For decades, the dominant economic model has been based on a relatively simple linear logic: extract resources, produce, sell and discard. This model proved effective in a context where resources were abundant, environmental costs were not part of the economic equation and supply chains operated with relative predictability. That context, however, no longer exists.
Today, companies operate in an environment shaped by volatile raw material prices, fragile supply chains, increasing scrutiny from clients and investors, and a rapidly evolving regulatory framework. Circularity has therefore moved beyond being a peripheral topic and is now part of the core discussion on efficiency, risk and competitiveness.
The publication in March of the new Circular Economy Action Plan (PAEC) reinforces this shift. The document clearly points towards an economy less dependent on resources, with greater material valorisation, more durable products and new business models based on reuse and lifecycle extension. More than a policy guideline, this framework is already translating into concrete market and regulatory conditions.
The Structural Problem of the Linear Model
Circularity is still often associated with waste management or recycling. However, this view falls short of the core issue. The problem does not lie only at the end of the cycle, but in how the system is designed from the start.
Linear models imply a constant dependence on external inputs — whether raw materials, energy or components — whose cost and availability are increasingly volatile. This dependence translates into operational and financial risk. When supply disruptions occur or prices increase, companies have limited room to respond.
It is precisely at this point that circularity gains strategic relevance: by reducing waste and creating alternatives within the production system, it allows companies to reduce that exposure.
Waste as Economic Loss
One of the most common barriers to adopting circular practices is the perception that they imply additional costs. However, this perspective overlooks a key point: waste already exists — it is simply not identified as such.
Material losses, process inefficiencies or underutilised resources are often embedded in operational costs and therefore not treated as a strategic issue. Still, they represent economic value that companies are failing to capture.
According to the Ellen MacArthur Foundation, a significant share of value across production chains is lost precisely because material loops are not closed and product lifecycles are not extended. In this context, circularity becomes a way to recover that value and improve economic efficiency.
Resilience in a Context of Uncertainty
In recent years, multiple crises have exposed the vulnerability of supply chains overly dependent on specific geographies or suppliers. This reality has brought resilience to the forefront of business management.
Circularity contributes to resilience by reducing the need for external inputs and by making better use of existing resources. Reusing materials, valorising by-products and extending product lifecycles increase operational autonomy and reduce exposure to external shocks.
According to the European Commission, the transition to circular models is directly linked to reducing dependence on imported raw materials and strengthening resource security in Europe — a critical issue in the current economic and geopolitical context.
More Than Efficiency a Shift in the Model
The framework created by the PAEC and European policies does not simply push companies to reduce impact. In practice, it is redefining what a competitive business model looks like.
Circularity is no longer just about operational efficiency; it is increasingly linked to how value is created. Models based on reuse, repair or product-as-a-service represent new forms of customer relationships and new revenue streams.
The Challenge of Implementation
Despite the strategic and regulatory momentum, implementation remains a challenge. In many organisations, circularity is spread across different areas without an integrated vision that allows for real impact. The lack of structured data, difficulties in measuring material flows and the absence of clear indicators remain significant barriers.
Without this integration, circularity tends to remain limited to isolated initiatives, disconnected from core business strategy.
Where to Start
The transition to circularity does not require an immediate transformation of the entire business model. In many cases, it begins with a more rigorous analysis of operations: identifying where value is being lost, understanding critical dependencies and assessing risks associated with materials and resources.
This exercise allows circularity to be framed not as an abstract concept, but as a practical management tool.
The Model That can no Longer Sustain the Future
The linear model has not disappeared, but it is increasingly exposed to the limitations of a rapidly changing economic, environmental and regulatory context. The publication of the PAEC reinforces this trend and makes the direction clearer.
Circularity emerges, therefore, as an evolution of the business model — a way to reduce waste, gain control and increase resilience. More than a sustainability issue, it is a matter of competitiveness. And that is, perhaps, the most relevant shift of all.
Excerpt written by Beatriz Santos
*Cover photo by Declan Sun on Unsplash
