How Startups Can Help the Circular Economy Succeed

Circular Economy

By Evoléna de Wilde d’Estmael, co-founder & CEO of Faircado

According to the 2021 Circularity Gap Report, only about 8.6% of the global economy is circular, which is a backslide from the 9.1% it was in 2018. To keep our planet habitable, it’s estimated that we need to reach at least 17% global circularity.

The circular economy is built on three main principles: 

  1. Eliminating waste and pollution
  2. Circulating products and materials
  3. Regenerating nature

By implementing circularity, businesses worldwide can make lasting changes in global crises like climate change, pollution and loss of biodiversity, slowing and potentially even reversing the damages. 

There are five main strategies that circular businesses can use: reduce, reuse, recycle, repurpose, retrieve. Often, companies will utilize more than one circular strategy in their bid for sustainability. However, startups have a few advantages over established businesses, which is why they are vital to a thriving circular economy.

The Importance of a Circular Economy

The Ellen MacArthur Foundation defines a circular economy as one based on “the principles of designing out waste and pollution, keeping products and materials in use and regenerating natural systems.” 

While companies and countries have made promises to work toward a greener future, the current pledges are still not enough to prevent the climate from rising another 2.4 degrees Celsius (just over 4 degrees Fahrenheit), which can set off a domino effect of serious negative consequences worldwide.

Fortunately, the circular economy has been rapidly gaining traction, especially among startups. The faster we manage to make our economy circular, the better off our planet will be, and startups are proving that they are ready and able to lead the way toward a successful shift to a circular economy. 

Here’s How Startups Are Moving Us Toward Circularity 

A recent white paper examining the disruptive potential of startups noted that 54% of circular startups are willing to embrace the circular strategies of regenerating and reducing compared to only 35% of established companies. In addition, startups are more likely to implement business models that focus on innovation, collaboration and low environmental impact. 

A startup is also able to build its entire business model around the idea of a circular economy, leading to true disruption of the status quo and trailblazing a better path for current and future businesses. It can often be difficult for established companies to shift their practices to ones that have not been well-tested, so startups can help prove that innovative strategies genuinely do work. 

Startups are also in a unique position because they don’t have the same weight of bureaucracy and consumer expectations to perform under. This frees them to try new things and educate the public about why a circular model is beneficial for all. 

For example, biotech startup Mycoworks is exploring an eco-friendly mushroom leather alternative and has even secured backing from Hermes for its potential. Other businesses promote a “sharing” model, allowing users to rent everything from clothing to electronics, thereby extending the lifespan and usefulness of products that would have likely been discarded or purchased for one-time use. 

Closing the Loop, One New Business at a Time 

Creating the world we want to live in seems like a tall order. However, every new startup that joins the ranks offers another opportunity to innovate, collaborate and simplify the transition from a wasteful linear economy to a sustainable, circular business model that has a positive impact along every aspect of the value chain. 

Not only do startups have the creativity and agility to address both social and environmental needs, but they also have the power to lead the charge into a better, greener, more resilient future.


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