The role of the Circular Economy in Sustainable Prosperity
Sustainable prosperity is underpinned by the principle that value creation and increased quality of life can both be decoupled from resource use – making the circular economy a key aspect. However, the question remains whether the current discourse goes far enough? In this blog, CUSP research fellow Geraldine Brennan summarises some of her recent findings.
In a recent publication in the Journal of Industrial Ecology’s Special Issue on the Circular Economy, my colleague Fenna Blomsma and I explore the conceptual development and emergence of the Circular Economy (CE) concept, a framing around waste and resource management that aims to offer an alternative to the prevalent (linear) take-make-dispose practices by promoting the notion of waste and resource life extension.
We demonstrate that CE can be considered an umbrella concept (Hirsch and Levin, 1999)—a deliberately broad frame that allows us to think about the different combinations and groups of strategies through which resources can be extended, value creation can be increased and value loss and destruction can be avoided.
Our paper illustrates that the CE concept has gained momentum, its interpretations reaching far and wide now, and it is associated with a variety of terminologies. Despite the new discursive space that research and practice has created, accompanied by strong and critical engagement, clarity regarding the circular economy is yet to emerge.
Within the umbrella concept framework, this infers that the CE has made the transition from the excitement stage to the validity challenge phase of its development—this is when attempts to operationalise a concept bring to the surface unresolved issues related to its definition and assessment (see Blomsma & Brennan, 2017 for an overview), as well as illustrates important avenues for further work.
Circular business models
Unresolved issues with the operationalisation of a circular economy also appear in the growing literature on circular business models (CBMs). The sustainable business models literature acknowledges the need for synergies between environmental and social value creation but recognises that in practice, firms often focus on one form of value creation over the other—rather than both. Addressing this gap, I recently presented a collaborative paper, which also won a best paper award, exploring the question of “What makes a circular business model circular?” at the New Business Models Conference in Graz, Austria.
Here, Fenna Blomsma and I argue that CBMs can be clustered along an impact spectrum that ranges from small to transformational impacts, developing a scale-based typology that aids in distinguishing between business-as-usual linear business models, from business models with circular aspects or elements, from what we regard as circular business models.Bringing further conceptual clarity to this debate we believe will support practitioners and investors to assess which business models will deliver the circular economy’s transformational capacity, hopefully avoiding circular washing (Blomsma & Brennan, 2017) and reducing the risk of circular economy rebound (Zink & Geyer, 2017).
Another key area of my ongoing work, in collaboration with Anthony Alexander, relates to CBMs as an important mechanism to create sustainable prosperity. Sustainable prosperity is underpinned by the principle that value creation and increased quality of life can both be decoupled from resource use (Jackson, 1996; Jackson, 2017).
In order for the circular economy to be coherent with sustainable development, it needs to include explicit consideration of social impacts and social value creation (Murray et al 2017). Yet work remains to unpack how broader ideals associated with sustainable prosperity, for example equity, morality, and flourishing, can be operationalised in the circular economy and CBM discourses. Particularly as social values and social value creation are predominantly framed solely in terms of job creation.
Ensuring circular business models deliver multiple forms of value is key if the circular economy is to become a new paradigm for sustainable development.
Key References
Blomsma, F. and Brennan, G. (2017) The emergence of the Circular Economy: A new framing around prolonging resource productivity. Journal of Industrial Ecology: Special Issue Exploring the Circular Economy. Available for free download via open access from: http://onlinelibrary.wiley.com/doi/10.1111/jiec.12603/full
Brennan, G. and Alexander, A. (2017) The role of circular business models (CBMs) in creating sustainable prosperity. 2nd International Conference on New Business Models: Exploring a changing view on organizing value creation: Developing New Business Models, 21st-22rd June, Graz, Austria. Proceedings available from: https://static.uni-graz.at/fileadmin/veranstaltungen/new-business-models/NBM%40Graz2017_Conference_Proceedings.pdf
Brennan, G. and Blomsma, F. (2017) Value Creation and Circular Business Models – What makes a circular business model circular? 2nd International Conference on New Business Models: Exploring a changing view on organizing value creation: Developing New Business Models, 21st-22rd June, Graz, Austria. Proceedings available from: https://static.uni-graz.at/fileadmin/veranstaltungen/new-business-models/NBM%40Graz2017_Conference_Proceedings.pdf
Hirsch, P. M. and D. Z. Levin. 1999. Umbrella advocates versus validity police: A life-cycle model. Organization Science 10(2): 199–212.
Jackson, T. (1996) Material Concerns: Pollution, Profit, and Quality of Life, Routledge, London.
Jackson, T. (2017) Prosperity without Growth: Foundations for the Economy of Tomorrow (2nd Edition). Routledge, U.K.
Murray, A., K. Skene, and K. Haynes. 2017. The Circular economy: An interdisciplinary exploration of the concept and application in a global context. Journal of Business Ethics 140(3): 369–380.
Zink, T. and Geyer, R. (2017) Circular Economy Rebound. Journal of Industrial Ecology: Special Issue Exploring the Circular Economy. Available for free download via open access from: http://onlinelibrary.wiley.com/doi/10.1111/jiec.12545/epdf