April 5, 2022

Why we need to rethink the 'technical' circular economy

A circular economy fit for the 21st-century
Lead authors:

Laxmi Haigh, Marc de Wit, Max Russell, Matthew Fraser, Ilektra Kouloumpi, Blake Robinson

Contributing authors:

Yasmina Lembachar, Lena Bäunker, Ana Birliga Sutherland, Melanie Wijnands, Maria Grazia Testa, Hatty Cooper, Annerieke Douma, Martijn Lopes Cardozo, Esther Goodwin Brown

Contributors:

Robert-Jan van Ogtrop, Herman Wijffels, Louise Vet

1. INTRODUCTION 

As the covid-19 pandemic swiftly spread across the globe, cracks in the prevailing linear system have been not only exposed but amplified. Rarely have the flaws of our global linear take-make-waste economy been so prominently revealed as under this collective experience. These include interdependent yet inflexible global supply chains, accelerated destruction of nature and our natural biodiversity to extract materials and an economic model focused on delivering infinite growth and profits for a few at the expense of the many. Ultimately, it lacks stability and resilience. As the pandemic threatened the livelihoods and health of billions, these flaws have received greater global attention. Now, our response needs to match the scale of the climate, social and economic emergency—in a way that reduces global and local inequalities and protects against climate breakdown. 

IMPACTING THOSE WITH LEAST, THE MOST

The blinking lights of climate breakdown have long been clear, not least in low- and middle-income countries. Wildfires are increasing as droughts lead to parched lands, coastal regions live under constant threat of loss of land due to rising sea levels and warming oceans will likely continue to exacerbate storms and hurricanes(1) and, in turn, the damage they wreak on our homes. Deforestation rates continue to rise to feed global appetites, draining the world of its natural carbon sinks and often infringing on the land of Indigenous peoples, for example.(2) The communities and countries who historically and currently contribute the fewest emissions are also most vulnerable to the impacts of climate breakdown: nearly half (48%) of cumulative CO2 emissions over the last quarter century can be attributed to just the richest 10% of the globe, whilst the poorest 50% were responsible for only 7%.(3) 

On top of this, the covid-19 pandemic, beginning in 2020, disproportionately impacted low- and middle-income countries and marginalised groups within higher-income countries. These impacts have included higher infection, death and job-loss rates—continuing to highlight entrenched inequalities in access to basic services such as clean water, nutritious food, healthcare, safe working conditions and jobs and secure social safety nets. These injustices, as well as rising activism across the world based on race discrimination, has further stirred millions of homebound citizens to speak out against systemic inequalities across and within countries. The alarm has been sounded once again to address systemic inequalities and it seems the world is finally listening: there is no environmental justice without social justice. 

BUILDING BACK BETTER

The growing consensus is that our fragility in the face of covid-19 shocks has been exacerbated by our current linear and extractive economic model. So, even with the introduction of short-term fixes, continuing with this model means inevitable future shocks—from further pandemics and recessions to worsening climate breakdown—will continue to exceed our capacity to recover. The latest IPCC report, showed that human activity was unequivocally responsible for the climate crisis we are in the midst of. As businesses, cities and nations seek to implement stimulus packages to ‘build back better’, reach the goals of the Paris Agreement and mitigate climate breakdown, we firmly believe that circular approaches can play a vital role. The situation we are living through shows that it is necessary to link circular economy interventions to efforts to mitigate climate breakdown and other pressing social issues.

Our Circularity Gap Report 2021(4) reported that circular economy interventions are vital if we are to limit global warming temperatures to 1.5-degree by 2032—thereby reaching the goals of the Paris Agreement. Current national emissions-reducing pledges—Nationally Determined Contributions (NDCs)—overwhelmingly focus on the energy transition and moving to non-fossil sources. Although undoubtedly important, this narrow focus will not bring us to where we need to be. Even if all NDCs are implemented, the rise in temperatures is still forecast to hit 2.4-degrees this century, reported our Circularity Gap Report 2022

A CIRCULAR ECONOMY AND SOCIETY

For the circular economy to be a means to a socially just and ecologically safe world it has to be managed well. This essay is a thought exercise that explores how the circular economy could strengthen its base moving forward, with social and ethical considerations front of mind. We are confident that the circular economy, which designs out waste and pollution, keeps products and materials in use and regenerates our natural systems, provides a strong foundation for ‘building back better’ and mitigating climate breakdown. 

