Circular economy in business – how to move from an idea to concrete action?

A circular economy in business does not start with the slogan “zero waste” or with a decision that the company should recycle more. It starts with a much more practical question: what exactly enters the process, what leaves it, and where does the difference arise?

Only when a company can assign mass and cost to raw materials, product, rejects, waste, by-products, water and other streams can it assess which measures actually make sense. Sometimes the best option is to reduce a loss at source, sometimes to return material to the process, and sometimes to sell or transfer a homogeneous stream to another entity. A high recovery rate alone does not mean that a solution is technically or economically beneficial.

In practice, the circular economy is therefore primarily about analysing flows and making technology decisions. Recycling is one possible step, but it should usually not be the first option considered.

Where to start? Map the process inputs and outputs

The most useful starting point is a simple process balance prepared for a defined period: a shift, day, week or month. The system boundary can be drawn around the entire plant, a single line, a production cell or a specific process stage.

On the input side, collect at least:

• primary raw materials and semi-finished products,
• auxiliary materials, additives, chemicals and process agents,
• packaging,
• process water, wash water and make-up water,
• consumables,
• energy and process utilities – as a separate stream supporting the analysis, rather than the main subject of the circular-economy assessment.

On the output side, identify:

• on-specification product,
• off-specification product and rejects,
• offcuts, chips, dust, sediment, sludge and process residues,
• materials already being returned to the process,
• by-products, provided their status has been correctly determined,
• waste sent for recovery, recycling or disposal,
• packaging and transport materials,
• wastewater and other water streams,
• emissions and losses that cannot be weighed directly.

A simple mass-balance check can be written as:

input mass = product + by-products + waste + change in inventory + other losses

If the equation does not close, that does not necessarily indicate a process error. It often reveals a data problem: different moisture content in the raw material and product, work-in-progress inventory, an unweighed stream, inconsistent reporting periods, or losses that have not previously been recorded at all.

What data can be used when the plant is not fully metered?

There is no need to start by installing dozens of new meters. The first map can be built from data that usually already exists:

• purchasing and warehouse data,
• recipes and BOMs,
• production reports,
• reject and complaint records,
• waste records and transfer documentation,
• invoices for waste collection or sale,
• water consumption and wastewater discharge data,
• quality laboratory data,
• records from MES, ERP or SCADA systems.

Only after preparing this balance is it worth deciding which 2–5 streams actually need more accurate measurement, because they have the greatest impact on the result.

Do not start with all waste streams. Find the largest and most expensive ones

A list of waste codes is not, by itself, a circular-economy analysis. Two streams with the same mass can have completely different economic significance.

For example, one tonne of clean scrap may have a positive sales value, while one tonne of a mixed material stream requiring specialist treatment may generate a cost. Another stream may appear inexpensive to dispose of but contain an expensive raw material that previously cost a few or more than ten zł per kilogram.

It is therefore worth ranking streams in at least two dimensions:

1. 1. stream mass or volume, e.g. kg/month, t/year, m³/day;
2. 2. economic value of the stream, meaning not only the waste fee, but also the value of the material that the company previously purchased and processed.

Material intensity is another useful indicator:

raw material consumption [kg] / quantity of good product [kg or pcs.]

and waste intensity:

waste mass [kg] / quantity of good product [t or 1000 pcs.]

These indicators should be analysed together with production volume, product-mix changes and quality parameters. Otherwise, it is easy to mistake a change caused only by a different product mix for an improvement.

Step two: determine why the stream is generated in the first place

Once the most important streams have been identified, separate the effect from the cause. “20 tonnes of waste are generated per month” describes the situation; it is not a diagnosis.

For each stream, ask several questions:

• Is the loss technologically unavoidable, or does it result from process parameters?
• Does it occur continuously, or mainly during start-ups, changeovers and shutdowns?
• Is it associated with a specific product, batch, machine or shift?
• Does the material become waste because it is contaminated or mixed with another fraction?
• Can it be separated earlier, before it loses quality?
• Are the quality requirements genuinely necessary, or is some material being rejected because tolerances are too narrow?
• Is the cause cutting geometry, dosing, process allowance, tool wear, temperature instability, cleaning or storage method?
• Does the problem arise at the supplier, within the process, or only during packaging and logistics?

