As warnings about climate change and environmental degradation grow ever louder, people across the world are starting to challenge the sustainability of the linear production and consumption model of “take, make, use, dispose.”
There is now a growing urgency felt by many business leaders and governments that the world should shift from this linear paradigm towards the “circular economy” of “take, make, use, reuse and reuse.”
A linear economy often leads to a system that is inefficient, costly and depletes natural resources. A byproduct of the linear model is material waste, which takes up space and may include contaminants. 
Going circular envisages an economic system where product lifespans are extended and components used repeatedly. Waste is eliminated by designing products that can be reclaimed, re-used and re-manufactured. 
Sure, there are close parallels with recycling. The two ideas are connected, but not the same. Circular economy has come to connote an approach that’s more systemic and ambitious than recycling. A truly circular economy would involve no new material inputs at all, reducing emissions, waste and eventually costs. 
As environmental, social, and governance (ESG) metrics are increasingly factored in investment decisions, the circular approach was taking hold at the World Economic Forum gathering in Davos last week. 
Unilever has pledged to reduce the amount of plastic packaging it produces by 14% each year by 2025. Adidas wants to almost double the number of shoes produced from recycled plastic this year to 20mn. Nestle has also set targets to slash packaging, while Alphabet Inc’s Google has begun advising companies on how to harness data to better manage resources.
BlackRock has started a fund focused on the circular economy in October alongside the Ellen MacArthur Foundation. 
A wider adoption of the concept would not only cut costs and bolster productivity, advocates say, but climate change and pollution would be tempered. It represents a $4.5tn opportunity globally by 2030, according to Peter Lacy, author of The Circular Economy Handbook.
On the flip side, some academics argue that it doesn’t address what they see as the fundamental problem of pursuing limitless growth. The global economy now needs 100bn tonnes of materials a year, according to the not-for-profit organisation Circle Economy, a figure set to more than double by 2050. Historically, for every 1% increase in gross domestic product, resource usage has risen on average 0.4%.
Longer term, however, the key challenge is getting more governments and companies on board. 
The European Commission has a circular economy action plan, which includes transforming the way plastic products are produced and recycled. It’s also part of China’s five-year plan. The German government offers grants to design products that have a lower environmental impact, or are cheap to repair. 
And the government in India introduced a law in 2012 requiring manufacturers of electronics and white goods to provide “take-back” services when a product reaches the end of its life.
A totally circular economy — with no waste and no new materials at all — is likely impossible to achieve, but squeezing the maximum waste out of the system could curtail use of new resources.
And for the financial world, here’s the message: A shift towards circular economy presents a sustainable investment opportunity.