 

We cannot continue to frame our relationship with the world solely through production and resource use.(5) With the circular economy’s traditional focus on economic and environmental impacts—such as resource depletion, resource efficiency, innovation rates and air pollution—the link between circular economy and wider social issues are still considered weak and blindspots should be addressed.(6) We need to add strings to our bow. 

We will explore how we can integrate social and ethical considerations into the circular transition: considerations for a circular economy and society. We do this across three core pillars for the successful integration of environmental and social foundations in the circular economy: A need to redefine prosperity, to reintegrate with nature and to rebalance the local and the global.

Living in these unprecedented times, we must fast forward the process of reaching a socially just and ecologically safe world.

2. LESSONS LEARNT FOR A CIRCULAR ECONOMY

2A. TAILORING THE CIRCULAR ECONOMY TO SUIT THE NOW

Fresh approaches to economic systems, such as the circular economy, have increasingly moved to the mainstream. The parameters of the circular economy now feature in governmental and multilateral policies and goals: from the EU Green Deal and the EU Circular Economy Action Plan, to the Sustainable Development Goals (SDGs). 

Circular strategies design out waste and pollution, keep products and materials in use and regenerate natural systems. Although the circular economy is firmly rooted in industrial ecology, many circular strategies have clear and tangible benefits that reach beyond the ecological and economic and toward the social. Through many of its strategies, barriers to access can be lowered and community building increased, while sharing models, Extended Producer Responsibility and value chain thinking can encourage a collective society and collective action. Furthermore, its mimicry of natural systems can help facilitate a respect, connection to and value for nature. Overall, the systems-thinking approach of the circular economy requires new forms of collaboration between stakeholders and governance; furthermore boosting our economy's capability to serve universal societal needs within the healthy boundaries of our planet and contributing to the broader sustainable development agenda. 

However, if not managed well there can be trade-offs at the social level in a circular transition. Extractive industries that will recede, for example, have workers who need to be supported and protected in a just transition, while circular procurement initiated in one nation may impact workers along the value chain in other geographies. 

These social-economic dynamics have been under increased critical observation: Doughnut economics,(7) for example, aims to transform traditional economics with a  roadmap that utilises many circular strategies to bring humanity into a spot where the needs of all are met within the means of the planet. Meanwhile, Circle Economy research from 2022(8) uncovered potential blindspots of circular business models and devised recommendations for avoiding them. These include ensuring true pricing so that circular products are equally accessible to all and being aware, and active in combatting, the fact that male-dominated leadership and gender pay are also observed within circular business models. Further Circle Economy research(9) noted that the circular economy is not a silver bullet for equitable employment, sustainability and prosperity in the ‘building back better’ era. While some circular economy strategies and characteristics are vital for recuperating from the impacts of the global pandemic—such as skills transferability and use of regenerative resources—others, largely its lack of sociological foundation, warrant caution when applying the circular economy in practice.

In short, any successful economic model must meet the needs of the society it serves, and not only by responsibly managing the natural resources it uses. It is a matter of people and planet, together. A circular economy needs a circular society, and vice versa.

INTEGRATING AN ETHICAL ELEMENT

Armed with the knowledge we have gained over the course of 2020, 2021 and the early days of 2022, we can strive for a more rounded approach to reach our end goal: the ecologically safe and socially just space for humanity. We can broaden the means to ensure that a societal and ethical element is integrated: a circular economy and a circular society.

