Circular economy — Vocabulary, principles and guidance for implementation
Introduction
This article summarizes circular-economy concepts and practical applications. It is not the full text, an official translation or a clause-by-clause interpretation of the ISO standard. The sections are editorial organization; the checklist, indicators and management activities are examples and do not mean ISO 59004 requires a certification-style audit system.
ISO first published the standard in May 2024. It defines key circular-economy terms, establishes a shared vision and principles, and provides guidance—including possible actions—to help organizations implement circularity. It is intended for organizations of every type and size, public or private, acting alone or together, regardless of jurisdiction or position in a value chain or network. Its purpose is to help organizations understand, commit to and contribute to a circular economy while advancing sustainable development.
Scope and how to read this guide
This guide summarizes the standard’s core terminology and definitions, shared vision, six principles and systematic implementation guidance across design, procurement, operations, reverse logistics, value retention and recovery. The practical checklist and example indicators below are planning aids written for this article; they are not official normative annexes.
ISO 59004 provides vocabulary, principles and implementation guidance. Organizations may connect its examples with existing environmental and quality-management activities.
Normative references
This article identifies no normative reference documents.
Terms and definitions
The following are plain-language explanations for reading and discussion, not official clause-by-clause translations. Consult an authorized copy for formal definitions and clause numbers.
Foundational terms
Circular economy: An economic system that uses a systemic approach to maintain resource flows through recovery, retention or value creation, while contributing to sustainable development. Resources may include stocks and flows. Inflows of virgin resources are reduced as far as practicable and circular flows are closed as far as possible to minimize waste, losses and releases.
Economic system: A network of organizations, people, processes and resources that produces, distributes and consumes goods and services. Social system: A network of people, groups, organizations and institutions that shapes resource allocation, values and behavioral norms. Ecosystem: A dynamic complex of interacting biological communities and their environment.
Resource: Material, energy, water, land, data, labor or another asset that can be used to produce goods or provide services. Circular flow of resources: The systematic supply and use of resources through multiple technical or biological cycles.
Value: The utility, benefit or importance of a good, service or resource to an organization, interested party or society. Value retention: Keeping the value of resources, products or components and preventing degradation or waste. Value addition: Increasing value through innovation, improvement or transformation. Value recovery: Recovering materials, energy or value from waste, by-products or used products.
Sustainable development: Development that meets present needs without compromising future generations’ ability to meet their own needs. Interested party: A person or organization that can affect, be affected by, or consider itself affected by an organization’s decisions or activities. Organization: A person or group with functions, responsibilities, authorities and relationships established to achieve objectives, such as a company, public body or nonprofit. Top management: The person or group that directs and controls an organization at the highest level.
Risk: The effect of uncertainty on objectives. Opportunity: A circumstance that can improve performance. Performance: A measurable result.
Technical cycle: Resources circulate within social systems through sharing, maintenance, reuse, repair, refurbishment, remanufacturing and recycling, and are used, recovered, restored or reused in existing or new solutions. Biological cycle: Bio-based resources—such as crops, timber and organic waste—return to ecosystems through composting, anaerobic digestion or biodegradation and may become resources again. Complex system: A system made up of interacting, interdependent components whose behavior cannot readily be predicted from any one component alone.
Solution-related terms
Solution: A product, service or combination that meets a need or solves a problem. Product: A deliverable, tangible or intangible item, such as a good, component, material or software. Service: An activity designed or performed for a particular purpose.
Life cycle: The connected stages of a solution from concept to end of life. Stages may include natural-resource extraction, design, production, transport, use, reuse, remanufacturing and recycling. A circular life cycle may include multiple use cycles before end of life.
Resource-related terms
Natural resource: A resource found in nature and usable for human activity, such as minerals, fossil fuels, water, land or biomass. Virgin resource: A natural resource that has not been used or processed. Renewable resource: A resource replenished through natural processes, such as solar, wind, biomass or water. Circular resource: A resource that re-enters the economy through recovery, reuse or remanufacturing. Recovered resource: A resource recovered from waste, a by-product or a used product.
Waste: A substance or object an organization no longer needs, intends to discard or has discarded. Loss: A resource that is not effectively used and escapes a process, for example through leakage, evaporation or degradation. Release: A substance or energy discharged into the environment, including air, water or soil.
