What does it mean for a circular economy to create social value?
The global rise in popularity of the circular economy (CE) concept is an indisputable fact. Policy, academia, business, civil society, media - any field you look into nowadays, you’ll find the circular economy to be a widely known and accepted concept, even though not necessarily understood in all its ramifications. This upsurge in popularity—powered by the CE promises in terms of economic, environmental and social value creation—has come together with a myriad of new innovations, job titles, business models and research topics. It has also led, however, to a growing body of voices starting to wonder about the true potential of this economic model for delivering distributed social value - easy slogan or tangible improvements in human wellbeing? With this article, we set the path for an exploration journey to find concrete answers. Together.
A concept with many faces
Despite commonly accepted definitions and principles, the circular economy means different things to different people, depending on their expertise, position in society and vision for the future. This is, partly, due to the fact that the origins of the CE concept are widespread, and it’s often seen as a framework whose basic principles come from a variety of schools of thought and disciplines, such as Cradle-to-Cradle, Performance Economy, industrial Ecology, Biomimicry, Blue Economy and others.
At its core, the circular economy is a set of strategies for closing material loops to preserve products, components and materials in the industrial system. As such, it has a strong focus on the design of products and industrial processes able to leverage an efficient use of resources and materials, avoiding the creation of waste and the negative environmental externalities of linear production processes. As an industrial strategy, it is a tool to increase economic competitiveness in a planetary ecology where inputs for production—natural resources—are finite and costly to extract, more so the more we keep extracting them. As stated by Janez Potocnik in the context of the EU, “we need to clearly understand that the circular economy is the only reasonable and logical solution to protect and improve European competitiveness in the long-run”.
If we look at the origins of the concept and its mainstream interpretations, we will not see the delivery of social value as embedded within. As suggested by Wayne Visser, “the circular economy doesn’t solve on its own problems of equity, social justice and human wellbeing’’. For those who see the CE as an industrial strategy aimed at maximising resource efficiency, the discussion about social value creation might appear redundant and even out-of-context. After all—if we are looking for a model to produce more efficiently—what social value are we talking about? Is this discussion just a clumsy attempt to push the boundaries beyond what the concept is supposed to deliver?
Pushing boundaries - what for?
Perhaps, this discussion is indeed all about pushing boundaries. And for a reason. The most open definition of a CE, in fact, is that of a regenerative and distributive economy. Starting from these two words—as the concept rose in popularity and convincingly entered policy and business agendas—many driven individuals and organisations have come to see the CE as an entry door to steer deep, systemic transformation. In a world where power, wealth and opportunities are terribly concentrated in the hands of a few—and the value of our environment and community life are continuously degenerated—regeneration and distribution can pave the way for more equal and just visions of the future. An effort worth trying, an opportunity not to be missed. Starting from the three pillars of sustainability—environment, society, economy—there has been a growing criticism towards the lack of clear social objectives within the circular economy framework. Throughout time, we have gathered and presented some of these voices:
“The circular economy is the model we need, but it has to be genuinely distributive, i.e. made available for all of us to thrive from it. If we fail to embed its social dimensions, it will remain within the VIP circles. Why? Besides being linear, the economy has also been unequal. If the circular economy is our next economic model, it’d better be appealing for all of us because we won’t have a second chance to redesign another one, if we continue splitting the economic from the environmental and the social. We will not succeed to remain below the 2 degrees set during the Paris Agreement with a circular model that does not grant a transparent access to resources, preserves human value and values, while responding to the needs of all people.”
“There is a need to bring a comprehensive framework for measuring and addressing the shortcomings related to the wider issues of the social pillar of sustainability, which are largely neglected, such as inequality and poverty, human rights and international justice in the context of the transition towards a circular economy.”
“As many scholars have rightly pointed out, the CE discourse—in its mainstream interpretations—currently lacks a social dimension. There is thus very little discussion on key aspects of the CE, such as who owns, controls and governs CE technologies and innovations, who pays for them and what implications this has for traditionally marginalised peoples. This depoliticized and uncontroversial discourse of the CE might have helped the concept rise-up the policy and business agendas, but it can lead to many negative consequences. For instance, it can foster a circularity transition that replicates gender, ethnic, racial and class inequalities and that reinforces the power of dominant groups. It can lead to a circular future, where circular solutions are luxuries produced by a handful of dominant companies for a handful of wealthy people, in a handful of wealthy countries, while the rest of the world lives in imposed scarcity. A circular future must not only be ecologically sustainable, but it must also be democratically established and fair for all citizens on Earth.”
