Transition through critical mass

Where to start

Everyone seems to agree that the amount of waste that is not recycled but simply burned or ends up in landfills is a terrible thing. Aside from possible leakage of dangerous substances that form an environmental/health hazard you will eventually run out of resources. Elements that are now processed as if they would never run out someday actually will run out. Imagine large scale manufacturing, medical devices, transportation, information technology and many other industries depending on these resources being crippled. Our way of life would seize to exist and ways to move forward would be very limited. A circular economy seems to buy us a ticket out of the mess but it must have its shortcomings, or at least difficulties. For if it did not, we would probably be really busy implementing.

Instead, efforts are still at an early stage even though there are claims being made by governments to become circular within decades. Take the Netherlands for instance, their goal is to have an economy that is 50% circular by 2030 and 100% free of waste by 2050. They are promoting it by injecting 80 million into the circular front.

Statements such as the following made by state secretary, Stientje van Veldhoven, show that circular economy is making its way through government agenda. Despite this being very positive the allocated budget seems to be rather low to enable the transition towards a circular economy in a country with almost a trillion US dollars in GDP within the given timeframe: "An economy without waste and therefore smart use of raw materials is the missing link in the Paris climate agreement. We will not achieve the targets agreed upon in 2015 without this link. The world population continues to grow and more and more people will use more resources. So we can either look for a second or even third planet, or we can work on a circular economy, starting in the Netherlands."

For circular initiatives it is great to have government support. But realistically, one might argue that these budgets are not sufficient in order to accomplish these goals by spending 0,009% of The Netherlands GDP, which is a mere 1,47% of Global GDP*, on research and development. So if not R&D budgets or small initiatives what will it take to move existing markets to becoming circular?

It is a global thing.

First of all we need to recognise that global economics makes it hard to offer sustainable alternatives and remain profitable in the harsh global game of supply and demand. Even without having to implement sustainable alternatives for current ways of production there are several trade wars going on of which the one between the U.S.A. and China based on trade deficits and power shifts alone gets the most publicity. In order to fully establish a circular economy everybody needs to be on the same page, not just locally, but globally. What difference would a fully circular country, such as The Netherlands as projected by 2050, make with 17 mln inhabitants versus the 7 bln global population?

Arguably the downside of globalisation is the interdependency of economies and therefore in order to organise you need to cooperate with a lot of different nations to create a uniform approach. The larger the scale, the harder this is to establish. If there is one thing that has occured repeatedly throughout history it is that rapid change mostly occurs when war occurs, people are suppressed, people are hungry or deprived of their basic needs in any other way. All of these might become issues over time if a circular economy or similar system is put into place too late, but that is exactly what needs to be prevented. Since the global economy has never seen this rate of growth before and living standards throughout developing nations such as China and India are on the rise it is hard for their populations to be discontent with that. Climate/sustainability goals have always been coming in second to short-term economic policies. So why change a, short term, winning policy?

But are trade wars and the rise of new economic powers really a bad thing with regards to the circular economy? Despite China being a rising star they are aiming for incredible sustainability goals and since they are champions at executing policies it is not unimaginable that they are capable of achieving this. Last year they, for instance, signed a Memorandum of Understanding on Circular Economy Cooperation. Although this is a rough framework to get communication on the establishment of a circular economy going it is marking a baseline. Stifling imports through trade wars might include reducing dependance on imported raw materials and thereby could increase looking into alternatives like increasing recycling efforts by those affected by it. As stated before people, and therefore nations, are definitely capable to incorporate change quickly when forced by external factors. Wether it is limitations on trade, which is what a trade war is, or actual war itself it will cause change to occur faster than it otherwise would. But if we have to endure war it better be one on tariffs.

Business not as usual.

Meanwhile we also see companies attempting to establish circular business models in various industries, pushing to change traditionally resource intensive markets. The one thing they all have in common is that they operate within niche markets. When goods become more expensive to back the sustainability claims or when they simply have to compete against strong, established and often more traditional competitors only to be more sustainable you will only reach those that are willing to pay a premium for products that are similar to their, not so sustainable, counterparts.

But even within companies we see initiatives concerning moving towards circularity. In sectors like the fast moving consumer goods (FMCG) and subsequently the consumer packaged goods (CPG) sector we see change coming from companies like The Coca-Cola Company, Nestlé, PepsiCo, Procter & Gamble [P&G] and Unilever by forming coalitions. Nonetheless this is of course also caused by customer demand and NGO pressure.

Together we stand and divided we fall.

So who should start this movement? It seems that governments make statements about becoming circular but do not, or are not able to, allocate enough resources to solving the issues surrounding the implementation and are just starting to form coalitions. The same goes for business, it needs to go through a lot of change in order to produce, maintain, refurbish, remanufacture, collect and recycle in a circular fashion. Change is underway but it needs to make up for lost time.

But let us not forget about pressure from the public. It is said that if everyone would stop drinking Coca Cola for one week it could topple the entire enterprise (please do not do this, a lot of us actually like Coca Cola) so whatever way we behave as consumers will also shape our future. In order to establish the circular economy it seems all we need to do is act collectively and reach a critical mass to make the transformation real. Easy right?