This part of the analysis is often more important than selecting a recycling technology. If 30% of the waste is generated only during start-up, an investment in recovery may create less value than shortening the start-up and stabilising process parameters.

Hierarchy of measures: from preventing losses to recovery

For every significant stream, assess the available options in a consistent order.

1. Can the stream be prevented from arising?

This is usually the most economical option because the company does not buy material that it later has to discard or recover. Examples include correcting cutting layouts, reducing allowances, improving dosing, reducing start-up rejects, extending the service life of consumables, or changing transport packaging.

2. Can the amount of material used be reduced?

It is not always possible to eliminate the loss, but material intensity per unit of good product can be reduced. Product quality and durability still have to be protected – saving raw material while increasing the complaint rate does not improve the overall balance.

3. Can the material be reused within the process?

The most attractive cases are those in which clean, homogeneous material can be returned without compromising quality. This may apply, among other things, to transport packaging, rinse water in a cascade system, selected material streams, or off-specification semi-finished products that can return to the appropriate process stage after inspection.

The technical and legal terminology must, however, be kept separate: if a material has become waste, its subsequent use may constitute a recovery operation and may require compliance with the relevant requirements.

4. Can the material be recovered or regenerated?

If direct return is not possible, consider cleaning, filtration, separation, grinding, regeneration, distillation, dewatering or another treatment that restores the material’s usability.

The key question is not “what percentage can we recover?”, but what quality will the recovered material have, and where will we actually use it?

5. Can the material or process design be changed?

Sometimes the problem is not the lack of a recovery system but the material choice itself. Changing a raw material, additive, adhesive, coating or packaging design may make streams easier to separate or enable repeated use. This requires reassessing quality, compatibility, safety and purchase cost.

6. Can the stream be used by another process or company?

This is the field of industrial symbiosis. If one plant has a stable, homogeneous stream that another company can use as a raw material, the solution may make sense. Finding a recipient is not enough, however. The material’s legal status, quality, parameters, volume, seasonality, transport and the parties’ responsibilities must all be confirmed.

7. Only then: what is the best recovery or waste-management route?

If the earlier options are not feasible, the remaining task is to optimise recovery, recycling and other management methods. This can still be valuable, but it should not obscure the question of why the waste arose.

“Reuse”, “by-product” and “waste” are not synonyms

In project work, it is very easy to make the mistake of calling any residue a “by-product”, or assuming that it ceases to be waste simply because someone is willing to take it.

Poland’s Waste Act distinguishes between these situations.

Reuse concerns a product or component that is not waste and is used again for the same purpose. If the product has previously become waste, checking, cleaning or repairing it so that it can be used again may constitute preparing for reuse, which is a recovery operation.

A by-product may arise from a production process whose primary aim is not to produce that substance or object, but only when all statutory conditions are met. These include, among other things, certainty of further use, the possibility of direct use without processing other than normal industrial practice, production as an integral part of the process, and compliance with legal, product and environmental requirements. As a rule, the producer submits a notification to the competent voivodeship marshal, and compliance with the conditions is confirmed by a decision; Poland’s Waste Act also provides specific exceptions for certain streams.

A material that is already waste may, under certain conditions, cease to be waste after recycling or another recovery operation. The conditions include, among other things, a specific use, the existence of a market or demand, compliance with technical and legal requirements, and no overall adverse impacts on human health or the environment.

For this reason, a circular-economy analysis should run on two tracks in parallel: technical – can the stream be used – and formal/legal – under what conditions can this be done.