Critical raw material: A raw material important to economic and technological development and subject to high supply risk. Bio-based resource: A resource derived from living organisms, such as crops, wood, algae or organic waste. Cascading use: Sequential use of a resource at different value levels, with value decreasing after each use while waste is avoided.
Recyclability: The ability of a product or material to be effectively recovered and reused. Disassembly: The ease with which a product can be separated into components or materials. Modularity: A product characteristic in which independent modules can be replaced, upgraded or repaired. Material purity: The proportion of a target constituent in a material, affecting its recovery value. Energy recovery: Recovering useful energy through controlled conversion of resources.
Process-related terms
Process: Interrelated or interacting activities that transform inputs into outputs. Design process: Activities that develop a solution’s concept, specifications and plans. Production process: Activities that transform raw materials into products. Reverse logistics: Collecting, transporting and handling used products, components or materials from consumers or users.
Repair: Restoring the function of a failed product or component. Refurbishment: Restoring the appearance and function of a used product to a condition close to new. Remanufacturing: An industrial process that restores a used product to new-product quality and performance. Reuse: Using a product or component again without changing its primary function. Repurposing: Using a product or component for a function different from its original design without changing its physical or chemical structure. Recycling: Recovering resources for use in processes or products, excluding energy recovery. Source reduction: Reducing resource use and waste generation at their earliest point.
Industrial symbiosis: Cooperation among organizations to exchange resources, energy or by-products and improve efficiency while reducing waste.
Business-model terms
Product-as-a-service: A model in which an organization retains product ownership and charges customers for access or use. Sharing model: A model in which multiple users share a product to improve utilization. Leasing model: A model in which an organization leases a product to a customer for a fee. Performance-based model: A model that charges according to actual product or service performance, such as output or availability.
Circular-economy vision
The vision is to create a restorative and regenerative economic system that respects ecosystem boundaries, maximizes resource value and minimizes waste and emissions through design, innovation and collaboration, supporting the well-being of current and future generations.
Its core elements are sustainable resources (prioritize renewable resources and reduce reliance on virgin inputs); value maximization (extend the value cycle through retention, addition and recovery); ecosystem protection (respect ecological limits and protect biodiversity); social equity (share transition benefits fairly and protect workers and communities); and system integration (collaborate across organizations, industries and regions to build circular value networks).
Circular-economy principles
Circularity rests on six interrelated and indivisible principles. Apply them together throughout organizational levels and processes, adapting them to organizational size, industry, resource constraints and stakeholder needs.
Six core principles
Systems thinking: Consider interactions across economic, social and ecological systems; understand resource flows, value chains and interested parties, and avoid local optimization that produces worse overall outcomes.
Value creation: Use design, technology and business-model innovation to create economic, environmental and social value, turning waste into resources and costs into opportunities.
Value sharing: Distribute transition benefits fairly across value networks so suppliers, customers, workers, communities and other interested parties can participate and benefit.
Resource stewardship: Manage resources responsibly; prefer renewable, recoverable and low-toxicity materials; minimize consumption, losses and releases; and preserve long-term resource availability.
Resource traceability: Track resources from sourcing and use through recovery, confirming lawful and sustainable origins while improving recovery efficiency and quality.
Ecosystem resilience: Respect ecosystem boundaries, protect biodiversity, reduce environmental footprints and strengthen ecosystems’ capacity to recover from disruption.
Applying the principles
Design and development: Embed circularity early. Design for reuse, repair, remanufacturing, disassembly and recycling; favor modularity, standardization and simplified materials; select non-toxic and recoverable materials; and minimize life-cycle impacts.
Information and resource-management cooperation: Share information across organizations, coordinate resource flows, improve reverse logistics and support industrial symbiosis.
Risk and opportunity management: Identify transition risks, such as immature technology, supply interruption and regulatory change, as well as opportunities such as lower costs, stronger brands and new markets; plan responses accordingly.
Guidance for implementation
Organizational context
Analyze internal issues such as organizational culture, technical capability and financial resources, and external issues such as regulation, market trends, supply-chain pressure, climate change and stakeholder expectations. Identify interested parties—including customers, suppliers, workers, investors, government, communities and NGOs—and consider their needs and expectations in decisions.
