A Social Inclusive Circular Economy, is it possible?

(Based on the Report Closing the Loop - The benefit of the circular economy for developing countries and emerging economies EXECUTIVE SUMMARY, © TEARFUND 2016)

Emerging economies can leapfrog development stages and implement an economic model that is better both for society and for the environment. The Circular Economy paradigm is a production model aimed at leveraging steady economic development for the future, without causing environmental damage. But is it capable of promoting the maintenance of natural ecosystems while at the same time offering benefits to the poorest groups in society?

In 2016 I have lead a study report named “Closing the Loop - The benefit of the circular economy for developing countries and emerging economies”[if !supportFootnotes][ii][endif] that illustrates the tremendous window of opportunity provided for Brazil by the unique features of the Solid Waste National Policy. Policies such as this can help low and middle income countries to build on and formalize existing informal circular economic activities, thereby taking a development path that avoids many unsustainable elements of the linear production model.

The various case studies included in this report demonstrate the potential of the circular economic model to bring numerous social benefits, such as strengthening local economies, empowering the poorest families and building resilience, through stimulating the entrepreneurial spirit of businesses based on the solidarity economy.

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Why circular?

Emerging economies like Brazil frequently encounter the false dilemma of having to choose between social development or environmental protection, as the two appear somewhat incompatible. The dilemma becomes even thornier when a degree of environmental destruction seems unavoidable if social development is to be achieved.

At global level, the economy is currently following a linear model based on ‘extracting, producing and throwing away’ and, as a result, the planet’s ability to sustain life is shrinking fast. This represents the greatest threat to recent advances in social development and has many negative environmental impacts, primarily affecting the people and economies of developing countries. The two inevitable consequences arising from the failure of the current linear production model are becoming increasingly obvious: non-renewable resources for the production of goods are quickly becoming scarce, while the damage to the environment is compromising ecosystem services such as pure water, clean air, fertile soil and biodiversity – very often irreversibly.

On the other hand, the Cradle to Cradle®[if !supportFootnotes][iii][endif] concept on which the circular production system is based can offer a genuinely viable alternative to the dilemma of ‘developing or preserving’, because it is able to promote improvements in the natural ecosystem and, at the same time, foster human social justice. That is because this economic model is based on the same rules followed by nature’s production system, which sustains life. Nothing in nature is thrown away – everything that an organism discharges throughout its life cycle becomes raw material and nutrients for other beings. This is the foundation of the circular economy which, seeing the production system from a new ‘positive impact’ perspective, becomes a common working framework capable of guiding creativity and innovation – the most abundant resources humanity possesses.

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Making the emerging economies of developing countries circular

The majority of academic and business case studies undertaken around the circular economy concept have so far produced analyses focusing on the reality in European countries. For example, studies have shown how Europe can benefit in environmental and social terms from the principles of the circular economy, generating economic gains of €1.8 trillion by 2030.[if !supportFootnotes][iv][endif] But what advantages could this concept offer if it were adopted by the emerging economies of developing countries? This is an important question, because the bulk of the world’s population is concentrated in those countries, and in the future global environmental and social outcomes will depend to a large extent on how countries like Brazil, China and India use their natural resources.

The study developed in cooperation with NURES/UFSC supported by TEARFUND, came to conclusions after investigate the relevance of the circular economic system for emerging economies – and the poorest people in those countries – on the basis of recent experience in Brazil. It is particularly pertinent now because Brazil is introducing a new Solid Waste National Policy, which is triggering a series of innovations in the social, technological, economic, political, legal and environmental fields.

The analyses carried out during this work demonstrated:

Benefits already offered by the circular economy model in comparison with a linear economy in the Brazilian context, for instance in existing examples of informal circular supply chains.

Some evidence of economic, social and environmental potential benefits linked to developing more circular supply chains in Brazil.

Insights from what role the government can potentially play in helping existing production chains to adopt the circular production model.

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Recommendations

The report puts forward a series of recommendations to help the Brazilian government promote the formation of circular supply chains. These recommendations are also relevant for other parties interested in the circular economy, and for emerging economies in other parts of the world. Detailed in the final section of the report, the recommendations may be summed up as:

1. Create a national-level policy framework for the circular economy

Building on the excellent start made by the Solid Waste National Policy, the new policy to promote the circular economy needs to refine some elements of current legislation. For example, there are many wasted opportunities in the fields of organic waste and agro-ecology. Unlike other countries, Brazil’s urban waste comprises 51 per cent of organic matter on average, generating high levels of greenhouse gas emissions in landfills. Technologies for recovering organic waste through composting on a large scale are viable, however, and have already been tested. Similarly, agro-ecological production initiatives in rural areas offer huge potential for local production in the circular model, using simple, decentralized, cheap technologies.

2. Establish a permanent national resource panel

Open for multi-stakeholder participation, the panel would be a vehicle for identifying and promoting best circular economy practice in emerging economies at all levels, bringing together policy-makers, industry bodies, universities, business leaders and civil society organisations.

3. Build capacity and raise awareness of the circular economy in the country

Public management capacity at municipal level is a particular cause of concern. There is a risk that the potential social benefits arising from the proper application of the Solid Waste National Policy in Brazil will be lost unless an effort is made to increase understanding of the social role of circular chains. At the same time, if they are to play a part in the circular supply chains in accordance with the Solid Waste National Policy, waste picker groups need support to organise themselves into cooperatives and acquire skills in business and production management.

4. Form international partnerships for the circular economy

Product design standards in the European Union and other major markets have considerable influence on global manufacturing chains and impact various aspects of production in Brazil, including reuse, repair and recycle capability. Similarly, valuable waste considered as secondary raw material is often sent beyond national frontiers for processing and is therefore lost. Cooperation with international partners is key to breaking into global circular supply chains.

Final considerations

The study demonstrates the potential of supply chains in the circular economic model to increase job creation and improve the working conditions and pay of the poorest groups in society. The study also provides evidence that circular chains can promote activities capable of strengthening local economies, empowering and increasing the resilience of resource poor families and promoting an entrepreneurial spirit for the solidarity economy. Furthermore, the circular economic model makes it possible for emerging economies to move directly to a more beneficial development model, with much more effective, balanced results for society and nature.

In conclusion, we can affirm that failing to support circular economic initiatives in emerging economies is a wasted opportunity to learn how the circular economy can offer a solution which, while promoting development and enhancing the natural ecosystem, can effectively reduce poverty on our planet.

[i] Alexandre is Director and Co-founder of EPEA Brasil. EPEA Brasil core competence is to help local organizations to close the loop of their products and eliminate de concept of waste, applying Cradle to Cradle® as a conceptual and scientific framework in Brazil

[ii][endif] “Closing the Loop - The benefit of the circular economy for developing countries and emerging economies” (Fernandes, 2016) in https://learn.tearfund.org/resources/policy_and_research/sustainable_economics/the_circular_economy/

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[if !supportFootnotes][iii][endif] Cradle to Cradle® is a design concept that was developed in the 1990s by Prof Dr Michael Braungart, William McDonough and the scientists of EPEA Internationale Umweltforschung in Hamburg. Cradle to Cradle® is a registered trademark of MBDC.

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[if !supportFootnotes][iv][endif] McKinsey & Company (2015) ‘Europe’s circular-economy opportunity.’ Available at: www.mckinsey.com/business-functions/sustainability-and-resource-productivity/ our-insights/europes-circular-economy-opportunity