The circular economy would benefit from tackling aspects which often remain blindspots in circular economy literature and practice. These include legal systems, culture, education, quality of life, values and behavioural norms,(10) and governance and political considerations. In this way, a fully circular approach should also address growing inequalities and actively integrate social justice into its work, for example addressing topics of fair accessibility of resources and taking into consideration the phenomenon of overconsumption in higher-income nations. Feedbacks and interactions from strategies rooted in the circular economy on different parts of the production and consumption chain must also be managed,(11) its environmental thinking linked and backed up with a strong sociological basis; this includes decent and fair job retention or creation and a just transition.

To explore this more holistic approach in theory, we consider three significant pillars: A need to redefine prosperity; to reintegrate with nature; and to rebalance the local and the global.

2B. WE NEED TO REDEFINE PROSPERITY

WHY? What has got us where we are today is the dominance of the current linear economic system that is largely organised around growth. Over decades, even centuries, it has delivered tremendous living standards, wealth and material comfort to some people, in some parts of the world, at certain times. But this has come at a high cost. In achieving this ‘progress’ and ‘prosperity’, our measure of success has been throughput oriented, with Gross Domestic Product (GDP) being the key metric. This is a measure that is focused on the monetary value of goods and services within an economy and policies aimed at economic growth that results in strong GDP have historically widened inequalities.(12)

There are many problems with equating GDP growth with success. It does not come with a moral compass; if you engage in deforestation, which is detrimental on multiple levels, GDP still rises. If worsening pollution causes a spike in hospital visits, GDP can also still rise. And in the same vein, GDP does not take into account non-monetised economic activities that may spur social and environmental wellbeing, such as growing your own food and limiting your waste. It only changes if you pay to have these services done for you.(13) Ultimately, most countries that tout the highest GDP rates also consume and waste far beyond several planetary boundaries—finds our Circularity Gap Report 2020(14) and are  responsible for most of the globe’s current environmental degradation(15).

There are limits to growth due to planetary boundaries. If our demands for energy and resources keep spiralling, for example, then no matter how swiftly we implement renewable energy or resource efficient practices we will end up in the same situation: dangerous climate breakdown. The 21st-century we envision demands new metrics for prosperity—natural and social.

IN A SAFE AND JUST SPACE: In an ecologically safe and socially just space, the economy works for both people and the planet. Measuring its prosperity reflects the wellbeing of both of these facets. Humanity and all living beings are at the heart of economic thought. City and national budgets, policies and operations would be organised around indicators of community and environmental wellbeing across broad categories, such as psychological well-being, health, time-use, education, culture, good governance, community vitality, ecology and living standards. These would be built upon the answer to the question—decided through a participatory and democratic process including representatives from across society—‘what enables us to thrive and prosper?’

2C. WE NEED TO REINTEGRATE WITH NATURE 

WHY? In viewing the natural world as a machine separate from humans, rather than something intertwined with our own existence, humans have systematised, commoditised and exploited natural systems.(16) In placing the natural world as separate to the economy and society, it could be cheapened.(17) Currently, common resources are often used for individual benefit, fuelled by the goal of continuous economic growth. But the negative impacts of such exploitation—greenhouse gas emissions, resource scarcity or plastic soup, for example—are shared by the entire planet and its people. This exploitation and the mismanagement of natural resources driven by private interests is causing overconsumption and damaging the delicate equilibrium of our planet’s natural systems, as illustrated by current climate breakdown, increased health hazards, such as from pollution in the air and oceans, biodiversity loss and risk of natural disasters and extreme weather. 

Yet the extraction of finite resources continues, painting a risky picture for our future.

Outdoor space, and access to it, can tell us a lot about inequality too. There is a division between those who can afford to reap the benefits of common resources (which have often been privatised) and provisioning services (such as clean air and fresh water) and those who cannot. The covid-19 pandemic has further highlighted the interconnectedness of these trends and continues to spotlight the lack of access to nature, as well as personal outdoor space(18) in low-income communities. 

How can we shift the narrative from one of independent gain and growth to one of coordination to reduce joint harm on the commons and to widen equal access?(19) To do so, we face a vast ‘organisation’ challenge of varied and divergent stakeholders, with their own independent goals and ambitions, and spread across a globalised system.

