Expert Speak Raisina Debates
Published on Apr 14, 2021
As a primarily economic discipline, the circular economy must empower business and industry.
Decade of Action: Importance of a circular economy This article is part of the series—Raisina Edit 2021

The circular economy addresses environmental pressures while acknowledging economic resilience imperatives and strengthening social foundations. It is a multifaceted concept that took inspiration from diverse schools of thought in the late 20th century before being widely adopted in the 21st century. Europe and China are leading the pack with many other international actors now entering the fray. Thought-leaders and practitioners have shown that this concept can provide practical pathways to contribute to the broader sustainable development agenda, while also challenging the status quo and empowering transformative change.

The last year was an important year for the circular economy. The topic has gotten more traction globally with dozens of national circular roadmaps being launched — the new EU Commission President, Ursula von der Leyen, announced circular economy as one of the most important topics for the EU and companies and business alliances committing to circular economy strategies and goals.

During the COVID-19 crisis, a common question asked is, what are the learnings for the circular economy transition and what would be the impact of the “big reset”? I have personally observed three topics on how the crisis can have a positive impact on circularity:

i. We have seen the emergent awareness that we need to rebalance the global economic system and build a resilient economy that takes into consideration health and well being as important variables of a future system;

ii. The COVID-19 crisis has clearly demonstrated the vulnerability of global supply chains. We, therefore, need to think — again — more locally;

iii. There is an urgent need for a reconnection to local communities, in our direct vicinity. The ability not to travel any more has made us more “home bound” and has not only given a tremendous push to the digitisation of the workplace but also to the need to reconnect.

There are five key paradigms on how we, together, can understand and implement the circular economy to achieve a more fundamental impact:

• The circular economy is also a climate agenda: The world is currently on course for climate breakdown. Current climate pledges would see global temperature rise by 3.2°C this century. China and the US have recently announced plans to achieve net zero emissions around mid-century, but these are not yet formal national pledges and they are still not enough to meet the Paris Agreement commitment to keep global warming well below 2°C — ideally 1.5°C. The UN Intergovernmental Panel on Climate Change has warned that going beyond 1.5°C to 2°C would significantly increase extreme weather events with devastating social, environmental and economic consequences. The Circularity Gap Report 2021 has identified a set of circular strategies that can keep the planet on a well below 2°C trajectory by cutting emissions by 22.8 billion tonnes beyond what is achieved by current pledges — a 39 percent reduction from 2019 levels. The report calculates that 70 percent of all emissions are generated by the extraction, processing and manufacturing of goods to meet society’s needs — the clothes we wear, the phones we own, and the meals we eat. The world is consuming more than 100Gt of materials a year and just 8.6 percent of it are reused. The strategies it identifies would cut annual material consumption to 79Gt, by reducing the volume of materials used to create products and services, using resources for longer, and replacing finite resources like fossil fuels with regenerative resources like renewable energy. They would also increase the proportion of materials that are reused from 6 percent to 17 percent, nearly doubling the circularity of the global economy.

• The circular economy provides a diverse foundation for a “new, inclusive and green economy” that should be celebrated. The circular economy continues to defy definition. It is a far-reaching concept and builds on many schools of thought. Each offers unique principles and strategies. While their respective proponents may differ in delineating the circular economy, they fundamentally agree on the need to find alternative solutions to resolve tensions between the environment and economy, while also contributing to society. The time for action is now. The linear economy is no longer fit for purpose and an alternative urgently needs to emerge. The breach of our ecological ceiling and failure to fulfill a social foundation are very real challenges. While ongoing debate can help strengthen capacity building efforts, the time is now to demonstrate the viability of the circular economy on the ground.

• Circular economy is a global endeavour. The circular economy provides a new opportunity to provide for a level playing field from which to build sustainable future economies. The global economy is highly integrated. Doing away with the linear economy requires fundamental changes across geographies at all scales. Micro-, meso- and macro-level solutions all have an important role to play. To date, the circular economy has primarily focused on the challenges of industrialised economies. Developing and emerging economies deserve urgent attention. This will require better integration of social and human development considerations.

• Circularity also supports stronger resilience — locally and globally: Two circular economy practices in particular build resilience. First, the use of secondary and renewable resources boosts resilience by increasing the diversity of feedstock available to industry. Second, decentralised value chains — a growing trend in circular economy developments — are less vulnerable to global shocks and support localised and therefore swift decision-making.

• We need to convince and push policymakers towards faster and better decision making — especially given the importance of circular jobs. The circular economy provides wellbeing for all within planetary boundaries. Jobs enhance this wellbeing by contributing to thriving societies and the equal distribution of wealth.

• The circular economy must contribute to Sustainable Development Goals. The circular economy is not a set of aspirational targets but rather comprises process-oriented principles to guide positive impact. Practitioners should explicitly contribute to existing development frameworks including the Sustainable Development Goals. Its most valuable contribution is its toolkit of practical and scalable solutions and its ability to challenge the status quo to promote transformative change.

A broad and diverse coalition is needed. No paradigm shift can happen overnight and without broad and diverse support. As a primarily economic discipline, the circular economy must empower business and industry. Policymakers must shift macro-economic incentives and comprehensively tighten the grip of policy around value chains. Civil society must continue to lead on conceptual development and keep strong checks and balances in place to safeguard long-term benefits.

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