Everyone’s talking about the circular economy. Fewer people can explain what it means in practice for a mid-sized Australian business that isn’t a recycling company. If you’re a manufacturer, a retailer, or a services business and you’ve been told you need a “circular economy strategy,” this article is for you.

What circular economy actually means

In the simplest terms, a circular economy aims to keep materials and products in use for as long as possible, extract the maximum value from them while in use, and recover and regenerate materials at the end of their service life.

The opposite — what we have now — is a linear economy: take resources, make products, throw them away. The circular model replaces “throw away” with “redesign, reuse, repair, refurbish, remanufacture, and recycle.”

For an Australian business, this means looking at your products, your operations, and your supply chain through a new lens. Where are materials being wasted? Where could products last longer? Where could waste from one process become input for another?

Start with a materials audit

Before you develop a strategy, you need to understand your current situation. A materials audit maps the flow of materials through your business — what comes in, what you do with it, and what goes out as waste.

This doesn’t need to be a six-month consulting engagement. For a small to medium business, you can start with a simple exercise:

List your top ten materials by volume or cost. For each one, track where it comes from, how it’s used, and what happens to the waste. Calculate the percentage that ends up in landfill.

You’ll almost certainly find opportunities you didn’t know existed. One manufacturer I spoke to in Western Sydney discovered that 15% of their raw material was becoming offcuts destined for landfill. A simple redesign of their cutting patterns reduced waste to 6%.

The easy wins

Some circular economy interventions are straightforward and pay for themselves quickly.

Packaging reduction. If you’re shipping products, look at your packaging. Can you reduce it? Can you switch to returnable packaging? Can you use recycled content? Australian consumers are increasingly receptive to reduced packaging, and in many cases it’s actually cheaper.

Waste stream separation. Properly separating your waste streams — recycling, organic, general — is basic but often poorly done. Many businesses pay for general waste disposal when a significant portion of their waste could be recycled or composted, often at lower cost.

Product durability. If you manufacture products, designing for durability rather than planned obsolescence is a circular economy intervention. Products that last longer require less material over time, and increasingly, customers are willing to pay more for quality.

Take-back programs. Can you take back your products at end of life and refurbish or recycle them? This works particularly well for electronics, furniture, and industrial equipment. It also builds customer loyalty and provides a secondary revenue stream.

The harder questions

Beyond the easy wins, circular economy strategy requires more fundamental thinking.

Product-as-a-service models. Instead of selling a product, can you lease it? This keeps ownership with the manufacturer, creates an incentive to design for durability and repairability, and generates recurring revenue. Carpet tiles, office furniture, and industrial equipment are all moving toward this model.

Industrial symbiosis. Can your waste become another business’s input? In Australia, the Kwinana Industrial Area in Western Australia is a well-known example where co-located businesses exchange waste streams. Similar principles can apply at a smaller scale — a food manufacturer’s organic waste becoming a composting business’s feedstock, for instance.

Design for disassembly. If you design products, can they be easily taken apart at end of life so that materials can be recovered? This is a design challenge that needs to be addressed at the product development stage, not as an afterthought.

The Australian policy landscape

Australian governments are increasingly supportive of circular economy initiatives. The National Waste Policy Action Plan sets targets for waste reduction and recycling rates. Several states have their own circular economy strategies.

There are also financial incentives available. NSW has the Waste Less, Recycle More initiative. Victoria has the Circular Economy Business Innovation Centre. The federal government has provided grants for recycling infrastructure.

These programs are worth investigating, but don’t design your circular economy strategy around grant availability. Build a strategy that makes commercial sense first, then look for government support to accelerate it.

Measurement matters

If you’re serious about circular economy, you need to measure your progress. The Ellen MacArthur Foundation’s Circulytics tool is one option for assessing circularity. Simpler metrics include material input per unit of output, waste diversion rate, recycled content percentage, and product lifespan.

Pick a few metrics that are relevant to your business, measure your baseline, set targets, and report on progress. This isn’t just good practice — it’s increasingly required by customers, investors, and regulators. For organisations looking to automate their sustainability tracking, working with AI consultants in Sydney can help set up dashboards that consolidate waste, energy, and material flow data in real time.

Don’t let perfect be the enemy of good

You don’t need to become perfectly circular overnight. You don’t need to redesign every product or restructure every supply chain. Start with the easy wins. Build capability. Learn what works. Then tackle the harder challenges.

The circular economy is a direction, not a destination. What matters is that you’re moving.