How can the Circular Economy create distributed social value?

February 19, 2021 Emanuele Di Francesco

The social value of a circular economy - easy slogan or tangible improvements in human wellbeing?

The upsurge in popularity of the circular economy concept has been accompanied with a variety of propositions for the creation of economic, environmental and social value. Driven by the willingness to convincingly enter business and policy agendas, however, the discussion has so far primarily focused on technocentric discourses aimed at the creation of economic value (i.e. resource efficiency, economic competitiveness, cost savings and new revenues streams).

While the environmental claims of such practices still need, in many cases, to be properly measured and verified—especially in a long-term, systemic, global scenario—when it comes to the social dimension there have been few in-depth discussions concerning how the circular economy paradigm can create tangible and distributed social value. The main argument in this sphere has focused on the potential for job creation. But, if this is to be the only token for social value, what about the track-record of a linear economy in creating jobs, while exploiting and destroying the environment?

To provide evidence able to back up the social value proposition, we definitely need more than that. This is exactly the starting point of a new journey we recently embarked on to discover if and how the circular economy can create social value for communities and citizens around the world. With this spirit, we initiated an open and participatory journey to discover it together, through visions, theories and tangible examples.

In this expert series, we ask a diverse ecosystem of researchers, entrepreneurs, businesspeople, experts and community leaders engaged with the circular economy to share their perspective on one overarching question:

How can the circular economy mindset and practices help us create distributed social value?

If you ask me what is the ultimate model for creating social value tomorrow, my answer is without a doubt: the ability to decide today as if future generations matter. This approach is called “decentering ourself” or “the decentration”. In short, the ability to spend one’s life preserving conditions conducive to future lives on the planet. If the question is whether the circular economy--in its current format--will fully embrace this notion, the answer is undoubtedly: not quite. Unless you design a model that takes into account all forms of life, thus maximizing “social value” in a new model of life (within which the economics is one among other elements) where all lives are interdependent, the circular model based on “growth within” might not succeed in preserving the conditions to welcome our future human generations. And so there is and there will be destruction of social value.

Alexandre Lemille, Co-Founder African Circular Economy Network & Futurist The Circular Humansphere

The Circular Economy is at a crossroads. Currently, we have preoccupation with delivering economic value, and in most cases the potential synergies between social and environmental value are largely neglected. Many large organisations are cherry picking aspects of circularity to fit existing agendas, retrofitting strategies around efficiency and recycling where financially viable. Little attention is focused at whether or how these strategies positively or negatively impact their employees. Currently I am exploring how a textile manufacturer in Vietnam, Saitex, is redeploying internal resources (stock fabrics/ rejected garments) to create a new upcycling business called “Rekut”. Rekut employs persons with disabilities, providing a livelihood and supporting life satisfaction of a community rarely discussed in the circular economy debate. Exploration of these unique, “strong sustainability” focused approaches to circularity must be shared and replicated to prove that, with the right mindset, circularity can be both inclusive and commercially feasible.

Rebecca Clube, PhD Researcher, Environment, Technology & Policy at Imperial College London

As resource consumption and waste generation continue to rise, transitioning to a circular economy has never been more vital. Just as the alarming environmental impacts of a linear economy can be felt by all, the circular mindset has the potential to build societal value for everyone. Moving away from current “take make dispose” systems encourages creative and collective thinking, from transdisciplinary collaborations to transformative technical development. At Aquafil, we are proud of our ECONYL® regenerated nylon yarn made from ghost fishing nets and other nylon waste collected from all over the world through different programmes and initiatives. The system enables local communities to earn a supplementary stream of income, whilst fostering the technical skill development and specialist knowledge required to transform waste into useable materials. As circularity emerges as the only solution to the pollution crisis, we are all facing, we will need to integrate it into global systems, together.

Giulio Bonazzi, Chairman and CEO Aquafil S.p.A

Circular economy research is prioritizing environmental and economic elements, largely neglecting social considerations. This is problematic as there may be trade-offs between circular practices and social value creation, particularly for vulnerable communities. For example, it has been shown that house sharing initiatives may lead to significant pressures on the prices of the housing market. In order to create social value, building relationships with local communities and giving community members a role in circular practices is important. This can assist in the creation of both social and ecological value, for example when social goals--such as revaluing the talents of community members--are directly linked to circular practices, such as the upcycling of materials. Furthermore, by giving communities a role in circular practices--such as an active involvement in sharing activities in neighbourhoods--lifestyles and consumption patterns can be addressed, increasing environmental and social benefits and reducing rebound effects.

