Embracing the Circular Economy: 10 Lessons from Nature for Business

March 24, 2023

Global businesses have uniformly settled in a defensive holding pattern in this prolonged period of mitigating the global pandemic. “Wait and see” is a mantra that has provoked the inaction of even the most bullish of companies. This is understandable. Businesses still face many unknowns, economic hardship, and the mitigation of numerous weak points in their global value chains. Moreover, businesses are learning the depth of interconnection and interdependence to each other, public health trends, and the environment. Acting independently and decisively in a context of global dependency is all but easy.

As another layer to the current business context, the pressures of consecutive environmental shocks mount. The frequency and magnitude of these environmental shocks are accelerating, as exemplified by the fires in the American West and the hurricanes ravaging the Atlantic. The devastation they are leaving is a tragic reminder us that our climate is vulnerable and stressed. It has its limits.

Businesses will require new approaches if they are to “turn back on.” To answer this need for fresh thinking, we present an untapped and underleveraged source of inspiration: nature. Compared with the mere hundreds of years of industrial innovation that we can claim as a modern economy, nature boasts 3.8 billion years of research and development. As Janine Benyus explains, “Failures are fossils.”[1]  There is a lot we can discover if we only look for it. Inspiration for businesses can be found everywhere, be it redwood forests, coral reefs, slow-growth forests, beehives, prairies, or many more. The key for businesses will be to draw inspiration from natural systems, not singular organisms. Working within the confines of a system comprise the new chapters that businesses must write as they design strategies for growth in the new economy. It’s time for systems thinking.

Complex natural systems have been studied by ecologists for centuries, and out of that, industrial ecologists have emerged to assess how ecological systems can inspire industrial systems. They ask us to contemplate one central question: What if a close-looped, sun-driven biology were to become our default functional model for our broader economy? This question is at the root of our analysis and recommendations that follow. The research below is built by the great systems ecologists, biomimics, and innovators of our time and offers business leaders a different set of opportunities as they seek new approaches to growth.

We’ve highlighted and summarized these ten lessons in the slide show below. For full details and business examples, scroll down to read how these lessons can be applied to your business. Each of the ten lessons is exemplified to showcase how these ideas both can be put into action and have been put into action by innovative businesses around the world. Although they may appear aspirational or altruistic, applications across industries and geography show their actionability, profitability, and effectiveness.

A foundational lesson from systems ecology is that as a system puts on more weight, it needs more recycling loops to keep it from collapsing. These systems are able to circulate what it needs within its pool of new or dying/decaying organic matter, as opposed to exchanging nutrients and minerals with the outside environment. All waste is food. The only thing imported is energy from sunlight. The only thing exported is the byproduct of the energy use: heat.

Danish Ecoparks – Look no further than the eco-industrial parks that are emerging in Northern Europe. Kalundborg, Denmark, boasts the world’s most elaborate prototype of an industrial, closed-loop system.[2] Instead of a linear production system, which necessitates virgin raw materials and emits unusable waste, ecoparks are designed to bring together companies that use each other’s waste as primary inputs. For example, in Kalundborg, the Asnaesverket Power Company passes its waste steam to power the engines of two companies. A different pipeline delivers the remaining waste steam to heat 3,500 homes. The power plant delivers its cooling water, in a warm state, to 57 fish ponds with 250 tons of sea trout and turbot. Even if not collocated, companies can operate in such a closed-loop web as long as they are connected by information and a mutual desire to use waste. As governments tighten regulation on waste, emissions, and ecological footprints for manufacturers, manufacturers will have to start embracing this concept and incorporating into their long-term planning.

In mature ecosystems, cooperation exists alongside competition. In fact, it seems to be just as important. Using cooperative strategies, organisms spread out into noncompeting niches, which embeds a dynamic stability to the system. To achieve harmonious resource allotments, animals claim territories or feed at different times of day. Ecologist Paul Colinvaux calls this “peaceful coexistence” and is understood to be essential to all evolution. Classic examples of cooperation include oxbirds and hippos, microbiota of the gut, and goby fish and the Nassau grouper fish—one animal helps the other by removing/eating unwanted pests in exchange for room and board and protection.

Vehicle Recycling Partnerships – Both Japanese and US auto manufacturers have created new forms of precompetitive cooperation in their vehicle recycling partnerships, which include competitive brands such as Chrysler, Ford, and GM. Trade associations, alliances, and other organizations have developed common labeling and materials standards that enable these companies to reuse each other’s parts. Much to their benefit, cars turn out to be one of the most recyclable products. Evidence of this is the low energy use required, as automobile recycling reduces energy use by as much as 75 percent.[3]

We learn from nature that not everything can be recycled. Energy is one of those items. When humans, animals, and machines do work, energy is converted to heat and thus often becomes unavailable to do more work. Energy must continually be imported into the system, whether its design is linear or a closed loop. Trees provide a natural example of the need to continually input energy with their efficient solar-collection mechanisms. Leaves are positioned relative to one another to maximize exposure and tilt toward the sun. Thrift delivers tremendous return to animals. Even in the development of bones, skin, shells, and webs, organisms have evolved to worker smarter, no harder, for this need of efficiency.


