Kalle Reflects on Circular Economy

A Reflection on How Greater Use of Circular Economy Can Be Achieved by Recognizing Its Limits

A Lens Through Which to Read This Reflection

Takeaway for Leaders at All Levels

“Circular Economy” is a relatively recent addition to the sustainability vocabulary. The concept gained broad recognition through the Ellen MacArthur Foundation and the influential 2012 report prepared in collaboration with McKinsey. CE is generally presented as an approach to making material flows in business and society more sustainable through reuse, remanufacturing, recycling, and other forms of circular resource management. 

The underlying ideas are not new. Discussions of cyclical material flows date back decades and have long been explored within fields such as Industrial Ecology. This raises an interesting question: What explains the remarkable growth of the Circular Economy movement in recent years? Why has it inspired conferences, networks, strategies, and implementation efforts around the world?

One reason is that the concept has helped make sustainability opportunities more tangible for business leaders. The Ellen MacArthur report illustrates clearly how organizations can reduce costs and improve resource productivity through greater reuse and recycling. The business case is well presented and easy to understand.

For those using the FSSD Operative System and the ABCD planning process, CE can be viewed as another useful “app” within the broader framework of strategic sustainable development (for references, please only look at References found on this platform, e.g. any of the ones in the Reference list below). It can help organizations identify opportunities for improved resource productivity and more circular material management at every stage of the ABCD analysis, while simultaneously improving economic performance.

Questions might include:

More in detail

It is not in the interest of CE proponents that the concept is used for purposes it is not designed for. So, how do we keep the above business case distinct from the risks? The opportunities offered by smarter material flows through CE must not reduce our focus on the many critical sustainability questions that lie beyond its scope. This calls for a clear understanding of several important issues:

Perhaps the most important question regarding material flows is not how to capitalize on increased cyclic flows, but whether such efforts can increase sufficiently to remain within robust boundary conditions for scalable investments toward attractive future scenarios.

Different materials require different degrees of circularity if society is to remain within the boundary conditions of sustainability. This imperative can only be addressed through rigorous modelling within those boundary conditions. Such analysis must precede economic and other strategic considerations. “Recycling more than before,” “recycling as much as possible,” or “recycling whenever it saves money” are not, by themselves, solutions to the sustainability challenge.

Some materials are so difficult, hazardous, or uneconomic to manage within the boundary conditions of sustainability that they should not simply be circulated more efficiently. Instead, they should gradually disappear from normal societal use. This may involve abandoning them in consumer products where recycling rates will never approach 100 percent or eliminating them entirely if modelling within sustainability boundary conditions indicates that this is necessary.

CFCs in consumer products such as refrigerators and air conditioners provide a familiar example of the former category. Plutonium, regardless of application, represents the latter. In such cases, the strategic question is not how to recycle the material, but how to provide equal or better societal value without it, or through alternatives compatible with sustainability requirements.

A sustainability framework must therefore address substitution and phase-out strategies, not merely circularity.

Many sustainability challenges are not primarily related to material flows.

Examples include:

These issues concern how society manages ecosystems and landscapes at a higher systemic level, not merely how it manages material flows.

The quality of social systems matters profoundly for sustainability.

Questions relating to loss of trust, sorted under the 5 social boundary conditions of the FSSD (structural obstacles to Health, Competence, Influence, Impartiality and Meaning-making) cannot be adequately understood through a circular-flow perspective. Amongst those we find aspects that are equally important to account for as any economic element, e.g. public policy instruments and laws.  Extensive evidence suggests that large income disparities are so consistently associated with reduced trust and a range of related social challenges that they may serve as a useful proxy for declining social trust.

The purpose of this reflection is not to criticize Circular Economy. On the contrary, in line with the discussion above, it is to help make greater use of its strengths by avoiding misunderstandings regarding what it can and cannot accomplish.

One overriding concern relates to the word economy itself.

The economy is not an end in itself. Unlike ecological and social systems, which ultimately define the conditions under which civilization can prosper, the economic system is entirely a human construct. It is one of many tools available for pursuing broader societal goals.

