It seems that, on an almost global scale, both the private and the public sector are coming to the realization that something needs to be done to limit, if not to revert, the degradation of our planet caused by the economic and social models that have governed the last century. It would sound, therefore, quite reasonable that policymakers, institutions, universities, the financial sector, CEOs and so forth came together to agree on a long term, shared roadmap to reach this goal. Truth is, exactly the opposite is happening. We have a heap of definitions and goals constantly adjusted to fit individual interests and the reasons seem to be quite clear - We cant move away from short-term mindset.
Politics have to deal with short term mandates and are mostly judged on factors, such as taxes, GDP etc... that do not allow for such transformative policies. The financial sector, in spite of recent claims of applying ESG screenings for investments, still looks at short term return on investment (ROI) as an investment driver. Thus, under a biased economic system in which the so called “externalities” are not allocated into product or service costs, things won’t change that easily. (watch the Ted speech from Prof. Rebecca Henderson ). The private sector, and especially large corporations that could have the financial and technical power to push this transformation, is still too often measured on financial indicators. Therefore, as Einstein would put it, we can't solve problems by using the same kind of thinking we used when we created them.
Since our mission is to support entrepreneurs and businesses to adopt models and practices that generate value while preserving natural ecosystems, we thought it could be a good idea to share our interpretation of these mainstream concepts. In particular, we will focus on Sustainability, or better Sustainable Development, and Circularity, or circular economy. It is important to approach what follows not as an objective comparison within these two concepts, as it would be pretentious and arrogant, but rather as a subjective interpretation of the applicability and benefits or limits of these models in a business context.
To fully understand and thoroughly analyze these two concepts we need to evaluate a few aspects such as - Who formulated them? What was the social, environmental and economical context? What was the purpose?
The origins of sustainability are difficult to be connected to a specific period or event. A study jointly conducted by the University of Cambridge (UK) and the TU Delft (NL) (Geissdoerfer, 2016),states that term sustainability originates in the French verb soutenir, “to hold up or support” and that its modern conception has its origins in forestry and specifically in the silvicultural principle that the amount of wood harvested should not exceed the volume that grows again.
However, the first time sustainability is connected to the social, economic and environmental dimensions is in the book published by The Club of Rome in 1972,The Limits to Growth. The Limits to Growth, as more recently done by Kate Raworth in her book Doughnut Economics, questioned the credibility of one of the founding theories of modern economics, perpetual economic growth. It argued, in fact, that we were going to go over the cusp of catastrophe if we did not take conscious action to create a curve of logistic accommodation to resources.
Only a few years later, in 1987, the Brundtland Report from the United Nations, provided the most prominent understanding of sustainable development - The concept of sustainable development does imply limits e not absolute limits but limitations imposed by the present state of technology and social organization on environmental resources and by the ability of the biosphere to absorb the effects of human activities. It was then Elkington in 1997, in the book Cannibals with Fork, to formulate the so-called triple bottom line, the three pillars of sustainability - People, Planet, Profit - and that was particularly relevant to the widespread diffusion of the term.
A few differences can be found in the origin of the Circular Economy. A few studies mentioned by (Geissdoerfer, 2016), attribute the introduction of the concept to the work of Pearce and Turner, Economics of the Natural Resources and the Environment, 1989. The book described how natural resources influence the economy by providing inputs for production and consumption as well as serving as a sink for outputs in the form of waste. Moreover, they investigated the linear and open-ended characteristics of contemporary economic systems.
However, it wasn’t until 2013 that, thanks to the work of the Ellen MacArthur Foundation, the Circular Economy reached its most renowned definition of an industrial economy that is restorative or regenerative by intention and design. Multiple are the theories that contributed to build this defitionion, cradle-to-cradle (McDonough and Braungart, 2002), laws of ecology (Commoner, 1971), looped and performance economy (Stahel, 2010), regenerative design (Lyle, 1994), industrial ecology (Graedel and Allenby, 1995), biomimicry (Benyus, 2002), and the blue economy (Pauli, 2010).
Looking through the definitions of these concepts we could conclude that both are essentially global in their nature, sharing concerns with the current state of technology, industrial production, and consumption and exposing the potential threats of such extractive, profit oriented and degenerative growth models. As an alternative, they both propose the integration of environmental and social elements within economic progress indicators thus implying system-level changes at their very core. Though, apart from these similarities, the concepts are notably used in different contexts and with different purposes.
Sustainability, in particular in its early rooting of sustainable development, is more open-ended than the Circular Economy (Yuan et al., 2008) and used to justify a broader variety of institutional commitments and to signal a wider set of risks and opportunities. It was originally conceptualised as holistically treating Social, Natural and Economic dimensions as equal and balanced, with a broad framing that could be adapted to different contexts and aspirations. Moreover, there is no fixed temporal dimension for sustainability as goals can be constantly adapted or reframed over time.
The Circular Economy, instead, is mainly motivated by the observation that resources could be better used and waste and emissions reduced with circular rather than linear make-use-dispose systems. It focuses on defining the principles for an economic and industrial system that will provide environmental benefits through less resource depletion and pollution, and society benefits from the environmental improvements and other assumptions, like more manual labour or fairer taxation. The Circular Economy has a clear emphasis on governments and companies as actors of this transformation while the temporal and spatial dimensions present theoretical and practical limits that could set the thresholds for the successful conclusion of its implementation.
Considering that Gross Domestic Product (GDP), the unit of measure of growth and development, and most of modern economic theory was formulated from the 1930’s, it is fair to believe that both Sustainability and Circular Economy, due to their relative joung “age”, will keep evolving and adjusting to mutating social, environmental and economic context for a while.
However, we can’t avoid to notice that Sustainability has been around for a bit longer than the Circular Economy without achieving much of the desired transformation. A few studies attribute the causes of this to its weak definition. As Castillo and Johnston state in their Paper
This is also remarked by Carl Mitcham that shows the ambiguity of Sustainable development by comparing Rostow’s concept of Self-sustained Growth, with the agricultural vision of a sustainable farming system that has much older roots and that eventually evolved into the concept of Regeneration. The greatest danger in this characteristic inflation of “sustainability” is that the term becomes what Uwe Porksen has called a plastic word. Sustainability is now an ambivalent cliché of which everyone approves, but in this universal approbation people agree upon nothing.
The concept of Circular Economy, on the other hand, is often seen as more narrowly framed, providing clearer directions for its implementation. Indeed, it seems that policymakers and the industry have a good grasp on its frameworks and principles driving its growing attention on a global scale. Moreover, even if often simplified in material efficiency or recycling, its principles are actually rooted in a higher dimension that integrates industrial processes within natural metabolism.
Some critics believe that the conceptualization of the circular economy could be a limit to the transition towards a more sustainable economic system because attention and resources are diverted from more comprehensive and holistic approaches. In our perspective, the opposite is happening and the circular economy is providing the tools to activate that transition required to achieve the holistic dimension of sustainability.