Sophie Hayes, Trinity Business School Runner-up in the 2021 CoBS student CSR article competition, explores sustainability through the circular economy, its many benefits and major challenges.  

The Circular Economy: More than just a buzzword. By Sophie Hayes.

When COVID-19 first hit Europe a little over a year ago, shops across the continent were forced to close. Seemingly overnight, online shopping became the norm. While some struggled with not being able to try on clothes before purchasing them, or with long shipping waits, the people of Ireland faced a different problem altogether. Primark has no online shopping platform.  Where would we purchase our three euro t-shirts and our two euro packs of ankle socks? The question may seem trivial, but it was genuine. There are 37 branches of the fast fashion shop across the Republic of Ireland and following the second lockdown, their reopening in December 2020 broke their daily sales records two days running, with queues of customers wrapped around shops nationwide.

If I were to ask my grandparents how often they bought new socks when they were in their twenties, the answer would certainly not be every month like I would answer.  Instead, their generation repaired what they owned, and clothing was purposely made of a higher quality so that it would last. If the likes of Penneys had existed 50 or 60 years ago, its shutting down for a few months would not have sent the country into disarray. 

What then, is the problem?  To use a cliché – they don’t make them like they used to. There is a deeply ingrained throwaway culture in MEDCs, and we as consumers continuously trade-off quality for low-cost and ease.  We ignore the cognitive dissonance caused by these habits and hold ourselves to low standards with regard to conscious consumerism, compartmentalising our discomfort. This extends beyond fast fashion and into what we eat, how we travel and even how we recycle.  We say that we want ethical and sustainable options, spurred on by activists like Sir David Attenborough, Greta Thurnberg, and the late Berta Cáceres, but this is not truly the case. Research suggests that we are increasingly worried about protecting the planet, with 65% of consumers wanting brands to advocate for sustainability. However, in reality only 26% of consumers actually buy from brands that do so. 

Yet, our concerns are warranted and the United Nations project that we have nine years left before the majority of the effects of climate change become irreversible. Companies need a solution that satisfies Elkington’s triple bottom line of people, planet and profit. Something that considers the planet as a stakeholder, without forgetting the existence and importance of shareholders. The solution is to create a global circular economy, an idea that has been gaining popularity as a theory since the late seventies, and has come to the forefront of sustainable planning discourse in recent years.

But what is the circular economy? More than a buzzword!

Most companies and organisations operate under the linear economy, which turns raw materials into goods that are used and then disposed of. The circular economy, in its most ambitious form, seeks to eliminate waste entirely. It is a model that keeps products and materials in circulation for as long as possible. Its priority is to reduce the amount of resources used, then to reuse these resources until depletion, and to recycle anything leftover.  By 2030, we could potentially gain $4.5 trillion if we switch from the linear economy to a circular one, and many companies are already engaging in circular practice.  For us as consumers, it means better quality products and lower overall costs.

In some industries, the circular economy takes the form of a subscription service. Vigga, a Danish children’s clothing company, saw waste in how quickly children outgrow clothes. In 2016, 1,413 tonnes of textiles were purchased in the form of baby clothing in Denmark. That amounts to slightly more than 20kg of clothes per baby.  Vigga sends parents bundles of clothes that will fit their children.  When the child outgrows the bundle, the parents return the clothes. The clothes are washed, repaired and sent out to a new family, while the original child receives a new bundle of clothes that will fit.  For Vigga to work, fast fashion cannot be engaged in at all. Clothing must be basic, of a high quality and removed from fashion trends. 

In the technology industry, the circular economy is more focused on take-back schemes. The European Recycling Platform (ERP) collects batteries and electronic waste. They shred batteries, recover potentially poisonous metals, and send them to smelters who ensure they are fit for industrial use.  This process is repeated for large home appliances like washing machines, televisions, and fridges, as well as smaller appliances like kettles and irons.  The appliances are decontaminated, stripped of parts that can be reused, and then sent away for further processing and recovery. The recovered materials are then returned to industry.  US start-up HYLA mobile operates under a similar system with a trade-in program for old mobile phones. The phones are cleared of any personal data and upgraded with new software so that they can be put back into the market.

With creativity, there is a wide scope for industries to change the way in which they make value.  Instead of buying new, the likes of Vigga, ERP and HYLA are part of the revolution that emphasises using goods until they are absolutely no longer fit for purpose. If every newborn in Denmark was signed up to Vigga, and if each bundle of clothing was used only five times, the amount of textile waste produced by Danish babies would decrease by 80 percent. Currently, ERP can recover between 50 and 90 percent of batteries, and HYLA have succeeded in extending the life of 62 million devices, generating $6 billion in the process.  These companies only represent a fraction of the organisations who are currently partaking in the circular economy. Their individual potential and successes make the possibilities of a totally circular world seem miraculous. But is this too good to be true?

