Sustainability in the Corporate World: A Strategic Imperative

At Solvay Brussels School, we define the Circular Economy not by what it saves, but by how it generates value. It is a fundamental decoupling of economic activity from the consumption of finite resources. For the forward-thinking leader, understanding this definition is the difference between tweaking a broken system and designing a resilient one.

1. The core definition: a system, not a loop

The linear economy—the "take-make-waste" model that has dominated industrialism since the 18th century—treats materials as disposable. The circular economy treats materials as assets.

A rigorous definition involves three design-driven principles:

1. Eliminate waste and pollution: Waste is viewed as a design flaw, not an inevitability.
2. Circulate products and materials: Keep materials in use at their highest possible value (rather than downcycling them into lower-grade inputs).
3. Regenerate nature: Moving from doing "less bad" to actively improving natural systems.

This requires a shift in mindset from efficiency (doing things right) to effectiveness (doing the right things).

2. The two cycles: biological and technical

To understand circularity, one must understand the distinct flows of materials. This is best visualised through the "Butterfly Diagram," a concept popularised by the Ellen MacArthur Foundation.

The economy is split into two distinct cycles:

• The biological cycle: Materials that are biodegradable (e.g., food, cotton). These should return to the earth to regenerate nature. The goal here is consumption followed by regeneration.
• The technical cycle: Materials that are finite (e.g., metals, plastics). These should never enter the biosphere. The goal here is usage, not consumption. Through sharing, maintenance, reuse, remanufacturing, and recycling, we keep these assets in circulation.

The leadership insight: If your business strategy treats technical materials as if they were biological (i.e., disposable), you are leaking value.

3. "Value retention" vs. recycling

A common platitude is that "recycling is the goal." In a strict circular definition, recycling is actually the last resort—the loop of lowest value.

When you recycle a smartphone, you destroy the complex labour and energy embedded in its structure to recover raw materials worth pennies. When you refurbish or remanufacture that same phone, you retain the high value of the labour, energy, and component integrity.

For Solvay leaders, the definition of circularity is Value Retention Architecture. It asks: How do we keep our product at its highest utility for as long as possible?

4. The economic rationale: decoupling

Why should a CFO care about definitions? Because the linear model exposes companies to massive volatility. Price spikes in raw materials and supply chain disruptions are symptoms of a linear reliance on finite extraction.

The circular economy offers decoupling: the ability to grow revenue without a corresponding increase in resource extraction. By selling services instead of products (Product-as-a-Service), or by mining your own install base for materials, you insulate your organisation from commodity volatility.

5. Moving from compliance to strategy

Regulations such as the EU’s Digital Product Passport are codifying these definitions. However, waiting for regulation is a defensive stance.

The "Homo Universalis" of tomorrow uses circular principles as an offensive strategy. They redefine their relationship with the customer—moving from a one-time transaction to a continuous relationship centred on service, repair, and upgrades.

Sources & Further Reading

• Defining the system:  Ellen MacArthur Foundation for the standard industry definition.
• The Solvay perspective: See our insights on Sustainable Strategy for in-depth coverage of circular economics.

• Interested in gaining the skills to lead this transformation? Learn more about our Sustainable Value Creation Through ESG short programme, our Executive EMBA programme, and other executive education opportunities at Solvay Lifelong Learning.

Article last updated on 10/02/2026