What is the circular economy? TechnoServe's latest explainer discusses key benefits of a circular economy and the obstacles and challenges to adopting a circular model.

“Humanity’s 21st century challenge is to meet the needs of all within the means of the planet.”

Kate Raworth

Today, the linear economy of take-make-waste is being replaced with a growing global movement toward a circular economy. 

The Ellen MacArthur Foundation defines the circular economy as “a systemic approach to economic development designed to benefit businesses, society, and the environment.” 

The circular economy evolved from cradle-to-cradle design and regenerative systems. It designs out waste, promotes reuse, and ensures materials flow continuously in a regenerative cycle. It is an intersectional and complex system designed to stop unsustainable economic practices that threaten natural resources and climate stability.

Core Principles of the Circular Economy

The circular economy is built on three key principles:

  1. Design Out Waste and Pollution

Designing out waste means proactively eliminating harmful outputs like plastics, carbon emissions, and pollution. This includes using biodegradable materials, modular product designs, and safe business models that minimize harm.

  1. Keep Products and Materials in Use

Reusing, repairing, remanufacturing, and recycling are at the heart of circularity. Instead of throwing away, products are designed to live many lives, benefiting consumers and the planet. 

  1. Regenerate Nature 

Beyond reducing harm, circular economy principles seek to move us from an extractive system to a regenerative model. At TechnoServe, we advocate for regenerative agricultural practices that help replenish natural resources like soil, water, and air. These practices make the Earth more productive and livable for present and future generations.

Core Framework of the Circular Economy

TechnoServe’s report “Inclusive Loops: The Crucial Role of Social Enterprises in the Circular Economy” outlines the 9Rs framework, which provides a widely used way to describe circular economy strategies. These strategies are grouped into four types of “loops”: Narrow, Slow, Close, and Regenerate. Each loop represents a different level of circularity, with the Narrow loop achieving the highest level.

An infographic that illustrates the loops of circle economy: Narrow, Slow, Close and Regenerate.

Narrow loops aim to reduce material and energy use:

Slow loops focus on extending the life of products and their components:

Close loops involve reusing materials:

Regenerate loops involve shifting to renewable resources and practices that protect and restore ecosystems.

Circular Economy and the SDGs

Aligning with UN Sustainable Development Goals

The circular model aligns well with the global aspirations laid out in the U.N. Sustainable Development Goals (SDGs) by optimizing supply chains, designing with care, and promoting recycling. The United Nations Economist Network provides a detailed overview in the “New Economics for Sustainable Development: Circular Economy.”

Goal 1: End poverty in all its forms everywhere 

Goal 2: End hunger, achieve food security and improved nutrition, and promote sustainable agriculture

Goal 3: Ensure healthy lives and promote well-being for all at all ages  

Goal 4: Ensure inclusive and equitable quality education and promote lifelong learning opportunities for all

Goal 5: Achieve gender equality and empower all women and girls

Goal 6: Ensure availability and sustainable management of water and sanitation for all

Goal 7: Ensure access to affordable, reliable, sustainable and modern energy for all

Goal 8: Promote sustained, inclusive and sustainable economic growth, full and productive employment and decent work for all

Goal 9: Build resilient infrastructure, promote inclusive and sustainable industrialization and foster innovation. 

Goal 11: Make cities and human settlements inclusive, safe, resilient and sustainable

Goal 12: Ensure sustainable consumption and production patterns

Goal 13: Take urgent action to combat climate change and its impacts

Goal 14: Conserve and sustainably use the oceans, seas and marine resources for sustainable development

Goal 15: Protect, restore and promote sustainable use of terrestrial ecosystems, sustainably manage forests, combat desertification, and halt and reverse land degradation and halt biodiversity loss 

Goal 16: Promote peaceful and inclusive societies for sustainable development, provide access to justice for all and build effective, accountable and inclusive institutions at all levels

Goal 17:  Strengthen the means of implementation and revitalize the Global Partnership for Sustainable Development 

Women cacao farmers spreading beans to dry with wooden rakes, Mabubu Farmer Business Group, Matema Ward, Kyela District, Mbeya Region, Tanzania. (TechnoServe / Nile Sprague)

Key Benefits of a Circular Economy

There are many advantages to transitioning to a circular economy, from the regeneration of nature to fostering innovation and growing social inclusion. 

