Rethinking Circular Economy

Global mean temperature is increasing, sea levels are rising and biodiversity is declining at an alarming rate rapidly throughout the world. All this is happening while the world continues to grow, and our environmental footprint with it. Planet earth is facing great challenges; one could say we are experiencing an actual environmental crisis.

What is our response to climate change, air pollution, species extinction and all the environmental problems?

For a lot of people, the answer is the Circular Economy model.

The concept of a Circular Economy has gained momentum from businesses, NGOs, and policy makers all around the world. The European Commission is fostering the implementation of a Circular Economy Action Plan across Europe, declaring that a “greener economy means new growth and job opportunities“. Many countries are producing their own ambitious circular economy agendas, perceiving the model as an almost magical solution to tackle the global environmental crisis, promising new “green growth”. Big business can continue to flourish, fueled by new opportunities and expanding markets. 

What is a circular economy? 

In 2010, the Ellen MacArthur Foundation was launched with the aim of popularizing the idea of a circular economy, which aims “to optimise resource-use yields in the economy and, as a consequence, minimise the creation of waste. The core idea is to ‘close the entire loop’ of the production cycle (cradle-to-cradle) and maximise the recycling and re-use of material. The concept promotes new product design to facilitate such re-use and recycling, as well as new product-service models that transform the way we consume and who owns the product.” Learn more here.

The recent upsurge of political and business interest in the idea of a circular economy raises a crucial question: Is this a holistic transformation and a great change, or only a greener versions of business as usual?

Sevan Holemans, who launched an urban agriculture business in Brussels, raises the question: “How can companies such as Apple, H&M or Nestlé claim to “accelerate the transition towards circular economy” and receive prizes for their “considerable achievements” in the field, and yet simultaneously continue polluting? All the while, their business models encourage and rely upon a system of endless consumption and economic growth.”

Do companies and policy makers (intentionally or unintentionally) abuse and misuse the principles of Circular Economy for greenwashing? Why do companies say they are committed to tackle the environmental crisis they helped create, but keep investing in the wrong “solutions”, under the cloak of the current Circular Economy hype. Why do they use the Circular Economy to promote “green growth” instead of a “real transition”?

As entrepreneur in social innovation and sustainability Holemans wonders: “Should I still be proud to present my urban farm as a model of the circular economy then? Or is my definition of circularity as faulty one as the one put forward by these brand-name companies? Are we really looking in the same direction and pushing for the same economic transition?”

Circular Economy vs. Sustainability

Circularity and sustainability – these terms are very often used together and somewhat interchangeably, but are they really the same? Is Circular Economy always sustainable?

Based on key literature analysed in “The Circular Economy – a new sustainability paradigm?” by Geissdoerfer et al. (2017), the authors define the Circular Economy as “a regenerative system in which resource input and waste, emission, and energy leakage are minimised by slowing, closing, and narrowing material and energy loops. This can be achieved through long-lasting design, maintenance, repair, reuse, remanufacturing, refurbishing, and recycling.”

The study defines sustainability “as the balanced integration of economic performance, social inclusiveness, and environmental resilience, to the benefit of current and future generations.”

The Brundtland Report highlights that “Sustainable development is development that meets the needs of the present without compromising the ability of future generations to meet their own needs”.
Any activity or process that is in accordance to this vision can be considered as sustainable.

At the same time, the U.S. Chamber of Commerce Foundation remarks that “the practice of circularity is grounded in and focused on the technosphere – a human construct designed to support the conversion of raw materials for human consumption beyond simple survival needs of food and water”.
In contrast, “the practice of sustainability is grounded in and focused on the biosphere, it evolved from the fields of ecology and environmental science, which gave sustainability the holistic, systems-based view so crucial to successful programs in this space”.

“The intentional design of a system is what separates circularity from sustainability.”

U.S. Chamber of Commerce Foundation

In their study, Geissdoerfer et al. (2017) highlight several other differences:

“In fact, sustainability aims at benefiting the environment, the economy, and society at large … while the main beneficiaries of the Circular Economy appear to be the economic actors that implement the system.”

“There is also a difference in agency, influencing the understanding of the agents that should influence system changes. While agency is diffused in the case of sustainability…as the priorities should be defined by all stakeholders, the Circular Economy has a clear emphasis on governments and companies…”

“the perception of responsibilities is also clearly distinct between both concepts. In the sustainability debate, responsibilities are shared, but not clearly defined, while the literature considers that the responsibility for the transition to a circular system lies primarily with private business, regulators, and policymakers. Moreover, the commitments, goals, and interests behind the use of the terms differ greatly. The focus seems to be on interest alignment between stakeholders for sustainability, whereas the Circular Economy prioritises financial advantages for companies, and less resource consumption and pollution for the environment.”

