Circular economy: what it is and how to apply it in your company

Why it matters: Circularity is usually framed as an environmental topic, but the gain that sustains the project is cost: less material bought and less waste paid for.

What the circular economy is

The circular economy is a model in which products, components and materials stay in use for as long as possible, and whatever is left over goes back as input to the same supply chain or another one. The contrast is the linear economy: extract, make, use and discard. For a company, the practical question is simple: how much of what I buy ends up as waste I pay to dispose of, and how much of that could be avoided, reused or sold?

What Brazilian law already requires

Brazil’s National Solid Waste Policy (Law 12,305/2010) already contains much of the circular logic:

• Order of priority (Article 9): non-generation, reduction, reuse, recycling, waste treatment and, last, environmentally sound final disposal of residual waste. Recycling is not the first step; it is the fourth.
• Shared responsibility for the product lifecycle (Article 30): manufacturers, importers, distributors, retailers, consumers and public cleaning services share duties to reduce waste and impacts.
• Mandatory take-back (Article 33): manufacturers, importers, distributors and retailers of pesticides and their packaging, batteries, tyres, lubricating oils and their packaging, fluorescent, sodium and mercury vapour and mixed-light lamps, and electrical and electronic products must set up systems to take products back after use. The law allows extension to plastic, metal and glass packaging and other products by regulation or sector agreement.
• Solid waste management plan (Articles 20 and 21): required, among others, for commercial and service businesses that generate hazardous waste or waste the municipality does not treat as household waste, and for construction companies. Minimum content includes a waste diagnosis, owners for each stage and targets for minimisation, reuse and recycling.
• Prohibited disposal (Article 47): dumping on beaches, at sea or in water bodies, open-air dumping and open burning or burning in unlicensed equipment.

Decree 11,413/2023 created three instruments for the Article 33 take-back systems: the reverse logistics recycling credit certificate, the packaging structuring and recycling certificate and the future mass credit certificate. They allow obligated companies to demonstrate results through recycling carried out by third parties.

The four moves

1. Design better: durability, ease of repair and disassembly, single materials, fewer components. The European Commission states that over 80% of a product’s lifecycle environmental impact is determined at the design phase, which is why the EU Ecodesign for Sustainable Products Regulation, in force since 18 July 2024, targets that stage.
2. Use less virgin material: cut packaging, switch to recycled content where specifications allow, buy in bulk.
3. Extend product life: preventive maintenance, repair, refurbishment, resale of used equipment, rental or service models instead of sales.
4. Close the loop: take-back, recycling and by-products that become another company’s input.

Step by step: applying it in your company

1. Diagnose your waste. List each waste type, monthly volume, classification (hazardous or not), current destination and cost. It is the same diagnosis a waste management plan requires.
2. Pick the priority stream. Start with the waste of greatest volume or cost, usually packaging, scrap, production leftovers or organic material.
3. Climb the hierarchy. For that stream, ask in order: can we avoid it? Reduce it? Reuse it internally? Only then, recycle.
4. Run a pilot. A supplier that accepts returnable packaging, a buyer for scrap, a cooperative for recyclables. Measure cost and volume for three to six months.
5. Check legal duties. If you make, import, distribute or sell Article 33 products, confirm how you meet take-back obligations: your own system, a sector managing entity or certificates.
6. Demand proof of destination. Keep waste transport manifests and final destination certificates issued by licensed receivers.
7. Scale and report. Once the pilot is proven, extend it to other streams and take the indicators into your sustainability report.

Practical examples

• Food manufacturing: organic process leftovers sold for animal feed or composting instead of paid landfill.
• Distribution: returnable pallets and plastic crates with key suppliers, removing single-use cardboard on fixed routes.
• Offices and services: laptops and furniture refurbished and resold at the end of their internal life; discarded electronics sent through the sector’s take-back system.
• Construction: on-site waste segregation so sorted rubble can be reused and metal sold.

Bringing suppliers and customers in

• Purchasing: include recycled content, returnable packaging, spare-part availability and extended warranties in purchase criteria.
• Contracts: provide for return of packaging and pallets, collection of equipment at end of life and responsibility for disposal.
• Customers: explain clearly how to dispose of or return the product, and offer collection points where the company is part of a take-back system.
• Local partners: waste-picker cooperatives, licensed recyclers and other companies that could use your waste as an input.

How to measure progress

Start with two numbers: virgin material per unit produced and the percentage of waste diverted from landfill. Then add disposal cost per tonne and revenue from by-product sales. These indicators also feed the GHG inventory, since waste sent to landfill generates Scope 3 emissions. See how to build a GHG inventory.

What circularity is not

• Swapping plastic for another single-use material and calling it a solution.
• Creating your own “recyclable” label with no collection chain to back it.
• Announcing “zero waste” without proof of destination. Environmental claims without evidence are the classic target of greenwashing complaints.

Frequently asked questions

Read next: what ESG is.

Primary sources: National Solid Waste Policy, Law 12,305/2010, in Portuguese (Presidency of Brazil); Decree 11,413/2023 on reverse logistics certificates, in Portuguese (Presidency of Brazil); Ecodesign for Sustainable Products Regulation (European Commission); Circular economy action plan (European Commission).