‘Going for zero’: hopes and fears in the circular economy

Copenhagen Business School’s Steen Vallentin considers problems of aspirational talk and corporate mindsets with regards to the circular economy, an often-heralded means of combating climate change. 

The circular economy (CE) is the subject of much hype and has become a pivotal buzzword in current debates about climate change and sustainable development. It’s also a mindset and model that is promoted widely by bodies ranging from the UN, the EU and OECD to national and local governments, NGOs and businesses. 

The primary appeal of CE (and before that, the notion of ‘cradle-to-cradle’) lies in its promise of decoupling economic growth from natural resource depletion and environmental degradation through activities that reduce, reuse and recycle materials in production, distribution and consumption processes. This is in stark contrast to our current ‘linear economy’, which, as critics argue, is based on a ‘take-make-use-dispose’ rationale that results in an inadequate amount of resources being reused or recycled.

Aspirational, but a long way to go 

The Ellen MacArthur Foundation considers Denmark a frontrunner among nations in the transition towards a more circular economy. However, the analysis provided by this UK non-profit is, arguably, cherry picking good examples of CE. The Danish economy still has a long way to go; it is, at best, approaching a transitional phase. 

The same goes for Danish businesses, at least in terms of action and actual accomplishments. When it comes to communication and aspirations, during the past couple of years, large Danish companies have committed themselves to ambitious future goals that build on a circular mindset. 

Global brewer, Carlsberg, has launched the ‘Together towards Zero’ campaign, which promises a ‘zero carbon footprint’, ‘zero water waste’, ‘zero irresponsible drinking’ and a ‘zero accidents culture’ by 2030. The most ambitious of these goals is to eliminate carbon emissions from its breweries by 2030. 

Novo Nordisk (Novo), a pharmaceutical multinational and market leader in diabetes treatment, has engaged in the project ‘Circular for Zero’, with the simple, but bold, ambition, ‘to have zero environmental impact. To get there, we are adopting a circular mindset – designing products that can be recycled or reused, reshaping our business practice to minimise consumption and eliminate waste, and working with suppliers who share our ambition.’ Novo has also set 2030 as its target date, this time for reaching zero CO2 emissions from global operations and transport. Similarly, shipping multinational, AP Moller-Maersk (Maersk) is aiming for climate neutrality by 2050. So is most of the Danish agriculture sector, by
the way.

The focus on zero

Zero, you might say, has become the new black (or green) of sustainability. These developments are underpinned by a circular mindset and they have an important feature in common. 

The companies involved do not know how to reach their transformative goals and, by implication, they cannot know with any certainty whether they are capable of getting there. The simple reason is that the technology and solutions required to get there have yet to be invented or applied commercially. The same concerns apply to many of the ambitious goals that are set out in the Paris climate agreement and in the UN’s Sustainable Development Goals. 

Companies such as Carlsberg, Novo and Maersk are engaging in what has been termed ‘aspirational talk’. They are making promises about sustainability which they cannot live up to at the present time, in the hope that these aspirational goals will serve to inspire and accelerate future green solutions. Viewed from the outside, the hope is that this aspirational talk will encourage companies to commit to sustainable courses of action and serve to make them publicly accountable for creating results. 

Here, the notion of ‘zero’ may cause some concern since, based on where we are and what we know today, it can appear utopian and out of reach. Can we imagine carbon-neutral industrial production, shipping and agriculture within a meaningful timeframe? How can we hold companies that seem to promise the impossible accountable for their actions? 

The technical answer is that this progress can be measured using science-based targets, milestones, and key performance indicators. The hopeful argument is that reaching zero is not what it is all about, and that the answer lies in driving and mobilising action in the most effective way in order to achieve the best possible results – ‘zero’ as a means to an end, rather than an end in itself. 

The fear is that circularity and aiming for zero are merely the latest examples of how businesses present themselves as responsible and sustainable corporate citizens while engaging in ‘greenwashing’ – that is, making unsubstantiated or misleading claims about environmental progress and benefits for the purposes of positive public relations. The argument here is that the sheer number of uncertainties and unknowns involved allows companies to get away with greenwashing. At this juncture, it’s critical to ask whether private businesses, in general, are merely piggybacking on the ambitious goals set out by international bodies and national governments, while hoping for some technological miracle along the way that will allow them to deliver on their goals and without necessarily putting much effort into transforming their ways of doing things. 

Partial redesign is not circular 

CE is making transformative demands on traditional, linear business models and production systems. Ideally, CE starts with a circular design of the entire production cycle, from raw materials to the post-consumption phase. However, partial redesign of existing ways of doing things will often fail to live up to the moniker ‘circular’. 

Take, for example, retailer H&M’s take-back scheme allowing for clothes recycling and the reuse of fibres. Notwithstanding the merits of this initiative, when viewed in isolation, it does little to alleviate the negative environmental impact of the unsustainable business model that is ‘fast fashion’. 

The fear is that any shift to circularity will fail to be transformative enough, that it will merely lead to optimisation at the edges of traditional business models that will continue to cause substantial environmental harm. 

Ultimately, a lot of hopes and fears in CE hinge on technology. Hopes accrue to future solutions, while fears centre on technical fixes becoming a panacea for development making people complacent. 

Recent research, led by Julian Kircherr of Utrecht University, has argued that the barriers to circular transition are not primarily technological. Instead, they have a lot to do with culture, including mindsets inside modern businesses and among consumers. 

Technological solutions are often available, but they are not ready for market and/or their use is constrained by regulation. In other words, we cannot reduce circular transition to technological development, market creation and smart regulation. We must also consider corporate culture and mindsets, as well as the courage and willingness to back up the (aspirational) talk with action. 

Steen Vallentin is an Associate Professor at Copenhagen Business School (CBS) and Academic Co-Director of CBS Sustainability. 

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