Circular Economy and the Barriers to Bussinesses in Transitioning to It

CIRCULAR ECONOMY
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Circular Economy
The current economic system takes raw materials from the Earth and turns them into products, eventually returning them to the Earth as waste. This economic model is linear. On the contrary, a closed-loop economic system, or circular economy, is based on eliminating waste and enhancing the continuous usage of resources (D'amato et al., 2019). This paper aims to discuss the concept of the "circular economy" and the barriers that businesses that want to transition into this economic model face. Additionally, it provides insights into real-world business examples that have adopted a closed-loop economic model and how they have achieved it.
The need for sustainability has gained importance in the past few years due to the increased depletion of raw materials. Due to the rapid depletion of raw materials, studies have demonstrated that a sustainable economy is the only feasible way to ensure future generations have resources (D'amato et al., 2019). In a circular economy, there is no wastage of resources since organizations use the residues to produce other new products. This system enables businesses to reduce the amount of waste they generate and release into the environment.
Stahel and Reday are considered the fathers of the circular economy after providing its concepts back in 1976. They related their concepts to product life extensions and their development processes in their work. Later in 1981, Stahel submitted a paper titled "The Product Life Factor," in which he explained the principles of the circular economy (Rathinamoorthy, 2019). In this paper, Stahel's primarily based the definition of the "circular economy" on the product life cycle extension. Stahel, in 1981 emphasized that extending the life cycle of a product is the first step towards a sustainable economy, but the progress should be consistent with the availability of resources (Rathinamoorthy, 2019). The second step has a strategy that is consistent with the role of businesses in society. The product life cycle determines their replacement period, the consumption of resources required to produce them, and the volume of waste they create.
When product life cycles are short, demand for replacement goods increases if affordable. On the other hand, extending the product life cycle optimizes its total life span, reducing resource depletion and waste. This action helps in building and increasing wealth. Stahel concluded the definition by stating that the more prolonged use of products contributes to the transition toward a closed-loop economy.
According to Stahel, product reuse and recycling are major resource conservation and waste reduction strategies for industrial production. Therefore, Stahel provided two primary concepts of the circular economy: product-specific and material-specific. Under product specificity, there is an emphasis on product reuse and life extension, whereas material specificity emphasizes loops during post-use waste and resources. In the second concept, Stahel detailed four loops: reuse loop, repair loop, reconditioning loop, and recycling loop (Rathinamoorthy, 2019). By "reconditioning," Stahel meant using t...