“The circular economy could unlock $4.5 trillion of economic growth and create six million new jobs, many of which will be in developing countries and will support further industrialization through activities like recycling, repair, rent, and remanufacture,” said U.N. Assistant Secretary General Ligia Noronha in a speech at the 2025 REMADE Circular Economy Technology Summit and Conference.

Environmental Impact and Biodiversity

A global transition from an extractive, linear model to a circular economy is essential to easing the immense strain on our planet’s finite resources. According to Earth Overshoot Day, humanity currently uses natural resources 1.7 times faster than Earth can regenerate them, essentially requiring the resources of 1.7 planets. 

Circular economy practices, which eliminate waste and pollution while keeping materials in use, are key to reversing this trend and protecting biodiversity and natural ecosystems. 

TechnoServe works with farmers and entrepreneurs to demonstrate how circular principles can be applied at scale. In Ethiopia, for example, TechnoServe has helped coffee wet mills adopt environmentally friendly processing techniques that dramatically reduce water use and contamination. 

Innovation and Economic Impact 

Circular economy processes are engineered to be incubators of innovation that disrupt the take-make-waste model. 

By prioritizing reuse, recycling, and regenerative design, circular systems challenge industries to create products and business models that are restorative by design. 

For instance, Dutch company Fairphone produces modular smartphones that are easy to repair and upgrade, reducing electronic waste and extending product life. Similarly, Patagonia’s Worn Wear program encourages customers to repair, trade in, and buy used gear, keeping clothing in circulation longer and reducing the need for new resource extraction. 

Social Inclusion and Equity

Circular economy principles naturally uplift marginalized populations by creating dignified jobs in sustainable sectors and ensuring access to clean resources. TechnoServe’s work offers clear examples of this in action. 

In Kenya, TechnoServe’s BlueBiz program provides training and facilitates market connections for waste pickers who collect plastic that might otherwise pollute the ocean. The program also helps participants access funding to construct material recovery facilities. Participants currently help to recycle 1-2 tons of waste per week. 

By embedding circularity into value chains, TechnoServe helps ensure that economic opportunity and environmental stewardship go hand in hand for marginalized communities.

Obstacles and Opportunities to Adopting the Circular Model

As we face more interconnected social and environmental challenges, transitioning to a circular economy seems like a common sense solution. Unfortunately, global interest in the model has not matched global action. According to the Circularity Gap Report 2025, global consumption has continued to skyrocket even as the adoption of secondary materials has decreased from a low of 7.2% down to just 6.9%. Recycled materials that can be used in manufacturing processes instead of or alongside virgin raw materials as known as secondary materials.

The United Nations Economic Network has noted that real progress will occur when circular initiatives displace linear ones, not when they coexist. For this to happen, practical applications and regulatory frameworks must ensure that producers and consumers take action. 

“We need to prepare ourselves to transition towards circular societies rather than mere circular economies. To this end, we need to understand aspects like the social impacts of circular innovations, new types of employment and organizational forms, and the role of citizens and grassroots initiatives needed to generate a positive impact.”
Professor Dr. Nancy Bocken Professor, Maastricht University

In transitioning to a circular economy, we must be vigilant about unintended consequences and managing trade-offs. The World Resources Institute notes the importance of ensuring economic benefits are equally distributed among lower-income and wealthier countries. Consumer behaviour must change along with the shift to sustainable natural materials. 

The International Chamber of Commerce outlined barriers and opportunities in a recent report

Policy and Regulatory 

Obstacles

Opportunities

Technology

Obstacles 

Opportunities

Infrastructure 

Obstacles 

Opportunities 

Financial 

Obstacles 

Opportunities 

Organizational 

Obstacles

Opportunities 

Social 

Obstacles

Opportunities 

Global Progress Toward a Circular Economy

Global leaders and innovators gathered to share circular economy solutions at the World Circular Economy Forum 2025, held in Brazil this year. (Everton Amaro / Fiesp)

Governments worldwide are incorporating circularity into urban planning, waste laws, and procurement strategies. These policy shifts drive large-scale transformation.