Manon Eikelenboom, PhD Researcher, Sustainable Entrepreneurship & Circular Economy at Rijksuniversiteit Groningen

According to many analysts, given the right economic incentives, a transition to a CE can automatically happen in market economies. The role of people, class relations and power asymmetries, local communities, care and social reproductive work, and nonhuman nature (plants and animals in particular) is generally overlooked. The details about how such a revolution in the way we produce and consume would happen are generally vague and--probably intentionally--underspecified. Therefore, there is a risk that economic imperatives to ‘close the loop’ as quickly and efficiently as possible conflict with the inevitable frictions and demands of democratic governance. A key issue that is often ignored is: who is going to decide where and how to implement closed-loop production and consumption systems? Since CE does not question issues of justice and power relations, the societal implications of such a paradigm transition are not explicit, suggesting a predominantly technocratic agenda underlying the CE notion.

Mario Pansera, Distinguished Researcher - ERC grantee at Universidade de Vigo

The circular economy mindset relies on an understanding of the interconnected nature of systems. While we often think of these connections in terms of material flows in CE, and identify the ways in which different processes might interact to create additional commercial value, we can also observe CE perspectives shifting towards an understanding of how social value is connected within these systems. This inclusive systems-thinking approach provides hope for a just transition, where the collective benefits of distributed social value are understood and prioritised. At the same time, the circular economy mindset lives within political, social, and cultural systems. Distributed social value is not by any means guaranteed through circular economy transitions, but must be integrated into the building blocks of enabling practices, business models, legislation, and funding mechanisms.

Heather Rogers, PhD Researcher, CRESTING research group at University of Hull

Whilst circular approaches can support a system where we have enough, for all of us, forever, it’s far from inevitable. We can see circular examples encouraging more consumption, or replacing one problematic material with another. There are recycling systems where toxins escape into the air and water, harming humans and other living systems. I believe we need to rethink the circular economy mindset, expanding its scope beyond a focus on circulating materials (and so avoid using virgin resources and creating waste and pollution), to a focus on circulating value for all stakeholders, including customers, society and our planet. In the same way that the Cambridge Value Mapping tool encourages business to think about the value needs of ALL their stakeholders, we can think about how each circular approach increases or reduces value for society, at every stage in the process, and for every location in the supply chain. I also believe we need to use sustainability criteria to assess our circular projects. I think the science-based Four Sustainability Principles, from the Natural Step, are both simple and robust, covering the needs of our planet and society.

Catherine Weetman, Founder of Rethink Global & Host of the Circular Economy Podcast

The circular economy encompasses a very powerful concept called biomisesis, which is based on imitating natural flows in the creation of sustainable products. I believe that this same logic should be implemented in the education of consumer practices as a way to include the wisdom of nature, also in social relationships and not only to obtain purely commercial objectives. When we do it as people, we can feel integrated into the ecosystem, we will value other human beings and we will be able to develop awareness of care and coexistence with all species that maintain planetary balance. The incentive to transform our production habits must also be included in our consumption habits. And the development of a circular system should consider in the first instance that we are all valuable beings with the right to live in a healthy world. Implementing a collaborative culture that values people for who we are over what we have. In order to empower society we need to complement individual knowledge with the collective purpose that I call ‘evolving from a rational animal to a conscious human being'.

Philippe Romero Muzz, President of the Tedoy Chile Foundation and Current Candidate for the Constituent Convention of Chile

’The circular mindset’ first and foremost needs to broaden its own mindset to not see circularity as the end goal of economies. Circularity is a part of the solution in a necessary 'fractal‘ economy design in which--like in nature--linear, circular, cyclical and spiral processes run in parallel and in interconnected ways. The cycle of a tree from seed to end of life combines all these elements. If circular strategies embody these aspects and add a 'human cycle‘ into the mix, the connections with fractal economy design can be explored towards wellbeing for all, in which the wellbeing of the individual can be a part of. This has consequences for how you design life and work processes and support a switch from competition to 'interbeing‘, from an exploitative economic system design to a regenerative & distributive economy. Circularity comes into full fruition in this broader context.