How to assess the economics of a circular economy project: the cost of waste is usually only part of the problem

The most common mistake in project appraisal is to compare the investment cost only with the waste collection fee. If a company pays 400 zł/t for waste management, it is easy to assume that this is the maximum potential saving. In reality, the waste may contain a raw material purchased for several thousand zł per tonne that has also already undergone processing.

For a significant stream, calculate a simplified full cost of loss:

stream cost = value of lost raw material + processing cost up to the point where the loss occurs + waste management + transport + storage + additional treatment – revenue or recovery value

Double counting must be avoided. If the process cost is already included in the product’s unit cost, it should not be added again without a clearly defined allocation methodology.

Illustrative example: clean material waste

Over a given period, a plant uses 10 000 kg of raw material at 8,00 zł/kg. The process produces 8 900 kg of good product, 700 kg of clean post-process material, 300 kg of quality rejects and a 100 kg balance discrepancy that needs to be explained.

The purchase value of the 700 kg clean stream alone is 5 600 zł. If the plant sells it for 1,20 zł/kg, it receives 840 zł. Looking only at sales revenue can therefore conceal the fact that the stream contains material that was purchased at a much higher price.

If quality tests show that 500 kg can safely be returned to the process and material preparation costs 0,70 zł/kg, the indicative value of the displaced purchase is 4 000 zł and the preparation cost is 350 zł. The 3 650 zł potential is not yet a guaranteed saving – CAPEX, servicing, energy, quality losses and storage must be deducted, and the process’s actual capacity to consume the recovered material must be taken into account.

This example shows why the statement “we recovered 90% of the waste” is insufficient. A high recovery rate can be achieved while costs remain high or the recovered material is of inadequate quality.

Water is also a material stream

In plants with washing, rinsing, cooling, surface treatment or wet processes, water should be included on the same map as raw materials.

For each major user, it is useful to know:

• water inflow,
• required quality level,
• how the water becomes contaminated,
• temperature,
• whether lower-quality water can be used at another stage,
• treatment cost,
• wastewater discharge and treatment cost.

Illustrative example: cascade rinsing

If a process uses 50 m³ of water per day for 220 days per year, and the combined cost of supply and discharge is, for example, 12 zł/m³, the annual cost of this stream is 132 000 zł. If quality testing shows that 20 m³/day of fresh water can be replaced with water from an earlier rinsing stage, the theoretical value of the reduced intake and discharge is 52 800 zł/year.

Before making a decision, however, filtration, a pump, a tank, controls, cleaning, the risk of contaminant build-up and the impact on product quality must all be considered. A circular-economy approach is not about recirculating water at any cost; it is about reusing it where process parameters and the economic balance allow it.

Stream stability matters as much as its average annual mass

A project may look very good in an annual summary and still fail operationally.

If a second process needs 2 t of material per day but the stream is generated once a week in a 10 t batch, storage and logistics will be required. If the material composition changes with every recipe, the recipient may require sorting and testing of every batch. If production is seasonal, an installation sized for the average annual flow may operate well below nominal capacity for part of the year.

For each use option, therefore, check:

• minimum, average and maximum flow,
• composition variability,
• contamination and moisture content,
• recipient’s quality requirements,
• need for testing and batch control,
• storage period and material shelf life,
• distance and transport cost,
• security of off-take over a several-year horizon.

Only this type of profile shows whether “raw material for another company” is a practical solution or merely a theoretical possibility.

Where do energy and heat recovery fit into the circular economy?

Energy matters, but circular economy is not another name for energy efficiency.

An energy-efficiency analysis primarily asks how to reduce the energy required to perform a given function or manufacture a product. A circular-economy analysis focuses mainly on retaining the value of materials, products, water and other resources in use, and on reducing material losses.

The two areas can overlap. For example:

• a hot water stream can be reused in the process while also transferring heat,
• material regeneration may require additional energy,
• internal recycling may reduce raw-material purchases while increasing energy consumption for grinding, drying or separation,
• a process change may reduce both rejects and energy consumption.