The European Union’s Circular Economy Action Plan, UN circular initiatives, and global climate accords provide strong frameworks for advancing circular economy principles globally. 

The World Economic Forum has noted that circular economy strategies like repair, refurbishment, remanufacturing, and recycling can help developing countries lay the groundwork for long-term, inclusive economic growth. Local movements like repair cafés, refill stores, and cooperative recycling programs show how circular economy models can thrive at the community level—even in resource-limited settings.

When nonprofits, businesses, and governments collaborate, they accelerate systemic circular transformation, building smarter supply chains and driving innovation.

Did you know… 

Finland was the first country in the world to adopt a national circular economy road map? The European nation has set an ambitious target for 2035, also committing to carbon-neutrality. Read more.

…In India, rice husk ash—a major air pollutant—is being turned into silica, a key component used in manufacturing tires and athletic gear? Brisil Technologies is one of TechnoServe’s clients in the Greenr program. The company is now profiting from the circular economy. Read more in our 2024 Annual Report.

….A waste entrepreneur in South Africa who collected cardboard using his own car in 2019 has grown to become a profitable venture? Today, ReCha, one of RLabs’ ventures, is a recycling, material-waste-management, and commodity-trading center employing more than 60 people and generating $2 million in revenue.

Nonprofits as Circular Economy Catalysts

Many social and economic development nonprofits like TechnoServe are pivotal in advancing a circular economy through education, outreach, and programs. 

For over 50 years, TechnoServe has used business solutions to tackle the wicked problem of poverty. We have integrated regenerative practices and inclusive business models into our work with smallholder farmers and entrepreneurs in around 35 countries. We are global in our outlook and local in our practice with close community ties that allow for creative and impactful solutions.

How the Circular Economy is Transforming Agriculture 

“You can’t achieve environmental sustainability without economic sustainability–and vice versa,” noted Katarina Kahlmann, TechnoServe’s former Chief Program Officer, at the launch of Regenerate 30. This ambitious initiative seeks to put farmers and small businesses at the heart of the solution to create a people-, nature- and climate-positive world. 

By 2030, TechnoServe’s work will benefit 30 million people, cut 30 million tons of CO2e, and strengthen the protection, management, and restoration of 30 million acres of land and water.

In Senegal, our CASA Technical Assistance Facility (TAF) shared key insights with the UK government after taking a close look at the country’s circular agriculture sector. Our work has helped update Senegal’s circular economy strategy, brought new energy to a committee focused on agro-circular solutions, and created flexible training programs. We’re also helping individual businesses move toward more sustainable practices by offering hands-on support for some of the 13 top investment opportunities. At the same time, we’re building connections between companies that produce waste and those that can turn it into useful products.

How the Circular Economy is Enhancing Entrepreneurship

TechnoServe addresses key challenges that micro, small, and medium enterprises face in the circular economy, including:

TechnoServe works to identify missing links in the value chains, the obstacles that entrepreneurs face, and the opportunities for different actors in the sector.

We collaborate with key partners across the ecosystem to help micro and small businesses adopt circular practices that boost the bottom line, support the growth of recycling businesses and other green enterprises, and help micro-entrepreneurs launch waste-collection businesses.

How the Circular Economy is Tackling Pollution

In the Kenyan capital of Nairobi, 62% of waste is incinerated or disposed of in illegal dumpsites, along the side of the road, or in waterways, according to this UN-Habitat report. The Smart Duka program is working to change that by helping micro-retailers to become champions for recycling. The program has worked with 50,000 duka owners since 2015, helping them to grow their businesses and offer essential goods and services to their communities.

In 2023, the program integrated waste management into its training curriculum and market linkage activities. Nearly 300 duka owners have entered the formal recycling sector as waste aggregators. They collect plastic and cardboard from their own operations and purchase materials collected by waste pickers.

They then sell the materials to recycling businesses.

Participants appreciate the additional revenue stream. “I didn’t know I was throwing away money,” said Samuel Okwemba. “Through the Smart Duka training, I learned to correctly segregate waste, sell it to a recycler, and get an extra coin that went to expanding my business.”

