Circular Economy
Are Existing Strategies Sufficient to Prevent Overconsumption?
Global concern in transitioning towards a circular economy (CE) has received much attention in recent decades since it is increasingly set to become a vital factor in developing sustainability, mitigating climate change, and reducing waste. In a circular economy, systems and products are designed to allow all materials to be recovered and reused at the highest possible value [1].
A circular economy is defined as an alternative to the current linear economy in which we extract resources, produce, consume and generate waste. As an example, in the case of electronic products, consumer electronics are semi-disposable products, as the new versions come up regularly, and old (but recent) phone versions are often discarded by consumers when new versions appear on the market. It is estimated that on average phones are replaced every 24 months. As a result, more virgin materials are mined and the consumption level becomes extremely high [2]. An alternative system is a “closed loop” or “circular economy” system. This is possible thanks to the circular design and reverse logistic implementation that allows products to be recovered through different strategies such as rental, reuse, sharing, resale and, as a last option, recycling [3].
In spite of the fact that CE provides essential strategies for eliminating waste, it includes weaknesses in providing practical solutions to overcome unsustainable consumption [4].
One of the challenges within the field of CE is how it will decrease the consumption level from a business perspective. The key issue with much of the literature about CE is that not many studies highlight mitigating consumption based on CE at all levels [5].
- Arnold Tukker’s study stated that customers prefer ownership, particularly within the business-to-consumer area. They are more negligent when they lease a product and have a lack of knowledge of the origins of products [6].
- Manufacturers, on the other hand, face a shortage of facilities to design products for reuse, repair, and recycling [7],[8].
- From a macroeconomic point of view, strategies and rules may prevent a circular business model transition. For instance, the tax system discourages the need for customers to reuse or repair their products because the cost of purchasing new materials is lower [9].
- Furthermore, the Swedish case study by Kalmykova et al. (2016), shows that although Sweden has the plan to reuse or recycle 60% of its household waste by 2020, it still lacks policies that encourage society to reuse and repair or reduce demand for new products [9].
A variety of CE initiatives have been implemented in various sectors, but the consumption level continues to increase and the strategies fail to reduce consumption. According to a report by the Circle Economy, global material consumption is 11.3 tons per capita per year, and as consumption increases, the earth’s carrying capacity becomes unsustainable [5].
Hence, it is of utmost importance to properly investigate innovative and sufficient-based CE business models which seek to slow down consumption levels and drive demand shifts in the long run. To embed a sufficiency-based circular economy into the business models, policymakers and markets including industries and reverse supply chain operators must understand barriers and opportunities. This allows society to benefit in terms of well-being, while critical materials remain in a closed-loop system and are achievable in the long term for the industry.
Adopting a sufficiency-based model in the re-definition of circular economy strategies can offer significant benefits by highlighting the pervasive issue of overconsumption.
— Circular economy business models endeavor to prolong the utility of products and materials by means of repair, refurbishment, and recycling, with the ultimate goal of minimizing waste generation. Numerous techniques may be employed to accomplish this objective, including but not limited to:
- Reusing and repairing products can be achieved through the provision of repair services or dissemination of information regarding product repair procedures. Such remedial measures can effectively restore the functionality of the malfunctioning product.
- The practice of refurbishing products encompasses the restoration of used items to their original condition, as well as the enhancement of their standard to a superior status.
- The recycling of products can be achieved by dismantling them into their constituent materials, which can subsequently be repurposed to fabricate novel products.
Here are some solutions that can foster these strategies: the method by which taxes are imposed on goods and substances has the potential to be altered by the government. As an instance, instead of taxing the sales of finished goods, the government might impose a tax on the raw material extraction. Businesses would be motivated to adopt reusing measures and manufacture products that can be repaired effortlessly. Smart regulation measures by the government can demand businesses to gather and reuse waste materials. The authorities might mandate that companies be responsible for gathering and reusing product refuse (e.g. electronic). By implementing this solution, the quantity of discarded electronic materials that terminate in dump sites would be diminished.
— Circular economy business models that are based on sufficiency, on the other hand, prioritize the reduction of consumption by offering products and services that satisfy individuals’ needs without necessitating additional consumption. Numerous techniques can be employed to achieve this objective, including:
- In order to achieve a longer lifespan for products and services, it is conceivable to employ the utilization of superior materials, facilitate effortless reparability of products, and conceive designs that emphasize reusability rather than disposability.
- The utilization of shared or rented products and services can effectively mitigate the resource consumption attributed to the production and disposal of consumer goods.
- Delivering digital products and services can efficiently mitigate the ecological footprint by curbing the level of packaging requirements and transportation emissions.
Circular economy business models, as well as sufficient-based circular economy business models, possess the capacity to foster a more sustainable economy. However, sufficient-based circular economy business models may be particularly important in addressing the issue of overconsumption, which is a major driver of environmental degradation.
Further attention is necessary beyond the aforementioned explanations, wherein this matter should be associated with other paramount topics, including consumer lifestyle and well-being.
Low-consumption lifestyles consciously decrease the consumption of materials. In addition to the obvious environmental benefits, a growing body of research shows that low-consumption lifestyles and sustainable behaviors can improve personal well-being [10]. Sufficiency promotes a business model that ensures everyone has enough to satisfy their lives by consuming less. This sufficiency-based approach values well-being over unlimited consumption and aims to prevent social and ecological crises caused by overconsumption [4],[11].