This is why a circular-economy option should also be assessed in terms of additional energy consumption. If recovering 1 t of material requires energy-intensive treatment and long-distance transport, and generates another difficult waste stream, the recovery rate alone is not enough to justify the project.

A broader analysis of energy use in a production process should be carried out separately, for example as part of an assessment of production technology. In turn, heat recovery is one possible energy measure and should not replace the material balance in a circular-economy analysis.

What does Polish law mean for a company carrying out a circular-economy analysis?

Under Polish law, there is no single universal legal procedure called “circular-economy implementation”. The applicable obligations depend on what the stream is and what the company intends to do with it.

Waste hierarchy under Polish law

Under Poland’s Waste Act, the order is: waste prevention, preparing for reuse, recycling, other recovery operations and, finally, disposal. The Act also requires entities planning activities that may generate waste to conduct them so that waste generation is prevented first, or its quantity and adverse impacts are reduced.

This has an important practical implication: a sound circular-economy analysis should not begin with “how can we process this waste?” if there is an earlier opportunity to prevent it from arising.

Waste records and transfer in Poland

As a rule, a waste holder in Poland keeps current quantitative and qualitative records in accordance with the waste catalogue, although the Waste Act provides exceptions. Where record-keeping applies, transferring waste to another holder involves documentation in Poland’s BDO system, including a waste transfer note prepared before transport begins.

A change in how a stream is used should therefore not be implemented solely on the basis of a technical decision. Its status and any required decisions, permits and documentation must be established first.

By-products under Polish law

If a company wants to use a process residue as a by-product in Poland, it should verify that all statutory conditions and the applicable procedure are satisfied. The mere existence of a buyer or a market value does not automatically make the material a by-product.

End-of-waste status under Polish law

If a material was waste and is to be treated as a material or product after recycling or another recovery operation, the end-of-waste conditions must be assessed. They include, among other things, a specific use, a market or demand, technical and legal requirements, and safety of use.

Packaging: an additional layer of obligations

If packaging is a material stream of significance, the rules specific to packaging and packaging waste also need to be analysed. Since 12 August 2026, Regulation (EU) 2025/40 on packaging and packaging waste (PPWR) has applied. The scope of obligations depends, among other things, on the company’s role and the type of packaging, so general conclusions from a circular-economy analysis should not be treated as a direct assessment of packaging compliance.

How should options be assessed? A simple decision matrix

For each of the largest streams, prepare 3–5 realistic options and assess them against the same criteria.

Using this type of matrix, a company can compare, for example, reducing rejects at source, internal recirculation and selling the stream to an external off-taker without reducing the entire analysis to a single “recycling percentage” metric.

Which indicators are worth tracking after implementation?

Well-chosen KPIs should show the actual change in the process, not just the quantity of waste collected by a recycler.

Example indicators:

• kg of raw material / t of good product,
• kg of waste / t of good product,
• share of virgin material displaced by recovered material,
• share of off-specification product,
• m³ of fresh water / t of product,
• m³ of reused water / m³ of total demand,
• cost of material losses / unit of product,
• waste-management cost / month,
• revenue or replacement value from recovered streams,
• share of streams with consistently verified quality.

Percentage indicators should always be shown together with absolute values. An increase in recycled-content share from 20% to 40% may look very good, but if rejects and total raw-material consumption increased at the same time, the overall process balance may have deteriorated.

90-day plan: from the idea to the first projects

Days 1–30: build the balance

1. 1. Select 1–3 processes with the highest material consumption or largest waste mass.
2. 2. Define the process boundaries and a common data period.
3. 3. Collect purchasing, warehouse, production, rejects, waste, water and main utility data.
4. 4. Build an input-output map.
5. 5. Identify balance discrepancies and data gaps.
6. 6. Select the largest streams for more detailed analysis.

Days 31–60: identify causes and options

1. 1. Separate streams into steady-state, start-up, quality-related and failure-related streams.
2. 2. Check where the material loses value or becomes contaminated.
3. 3. For each stream, assess in sequence: prevention, reduction, reuse, recovery/regeneration, material change and external use.
4. 4. Verify quality and legal constraints.
5. 5. Run short process trials where they can be carried out without putting production at risk.