“Circular Economy focuses on environmental performance improvements rather than taking a holistic view on all three dimensions of sustainability.”

“The Circular Economy … refers mostly to individual economic benefits through input reduction, efficiency gains, and waste avoidance with relatively immediate results compared to sustainability.”

To sum it up, the current Circular Economy model is an intentionally designed human construct, grounded in the technosphere with a clear emphasis on governments and companies.
Sustainability, on the other hand, aims at benefiting the environment, the economy, and society at large; responsibilities are shared by everybody, but are not clearly defined.
Circular Economy does not necessarily has anything to do with sustainability. The concept features some ideas that can help sustainability, but one always has to evaluate, if they can be applied in terms of sustainability.

The risks of the current Circular Economy conceptions

Currently the Circular Economy is very often presented as “a pragmatic win-win solution for everyone” to “solve the problem of climate change, resource depletion, and waste”.

Without a doubt, the Circular Economy and the ideas behind it could make a big difference towards an ecologically sustainable future — but its current widespread approaches also introduces several risks.

The biggest risk might be that it is a band-aid solution that keeps us from realizing that truly solving environmental problems requires a much more comprehensive and holistic transformation of our political, economic, and social systems.

A recent study by Zing and Geyer (2017) concluded that there are, without a doubt, “circular economy rebound” effects. The main drivers for businesses to join the Circular Economy are not just to do good for the planet, but rather to reduce their waste and make processes more efficient, thus lowering costs.
This can ideally be a win-win situation, but in reality it might lead to a rebound effect in which more efficient operating procedures might lead to lower per-unit production costs and therefore higher demand for the products and price wars in the markets. As Holemans sums it up ” In fact, even if you use fewer resources to produce one consumption unit but you keep on increasing the production volume, the absolute impact on natural resources will continue to increase. While this might sound simple or intuitive, its implications are essential. Closing the loop without questioning the unlimited growth paradigm does not bring us any closer to a better use of natural resources! Doing less bad is not good enough.”

The currently widespread conceptions to Circular Economy promise a new economy in which innovative technical engineering leads to more and “greener” growth for businesses. We have to acknowledge the fact that complex problems do not have easy solutions and that companies don’t act green just for the good of the planet. There is a very high risk that the overall environmental benefits will be largely offset by economic growth. 

Narberhaus and von Mitschke-Collande highlight that “corporate interests are served by the Circular Economy in other ways too. Take one of its most widely hailed features: the business trend towards offering services rather than selling ownership. Sharing underused items, like children’s shoes or DIY tools, may save money and materials. But a “sharing economy” put in place and dominated by large corporations also increases corporate power and can exacerbate inequalities and dependencies”.
Two ubiquitous examples of this are the business models of Uber and Airbnb, which are largely built on precarious working conditions, evading regulations, and breaking laws. In their greed for growth, profit and dominance they have often acted ruthless, causing harm to many other people and businesses.

The current widespread conceptions of the Circular Economy “ignores the fact that, on a finite planet, endless economic growth is not an option“. It doesn’t address the issue, that “today, the management and distribution of the majority of resources and services, such as energy, water, food, education, and health, is controlled by a few large corporations who exploit it for their own profit. Besides creating a division between providers and consumers this concentration of power contributes to an unsustainable economy that drives overexploitation of resources”. And it fails to see that solving our ecological crisis means “diluting the power of global corporations – not propping them up. This Circular Economy model “does not consider the enormous inequality inherent to financial capitalism nor the continuous democratic erosion we are experiencing as a result of the market society that we have become”.

Geissdoerfer et al. (2017) sums it up very well: “many conceptualisations of the Circular Economy … appear to exclude large parts of the social dimension, emphasise economic benefits, and simplify the environmental perspective, the concept might be more attractive for policy makers and private business than competing approaches. This can be problematic for the transition to a more sustainable economic system because attention and resources are diverted from more comprehensive and holistic approaches.” 

A better approach to a circular economy

Many companies and policy makers are currently abusing and misusing the term “Circular Economy”. We should help spread its true meaning! Thereby, we can cherish the existing projects that promote real change and transformation, instead of discrediting companies for their abusive labeling. Together we should enter a public discourse on Circular Economy and “push for a more holistic definition that can be adopted by public and private authorities”. There is a wide range of opportunities for future discussion and research in this area.