IN A SAFE AND JUST SPACE. Core to a socially just and ecologically safe space would be the embeddedness of human-centred systems—such as culture, finance and governance—with nature. We can turn to nature for inspiration and mimic its systems, rather than exploit it. In embracing and integrating principles of natural systems—that are fossil-free—within our current systems, they transition from being viewed as individual machines to part of a holistic and interconnected ecosystem. Avenues here include industrial systems such as industrial symbiosis and adaptive capacity, to urban systems, such as natural and green infrastructures. National and subnational governments can drive this in their policy, bringing nature into cities in tangible ways—such as rewilding—to increase access, air and water quality. 

2D. WE NEED TO REBALANCE THE LOCAL AND THE GLOBAL 

WHY? From the silk road to the spice routes in the so-called ‘age of discovery’ in the 15th to 18th centuries, people have long traded goods and services across borders.(20) Alongside the industrial revolution in some parts of the world and the rise of digital competency and the internet from the 1960s onward, global interconnectedness has proliferated. The global economy has rapidly developed, and in its wake, increasingly complex global supply chains.

Globalisation has driven economic growth by opening up global markets and has given rise to low-cost products through economies of scale, and high degrees of specialisation and technological innovation. In many ways, the model has provided many groups with wealth, accessibility and progress along sustainability indicators. But it has also served to tip the scales in favour of large multinational organisations, which often relocate labour to lower-cost countries and tax havens; exploiting both human and natural capital along the way. In this, the global wins over the local. 

In tipping the favour toward the global, we see a number of systemic risks to our systems begin to emerge. Fragile supply chains with high complexity and low redundancies, inefficient and resource and emissions-intensive routes, increasing financialisation and speculation on markets, and health emergencies such as the covid-19 pandemic encapsulate these risks. Reflecting on our way forward should immediately call into question the pursuit of economic growth and further globalisation, over, for example, the pursuit of local resilience and regenerative capacity. When faced with so much risk and uncertainty about the future, how can we strengthen our communities, institutions and businesses to reliably generate positive economic, social and environmental outcomes well into the future?

IN A SAFE AND JUST SPACE. A balance between the local and the global would be core to a safe and just space: a notion of ‘glocalisation’ that is adapted to the local but with a globally cooperative ethic. Local systems would be intentionally designed to be regenerative and resilient because they are the ‘life support’ system for the basic needs of the local population. Here, people would be less reliant on global supply chains and less vulnerable to currency fluctuations. Local economies can prioritise the resilience of support systems, such as food, water, shelter and mobility, and further withstand shocks by maintaining strict closed loops as much as possible. In extending this thinking across all economic activities, every region of the world hosts a diverse and thriving economy and a market for a wide variety of skills and jobs spanning agriculture, manufacturing, retail and IT, amongst others. Material flows are localised as much as possible. Other forms of ‘lighter’ flows, such as knowledge, cooperation and finance, continue to be globalised. That is not to say that specialisation and trade no longer exist; indeed they do, but at a more balanced rate. Localising the heavy stuff, while globalising the light stuff, so to say. In a functioning circular economy, highly inefficient trade routes for products would not be the norm. Around the world, we still see examples of this which seem highly counterintuitive: Mexican calves fed on American corn, only to be exported to the US to be butchered for meat which is then sold in Mexico.(21)

4. THE WAY FORWARD

This paper is a thought exercise, or even a reflection, on the curious, turbulent and unexpected events of 2020 and 2021. Looking forward, we must be optimistic and ask: what can we do better?

The circular economy is an ideal base for ‘building back better’, and we know it is crucial for mitigation of climate breakdown, but it must be strengthened by broadening its horizon and including ethical considerations. At Circle Economy, we want to create prosperity for all within the limits of our planet. To do so, we combine data, tools and digital knowledge for the greater good. We understand the importance of social and ethical considerations in the work that we do, but that does not mean we are fully there yet. In our journey of exploration and discovery, we welcome input and collaboration.