Days 61–90: build the business case and select pilots

1. 1. Calculate the full cost of the stream, not just the waste fee.
2. 2. Estimate CAPEX, OPEX, logistics and quality-control costs.
3. 3. Check stream stability and the ability to use the recovered material.
4. 4. Select 1–3 pilot projects with measurable effects.
5. 5. Define KPIs, the baseline and how the effect will be measured.
6. 6. Decide whether to scale only after the pilot.

The most common mistakes in circular-economy projects

“We recover 95%, so the process is good”

That cannot be known until we calculate how much virgin material has actually been displaced, how much recovery costs, and what happens to the remaining 5%.

“This waste has a buyer, so it is a by-product”

No. Market value or a sales agreement alone does not determine its status. The statutory conditions and the applicable procedure must be checked.

“We will install internal recycling and the problem will disappear”

Not always. The bottleneck may be the allowable proportion of recovered material, unstable quality, contamination, or insufficient process capacity to reuse it.

“The saving is the waste collection cost we will no longer pay”

That is only one component. The largest value may be the avoided raw-material purchase, while the largest new cost may be preparation, quality testing, storage or transport.

“Circular economy means heat recovery and lower energy consumption”

Heat recovery can support better resource use, but it is primarily an energy-efficiency measure. In a circular-economy analysis, energy should be included in the option balance, but it should not replace analysis of materials, water and products.

Should every company carry out this type of analysis?

The greatest potential is usually found where a company:

• purchases large quantities of raw materials or auxiliary materials,
• has a significant proportion of rejects and off-specification products,
• generates homogeneous process waste,
• incurs high waste-management costs,
• uses water intensively,
• uses large quantities of single-use or transport packaging,
• operates processes in which material can be separated before it becomes contaminated,
• works with other plants that could use stable side streams.

This does not mean that a company should immediately create an extensive circular-economy programme. It is often enough to start with one process and one balance that shows where material and money are actually being lost.

Summary: a circular-economy analysis should end with a list of projects, not a presentation

A good circular-economy analysis should answer several specific questions:

• where the largest material losses occur,
• how much those losses really cost,
• which losses can be eliminated at source,
• which streams can be safely returned to the process,
• where recovery or regeneration is required,
• which materials may have a genuine external recipient,
• which quality, logistics and legal requirements must be met,
• what the material, water, energy and economic balance of each option is.

Only then does the circular economy stop being a general idea and become a portfolio of specific technical and organisational measures that can be prioritised by impact, risk and profitability.

If a company wants to begin this type of analysis, a good first scope is to prepare a flow map for a selected process, identify several of the largest streams and calculate their full cost. This provides a basis for deciding whether the next step should be a process improvement, a reuse trial, a recovery project, a material change or a search for an external recipient.

FAQ

Is circular economy simply recycling?

No. Recycling is one possible measure. In practice, priority should be given to solutions that prevent losses from arising and keep a product or material in use without the need to process it as waste.

Can waste from one process become a raw material for another company?

Technically, often yes, but the legal status cannot be ignored. It must be established whether the stream is waste, a by-product or a material that has met the end-of-waste conditions, and what requirements apply to its transfer and use.

Can the business case for a circular-economy project be assessed from the waste collection cost?

No. The analysis should also include the value of the raw material contained in the loss, additional processing, energy, water, transport, storage, quality testing, CAPEX and the value of the recovered material.

Is heat recovery part of the circular economy?

It can form part of a broader resource analysis, but it is fundamentally an energy-efficiency measure. In an article about circular economy, it should be assessed as one element of the balance rather than the main topic.

What if a company does not have accurate data on material flows?

Start with purchasing, warehouse, production, quality and waste data. The first balance can be partly estimated, provided the assumptions are transparent. Then measure the streams whose uncertainty has the greatest impact on the investment decision.