Ralph Thurm, Managing Director r3.0

Economic and environmental benefits are recurrently highlighted as arguments to promote the application of circularity principles for achieving sustainability whereas the social benefits that might emerge are less obvious. Transforming the society and economy around circularity principles requires changing the way we, human beings, behave and view our consumption and use of resources. Circular economy encourages people and organisations to redefine their relationship with using finite resources and interacting with their surrounding materiality. A circular economy requires to go back to the local scale centred around how people--as citizens in communities and as employees in organisations--can change their unsustainable practices. Increased collaboration, communication and care are some of the essential ingredients to create and maintain circularity that hopefully will bring a new sense of well-being and social cohesion amongst other values. Therefore, I think that social values need to be considered not only as a desired result of implementing circularity principles but as crucial elements to address in the transition to a circular society. We need to start creating, promoting the emergence of the necessary social values and sustainable features in individual behaviour and collective norms during the change process already.

Natacha Klein, PhD Researcher, CRESTING research group at NOVA University Lisbon

While wealthier industrialised societies must surely embrace circular concepts and practices, this is not enough. To dramatically shrink their inequitable emissions levels by up to 97%, and to share global resources with the less fortunate to assist them emerge from poverty, the wealthy must abandon modes of material-driven, linear economic growth to reduce resource consumption. Arguably, they also have an ethical responsibility to atone for past despoliation of the planet, plundering resources of poorer countries, and their primary role in creating the climate emergency. But as they wind-back imports of materials and goods, and reuse more of what they have via more localised circular practices, the economies and livelihoods of lower income nations may be severely affected as their resource extraction and production declines, as Chatham House highlighted. How can this imbalance and social inequity be addressed? To enable a just transition to new modes of growth and circularity, the wealthy must surely support the disadvantaged to attain the SDGs by improving facilities, infrastructure and livelihoods. Imagine if poorer societies could be compensated for less resource extraction by adopting extended producer responsibility and adding considerably more value to reduced raw material exports! That is, by retaining ownership of materials and goods, providing them as a part of a distributed, devolved service system, and taking them back via circular trade – all supported by know-how, capacity building, technologies, and investment from wealthier trading partners. Could such ‘turning the system on its head’ position lower income economies in the driver’s seat by enabling them to manage resources over their extended life, and provide a pathway to prosperity and global equity?

David Ness, Adjunct Professor at the University of South Australia

Just as it is important to adopt a holistic approach to physical and mental health that recognizes the interconnectedness of a wide range of aspects (physical, emotional, social, spiritual), it is crucial to take a holistic mindset to circular economy development that acknowledges mutually interdependent dimensions: economic (material) and extra-economic (social and environmental). Only by adopting such an integrative approach is it possible to design circular ways of healing the deeper wounds that underlie our socio-economic system (e.g. debt accumulation and uneven distribution of wealth that underpins social inequality) rather than just treating particular symptoms of a disease (e.g. piles of non-biodegradable waste). An example of an ambitious initiative that embodies circular economy principles whilst creating tangible social value concerns Unión de Padres y Amigos Solidarios (UPASOL) – a community foundation located in La Serena in Vicuña, Chile. The enterprise offers (1) free rehabilitation and integrated treatment services for low-income, disabled and/or vulnerable individuals (often children with Down syndrome, autism or cerebral palsy that require kinetic, speech and psychological therapies); (2) social integration and labour insertion schemes; and (3) rural care home programs for children, among other social support activities. Crucially, all of this is enabled by profits generated from operating a collection service for recyclable household goods, which are then sold to companies for recycling and re-production. What is more, the rehabilitation center and kitchen use donated and refurbished medical/kitchen equipment. Any unusable goods are displayed in ‘Museo del Recuerdo’ whose purpose is to increase visitors’ awareness about the environmental threat of planned obsolescence. While many items used in UPASOL embody high carbon footprint as a result of globalization (e.g. waste balers come from Japan), environmental externalities seem to be overshadowed by the generated environmental value and, more importantly, social value, which is manifested in personal empowerment, healing and socially inclusive practices.