Energy Efficiency Programs – As renewable energy technology continues to improve and is not less expensive than carbon alternatives, we are now finally at an acceleration point in the transition to a carbon-free economy. During this time of transition, we see utility companies investing in system improvements and helping consumers plug leaks at companies’s expense. They recognize the financial gains in weatherproofing customer homes, for example, which eliminates construction costs of new plants from budgets. It is estimated that energy efficiency programs return benefits of $2 or more for each dollar invested.[4] All of those savings allow for structural updates to new renewable and localized platforms.

As natural systems mature, the priority shifts from throughput to optimizing closed nutrient and mineral flows to ensure both the survival of fewer offspring and long-term reproductive fitness of the entire system. Organisms enjoy rewards for being efficient and learning to do more with less. Those that survive live within their means. Ecologists Allenby and Cooper credit the resilience of ecosystems to their pace, “They aren’t doing anything in a hurry. The slower the flow rates, the more you can modulate the controls.”[5]

Factory Refurbished Products – It’s estimated that 85 percent of manufactured items quickly become waste in our current system. When you combine municipal and industrial waste, every person in the US produces twice his or her own weight waste every day. That’s enough to fill two Louisiana Superdomes daily.[6] As the pains of waste management grow deeper in this country and many others, we are seeing the increasing acceptance of factory refurbished products in the form of engines, batteries, stereos, computers, and home appliances. For those companies that can innovate new product design processes and systems, the opportunity is immense. In the US alone, consumers throw away as many as 130 million phones a year, and the current recycling rate is only 8 percent. This results in 119,6000 cell phones that end up as toxic waste in landfills every year. All of these components could be inputs for a circular-thinking refurbisher. The EPA estimates that recycling those phones would reap 75 pounds of gold, 772 pounds of silver, and 35,274 pounds of copper.[7] Not a bad deal.

Overbuilding in nature has negative consequences for lavish species, since it means a diminished supply of resources to use in the future and requires more of their energy. Form follows function. What is needed is built. Honeycombs are an example of this; they enclose the maximum amount of space with the minimum amount of walling material.

The Sharing Economy – The trend of dematerialization has taken off and allows companies to use less material to produce a lighter, smaller, and sleeker product. Computers that fit into your palm are an example of just that. Another example is in our most common mode of transport, as the average car body has shed about 1,000 pounds since 1975.[8] The sharing economy is also accelerating this trend, as car-sharing and Airbnb models of leasing/renting, make it easier, more efficient, and cost-effective to own fewer things. The sharing economy is set to reach $335 billion by 2025, and that companies working in sharing economies will grow by over 1,000 percent in 12 years.[9] In the US in 2016 alone there were 45 million adults using sharing economy services a figure that is forecast to increase to 86.5 million by 2021.[10] What’s your play in the sharing economy?

Organisms eat, breathe, sleep, and cohabitate in their manufacturing facility: their habitat. As such, their chances of survival plummet if they harm their nests. For example, poisonous snakes don’t store their toxins in bulk. Instead, they create small batches to use only when needed. Furthermore, animals don’t use high heats, strong chemicals, or high pressures to manufacture as humans do. All of these things would contribute to a “fouled nest.” All in all, by not putting undue stress on supply chains or cleanup mechanisms in their environment, organisms earn the right to keep making a living there.

Pollution Prevention as Windfall of Cost Savings – 3M was one of the first major US corporations to experience the cost savings of pollution prevention. According to their own accounting, in its first 20 years, pollution prevention has saved them an estimated $750 million and spared the planet 1.2 billion pounds of waste.[11] The company adopted 4,350 cleaner-production projects in categories such as product reformulation, process modification, equipment redesign, recycling, and the cover of waste materials for resale. 3M learned that eliminating toxins from processing proved cheaper than cleaning up the toxins afterward.

In nature, the best predator is the one that doesn’t completely eliminate its prey. Similarly, a parasite that intends to survive won’t kill its host. When sufficient room is provided, buffaloes will roam in distinct patterns rather than overwhelm and decimate their prairie homes. The negative feedbacks in nature keep organisms from chewing off the hand that feeds them.

Sustainable Forestry – In forestry, this concept is called a “sustained yield,” and the idea is to only harvest what has grown that year, so the company can live on interest as opposed to depleting the principal. Smart forestry outfits have learned this, although many fall to the incentives to liquidate their assets by cutting down trees when wood prices stagnate. We see the understanding of this concept and the cooperation needed to drive global sustainability in the formation of the Forest Stewardship Council, an international non-profit, multi-stakeholder organization established in 1993 with the mission to promote responsible management of the world’s forests. It is an example of a market-based certification program used as a transnational environmental policy. It, like other resource-focused associations, has faced criticism for not doing enough or aligning too deeply to corporate incentives. Nevertheless, it is a starting point in achieving this lesson for businesses.

