Understanding the circular economy

As GDP grows exponentially, so do emissions and resource extraction (for example, one laptop requires a ton of raw materials and produces a quarter of a ton of carbon dioxide emissions). This growth brings climate change, pollution, waste and biodiversity loss. Moreover, while incomes rise, so does inequality, exacerbating a myriad of social issues that do not receive adequate resources to address them.

One way to address these interconnected issues is the concept of the social circular economy, which unites the ideas of social enterprise and circular economy. Social enterprises use business principles to achieve positive social impact and typically are local organisations generating most of their income through trade and reinvesting profits into their mission. Meanwhile, the circular economy replaces the ‘linear’ economy, which is based on take, make and throw away, and assumes that the earth has infinite resources. Instead, the circular economy keeps resources at their highest value, cycling them within the economy through activities like reuse, refurbishment and recycling, helping to decouple material extraction and emissions from GDP. I use the term ‘social circular enterprises’ (SCEs) for organisations that deliver social impact by creating value using circular economy approaches.

An example of an SCE is UPASOL in the Chilean Andes, which took the lack of any local rehabilitation facility for disabled children as an impetus to build a centre using surplus building materials and stocked it with donated hospital beds, exercise equipment and – extraordinarily - an ambulance from Liverpool. The centre also runs a recycling centre, generating cash from waste, to fund its physiotherapy activities for disabled people. Another example is Retalhar in Saõ Paulo, which takes corporate uniforms and refurbishes them or repurposes them into new products. It often works on a contract basis, returning the products to the original firm for them to showcase sustainable practices. This activity provides work and returns a sense of worth for unemployed seamstresses and ex-offenders in poorer neighbourhoods.

I am greatly indebted to my Churchill Fellowship, which allowed me to meet and learn from these organisations and many more. Through that work and my work since, I now recommend these steps to scale up the social circular economy.

1. Demand-side

• Embrace procurement: government and businesses should embrace a bolder approach to procurement and actively seek out SCEs to fulfil their product/service needs, being explicit in what is valued and scoring tenders accordingly.
• Raise awareness: governments should promote awareness among consumers so that they can make better informed choices about the types of organisations they buy from. Businesses which are partnering with SCEs should take a collaborative rather than competitive view and encourage other organisations to do the same.

2. Supply-side

• Achieve scale and professionalisation: any demand that is created needs a viable and attractive offer to meet it. While SCEs do incredible work, many suffer from a sole focus on mission, which means that their scale and professionalisation suffer. Developing responsive communication, data systems, social impact measurement and a networked approach (by partnering with similar organisations to ensure delivery scale) are critical.
• Enhance support: government and businesses can facilitate the development of the necessary infrastructure through funding, advisory support, networking and matchmaking. Legislation can also help, creating friction for those that do not align and incentives for those that do. For example, the UK’s plastic bag charge resulted in funds that often went to SCEs.

Since completing my Fellowship research, I have helped a global manufacturer to scale up their circular economy business model by incorporating social circular enterprises as partners to clean, sort and resell post-consumer ‘waste’ construction products. I have also supported the European umbrella organisation of social circular enterprises to better understand social impact measurement and consider how its member organisations could better demonstrate this to funders and customers. I also sit on the board of Zero Waste Scotland, a world-leading organisation tasked with delivering a circular economy. It has a strong focus on working with social enterprises by providing funding, business support and a kitemark for quality second hand retail.

My hope is to keep pressing on these systemic levers which foster a transition to an increasingly scaled social circular economy, and to see consumers, big business and government embrace the concept more widely.

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