How Donor Support Fuels Circular Projects

Philanthropy is key to scaling small wins into big systems change. Donors can unlock potential in grassroots programs and influence policy change through strategic support.

Philanthropic giving allows nonprofits to:

Leveraging Tech for the Circular Economy

A comprehensive review on leveraging digital technologies notes that how we manage resources, design products, and assess sustainability has vastly improved. We are now capable of real-time monitoring, data aggregation, and sophisticated predictive modeling. 

Digital technologies have revolutionized key aspects of the circular economy. Tools such as Internet of Things (IoT), artificial intelligence (AI), blockchain, and big data analytics help optimize supply chains, increase transparency, and reduce emissions and resource consumption. 

According to this Forbes piece, AI could unlock multiple benefits for the circular economy, ranging from increasing the lifespan of products, improving resource efficiency, streamlining supply chains, and improving recycling. 

In product design, technologies like computer-aided design (CAD) and simulation software enable organizations to create products with circularity in mind, focusing on durability, reparability, and recyclability. 

Digital platforms also support efficient waste management and material recovery, transforming end-of-life products into resources and enabling closed-loop systems that reduce environmental harm.

The study also highlighted challenges, including data privacy, lack of interoperability, and skill gaps. Addressing these issues will require targeted investments in infrastructure, education, and policy support. 

Measuring Circular Economy Impact

It is critical to measure and evaluate the various complex loops of the circular economy if we are to accurately assess what works and what doesn’t. The Resonance Group also identifies the importance of alignment and transparency around key performance indicators to give us all a common lexicon to work from.   

As an emerging discipline, the circular economy still lacks a common lexicon or a standardized framework for monitoring and evaluation. The following are a few of the frameworks in use: the Circular Transition Indicators, Planetary Boundaries, and the Key Elements Framework

Key Metrics and KPIs to Track Progress

Did you know…

…126,000 tons of CO2e emissions were mitigated by TechnoServe projects that promote regenerative practices in 2024.  

…189,000 hectares of land were under regenerative management through TechnoServe clients’ project activities in 2024.  

…our work with waste pickers is changing attitudes to this important service that recovers waste from landfills? 

Circular Actions for Individuals

Conscious Consumerism in Everyday Life

Being a conscious consumer means being part of the circular economy through purchasing decisions aligned with our ethical, environmental, and social values. This definition from Corey Ames makes a helpful distinction: 

“Conscious consumerism is the practice of mindfully and intentionally buying and using products as a statement of values. The opposite of conscious consumption is mindless consumption.”

Mindless consumption is thoughtless, extractive, and wasteful—a paradigm for the linear economy. In contrast, the circular economy aligns with actions that you and I can take to support a circular economy. 

So what choices can you make as a conscious consumer?

Here are some practical tips using the 9Rs of the circular economy:

R0 – Refuse

Refuse to indulge in retail therapy. Save money and the planet by saying no to products and services that result in excessive waste or rely on the harmful extraction of natural resources. Say no to freebies you don’t need, plastic straws, and over-packaged items. Join a Buy Nothing group in your neighborhood to shift from purchasing to no-cost sharing.

R1 – Rethink

Rethink how you consume. Could you borrow instead of buying? Start or join a community tool shed where neighbors invest in high-quality, multipurpose tools that everyone can borrow and maintain. Rethink upgrading your phone with every new model. Software updates often extend the life of your current device.

R2 – Reduce

Stop buying fast fashion. It’s creating an avalanche of waste and flooding landfills and oceans with plastic microfibers. A shocking amount of fast fashion is made of synthetic materials derived from fossil fuels. Instead, choose timeless, high-quality clothing or buy secondhand. 

R3 – Reuse

Switch to durable, reusable items like water bottles, coffee cups, shopping bags, and food containers. A single-use plastic bottle might serve you for 15 minutes, but it will pollute our earth for approximately 450 years. Buy secondhand, host clothing swaps, and creatively repurpose items in your home before tossing them.

R4 – Repair

Before discarding something broken, search for a “how to repair” video—there’s a YouTube tutorial for almost everything. Better yet, join a repair café or community workshop. In Washington, D.C., some local libraries even host events where you can learn to give old clothes a new life

R5 – Refurbish

Refurbish old furniture, electronics, or appliances to extend their life and save resources. Many companies now offer certified refurbished products that are as good as new, often at a lower cost. Consider giving a second life to something you might otherwise discard.