Malgorzata Lekan, PhD Researcher, CRESTING research group, at the University of Hull

First, the circular economy concept has to be redefined. The circular economy is virtually silent on the social dimensions, concentrating only on benefits to the biosphere, and there is no explicit recognition of the social aspects inherent in other conceptualizations of sustainable development. Based on the last, a new, more holistic definition should include a social objective, including the sharing economy, increased employment, participative democratic decision-making, social equality, and more efficient use of resources through a cooperative and community user--as opposed to individual consumer--culture. Second, to create distributed social value within circular economy practices is necessary to engage stakeholders and cross-sectors to bring a range of desired social changes or social impacts; market makers — where beneficiaries are involved in the business model of the enterprise, creating jobs in the community; system innovators — implementing system-level innovation that caters efficiently to serving the disenfranchised populations; and innovative campaigns — providing education and raising awareness among beneficiaries to create social value and change. However, operationalizing and measuring social value creation still remains a challenge.

Alejandro Padilla-Rivera, PostDoc at University of Calgary

The circular economy discourse mostly focuses on value creation in the economic realm, not so much outside of it. For example, used electric and electronic equipment from Europe are sent to Africa via countries like Nigeria and Ghana as ports of entry. Some are dead on arrival while others provide value to the users for one to three years before it becomes e-waste. During a research visit in 2019, the two state-of-the-art e-waste recyclers in Nigeria shipped hazardous parts of e-waste to Belgium after stripping the valuables. Nigeria, like many other nations, simply lacked the capacity for sound management of the hazardous component of e-waste. Crude material recovery from e-waste by the informal sector was the norm. Multiple pieces of research show the health and ecological harm of such crude recovery processes. Focusing on just the economic value creation from 'reuse' without context can also cause social and environmental harm, like in this example. Can the circular economy ensure that reuse can benefit societies and limit social and environmental harm to a minimum? It is possible. One can test the product rigorously before exporting for quality assurance. One can extend the extended producer responsibility beyond national boundaries to take care of e-waste caused by such exports. One can build capacity and awareness in the informal sector to minimize harm. These are practical things one can do right now to create value beyond the economic one. The circular economy can create distributive socio-ecological value, only if humanity operates outside the human politics of division, in the interconnected space where nature and all humans have intrinsic value. Otherwise, it is merely trying to solve the problem with the same level of thinking that created them in the first place.

Kaustubh Thapa, PhD Researcher at the Copernicus Institute for Sustainable Development, Utrecht University

Circular economy suggests a new way of understanding resources. First of all, the human resources. While applying the circular and systemic mindset we must ensure that at all steps of any process we do not "over consume" the human resource and distribute the flows evenly (financial, recognition, knowledge...) with and between all the individuals involved. In addition, with a circular economy we aim to share and distribute evenly all the functions of products, components and goods in circulation. That means we can improve access and multiply uses and users for each element to satisfy more people's needs and create new loops of value creation. Finally, as the circular economy creates new loops of value creation, it relies on strong and local jobs and know-how that can be consolidated, created or relocated. To conclude, circular and systemic mindset and fundamentals go beyond the pyramidal creation of value oriented towards the same "owners" and "users" to create new values and distribute it among all the human ecosystems, at all steps of the value chains, including use and next uses.

Justine Laurent, Managing Director Circulab

This is a key question. So far, social impact and social equity are often absent from circular economy understandings and definitions, and from many of the new circular business models emerging. Communication is key for making a circular economy mindset and practices more widely understood and including more people - beyond favouring the privileged and the digitally connected/savvy, which risks making circular economy another elitist model. Circular mindsets and practices need to be communicated sensitively, addressing local cultures and their preoccupations, using stories and images which inspire and resonate, whether this is in the education sphere or more generally around products and services. For many, circular economy and what it implies is negative, synonymous with austerity, hardship, 'making do', scrimping to get by. It is a challenge to bridge that gap, and for people not to feel they are 'getting less'. But intelligent communication, and inspiring stories, experiences, roles and business models can help. In Berlin, the NochMall opened last August, a second hand store run by the city's waste management company in a less affluent part of the city; it was 35°C that day, but there were queues round the block on opening day, with people of all ages and backgrounds. I've never experienced such a positive buzz in a second hand store, what's more in the middle of a pandemic (masks and social distancing). It felt like second hand was slowly becoming mainstream once again, and more acceptable, desirable and inclusive. Stockholm, Munich, Hamburg and other cities also have such stores, and hopefully this is just the beginning.