Define the boundary of circular activities, for example by product line, site or supply-chain region, and prioritize high-resource-use or high-waste processes. Establish a baseline by mapping virgin and circular resource inputs, water and energy use, waste, emissions and resource losses; assess current indicators such as recovery and reuse rates.
Leadership and planning
Top management can communicate its commitment, provide resources, assign accountability and integrate circular objectives into strategy and operating plans. Establish and communicate a circular vision and policy reflecting the six principles and stating the organization’s commitments and direction.
Set SMART objectives—for example, resource productivity, waste diversion or recycled-material content—and an action plan with owners, resources, timing and verification methods. Integrate circular objectives into departmental measures.
Procurement, operations and collaboration
Prefer recovered materials, renewable resources and products from sustainable sources. Include requirements such as recyclability, repairability and reduced packaging in supplier evaluation and contracts. Work with suppliers on improvements. Optimize processes through technology and management changes to reduce resource use and waste; apply cleaner production where suitable.
Cooperate with other organizations to exchange by-products, energy or waste, and participate in regional circular networks to share infrastructure and resources.
Actions to retain value
Value retention extends the useful life of products and resources and delays recovery or disposal.
- Reduce, reuse and repurpose: Reduce product and packaging materials at source; promote reuse of products and components; and find other suitable uses for products.
- Maintain and repair: Provide maintenance and repair systems, parts, tools and technical support. Design products to be easier and less costly to repair.
- Performance-based models: Consider product-as-a-service, leasing and sharing models to improve utilization; link payment to performance to encourage durable, reliable products.
- Sharing: Use platforms to increase utilization of valuable, underused products and share assets inside or outside the organization.
- Refurbishment: Restore used products’ functions and appearance and develop markets for refurbished products.
- Remanufacturing: Restore core products and components to new-product condition through defined processes and quality criteria.
Actions to recover value
Value recovery aims to recover materials, energy or value from products, components or materials that can no longer retain their value.
- Reverse logistics: Set up collection, transport and storage networks for returned products and packaging; simplify returns to encourage participation.
- Sorting and pretreatment: Improve sorting to increase material purity and prepare materials through disassembly, cleaning, crushing or other suitable steps.
- Material recovery: Mechanically or chemically recycle recoverable materials into secondary materials, improving quality and applications.
- Cascading use: Use materials in successive applications that may retain progressively lower value while avoiding disposal. For example, a used electronics battery might first serve grid storage, then lower-power equipment, before material recovery.
- Energy recovery and biological treatment: Consider anaerobic digestion or energy recovery for non-recyclable organic waste. Meet environmental requirements and minimize secondary pollution.
- Minimize final disposal: Reduce landfill and incineration as far as possible and use them only as a last resort, with strict pollution controls for unavoidable disposal.
Support and capability
Allocate adequate financial, human, technical and infrastructure resources, prioritizing critical needs such as recovery technology and digital traceability. Train employees in circular-economy knowledge, skills and tools; build cross-functional capability; raise awareness among staff, customers and suppliers; and share examples that encourage participation.
Establish internal and external communication to share policy, objectives and progress, respond to stakeholder concerns and improve transparency. Digital tools such as IoT, data analytics and distributed ledgers may support traceability, process optimization and performance monitoring; digital platforms can also support reverse logistics and supply-chain coordination.
Performance evaluation and improvement
Develop indicators and routinely monitor resource flows, waste, emissions, value retention and recovery. Analyze trends and improvement opportunities. An organization may use internal reviews to evaluate implementation, identify gaps and assign corrective actions; this article’s examples do not create a requirement for a certification-style audit.
Management can periodically review performance, objectives and continuing suitability, then adjust strategy, targets and resources. Address gaps, investigate causes, implement actions and verify results. Continually revisit objectives and action plans as internal and external conditions change, explore technologies and business models, learn from peers, and extend circular practices across the organization and value chain.
Practical tool 1: Example self-assessment checklist
These sample questions can help an organization review progress, support internal discussion or identify improvement opportunities. They are not official ISO audit questions.
Organizational context
- Have internal and external circular-economy issues been identified?