We have already begun researching and publishing on this topic and will continue to do so. Our past publications include: 

Work with us in implementing a circular economy fit for the 21st century

Our Circle Scans support businesses, cities and nations with circular ambitions in implementing components of the three pillars we discuss in this paper: redefining growth, reintegrating with nature and rebalancing the local and the global. If you have circular ambitions, contact us. You can also learn more about Circle Economy’s Circular Jobs Initiative, which seeks to maximise the employment opportunities offered by the circular economy.

References

  1. Berwyn, B. (2020). New study shows global warming increasing frequency of the most-destructive tropical storms. Inside Climate News. Retrieved from Inside Climate News Website
  2. Chemnick, J. (2020). Amazon deforestation falls where land is under Indigenous control. Scientific American. Retrieved from Scientific American Website
  3. Gore, T. (2020). Confronting carbon inequality: Putting climate justice at the heart of the COVID-19 recovery (pp. 1-12, Rep.). Nairobi: Oxfam. Retrieved from Oxfam Website
  4. Circle Economy. (2021). The circularity gap report 2021 (pp. 1-71, Rep.). Amsterdam: Circle Economy. Retrieved from CGRi Website
  5. Webster, K. (2017). The circular economy: A wealth of flows (2nd ed.). Ellen MacArthur Foundation Publishing.
  6. Webster, K. (2017). The circular economy: A wealth of flows (2nd ed.). Ellen MacArthur Foundation Publishing.
  7. Raworth, K. (2017). Doughnut economics: Seven ways to think like a 21st-century economist. Chelsea Green Publishing
  8. Circle Economy. (2020) Avoiding blindspots: promoting circular and fair business models. Retrieved from Circle Economy Website
  9. Circle Economy. (2020). Resilience & the circular economy: Opportunities & risks (pp. 1-16, Rep.). Amsterdam: Circle Economy. Retrieved from Circle Economy Website
  10. Circle Economy. (2020). Resilience & the circular economy: Opportunities & risks (pp. 1-16, Rep.). Amsterdam: Circle Economy. Retrieved from Circle Economy Website
  11. Causa, O., De Serres, A., & Ruiz, N. (2014). Growth and inequality: A close relationship? Retrieved from OECD Website
  12. Causa, O., De Serres, A., & Ruiz, N. (2014). Growth and inequality: A close relationship? Retrieved from OECD Website
  13.  Hickel, J. (2020). Less is more: How degrowth will save the world (1st ed.). Cornerstone Digital.
  14. Circle Economy. (2020). The circularity gap report 2021 (pp.1-64, Rep.). Amsterdam: Circle Economy. Retrieved from CGRi Website
  15. Gore, T. (2020). Confronting carbon inequality: Putting climate justice at the heart of the COVID-19 recovery (pp. 1-12, Rep.). Nairobi: Oxfam. Retrieved from Oxfam Website
  16. Kopnina, H., Washington, H., Taylor, B., & Piccolo, J. (2018). Anthropocentrism: More than just a misunderstood problem. Journal of Agriculture and Environmental Ethics, 31, 109-127. doi:https://doi.org/10.1007/s10806-018-9711-1
  17. Kopnina, H., Washington, H., Taylor, B., & Piccolo, J. (2018). Anthropocentrism: More than just a misunderstood problem. Journal of Agriculture and Environmental Ethics, 31, 109-127. doi:https://doi.org/10.1007/s10806-018-9711-1
  18. Lufkin, B. (2020). What outdoor space tells us about inequality. BBC. Retrieved from BBC
  19. Ostrom, E. (1990). Governing the commons: The evolution of institutions for collective action (p. 39). Cambridge: Cambridge University Press. Retrieved from WTF Website
  20. Vanham, P. (2019). A brief history of globalization. World Economic Forum. Retrieved from WEF Website
  21. Semple, K. (2017). Mexico ready to play the corn card in trade talks. The New York Times. Retrieved from New York Times Website

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