Phoebe Blackburn, Communications & Facilitation at Phenomenal Words and certified consultant at Circulab

To create tangible social value in a circular economy we must think beyond simply circulating material resources in an ecologically sound manner. We must also circulate wealth, power, technology, and knowledge in fundamentally redistributive and democratic manners. A wholescale democratization and redistribution of value is at the core of what a fair, sustainable, and convivial circular society is truly about. Some mechanisms to create this circular social value include establishing a universal basic income, closing financial paradises and speculative markets, establishing taxes on financial transitions, building high quality public education, health-care, housing and transport systems, fostering open-source innovations and technologies, establishing participatory budgeting systems, building local food and energy sovereignty, fostering worker-owned cooperatives, creating public and community banking systems, transforming international cooperation between Global North and South to make it more democratic, fair and sustainable and, most importantly, creating citizen councils of randomly selected citizens to co-create this socio-ecological transition.

Martin Calisto Friant, PhD Researcher at the Copernicus Institute of Sustainable Development, Utrecht University

In Closing the Loop, the circular economy documentary that I co-produced and presented, many of the cases we featured had features of socio-economic inclusion. For example, in the city of Quito in Ecuador, the municipality was collaborating with a company called EcoPak to upcycle TetraPak cartons into furniture, corrugated roofing, kitchen tabletops, even jewellery. For the sorting process, where the Tetrapaks were picked out from the general municipal waste, they chose to work with a group of women who had suffered domestic abuse. This is a classic inclusive approach. Similarly, the tyre-recycling case of REDISA in South Africa helped many previously disadvantaged people to become self-employed, some as waste pickers collecting the discarded tyres in their communities, others as depot managers in the sorting, cutting and packing the tyres for onward distribution.

Wayne Visser, Professor of Integrated Value at Antwerp Management School (*excerpt from forthcoming book 'Regeneration:The Great Reset for Nature, Society and the Economy)

Today, a lot of innovative circular business models are being created and implemented, however, the social aspect is often lacking. The circular economy and its application through business models is mostly associated with creating economic value out of products already in use. Nevertheless, I believe the circular economy has the potential to create social value, hand in hand with environmental and economic value by going beyond incremental change. Indeed, it creates a rupture with our current economy by adopting a systemic approach. To achieve and create social value, I think the circular economy can be implemented through disruptive systemic business models where a wide range of actors collaborate towards achieving sustainability throughout the life cycle of a product. In my PhD, I aim at exploring how such collaboration can lead to create more value out of circular activities.

Virginie Litaudon, PhD Researcher in Circular Economy and plastic waste at Portsmouth University

Introducing circular practices inevitably comes with social implications. Identifying the character and magnitude of such implications has the potential to ensure that the circular economy transition also creates social value in line with the Sustainable Development Goals. This can be done through the development and application of assessment approaches and decision-making tools which help companies to determine the social value of products across each phase of the life cycle. There are numerous challenges associated with both defining and assessing social value, given its dependency on the local context and value systems, as well as the lack of standardised and integrated assessment methodologies. Thus, the social sustainability dimension has remained in the shadows of the economic and environmental ones, and the inherent opportunity to move towards a more just society is overlooked. Future research to further the agenda of the social value of circular economy practices should hence not detract from ongoing efforts to support companies in considering the social sustainability of their business operations. Rather, we recommend identifying the most relevant social aspects affected by circular economy practices and addressing them with existing social assessment approaches based on life cycle thinking.

Katelin Opferkuch, Erik Roos Lindgren and Anna M. Walker, Early Stage Researchers in the WP5 on measuring the impacts of circularity, CRESTING research group

The concept of circular economy is a departure from linear thinking. Circular implies that people should work together in a relationship that is flat rather than hierarchical. Cooperation, co-creation and trust should be the essence of the new economy. We need to recognize the importance of forming decentralised organisations capable of responding swiftly to a range of environmental changes, rather than hierarchical ones that issue orders and regulations in a centralised manner. We need to change people’s behaviour. And, to do this, we need to show there is a new concept for society, not based on competition, but on trust, co-creating and co-existing. By making this concept penetrate in people’s minds, people can share common values and co-work for achieving the circular economy. New value creation based on the circular economy concept is not an issue of technology, but of creating a new narrative in society. Policies should be aimed at improving the problems of fragmentation and isolation in society.

Tadashi Yagi, Professor of Economics at Doshisha University in Kyoto (Japan)

This is an expanding catalogue of views on the social value of the circular economy. Do you want to add your contribution through a vision or concrete examples? Get in touch at emanuele@circularconversations.com - we’d love to have you on the journey with us.

Circular Conversations

How can the Circular Economy create distributed social value?

How can the circular economy mindset and practices help us create distributed social value?

Suggested links