, reuse, refurbishment, remanufacture, recycling, and composting. The circular economy tackles climate change and other global challenges, like biodiversity loss, waste, and pollution, by decoupling economic activity from the consumption of finite resources.

The circular economy is based on three principles, driven by design:

Underpinned by a transition to renewable energyrenewable energyEnergy derived from resources that are not depleted on timescales relevant to the economy, i.e. not geological timescales. and materials, the circular economycircular economyA systems solution framework that tackles global challenges like climate change, biodiversity loss, waste, and pollution. It is based on three principles, driven by design: eliminate waste and pollution, circulate products and materials (at their highest value), and regenerate nature. is a resilient system that is good for business, people, and the environment.


In our current economy, we take materials from the Earth, make products from them, and eventually throw them away as waste – the process is linear. In a circular economy, by contrast, we stop waste being produced in the first place.


We must transform every element of our take-make-waste system: how we manage resources, how we make and use products, and what we do with the materials afterwards. Only then can we create a thriving circular economy that can benefit everyone within the limits of our planet.

A way to transform our system

What will it take to transform our throwaway economy into one where waste is eliminated, resources are circulated, and nature is regenerated?

The circular economy gives us the tools to tackle climate change and biodiversity loss together, while addressing important social needs.

It gives us the power to grow prosperity, jobs, and resilience while cutting greenhouse gas emissions, waste, and pollution.

How the circular economy works

Get the basics or explore the circular economy in detail.

Close up of butterfly wings
Learning resource

The butterfly diagram: visualising the circular economy

The 'butterfly diagram' shows the continuous flow of materials in a circular economy.

  • Circular economy explained

Circular economy principles

A circular economy is based on three principles, all driven by design.

Circular economy examples

See the circular economy in action with these case studies from brands, businesses and policy makers.

  • Citeo

  • CATL

  • SOJO

Glass bottles

A nationwide, shared system for reusable packaging

The Citeo ReUseproject is an ambitious initiative bringing reusable packaging to a large scale within the retail sector across four major regions in France: Brittany, Normandy, Pays de la Loire, and Hauts-de-France, collectively reaching over 16 million people. This project allows shoppers to purchase certain products in reusable packaging and then return the containers in-store via collection machines, facilitated by a user-friendly deposit-return system.

Dig deeper

Video series: What is the circular economy?

Explore the circular economy by topic

Close up of steel in a bridge

Built environment and the circular economy

In a circular economy our built environment can be a force for good

  • Built environment
Photo of building with trees growing on it

Cities and the circular economy

This topic area looks at the role cities play in the transition to a circular economy.

  • Cities
Abstract image

Circular design and the circular economy

Design is a force for change. From innovative products or disruptive business models to entire...

  • Design
Coloured textile cloth

Keeping fashion and textiles in use

Together we can tackle the barriers to circular economy implementation at scale and keep fashion...

  • Fashion
Looking up at skyscrapers

Finance and the circular economy

This topic area looks at the role of the financial sector in the shift to a circular economy.

  • Finance
Close up of wheat in a field

Food and the circular economy

This topic area shows that we can create a food system that is better for nature, climate, and...

  • Food
Plastic pellets

How to Prevent Plastic Pollution and Eliminate Waste

Discover how the circular economy can help eliminate plastic waste, reduce pollution and drive...

  • Plastics
  • Mission
Rounded stones in water causing water ripples

Activating policy for a circular economy

Policymakers can create the enabling conditions for the circular economy to outcompete linear...

  • Policy
  • Circular economy explained