A discourse on the Circular Economy already exists with contributions such as Urban Circular Economy by Bonato and Orsini (2018), which focuses on cities, and the Social Circular Economy by Hobson (2019), which adds the aspect of how transitions can be realized in everyday practices and spaces.

Lars Zimmermann, an artist, economist, designer, and activist based in Berlin,  promotes the concept of open circularity, describing it as follows:

“When we talk about a “Circular Economy” we talk about the idea of an economy without waste! It is different from our current – linear – economy. Where we take resources make products and then throw them away as garbage!
In the Circular Economy everything is designed and organized in a way that our products can be repaired, reused, refurbished, and fully recycled. We save resources. Because the materials in our products are the resource base for future products of the same quality. The Circular Economy works in evolving symbiosis with our bioshpere – protecting it and growing its potentials.
But when we take this idea and compare it with the world today. It quickly becomes clear that almost everything in our current economy has to change for this. And not just the designs of our products and services. But also the collaboration methods we use to make and distribute them.”

What Zimmermann demands is “transparency”, “open-source” and “open-innovation”. We need to share information, so that we can make sure, that the information necessary to repair, reuse, refurbish, and recycle an object is accessible wherever the object goes.

“Imagine the following story. You have a scooter factory in Italy and someone on the other side of the world – in China – has a repair question. Sure. The guy in China could call you. And you pick up the phone and guide him step by step through the process. Spending 20 minutes. That is not going to happen. Because the costs are too high. For both of you. Dealing with time-zones, language barriers, maybe licenses – investing the time on the phone – just to repair one scooter. No! The information must be freely available. Everywhere. Anytime. So people can bring broken or unused things back to life quickly, with little effort.”

Lars Zimmermann on transparency in the Circular Economy

According to Zimmerman information needs to be “open”, which means that is must be “available”, “in editable formats” and “under open licenses” to enable the collaboration and communication we need for a true circular economy – Open Source Circular Economy.

“When things are open it is also easier for people to get involved with circularity – to invent, use and spread circular solutions. Learn from existing stuff and built on it. Openness speeds up innovation.“

“For the Circular Economy we need simple Designs and Open Communication and Collaboration about them. That enables ecosystems. Of decentralized collaboration. With short cycles.“

Lars Zimmermann on Open Circularity

I absolutely agree with Lars Zimmermann in that almost everything in our current economy has to change, and that our current understanding of the Circular Economy needs to be expanded.

I’m totally with Narberhaus and von Mitschke-Collande, who say,The circular economy needs to be part of a bigger effort to tackle economic growth, wasteful consumerism and undemocratic power structures in the global economy. It needs to be geared to the real needs of all people rather than the excessive consumption of a few, and to be underpinned by more cooperative mechanisms rather than controlled by a small number of powerful companies.”

A Civic Circular Economy – Civic Circularity

What I propose that we really need is a the Circular Economy model designed and driven by the civil society – a Civic Circular Economy, or Civic Circularity – as a grassroots circularity, a holistic and sustainable transition from and with all stakeholders.

As Geissdoerfer et al. (2017) highlights, “circularity has a positive influence on certain aspects of sustainability, it does not integrate other dimensions, especially the social one.”

The Civic Circularity embeds and extends the common principles of the Circular Economy and is collaborative and aligned with civic economy, social economy and social innovation as well as many ideas of Urban, Social and Open Circularity.

Currently, the discourse on the Circular Economy usually focuses exclusively on businesses and as Hobson (2019) notes in his work on “Social Circularity“: “The role of individuals as consumers/users has received less attention than other aspects of the CE (e.g. technological interventions) within mainstream debates to date”.

As individuals, in the role of consumers, customer, users and entrepreneurs “we” citizens are major stakeholders in every economical model and play a key role in the system.
Through our behavior as consumers, the way that we select, buy, use, and dispose ideas, goods, and services, we individuals can actively shape an economy. We choose what we buy and with our decision to purchase or not, we vote for the future we want. Thereby, there is no way to be passive, because inaction (not buying) or action (buying) is active and a message to the businesses. As Tom Szaky, CEO of TerraCycle and Loop, says it: “Vote for the future you want with the products you buy” or “What you buy is the future you are voting for”.
As individuals we have direct individual control over companies and governments, who make decisions based on our desire and we should be aware of this power.
Campaigns like “Fridays for Future” are a great example for the growing awareness of (young) citizens for the current environmental crisis and their demand for action and change.
Companies and policy makers should react to and comply with these requests, while greenwashing is no longer enough these days.
We need businesses to provide (actual) environmentally friendly alternatives for conventional products to competitive prices and we need governments to provide infrastructure and set up laws to foster such trends.
As customers, we need to not only demand and push for deployment, but also need to be willing to financially support it during the time of transition, wherever it is possible. If we demand that businesses use alternatives for single-use plastic products, then we need entrepreneurs to explore alternatives and customers to facilitate thus developments.
For businesses, it is only attractive to switch to more resource-saving alternative products if they are affordable or the switch is incentivized. As customers, we should demand and support such developments and favor businesses that develop and implement sustainability. Especially small, local businesses, which are the the pillars of a local economy, but are underrepresented in the current Circular Economy, need stimulation from the government and the civil society.
We have the unique chance to collectively design a new economy as conscious consumers, customers, users, and innovative entrepreneurs with green, open-source, and open-innovation solutions.