In contemporary societies, however, economic reasoning is often treated not merely as a useful tool, but as the dominant lens through which public issues should be evaluated. This tendency is sometimes described as economism. The concern underlying this term is straightforward: the life-supporting prerequisites for scalable progress toward attractive futures, see points 1-5 above, should be monitored and managed directly rather than indirectly through the economy or any other tool.

The logic is similar to that of personal finances. We may decide that a particular goal is desirable and then ask whether we can afford it and how our finances might best support that objective. The goal comes first; the economy serves as a means of achieving it. The horse before the cart.

When this distinction is overlooked, new concepts frequently emerge that seek to redefine the economy while continuing to treat it as a supreme objective. Examples include:

• Steady-State Economy
• Green Economy
• Ecological Economy
• Bioeconomy
• True-Cost Economy

Circular Economy risks becoming another concept in this group of ambitious hopes followed by disappointment, unless its role is clearly understood as one important contribution within a much broader sustainability agenda.

The following sections examine three areas that are frequently neglected in sustainability discussions despite their crucial importance.

Some sustainability challenges are fundamentally questions of land use rather than material flows.

As society transitions away from dependence on unsustainable fuel-dependent energy sources, we will become aware of an explosive need for areal space. Humanity’s future resource base will ultimately depend on society’s ability to capture energy from nature’s continuous renewable flows. Which is extremely dependent on areal space.  

Attention will therefore increasingly shift toward how land is allocated and prioritized through effective spatial planning. This includes balancing several highly space-demanding functions, including, in falling order of prioritizations:

Or, put differently: What would it take to provide a high quality of life for around ten billion people while simultaneously preserving biodiversity, climate stability, and ecosystem resilience? If the first of the bullets fail, we can forget about the next. And so on in the presented sequence.

Circular Economy can contribute valuable insights to such discussions, but only when embedded within this broader system’s perspective.

A revealing example concerns biofuels. Their appeal often stems from the fact that, unlike fossil fuels and nuclear fuels, the carbon involved circulates within visible biological cycles. Yet once competing demands for land, including food production, biodiversity conservation, forestry, and other ecosystem services, are taken into account, biofuels appear unlikely to become a scalable component of civilization’s future energy system.

Research has repeatedly demonstrated strong associations between large income disparities and a range of the social “diseases” including corruption, segregation, crime, reduced social mobility, and weakened social cohesion. Income inequality functions as a remarkably robust proxy for societal trust.

When economic differences between groups become too large, trust tends to decline. This erosion of trust can generate substantial societal costs through increased conflict, reduced cooperation, lower creativity, higher transaction costs, and weakened institutional legitimacy.

Again, Circular Economy may contribute positively to these challenges, but they cannot be addressed through circular material flows alone. They require direct monitoring, management, and accountability within a broader framework for social sustainability.

One of the most overlooked economic opportunities associated with sustainability lies beyond resource efficiency.

The greatest business opportunities are often found in innovation and in the levels of trust that enable innovation to flourish.

As ecological and social pressures increase, entirely new markets emerge. Organizations innovatively capable of providing products, services, technologies, and business models that are compatible with the boundary conditions of the FSSD will increasingly enjoy significant competitive advantages.

The economic gains achieved through improved circular material flows therefore represent only a fraction of the opportunities available through strategic sustainable development.

Concluding Remarks

Today, we have access to scientifically grounded methods that enable organizations to understand, communicate, and manage strategic transitions toward attractive organizational and societal goals within the full scope of ecological and social sustainability.

Circular Economy is best understood as one valuable contribution within this larger framework. When treated as the dominant lens for sustainability, it risks encouraging overly narrow interpretations of a challenge that is inherently systemic.

The objective, therefore, is not to replace Circular Economy but to place it in its proper context. Doing so helps avoid unrealistic expectations while making fuller use of what Circular Economy genuinely has to offer.

References

The science of the Operative System with references                                                                                                                                                        

Operative System for Strategic Sustainable Development—Coordinating Analysis, Planning, Action, and Use of Supports Such as the Sustainable Development Goals, Planetary Boundaries, Circular Economy, and Science‐Based Targets” published in Sustainable Development (Volume 33, Issue 4, pages 4759–4774)                                                                                                                       

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