Over the recent years, the concept of circular economy has been widely adopted by businesses, governments, and academia. In contrast to the take, make, waste rationale of the linear economy, the circular economy tries to decouple economic growth from the depletion of natural resources and environmental degradation. Ideally, in a circular economy, there is no waste. It tries to do so by creating a system that reduces, reuses, and recycles materials in production, distributions, and consumption processes. Today, fashion companies like H&M, Filippa K, Martins, Levis, and many more, talk about circular economy. Our colleague Kelly Cantvas, who you will meet later on in this module, pointed us towards the work of the Swiss architect, Walter R Stahel, who already in the 1970's, sketched his vision for a circular economy. Style distinguishes between two different types of resource efficiency loops that govern the circular economy. The first loop is a product-specific loop which focuses on how to keep products life as long as possible. You can for example, do this through repair, resell, or technical upgrade. Most products are not meant to last forever. Therefore, the second loop is more material specific. It focuses on material recycling, for example, recycling cotton or wool. Seem from a business perspective, circle economy looks at products and services throughout their entire life-cycle. This means taking into consideration design, material sourcing, production logistics, retail, use after use, and even disposal. Within the context of the textile and fashion industry, circularity can be translated into designing for longevity and circularity, creating a sustainable fiber strategy, implementing resource efficiency during production, engaging in the management of used products, or using recycled materials and new products. In spite of its popularity, circular economy also faces criticism. First of all, there are many issues that need to be solved before circularity is feasible at scale. For example, changes in legislation, the need of new technology, innovative materials and products that don't exist yet, changes in consumer behavior, and people's mentality, and so on. Second, scholars have started to question if closing material and products loops do in fact, prevent businesses from producing products using virgin materials. In other words, the main principle behind the environmental merits of the circular economy is whether secondary production activities actually reduce primary production. If so, the promise of the circular economy is achieved. If not, we're left with the impacts of increased secondary production in addition to the impacts of primary production. For example, to be a more sustainable consumer, maybe you start buying more secondhand clothing, but you keep buying new clothes anyway. In conclusion, you wanted to be more sustainable, but you ended up with twice the amount of clothes. Despite all of this, many seemed to think that circular economy currently offers the best route to think about a more sustainable fashion industry. Resources will run out, so we do need to find a more sustainable way of producing. When we discuss and explore how we can turn to form to a circular economy, business model thinking can be a useful tool. But creating circular business models requires massive systemic changes, collaboration, and technological developments. In the next video, we will go into more depth with some of these challenges.