- Have relevant stakeholder needs and expectations been identified?
- Is the boundary of circular activities defined?
- Is there a baseline for resource flows, waste, emissions and circular performance?
Vision, principles and policy
- Has a circular vision been established and communicated?
- Are the six principles understood and applied?
- Does top management demonstrate commitment?
- Is the circular-economy policy documented and communicated?
Objectives and action planning
- Are SMART objectives and indicators established?
- Have circular-economy risks and opportunities been identified and addressed?
- Do action plans assign responsibilities, resources and timing?
- Are circular objectives integrated into strategy and operations?
Resources and support
- Are financial, human, technical and infrastructure resources adequate?
- Do relevant personnel have the capability to apply circular practices?
- Are workers aware of the policy, objectives and impacts?
- Are internal and external communication processes in place?
Design and development
- Are design-for-reuse, repair, remanufacturing, disassembly and recycling considered?
- Are materials selected for circularity, including toxicity, recoverability and recycled content?
- Are modularity, standardization and material simplification considered?
- Do digital tools support circular design and life-cycle management?
Sourcing and supply chain
- Does procurement consider recovered materials, renewable resources and lower-waste suppliers?
- Are circular requirements included in supplier evaluations and contracts?
- Does the organization collaborate with suppliers on circular improvements?
- Are logistics impacts and resource use minimized where practicable?
Operations and value retention
- Are source reduction, reuse and repurposing practiced?
- Are maintenance, repair, upgrade and take-back arrangements available?
- Are refurbishment or remanufacturing used where suitable?
- Have sharing, leasing or product-as-a-service models been considered?
Reverse logistics and value recovery
- Is there a system to collect and return products and packaging?
- Are sorting, recycling and material recovery optimized?
- Is cascading use considered?
- Are energy recovery and biological treatment used appropriately for non-recoverable waste?
Waste, emissions and ecosystems
- Is waste minimized at source, including hazardous waste?
- Are releases and emissions minimized and controlled?
- Is final disposal minimized?
- Are ecosystem and biodiversity effects considered?
- Are renewable resources prioritized and water, energy and land used efficiently?
- Are pollution prevention and remediation measures implemented where needed?
Evaluation and continual improvement
- Are indicators monitored and analyzed regularly?
- Are implementation reviews performed and gaps addressed?
- Does management review performance and resource needs?
- Are corrective actions checked for effectiveness?
- Are innovation, collaboration and lessons learned used to expand circular practices?
Practical tool 2: Example indicators
These are examples for selecting indicators that fit the organization’s objectives and boundaries.
Resource-flow indicators
- Virgin-resource intensity (mass per output or value of output)
- Percentage of renewable or circular materials by mass
- Percentage of renewable energy
- Water use per product unit
- Resource productivity (value generated per unit of resource input)
- Resource-flow narrowing, slowing and closing
Waste and emissions indicators
- Total waste generated (mass per unit of output)
- Waste diversion from landfill and incineration
- Material recovery rate by mass
- Hazardous-waste generation and reduction
- Process releases, including greenhouse gases, air pollutants and water discharges
- Share of waste sent to energy recovery
Value-retention indicators
- Product life or life extension
- Product and component reuse rate
- Repair frequency and service availability
- Share of products refurbished or remanufactured
- Share of components reused internally
- Product take-back rate
Value-recovery indicators
- Purity of recovered materials
- Cascading-use efficiency
- Quality of secondary materials
- Recovery rate of critical raw materials
- Reverse-logistics coverage
Design and life-cycle indicators
- Number of products designed for circularity
- Share of products with modular design
- Material-diversity or simplification index
- Use of hazardous substances in new products
- Product recyclability index
Organization and strategy indicators
- Number of circular-economy projects implemented
- Investment in circular technologies
- Number of suppliers with circular objectives
- Employee training hours on circularity
- Stakeholder satisfaction with circular performance
- Compliance with relevant circular-economy regulations
Ecosystem and sustainability indicators
- Carbon footprint associated with resource use
- Impacts on biodiversity and ecosystems
- Impacts on land and aquatic ecosystems
- Replenishment rate of renewable resources
Official reference
ISO 59004:2024 official standard information and access options. Consult an authorized edition for the official text, definitions and structure.