A local, open and sustainable Civic Circularity

I share the same vision as Narberhaus and von Mitschke-Collande and love to “think of a world with widespread networks of community gardens, repair cafes and time banks – where individuals can provide services, track and bank their hours and then spend those hours to get their own needs met – and where the introduction of a universal basic income has made participation in such activities realistic for ordinary people.
In such a vision, global corporations might still exist, but would play a much less dominant role than today. Peer-to-peer economic co-operation or local and regional community-led production and consumption models would thrive, helping to support a less growth-dependent and more sustainable economic system.” 

There are actually already alternative concepts of unconditional sharing and true circulation, such as locally organised car and bike sharing organizations, food sharing initiatives, second hand and free markets, community gardens, time banks, and housing projects. I encourage everybody to take a look at such initiatives as I find them very inspiring and they might make you rethink as well.

We need local solutions for global problems, as Holemans explains: “The drive should be to generate more value locally, using locally available resources (natural and human) and allowing the local circulation of money. This is a fundamental shift from the current status quo of global trade and competition.”

We need an active and progressive society with grassroots movements, independent from big businesses and monopolies. We need an open economic model, driven and owned by citizens and an enlightened civil society. We need to be aware of our power as entrepreneurs, consumers, customers, and users to promote change for a better world. 

The Circular Economy model contains many important concepts and strategies for a great transition, but we need to be clear that what we really need is a much deeper change in our current economic system geared towards the real needs of all people rather than the excessive consumption of a few, and to be underpinned by more cooperative mechanisms rather than a small number of powerful companies.

We indeed need to employ the principles of circular systems, such as reuse, sharing, repair, repurpose, refurbishment, remanufacturing, recycling, and even upcycling to create closed, looped, and sustainable systems, minimising the use of resource input and the creation of waste, pollution and emissions.
Our common vision is an economy without waste!

We need to clearly highlight the issue of finite natural resources and limited economical growth! As Holemans says it: “The definition of circularity would lose its coherence if it didn’t include the notion of absolute decoupling. To be circular, one should integrate the finitude of the planet and, therefore, the limits to growth. This bring us to the “simple living” lifestyle characterized by individuals being satisfied with what they have or genuinely need, rather than what they want.”

Joséphine von Mitschke-Collande and Micha Narberhaus agree, that “a future economic system has to find solutions to the problem of economic growth and wasteful consumerism, as well as to the undemocratic power structures in the global economy. The Circular Economy can only become a positive contribution to a new economic system if it is embedded in a vision and narrative of a post-growth and post-neoliberal economy.”

We need local, self-sufficient, open, holistic, post-growth, post-neoliberal, truly circular, sustainable and civic solutions from and with everybody!

Join the discourse and help to spread the true meaning of a circular economy

The Circular Economy is an emerging topic that has attracted increasing research interest. While the roots of the topic are European, the concept has gained momentum from policy makers, businesses, and NGOs all over the world.
We need more research and more public discourse on the topic and recognize the demand for a much more comprehensive transformation of our political, economic, and social systems.

Under the cloak of the current Circular Economy hype, companies declare, that they are committed to tackle the environmental crisis they helped create, but they keep investing in the wrong solutions. We need a holistic transition and a great change, not greener versions of business as usual!

This requires real innovations and shifts in consumer behavior; global active citizenship and the awareness of entrepreneurs, consumers, customers, and users to collectively shape and design a more inclusive and sustainable economy; and further social fermentation through grassroots initiatives such as the transition movement or Ferment the City.

A Civic Circularity employs the principals of a “true” circular economy, embedded into a broad, collective and holistic transition. An inclusive and sustainable circular economy model, benefiting the environment, the economy, and society at large; where responsibilities are shared by everybody and transformation is driven by an enlightened civil society.

There’s no time to waste in making real change, not offering false hope. We have a long way to go and we need everyone to help!

By Stefan Simon for Collective Green

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