All ecosystems mentioned roll up to the total biosphere. In the most general sense, this is the layer of air, land, and water that supports all life. This system is closed and its resources are finite. There are dynamic balances all around us. One is the level of gases in the atmosphere. In photosynthesis, plants inhale carbon dioxide and exhale oxygen. Respiring animals take this same oxygen and return carbon dioxide to the atmosphere. Neither of these gases is removed or returned in excess. This is a stable and stabilizing give-and-take. Life maintains the conditions needed for life. All of life is dependent on maintaining these balances and each has a role to play.

Renewable Energy Adoption – Industrial ecologists identify our answer in an industrial ecosystem that can integrate with the biosphere without harm. Unlike the biosphere, our industrial systems are open and linear systems. We can look to countries for examples, in this case, in adoption of renewable energy systems. Iceland and Costa Rica are clear leaders and source nearly 100 percent of their energy from renewable sources — one step closer to achieving the balance with the biosphere. Iceland generates the most clean electricity per person on earth in its development of geothermal and hydroelectric power plants.[12]

Mature ecosystems, just like leading innovative companies, are data driven. They have installed rich communication channels that carry feedback to all members. Excess and waste find a check-and-balance by natural mechanisms that reward efficient behavior and punish the overindulgent.

Companies are learning about these feedback loops, whether they are due to environmental regulation, dwindling output, consumer pressures, degraded source materials, or rising costs of inputs. From a consumer lens, the greening of products, certifications, and labeling is becoming more coveted and enhancing brand value. In the past 20 years, we’ve seen a burgeoning of certifications to promote a company’s commitment to organic farming, fair trade, local-sourcing, and much more. As of January 2011, there were 1,000 companies certified to the FLO International’s certification and a further 1,000 or so certified to other ethical and fair trade certification schemes around the world.[13] Although these certifications have proved to show gains in consumer trust and benefits to the value chain, more work remains to be done to ensure their efficacy and holistic perspective.Shop Locally – Unlike today’s Amazon users, animals can’t import products from all corners of the world and have them arrive at their doorsteps in weeks, days, or even hours. Animals must shop locally and demonstrate millions of years of evolutionary expertise at navigating their backyards. For instance, mountain lions have coevolved with mountain goats. The mountain lions have the optimal physique and teeth to prey on and eat them. The goats, on the other hand, have evolved clever defenses to an enemy they know. Staying close to home conserves energy and makes the best use of an organism’s abilities.

Near-Sourcing – In the era of online shopping and extreme convenience, we tend to ignore this lesson completely. The trend and focus have been to build a global, borderless economy. A single product is often assembled in a dozen different countries. Foods, even if they could be produced locally, are trucked, flown, and shipped from foreign countries. Against this trend, the global pandemic has made us question the merits of such a system, as we have learned that with deep dependency comes deep vulnerability to unanticipated health risks. See our piece on regenerative supply chains for more thinking. The concept of near-sourcing and going “glocal” are powering trends that are picking up momentum the next normal. Companies see the benefits of agility and resilience that were previously overshadowed by cost efficiencies. We’ll see this lesson unfold as we are forced to operate differently.

These lessons are not about altruism. Instead, they are about how we structure things, and generating new opportunities for businesses as they learn to adapt within the constraints of a post-carbon economy. Businesses and governments that understand their boundary conditions will see opportunities for growth that others cannot. These companies, like the species that live by these lessons, will prosper as the world around them changes.

We welcome the ideation that will be required to turn these concepts to practical and profitable pathways for companies. For more information, don’t hesitate to reach out to our team: info@telesostrategy.com.

[1] Benyus, Janine. Biomimicry: Innovation Inspired by Nature

[2] Kalundborg Symbiosis: http://www.symbiosis.dk/en/

[3] World Economic Forum, How care manufacturers can reduce waste

[4] National Conference of State Legislatures, “Encouraging Efficiency: Policies to Promote Utility Energy Efficiency”

[5] Allenby, Braden, and William Cooper, “Understanding Industrial Ecology from a Biological Systems Perspective”

[6] Benyus, Janine. Biomimicry: Innovation Inspired by Nature

[7] NFP, “Don’t Trash or Stash Old Cell Phones; Recycle Them”

[8] Benyus, Janine. Biomimicry: Innovation Inspired by Nature

[9] SpendMoney

[10] Statistica, “Number of sharing economy users in the US from 2016 to 2021”

[11] 3M Sustainability report: https://www.3m.com/3M/en_US/sustainability-us/goals-progress/

[12] EcoWatch, “Iceland: World’s Largest Clean Energy Producer Per Capita”

[13] Fairtrade International, Fairtrade Labelling Organisations International (FLO)

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