Linear business models follow the “take-make-waste” principle, while circular business models aim to keep materials and products in the usage cycle for as long as possible. The central difference lies in whether value creation is based on one-time resource consumption or on reuse, the extension of life cycles, and recovery.
In linear business models, raw materials are extracted, processed into products, used, and subsequently disposed of. This model is heavily dependent on the availability of cheap primary raw materials and is often associated with high volumes of waste, rising costs, and increasing environmental impacts. Against the backdrop of resource scarcity, price fluctuations, and regulatory pressure, this model is increasingly reaching its limits.
Circular business models intervene at several points: products are designed to be durable, repairable, or modular; materials are reused, recycled, or refurbished; and new revenue models emerge—such as through product-as-a-service, take-back systems, or resale. Value creation arises not only from the sale of a product but from its use across multiple cycles.
For companies, the transition to circular business models represents a strategic realignment. It requires a rethink in design, procurement, production, and sales, and should be clearly anchored in the sustainability strategy. At the same time, circular models make a significant contribution to the climate strategy, as they reduce material- and energy-intensive processes and specifically lower Scope 3 emissions.
Circular business models are also gaining importance in the context of sustainability reporting and supply chain due diligence. They create transparency regarding resource flows, reduce risks in the supply chain, and strengthen the long-term resilience of the business model.
