The social dimension of the circular economy

The circular economy (CE) is gaining momentum. The CE is a more sustainable alternative to the linear ‘take-make-waste’ economy which depletes resources and turns them into (often harmful) waste. The transition from a linear to a circular economy is supported by the Dutch government, which has committed itself to a fully circular economy in the Netherlands by 2050, and the CE is also one of the building blocks of the European Green Deal. This transition is believed to reduce emissions, resource depletion, and biodiversity loss, while at the same time enabling sustainable growth and new jobs.

A transition to the CE is laudable, yet there remains a rather deafening silence when considering the social rather than environmental aspects of the CE. When the social aspects are taken into account, it is often assumed that the CE will benefit people, for instance by creating jobs. However, the CE can also have negative social aspects. For instance, recycling, an important aspect of circularity, often requires contact with unhealthy chemicals. This opens up other possible issues: Can the emphasis on technology for waste reduction also reduce jobs rather than create them? And can the local repairing and recycling of textiles come at the detriment of industries in countries such as Bangladesh, China or India? These issues highlight the complex nature of the CE and its social aspects. Based on a study of the social aspects of the CE in the Netherlands, recently published in Journal of Cleaner Production, we put people at the heart of the CE and examine how to combine environmental and social benefits. We do so through a combination of interviews with strategic leaders in Dutch circular organizations and a Delphi study with experts in the CE.   

Social values, trade-offs and synergies

Our study highlights that social benefits in the CE do exist at multiple levels, and that these different social benefits can lead to both positive relationships (i.e. synergies) and negative relationships (i.e. trade-offs) between the CE and social benefits. Social benefits within the CE are visible at three levels: micro, meso and macro.

At the micro level, examples are well-being and meaningfulness at work or the creation of unique products for customers. At the meso level, telling examples are the inclusion of people with a distance to the labor market in the value network or generating inspiration and awareness. Finally, macro level benefits evolve around global justice, equality and making the world a better place.

We show that synergies exist mostly at the micro level. Circular working and organizing are considered intrinsically more meaningful and attractive, and come with positive feelings and interactions. Succinctly stated by one circular entrepreneur: it is great fun to create value this way!”. Circularity and social benefits are also positively connected as they lead to win-win situations regarding new jobs, skills, products, services, and innovation.

However, we also find that trade-offs are experienced between circularity and macro level social benefits. Tensions are, for instance, perceived between circularity and social justice. Tellingly put by one of the CE experts consulted:

“It is fabulous that a computer or ‘smartphone’ will be repurposed, or that energy garnered from sewage will heat a neighborhood, but what about the fact that MOST of our (Dutch) consumption relies on ‘ghost acres’ elsewhere. I am thinking of devastated ecosystems where mining takes place, I am thinking of children mining coltan”

In addition, experts find it difficult to scale up the benefits of circularity to the macro level because of the current economic system, as the example below illustrates:

“Circular business is less capitalist thinking. Capitalism is based on infinite growth. And we see what this does to inequality and destruction of the earth. Thinking more holistically, that is circular.”

How to turn trade-offs into synergies  

Turning trade-offs into synergies can be fostered by a communal sharing strategy. This is a strategy that consists of personal, structural and socio-circular strategic behaviors.

Personal strategic behaviors focus on developing intrinsic motivations, meaningfulness, community building, and information sharing among stakeholders with similar idea(l)s. Structural strategic behaviors aim to create resource efficiencies, leveraging government policies, and developing stakeholder relations based on trust and cooperation. Socio-circular strategic behaviors treat stakeholders as multifaceted human beings who are embedded in broader social networks. For instance, social benefits can be achieved when viewing a stakeholder as both community member, supplier and customer, as one strategic leader explained:

“youth have nothing to do, so let them clean up junk and bring it to the community center. Then we turn it into a skateboard and then they can get skate lessons. Then it’s also a community thing, that’s part of what you could do with it.”

Overall, a more ethically motivated communal sharing strategy works well to create synergies at, and between, the micro and meso level. However, it fares less well at, or scaling up to, the macro level. The reason is that economic growth motives seem essential to reach the macro level, but the pressures of these economic growth motives appear to be particularly at odds with the interests of social and circular organizations. This is summarized in the following observation:

“Circular business is less capitalist thinking. Capitalism is based on infinite growth. And we see what this does to inequality and destruction of the earth. Thinking more holistically, that is circular.”

CE practitioners and policy makers do well to remember this complex nature of the CE. A truly sustainable CE comprises next to economic and environmental benefits also social benefits, which manifest itself at micro, meso and macro level. Moreover, as the relation between social benefits and circularity shows trade-offs and synergies, communal sharing strategies can help to overcome trade-offs and turn them into synergies.