How the circular economy can improve our society

By Liam Taylor  December 4th, 2020

Going circular isn’t just good for business and the environment, it can also improve our lives.

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At the ACE Hub, we believe in the circular economy and its potential to make our lives better. We know the opportunities are there to begin the transition, but what kind of benefits can we expect from going circular?

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The need for an alternative economic system that recognises our planetary boundaries is clear. The circular economy, restorative by intention and design, can be that system. In order to understand why we need to go circular, it’s instructive to look at the potential benefits of replacing our current ‘take-make-dispose’ linear system with a circular model. 

It isn’t just business and the environment that benefit from the circular economy. Good policy and collaborative action to make products easier to repair and longer lasting with incentives for end-of-life solutions can cut unemployment, save people money and improve livelihoods. The circular economy approach of keeping products and materials at their highest value and transitioning towards a regenerative economic cycle creates flow-on social benefits for consumers and the workforce.

Benefits to consumers

There are a number of societal benefits to the circular economy beyond simply avoiding ecological collapse, starting with greater overall consumer satisfaction. This is primarily derived from the increased efficiency of material flows in circular business models, which provide more comprehensive and efficient products and services.

The Ellen Macarthur Foundation lists four key social benefits for people partaking in a circular economy:

  1. Increased disposable income through reduced cost of products and services

  2. Greater utility through the additional choice or quality circular models provide

  3. Overcoming designed/premature obsolescence to reduce total ownership cost

  4. Better health as the circular food system reduces our reliance on pesticides and other industrial agricultural chemicals

Each of these benefits is based on the improvement to products and services in a circular system that increase their efficiency, durability, impact on consumers and end-of-life outcomes. The rapid growth of circular business models both in Australia and around the world in recent years is testament to both the demand for new and innovative business models and their profitability.

Benefits to the workforce

In addition to increasing customer satisfaction, the circular economy promises significant benefits to the workforce at large. Keeping valuable resources circulating in the economy supports the market for secondary products and materials across all regions, which could create new jobs in areas of high unemployment. In implementing circular principles, a number of nations with advanced economies have proven the circular economy can bring about significant benefits to the quality of life of participants. 

In a comprehensive analysis of the potential benefits of a circular economy in the United Kingdom, the UK Waste & Resources Action Plan in collaboration with Green Alliance UK found expanding the circular economy could provide up to 517,000 new jobs in the UK alone between 2014 and 2030. But the circular economy wouldn’t just create new jobs, but also provide work at all skill levels in the labour market – from low skilled workers to professionals. Another report from the Club of Rome found that under optimistic scenarios, France could develop up to an additional 500,000 jobs by combining energy and material efficiency with renewable energy use. 

In Australia, KPMG Economics have estimated that by 2048 the circular economy will provide an additional 17,000 full-time equivalent jobs in Australia on current development paths. This kind of economic modelling shows how an efficient circular economy in Australia can help us decouple economic development from extractive resource processes without detracting from other concerns such as employment and innovation. 

Living within planetary boundaries (and thinking about doughnuts)

Whilst benefits for consumers and the workforce are important, the above summary leaves out a more fundamental kind of social capital that could be generated by a circular economy. Namely, the greater social equality promised by a model that is ‘distributive by design’. 

“To transform today’s divisive economies, we need to create economies that are distributive by design — ones that share value far more equitably amongst all those who help to generate it,” Kate Raworth, the economist behind the widely discussed ‘doughnut economics’ theory, explains

Kate suggests that those working under a distributive system might ask themselves questions like: how can land be shared more equitably? What kinds of companies — co-operatives, employee-owned entities — can deliver the most value to workers? Who creates money? How can knowledge be shared through open-source systems for the benefit of all? In essence, a distributive system takes wealth and power out of the hands of few and shares it among many. 

Doughnut economics is based on the idea of creating an economic system that is good for people and the planet. “Humanity’s 21st century challenge is clear: to meet the needs of all people within the means of this extraordinary, unique, living planet. So that we, and the rest of nature, can thrive,” Kate says. The doughnut represents the safe operating space where people can thrive within the limits of the planet. 

The social and environmental benefits of circularity are deeply intertwined and co-constitutive. After all, a healthy environment is a prerequisite for any form of life. 

The circular economy is broadly about designing out waste and pollution, extending the life of products and materials in our economic system and regenerating natural systems in the process. The rationale for seeking a transition towards such a system is simple: we cannot use resources infinitely on a finite planet.

By moving towards greater resource efficiency, keeping those resources in circulation for longer and creating regenerative products and processes we can reduce our ecological footprint to within the limits of our biosphere. The opportunity cost of not taking action given the current climate crisis makes this a no-brainer, but it’s still worth pointing out that the most significant social benefit of undertaking this transition is ensuring our society functions within our planetary boundaries. 

Without doing so, we will continue to move beyond the safe operating systems of natural systems that sustain human life on our planet.

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Liam Taylor

Prior to joining Planet Ark Liam spent his time studying global environmental issues, travelling Southeast Asia on the cheap and working for a sustainable property management company in Bali, Indonesia. Joining the communications team at Planet Ark, he hopes to inspire positive environmental behaviour through effective and positive messaging.

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