The core concept of circular economy is, that products are regarded as a temporary stage of a material.

In the current linear economy model, textile companies are seen as producing and marketing products. By adding the life-cycle perspective, a shift happens: Companies are defined as services, that need material for a given period of time and turn it into products. These products have a specific life-time. Following this perspective, the specific material flow that is managed by one company, becomes one part of a much bigger material-flow puzzle.

The production-stage is followed by a waste-stage or “end-of-useful-life”-stage, which is very typical for the current linear economy thinking. In a circular economy, that waste would be regarded a “raw-material”, and the circle would continue from there. Within the circular economy model, the goal is not to produce products, but to manage/operate material, and to operate the material within loops that become increasingly circular. To achieve circularity, a basic distinction is required between two kinds of loops:

1. Organic material can be recycled through a composting circle, and can be used for materials such as cotton or wool and any organic matter such as starches, natural oils and plants etc.
2. Technical materials require technical recycling and examples are glass, metals, or polyester.

When applied to the textile sector, the bigger picture includes many more options to increase material-efficiency besides those two standard circles. For example cotton and wool can be recycled which usually increases material efficiency compared to composting -  for example when natural fibres are not turned into viscose or casein fibres, but are re-used as fibre material. The circular economy concept goes as far as to include “alternative business models” in particular those that are now collected under the title of “sharing economy” and are models, where materials and products are not “owned” but leased, rented, borrowed or shared instead.