The circular economy is a system where materials never become waste and nature is regenerated. In a circular economy, products and materials are kept in circulation through processes like maintenance, reuse, refurbishment, remanufacture, recycling, and composting. The circular economy tackles climate change and other global challenges, like biodiversity loss, waste, and pollution, by decoupling economic activity from the consumption of finite resources.
There are two distinct cycles that constitute a circular economy – a technical cycle and a biological cycle, both of which together resemble a butterfly, hence the butterfly diagram, as depicted in the diagram from Ellen Macarthur Foundation.