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Walter R. Stahel

R. Stahel

Walter R. Stahel is a Swiss architect and industrial analyst. He is the founder of the Product-Life Institute, a not-for-profit consulting organization that promotes sustainable strategies and policies.


Walter R. Stahel

Circularity, Circular Economy, Circular Industrial Economy and Performance Economy

In order to structure the many facets of Circular Economy, I distinguish four types of “circularity”, which exist simultaneously and in parallel all over of the world:

(1) Circularity has been inherent in nature — water, CO2, matter and energy — and also in early civilization — reuse, barter and cascading of goods and materials. A sustainable consumption of natural capital — food, land and water — and the protection of the global commons such as oceans, atmosphere, biodiversity and space is a necessity to conserve the carrying capacity of nature and the survival of humankind.

(2) The early Circular Economy was driven by scarcity and poverty and based on the reuse and repurposing of objects, as well as the skills of do-it-yourself and local craftsmen repairing individual objects — infrastructure, buildings and mobile goods — to maintain their use value. This circular economy is locally integrated and lives on in many countries, motivated either by scarcity, ethical or religious convictions (such as the Amish people in the USA and charitable organization worldwide) and increasingly as a result of social self-help initiatives, such as repair cafés, food donations and garment exchanges. Individuals are the key players of circular economy.

(3) The Circular Industrial Economy (CIE) focuses on making the best use of the stocks of natural, human, cultural and manufactured assets. It was triggered by the emerging society of abundance in the mid-20th century and started through research on the impact of extending the service-life of objects on jobs and waste, energy and material resource consumption. The industrialization of reuse, repair and remanufacture in the CIE is a viable and regional low-carbon alternative to the global Linear Industrial Economy. The CIE took first roots in the industrialized regions of the USA and Northern Europe; Japan joined the trend in the late 20th century, with a special interest in Eco-Design; China adopted the CIE in the early 21st century as part of its national development and reform policy. The role of individuals’ shifts in the CIE from consumers to users — sustainable consumption of manufactured objects is an oxymoron. Eco-design is used to minimize environmental impairment. As the CIE substitutes manpower for energy, the traditional focus of policymakers on recycling and waste management should shift to taxing resource consumption and waste instead of taxing human labour, which is a renewable resource.

(4) The Performance Economy (PE) integrates the principles of the CIE and in addition retains the ownership of objects and as a consequence internalizes the costs of liability, risks and waste. The PE sells the performance or function of objects by, for example, renting or leasing instead of selling them. In this ‘sharing economy’, liability and control are split between owners and users (stewardship). The fields of activities of the PE are broader and more competitive than those of the CIE because they include systems solutions and exploit prevention and sufficiency strategies, in addition to efficiency. Eco-design is now a corporate strategy to increase long-term profitability. This opens numerous new business models both on the supply side (such as Private Finance Initiatives and rent-a-molecule) and demand side (such as sustainable public procurement through buying objects as a service). Today, the PE rapidly expands with the growth of the Internet of Things (IoT). As users now become prod-users, producers of user data, policymakers are challenged to adapt the protection of authorship (intellectual property rights) accordingly.

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