Circular economy: the idea is 50 years old, and Luxembourg has made it a national strategy

In recent years the term “économie circulaire” (“circular economy”) has become a fixture of corporate discourse and public strategy, so much so that it can seem like a recent invention. Yet the concept dates back to the 1970s and a largely forgotten Swiss report. Understanding this origin is not a history exercise: it sheds light on what Luxembourg companies are now putting into practice, with substantial public support in 2026.

A Swiss architect behind the concept

Walter R. Stahel is credited with one of the intellectual foundations of the circular economy. An architect who trained at the Swiss Federal Institute of Technology in Zurich, he joined the Battelle research centre in Geneva in the 1970s, working in its applied economics department. In 1976, together with Geneviève Reday, he delivered a report to the European Commission entitled The Potential for Substituting Manpower for Energy. In it, he outlined an economy operating “en boucle” (“in a loop”), able to create jobs, preserve economic competitiveness and save resources, rather than extracting and then discarding according to the linear model inherited from industrialisation.

Stahel went on to found the Product Life Institute in Geneva, built around four priorities that, fifty years later, remain the backbone of any circular approach in business: extending product lifespans, manufacturing durable goods, remanufacturing, and preventing waste at source. The Ellen MacArthur Foundation, now the global reference on the subject, explicitly recognises him as one of the pioneers whose work shaped today's concept of the circular economy.

The “performance economy”: selling the use, not the object

Stahel's most disruptive contribution for business leaders comes down to an idea that is simple to state and harder to apply: in a “performance economy”, what is sold is not the product but the performance it delivers, the use or service it provides. The goods remain the property of the supplier. The direct consequence: that supplier now has an economic interest in making a product that lasts a long time, is easy to repair and consumes few resources, since it bears the product's entire life cycle. This reversal of logic underpins models such as industrial equipment rental, IT equipment leasing with maintenance included, and energy performance contracts. For a decision-maker, it is less an environmental question than a business model question: where does the margin lie when you no longer sell an object but a promise of long-term use?

Luxembourg, a practical testing ground

The Grand Duchy has made the circular economy a deliberate pillar of economic policy, for an obvious structural reason: a small territory with no significant natural resources has a direct interest in optimising the use of materials rather than importing more of them. In February 2021 the government presented a national strategy for a circular economy, included in the coalition programme and built around three complementary levers: regulation, financing and knowledge. Further reading on this topic: Sustainable Development Goals.

On the ground, this strategy has translated into practical schemes run by the Ministry of the Economy and Luxinnovation. The Fit 4 Circularity programme, launched back in 2015, supports SMEs that want to structure a circular approach: reducing the use of raw materials, making greater use of renewable resources, and developing products and services designed for recyclability. The Luxembourg EcoInnovation Cluster, run by Luxinnovation, has since brought clean technology players together around this shared goal.

The country has also taken an internationally noted initiative with the Circularity Dataset Initiative, launched in 2019: more than fifty companies from a dozen countries have joined it, and it led to the Product Circularity Data Sheet (PCDS), a standard for documenting a product's circularity. This framework has just been published as the international standard ISO 59040, a recognition that puts the work carried out from Luxembourg at the heart of the standards now used by European manufacturers.

Another local example: the municipality of Wiltz, which in 2025 celebrated ten years as a national circular economy hotspot, has served for a decade as a full-scale testing ground for public and private players in the sector.

What Luxembourg business leaders should take away

Three points deserve decision-makers' attention in 2026:

• A call for projects with a budget of €25 million is open until 30 June 2026, covering up to 60% of the additional investment costs linked to a circular transition, under the law of 8 December 2025 on aid for resource efficiency and the circular economy. A scheme worth examining closely for any industrial or construction company already engaged, or ready to engage, in this kind of approach.
• The construction and renovation sector is particularly concerned: studies carried out with the support of SECO Expert, the one-stop shop for circular and low-carbon projects, show significant decarbonisation potential when the reuse of common materials is combined with ecodesign that conceives buildings to be repairable, adaptable and dismantlable.
• Documenting circularity is becoming a standard, with ISO 59040 born of the Luxembourg work. Exporting companies and suppliers to large industrial clients would do well to familiarise themselves with it now, before it becomes a de facto contractual requirement.

The idea Walter Stahel set out in 1976 in a technical report for the European Commission has thus become, fifty years later, a regulatory framework, international standards and very real funding lines in Luxembourg. For the country's companies, the question is no longer whether the circular economy is a passing trend, but at which link in their value chain (product, service or material) this model can be applied first.