Six Benefits of a Circular Economy Business Model

Six Benefits of a Circular Economy Business Model

Sustainable development needs disruptive changes in the way businesses and societies are organised. The circular economy (CE) model offers new chances to integrate natural resources, businesses, waste management and people’s everyday lives.

With the adoption of the circularity model, businesses can change how they consume resources.

The model is particularly relevant in the context of the operations of the textile industry, which produces tons of waste every year, causing mass pollution worldwide. With renewable resources, the use of circular fibres, repairing and recycling, the industry can minimise wastage and have many other benefits.

If you are still unaware of the benefits of this business model, read the section below.

  1. Increased business resiliency

When you switch to a circular business model, you will focus on using fewer non-renewable resources. As a company, it will reduce your exposure to the volatility of material prices and disruptions in the supply chain.

You probably have already noticed an increased disruption in the supply chain, which will likely be more frequent in the future. By shifting towards a decentralised circular economy, you can increase your resilience and have an advantage over your competitors.

  1. More business opportunities

Circularity in business leads to job creation which is a huge advantage for businesses. Furthermore, companies also make optimum use of their existing resources, which decreases material costs and helps them run more efficiently.

Modern-day consumers support companies who promote green initiatives and conduct business responsibly. Therefore, adopting a more environmentally sustainable business model increases your customer base.

  1. Increase customer loyalty

Adopting the circular business model leads to changes in subscriptions and contract terms, which creates long-term relationships between an organisation and its customers. Hence, when you adopt this model, you can gain insight into the consumption pattern of customers and offer them better services. Improved services invariably translate into brand loyalty and increased profits.

  1. Reduce emission of GHG

The textile industry produces greenhouse gases in massive quantities at every stage of the product life cycle. The use of a circular model promotes sustainable material management. With this model, you can manage your materials more efficiently by promoting reusing and recycling, encouraging renewable resources, and adhering to sustainable practices. This way, you not only reduce the production of waste but also encourage the development of new industries around better waste management.

  1. Reduce resource consumption

The linear business model is resource-intensive and, therefore, not sustainable. With a greater focus on the circular economy, you can move towards remanufacturing, repairing and recycling practices and lessen the amount of resource consumption. Therefore, if you adhere to such practices, you can reduce the consumption of resources by almost 70 per cent.

  1. Improved benefits for customers

A circular business model creates a lot of benefits for consumers. Since the model discourages planned obsolescence, the reuse of materials is prioritised, which makes the products last longer. Also, it promises an increase in disposable income by encouraging practices like renting or leasing, buying used items and other economic practices that will benefit the consumers.


Shifting from a linear to a circular business model is not a small undertaking. It requires the alignment of government initiatives, business approaches and consumption decisions. However, it is the call of the hour, and the businesses that adopt the changes sooner will likely have an advantage over other businesses. Customers are also making more purchases from businesses expressing a desire for a more sustainable approach and making changes throughout their value chain. So, it’s time you assess the principles of circularity in your business and implement the changes.

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