“The CE is not a paradigm that offers an unconditional enhancement of all three pillars of sustainability. While current legislation puts emphasis on environmental aspects, the associated economic costs and social implications that accompany the transition to a circular economy also matter. This can be attributed to the technocratic reductionist approaches that characterise the assessment of circular practices, resulting in the disguise of serious failings at the social level and thus to the identification of effective remedial actions.”
As these perspectives show, there is a substantial interest in including the social dimension in CE practices, policies and objectives. Up to date, however, most of the discussions about social value creation have been rather superficial and often centred on just one indicator: job creation. Performing a quick keywords search, in fact, you’ll find many reports from consultancies, policy bodies and even academia providing estimates regarding how many jobs will be created in the transition to a circular economy, mostly powered by waste management, repairing, refurbishing and remanufacturing jobs. This is no surprise, as job creation is the silver bullet of every politician looking for consensus.
The main problem with focusing the social discussion solely on the potential for job creation is that it becomes hard to see how it can provide more social benefits than a linear economy. After all, through its continuous extraction and environmental destruction, the linear economy has—de facto—been responsible for creating most of the jobs that have allowed the growth in prosperity of the last century in industrialised nations. If we want to show that the circular economy can deliver (superior) social value, we must go beyond that. But, if so, what should we look into?
The quest for social use cases of a circular economy
When we abandon mechanistic thinking and apply a systemic lens, it becomes clear how the circular economy—in virtue of its positive economic and environmental implications—can create social value. For instance, living in a cleaner and safer environment, where inputs of production are preserved and regenerated for future use, has indisputable social benefits. This leads us to think that the circular economy might have a plethora of different avenues through which it can create social value—both directly and indirectly—through the application of its principles, practices and strategies. And this is exactly what we are looking for: how can we employ the CE framework, mindset, and practices to generate concrete social value?
To rigorously define what creating social value means would take a book in itself - and there are better minds placed for the mission. Rather than conceptual clarity, we are here looking for tangible visions and examples. For instance, how can the CE framework help us achieve Sustainable Development Goals (SDGs)? Or—looking into the framework of the Doughnut Economy—how can it help us secure social foundations? As we stand today—at the beginning of this discovery journey—the best we can do is to delineate the path by stimulating the imagination around an open and ever expanding set of questions, such as:
How can the CE contribute to no poverty and zero hunger?
How can the CE contribute to lower inequalities by benefitting those at the ‘base of the pyramid’?
How can the CE increase accessibility for all towards basic services and goods, i.e. food, water, housing, energy, mobility?
How can the CE contribute to intra-generational and inter-generational equity?
How can the CE lead to benefits for communities, both in rural and urban contexts?
How can the CE have a positive effect on wellbeing and mental health?
How can the CE lead to a more inclusive future for marginalised communities?
How can the CE lead to higher citizens engagement and collective participation towards the commons and the common good?
How can the CE push us to think differently about distribution of wealth?
How can the CE have a positive effect on the realisation of basic human rights and needs?
……
It goes without saying that these questions are nuanced and are in need of further specifications: what conditions are necessary for the social outcomes to happen? How should policies, business services and community initiatives be designed to achieve these outcomes? How does the ultimate social outcome differ depending on different contexts (e.g. ‘developed’ vs. ‘developing’ countries)? And the list goes on.
Let the exploration begin.
What is the social value of a circular economy? Beyond slogans and political manifestos, the reality of today is that we don’t know yet. It’s time to find out. With this spirit, we initiate this open and participatory journey to discover it together, through visions, theories and tangible examples from around the world. To see what is already happening, what futures are possible and how virtuous examples can be replicated to create scale. Perhaps, social value creation is not what we should focus on when it comes to a circular economy, and we should rather look at other frameworks and theories. Or, perhaps, the application of its principles to social objectives can actually lead us to a more inclusive, just and fair world. We don’t know yet. What we do know is that we want to play our small part to find it out.
We want to hear from you! Whether it’s your ideas and visions, projects you started or witnessed, we would love to include your contribution in order to enrich the discussion and create a database of social use cases of a circular economy. If you want to be part of the journey, get in touch with us at emanuele@circularconversations.com.
Emanuele Di Francesco
January 2021