What is a circular economy?

A circular economy is a set of sustainable economic practices. It is driven by the efficient use of finite resources and the minimization of waste. This involves keeping products and materials in use, in contrast to the linear economy where businesses operate based on a take-make-waste model. Unfortunately, the linear model takes raw material to make a product and sells it to consumers, who at the end of the product’s life dispose of it.

However, Dutch conglomerate Philips shows us how a circular economy can look like. It is at the forefront of companies implementing a circular system, using a make-use-return model. Instead of selling lightbulbs, the company provides lighting as a service while retaining ownership of the bulbs. Customers, in turn, can save money by paying only for the lease on the bulbs. They can also be free from the hassle of discarding and replacing blown bulbs themselves. Moreover, this model allows the company to pursue better maintenance and improvement of its products, contributing to fostering a lasting customer relationship.