R6 – Remanufacture

Support businesses that remanufacture—i.e., rebuild used products like electronics, engines, or furniture using salvaged parts for the same purpose. Some companies now offer modular devices that are designed to be taken apart and rebuilt. 

R7 – Repurpose

Repurpose materials from old products for a new use. Turn glass jars into storage containers, old t-shirts into cleaning rags, or shipping pallets into garden furniture. Crafting and DIY projects can be a fun and sustainable hobby.

R8 – Recycle

When reuse or repair isn’t an option, recycle responsibly. Learn your local recycling rules. Please don’t wish-cycle by putting non-recyclables in the bin and hoping for the best. Look for drop-off programs for hard-to-recycle items like batteries, textiles, and electronics.

R9 – Recover

Support systems that recover energy from waste when no other circular option exists—like composting food scraps to generate biogas or heat. At home, start with composting your kitchen waste; many cities now offer compost pick-up or drop-off options.

Last but not least, give with circular principles in mind

Your donation can support reuse centers, climate tech, or zero-waste education—causes rooted in circular economy principles that multiply impact over time.

Did you know…

…the Conscious Consumer Spending Index (CCSIndex) has tracked socially responsible spending since 2013? This ongoing benchmarking study gauges momentum for conscious consumerism and charitable giving. 

A sale promotion in Birmingham, England. (Quim Gil CC BY-SA 2.0)

The Future of the Circular Economy

As the world grapples with interconnected wicked problems, it’s clear that scaling up a circular economy will benefit people and the planet. The World Economic Forum notes the importance of integrating circularity into business models, nurturing sustainable synergies, improving value chains, investing in behaviour and culture change, and taking small steps toward significant changes. 

Emerging Trends to Watch

The circular economy is about rethinking entire systems. 

New trends are shaping this shift, like using AI to track how materials move through the economy, creating local repair networks, breaking down products at the molecular level for reuse, and using blockchain to follow items through their life cycle. More companies are also offering products as a service—like leasing instead of selling—and using smart technology to manage returns and reuse. 

Here are a few trends to track: 

The end goal is to build efficient, connected, and designed systems to reduce waste while creating long-term value.

How You Can Get Involved Today

Support nonprofits practicing circularity, reduce your emissions, and advocate for policies that protect natural resources and encourage smarter business models.

The circular economy gives us a sustainable path forward, one that allows us to live with and within the natural resources of our planet. It’s clear that we have a long way to go, but at least we are on the right track. As we continue to learn more, we can hold companies accountable and make small, meaningful changes that can cumulatively have a big impact.

Rainbow (Didier Bottin – CC BY-NC-SA 2.0)

FAQs

Frequently asked questions

What are examples of a circular economy?

Bike-sharing systems, refillable packaging, and plastics turned into building materials are great examples.

How does the circular economy fight climate change?

By cutting emissions, conserving energy, and restoring natural resources.

How can I support the circular economy as a donor?

Fund nonprofits that promote circular economy principles, local reuse hubs, and sustainable innovation.

What’s the role of tech in circularity?

It enables smarter supply chains, optimizes business models, and verifies progress through data.

Is the circular economy realistic for low-income communities?

Yes—many reuse and recycling models are already thriving in these areas. With support, they can be scaled.

Can small nonprofits implement circular practices?

Absolutely! From community composting to upcycled goods, nonprofits are ideal stewards of circularity.


Trishna Gurung

Trishna Gurung

Trishna Gurung | तृष्णा गुरुङ्ग (she/her) is the senior director of communications at TechnoServe. She is passionate about building courageous communities using communications to connect heart and mind toward action that breaks past fear, apathy, and indifference. With close to 20 years of global nonprofit experience starting in her home country Nepal, Trishna has led award-winning global campaigns, built engaged and high-performing teams, and advanced justice and equity in her professional roles. She holds a master's degree in mass communications and journalism from Bond University, Australia. She is a proud immigrant and a budding green thumb who not-so-secretly misses being a radio jockey.

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