The difference between the CE and sufficiency models is that the CE focuses on the entire lifecycle of a product to reuse materials and waste, whereas sufficiency has a societal-wide focus on consumption reduction [4].
Using disposable plastic packaging as an example to illustrate the difference in approach, a CE approach might ask: “How can the waste stream of plastic packaging be recycled or reused to reduce demand for new material and reduce waste to landfill and plastic environmental pollution?”. In contrast, the sufficiency-orientated approach would ask: “How can we reduce (and ultimately eliminate) the need and demand for disposable plastic packaging altogether?” [4].
In order to reduce overall consumption, the CE model should be combined with the sufficiency model. Consumers must prioritize share and reuse over purchasing virgin material-based products. Companies should regularly measure their impacts on resources to avoid meeting the bottleneck of critical raw materials. This will help develop new business models in line with changing consumer attitudes that are reluctant to purchase new products. Markets, policymakers, and governments should collaborate and implement sufficient-based circular economy strategies to enhance the positive impact on the economy, environment, and society by reducing consumption and focusing on improving health and well-being.
Moreover, to be able to foster the term sufficiency and convince consumers to reduce their consumption, companies should focus on storytelling.
What role does storytelling play in promoting low consumption lifestyle and persuading consumers to follow CE strategies?
Storytelling has the power to clarify a product’s supply chain journey and the importance of its CE strategy, whether it is reuse, repair or other strategies. It helps consumers better understand the strategies, and know what benefits they will achieve, thereby gradually shifting their mindset towards low consumption lifestyle.
As a packaging company, Repack does a great job of storytelling, guiding consumers through a brand’s supply chain, the challenges of the linear economy, the solutions repack offers, and how consumers can participate in their journey to reduce packaging waste [12].
Patagonia is a clothing company that enables its customers to reduce waste by extending the life of their garments and gear. One of their programs is called “Worn Wear”. It provides people with tools and advice to repair their own gear and also offers opportunities to buy back used clothing [13]. Through a short video, they introduce this program and explain to consumers why buy used.
Worn Wear is our program to trade in and buy used Patagonia gear.
References
[1]. Ellen MacArthur Foundation. (2013). Towards the Circular Economy. Available at: https://www.ellenmacarthurfoundation.org/assets/downloads/publications/Ellen-MacArthur-Foundation-Towards-the-Circular-Economy-vol.1.pdf
[2]. Fairphone. (2019). The Phone That Cares for the People and The Plenate. Available at: https://www.fairphone.com/en/
[3]. World Economic Forum. (2014). Towards the Circular Economy: Accelerating the scale-up across global supply chains. Available at: http://www3.weforum.org/docs/WEF_ENV_TowardsCircularEconomy_Report_2014.pdf
[4]. Bocken, N.M.P., Short. S.W. (2020). Transforming Business Models: Towards a Sufficiency-based Circular Economy. In Brandão M, Lazarevic D, Finnveden G. eds., 2020. Handbook of the Circular Economy (pp. xxx-xxx). Edward Elgar Publishing. Cheltenham, UK. Available at: https://www.researchgate.net/publication/335234318_Transforming_Business_Models_Towards_a_Sufficiency-based_Circular_Economy
[5]. Circle Economy. (2020). The Circularity Gap Report. Available at: https://www.circularity-gap.world/2020
[6]. Tukker, A. (2004). Eight types of product–service system: eight ways to sustainability? Experiences from SusProNet. Bus. Strat. Env., 13: 246–260. doi:10.1002/bse.414. Available at: https://onlinelibrary.wiley.com/doi/abs/10.1002/bse.414
[7]. Planning, P. (2015). Business model innovation in circular economy reasons for non-acceptance of circular business models. Open Journal of Business Model Innovation. Available at: https://www.researchgate.net/publication/273630392_Business_Model_Innovation_in_a_Circular_Economy_Reasons_for_Non-Acceptance_of_Circular_Business_Models
[8]. Linder, M.; Williander, M. (2015). Circular Business Model Innovation: Inherent Uncertainties. Bus. Strat. Env., 26: 182– 196. doi 10.1002/bse.1906. Available at: https://onlinelibrary.wiley.com/doi/10.1002/bse.1906
[9]. Kalmykova, Y.; Rosado, L.; Patrício, J. (2016). Resource consumption drivers and pathways to reduction: Economy, policy and lifestyle impact on material flows at the national and urban scale. Available at: https://www.sciencedirect.com/science/article/pii/S0959652615001407
[10]. Lloyd, K. (2022). Low-Consumption Lifestyles and Well-Being. In: The Palgrave Handbook of Global Sustainability. Palgrave Macmillan, Cham. https://doi.org/10.1007/978-3-030-38948-2_96-1
[11]. Alexander, S. (2012). Living Better on Less? Toward an Economics of Sufficiency. Simplicity Institute Report, 12c, p.20. Available at: https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2060205
[12]. Repack. (2023). Impacts. Available at: https://www.repack.com/impact/
[13]. Patagonia. (2023). Worn Wear. Available at: https://wornwear.patagonia.com/