Not a perfect solution

In its most basic form, the circular economy is not without fault. Total global implementation of a fully circular economy, where waste does not exist, is highly unlikely. If the cases of Vigga, ERP and HYLA were totally circular, then no clothes would ever be thrown out again, ERP would recover 100 percent of materials used and no new phone models would ever come into existence. Critics of the circular economy argue against endless economic growth with finite resources, and cite the three following issues as their reasoning:

1. Impact measurement

For resources to be used until depletion, the added step of stripping, repairing or even just washing needs to be implemented. However, organisations must ask whether less energy is being used on this step than what would be used to create a totally new product. Prior to the pandemic, there was a huge increase in the use of reusable coffee cups. The amount of greenhouse gas emissions and energy needed to create a reusable coffee cup is equivalent to the amount needed to make anywhere from 20 – 1000 disposable cups. At a minimum you would need to use the reusable cup 20 times, and at a maximum 1,000 times, for the environmental factor to break even. For the circular economy to do more good than harm, a similar calculation must be made that considers the environmental impact of the added processes. Quantifying impact is a necessity for this system to work, but this is not always straight-forward. Some outcomes are difficult to assign a figure to, and for businesses undertaking circular strategies accountancy figures are bound to fall short.

2. Growing consumption

The circular economy will undoubtedly struggle to keep pace with consumption rates. By working to eliminate waste, the circular economy focuses on restoring and using resources already in circulation.  However, a balance will need to be struck in order to cater to a growing population and the ever-increasing global consumption rates. Under the Jevons paradox it is even possible that introducing a circular economy will spur increased consumption. As we consume in an increasingly ethical manner, we will inevitably feel less guilt about our purchases. This is likely to cause us to consume more frequently than we previously would have.

3. Intersectionality

Leaders making this switch must consider all of their stakeholders. The circular economy has the potential to create millions of new jobs. However, marginalised workers in factories and mines are likely to lose theirs. It is projected that there will be 18 million new green jobs by 2030, but the same report suggests that one million people in the petroleum industry will lose theirs. The environmental crisis is deeply intersectional and we must ask; who will get these new jobs and where will they be located?

The most affected countries are also the poorest, and the countries causing the crisis are the wealthiest. For Jamaicans, climate change is a current reality with oil pollution, contaminated groundwater, and deforestation destroying the country. The Philippines were struck by torrential rainfall in 2018 that left at least 59 dead, accounting only for twelve percent of deaths caused by extreme weather in the country that year. For those living in developed countries, language surrounding climate change is future oriented.  Jobs focused on repair and reuse will ultimately move closer to the end-user, and the jobs lost are likely to be in LEDCs where the impact of lowered employment will be much higher. 

The Circular Economy: More than a buzzword. How can we make it work?

We must ask ourselves if we simply want organisations to maximise the use of existing resources, or if we want them to decrease consumption totally. There will need to be a universally agreed upon measurement scheme that accounts for both the positive and negative consequences of a circular economy and considers the variety of people that will be affected. Engaging with the United Nations is possibly the only way a sustainable, global, circular economy can come to fruition. The United Nations Sustainable Development Goals already take into consideration the interconnectivity of the problems caused by overconsumption and the climate crisis.

Merging the two ideas can only create change for good. By having an international body endorse the circular economy, we can hope that all views are considered. However, we must recognise that the United Nations does not have any enforcement capabilities. The responsibility to implement ethical and circular practices will ultimately fall upon corporations.

There are clearly vast benefits to be had in a society that has as little waste as possible. Searching for ethical ways to create profitable and positive change to our consumption habits is by no means an easy task, but the success of companies that have already fully engaged in circular practices demonstrates that it is possible. Provided that the idea of a waste-free world does not lull us into a false sense of security, and that we consider those more marginalised than us, we can remain cautiously optimistic that the circular economy will make significant change to how and what we consume.

*The Circular Economy: More than a buzzword. For a full list of references used in this article, please refer to p.58 of Global Voice magazine #18

Useful links:

• Link up with Sophie Hayes via LinkedIn
• Read a related article The EU Green Taxonomy: A game-changer for business and investors
• Discover Trinity Business School, Ireland
• Study an MBA or EMBA at Trinity Business School.

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