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Circular economy (CE) principles are gaining momentum in the political, economic, and scientific fields and growing in popularity in corporate strategies as well as among local and national governments—including China, Japan, the U.K., France, Germany, Canada, the Netherlands, Sweden, and Finland.
Oftentimes used in conjunction or synonymously with CE is the term “sustainability,” arguably the most misconstrued descriptor of the decade, ubiquitously interwoven into the decarbonization, energy transition, and waste minimization narrative. However, although there is a relationship between sustainability and a CE, these two concepts are vastly distinct.
Sustainability: A Systems-level Approach
Sustainability in its truest form is a systems-level approach that considers the wide array of environmental, social, and economic factors and assesses how they interact (Figure 1). It evaluates, as examples, geopolitics, impacts to indigenous communities, sociotechnical capabilities and other subdomains.
Figure 1 — Sustainability: Interaction of Factors
Sustainability involves quantifying and understanding the risks, trade-offs and unintended consequences, from a life cycle perspective, across the entire value chain. This is what leads to long-term system balance. There is very little understanding or application of this in today’s policies and decision-making. Although there is an environmental dimension, sustainability is far more complex than simply focusing on conservation/preservation, choosing presumed eco-friendly options, or switching to alternative energies. A comprehensive understanding of the impact on the overall system and of any potential risk shifting is needed before an action, policy, or product is deemed sustainable.
Theoretically, sustainability is not a property of something. Things in isolation cannot be sustainable, (i.e. paper straws, solar panels, electric vehicles, etc). Sustainability is a feature of a system in its entirety, not a singular focus on any individual part. It embodies how the parts interrelate to enable effective overall outcomes. From a sustainability perspective, individual parts cannot be optimized without optimizing the whole. For example, an electric vehicle is not sustainable if we factor in the unquantified and unaccounted social and environmental impacts that span the lifecycle of the lithium-ion battery that powers the vehicle—from mining, processing, smelting, trade, and transportation across the globally networked supply chain to the lack of recycling and reuse options for the battery at its end-of-life. The geopolitics and human rights violations involved in such processes, as well as the potential of operating in sensitive environments and collaborating with corrupt regimes that have weak or absent environmental, safety, and labor laws, can also undoubtedly affect a system’s overall sustainability profile.
This scenario is why sustainability imparts such a distorted and complicated challenge to our existing utilitarian structure, because traditionally we exercise a very systematic and diagnostic method to management and policymaking. We disassemble, dissect and examine systems into their constituent components, analyze and aggregate the parts and then attempt to synthesize and optimize, assuming that if all the portions are seemingly functioning, the whole is effective. This superficially plausible façade emerges when a limited perspective of sustainability is leveraged, and it ultimately inhibits systems balance.
In assessing something as complex as an entire economy or global supply chain, it becomes even more critical to understand how the components synchronize and integrate into the whole network. Focusing solely on the individual parts invariably shifts risks elsewhere in the system, thus yielding unsustainable and undesirable outcomes.
How Does a CE Relate to Sustainability?
The CE (Figure 2) is presumed to have the potential to interrupt the current linear economy of unsustainable production, consumption, and waste generation by encouraging system innovation that designs out waste, increases resource efficiency, keeps materials in use, and decouples growth from the consumption of finite resources—thereby achieving a healthier balance between the economy, the environment, and society. The ultimate objective is to transition to a regenerative circular system where the societal value of products, materials, and resources is maximized over time. CE builds resilience against future disruptions—like pandemics, extreme and punctuated weather events, or the impacts of a changing climate.
Figure 2 — Sustainability and the Circular Economy
Sustainability, mediated by innovation, can enable a CE, and a CE can be a means or stepping stone toward the alignment between the three dimensions of sustainability.[1]
However, circularity in and of itself does not guarantee positive social, economic, and environmental performance (i.e., sustainability). Just as sustainability can be misrepresented, a CE is accompanied by vast versatility, wide-ranging scope and applications, and definitional ambiguities. In fact, some actions are favorable to and increase circularity yet lead to unintended externalities that shift the sustainability profile. For instance, a number of life cycle assessments demonstrate that some alternatives to plastics perform poorly from an energy and resource standpoint.
And while circularity has proliferated and concept of sustainability took reign in policy and economic discourse, no methods or combination of methods exist that quantify the sustainability impacts of circular strategies.[2]
How Do We Establish Connectivity to Ensure System Balance?
China, ostensibly the global trailblazer in CE, has made circular strategies a part of their national priorities since the early 2000s, recently releasing its 14th Five-Year Plan (2021-25). Although the United States does not have a national CE strategy, the framework is trickling into federal and state level policy discussions and finding its way into many corporate sustainability plans.
Ensuring a successful transition to a sustainable CE requires a common understanding of and approach to circularity; an acknowledgment of circularity’s relationship and contributions to sustainability and long-standing waste management principles; and the ability to consistently measure and report at the microlevel (i.e., a single firm, product, or process) and macroscale (i.e., an entire enterprise; a local, regional, or national government; or even a global system). Incorporating systems-level thinking into new policies and joining forces across the value chain can minimize the impacts of sourcing and extraction and can improve recycling and waste management.
The preparation and conversations should start now about how we can optimize human, capital and natural resources to create a circular and sustainable economy. When assessed through the lens of systems sustainability, circularity can uncover new investment opportunities, create novel business models, encourage innovative products and technologies, foster supply chain collaboration, and build an economy that is far more resilient against future global disruptions.
For the full issue brief on this topic, see: https://doi.org/10.25613/884Q-M392
Endnotes
[1] Rossi, E., Bertassini, A. C., dos Santos Ferreira, C., do Amaral, W. A. N., & Ometto, A. R. (2020). Circular economy indicators for organizations considering sustainability and business models: Plastic, textile and electro-electronic cases. Journal of Cleaner Production, 247, 119137.
[2] Walzberg, J., Lonca, G., Hanes, R. J., Eberle, A. L., Carpenter, A., & Heath, G. A. (2021). Do we need a new sustainability assessment method for the circular economy? A critical literature review. Frontiers in Sustainability, 1, 12.
This post originally appeared in the Forbes blog on August 3, 2021.
