How do we transition from the dominant status quo, an extractive political economy, towards a regenerative, circular system? Indeed coordinated efforts have been underway: The European Commission launched a Circular Economy Action Plan in 2015 (and adopted a new one in March) as part of the industrial strategy; we see contemporary calls for ‘just transitions’ to Circular across Latin America; and literature dedicated to the discourse from the global south point of view, which builds upon the establishment of the African Circular Economy Network (ACEN) in 2016 by practitioners, and soon thereafter, that of The African Circular Economy Alliance (ACEA), forumated at COP23 in 2017.
Yet, what does all of this activity add up to, and how might action plans, policy and financial instruments be arranged in such a way that induce tipping points that enable the scale of change required to meet the exponential challenges society faces today? Bright spots exist: from the city of Amsterdam committing to being fully circular by 2050, to a growing ledger of 20+ cities signing the ‘Circular Cities Declaration’, which in essence is a commitment towards derisking the transition to circular by investing in experimentation, learning and pilots. The financial sector is gaining momentum as well. Within the span of the last 18 months at least 10 corporate bonds have been issued and since the start of 2020 there has been a 6 fold increase of assets managed through Private Equity funds, with a CE focus.
Is the Circular Economy model a socio-technical silver bullet (that doesn’t exist)?
There is little question that whole sets of paradigms are up for reimagination and negotiation as we walk indefinitely away from pre-pandemic ‘normals’. The Circular Economy is often positioned as an economic framework that champions dematerialization and designing out waste and pollution from a supply chain outset, amongst other tactics. However, Covid-19, a monumental shock with ripple effects, has exposed a global rising inequality among an impending climate emergency, where science shows us how close we are to crossing tipping points. In Q3 of 2020 alone, what was once reserved for futures fiction has become alive. Iceland's ice is melting faster than at any time in the past 12,000 years, the Amazon rainforest is close to transitioning to Savannah, and food security fragility is imminent. For many public policy decision makers, amongst this contextualized backdrop of long emergencies, it’s less a question of why might a Circular Economy ‘make sense’ as a strategy, and more about how do we get there, or how to the mitigate risk incurred when not accounting for the social and environmental costs of the commons. What does transition look like and how can it be fostered? The image below is a helpful visual scaffold of how transition and change happens from a macro perspective. Yet, perhaps more philosophically, is there a myth in the narrative of this model to confront?
‘Are we solving the wrong problem perfectly?’
As the world co-navigates risk and complexity, it is likely that certain paradigms and mindsets need to be dismantled, and emergent models need to be nurtured. In some ways this functions in congruence with the proposition that ideas and arrangements (of bureaucracies and institutions in this case) lock the system into generating effects that are problematic for transitions. In other words, how do systems get un-stuck? As recently highlighted by EIT Climate-KIC’s Dominic Hofstetter: “Systems can’t just jump, they evolve gradually, what scientists call ‘adjacent possibilities’. What are the transformation strategies that are available?” The Circular Economy, in many ways, is an innovation economy. To use this lens, allows the conversation to move laterally towards understanding the conditions necessary for transformational change.
Provocations to consider for navigating the transition from linear, to circular, to regenerative societies:
- Reframe the Circular Economy paradigm from end game to intermediary step: Incremental first order response is not sufficient to respond to the decarbonization targets and calibration that our earth's ecosystems require. Second order change transitions will entail attentive and decisive investment in understanding exit strategies for what needs phased out, how to align CE policy with sector specific policy, and space making for experimentation and new entrants. On the other hand, it may be third order change that should be considered a ‘north star’, a re-orientation of efforts towards enabling change dynamics. As, outlined in this paper, a focus not on tactics of shifting complex systems, yet “on the governance processes that enabled the emergence, adoption, and implementation of this new paradigm [and the] development of the capacity of the people involved to reflect on the schemata underlying the system, of which they themselves are part.” This updated take on the three horizons framework, is a helpful conceptual heuristic to work past analysis paralysis, ideally in concert with circles of collaborators.
- Reorient organizational architecture to enable operating systems of the public sector to ‘update’: Is it possible for government to be a platform? As noted in this research paper from the Latin American experience, “the multi-sector approach of the circular economy model poses a major challenge to their institutional structures. The truth is that individual sectoral ministries, acting in isolation, are likely to face major obstacles in accelerating the circular economy agenda.” How do political apparatus design for decentralization and inter-agency collaboration? In a recent provocation piece it’s argued that “If democracies cannot build decentralised, distributed capacities for innovation with coordinated mutual learning and recognition of interdependence, then they will struggle to make the complex transitions necessitated by the challenges and opportunities that confront us.” The call for action lies in the practice of change on a variety of scales, yet structural in nature and by design. What might analogous models of decentralization, in today’s ‘networked age’, from the private sector be applied to the public? In the Asia Pacific region, a ‘Next Gen Gov’ platform was launched in June specifically for senior civil servants and leaders to manage these systemic challenges and shifts together.
- Redesign the portfolio logic and de-risking through rapid experimentation and learning amid uncertainty of change: In April of this year the Government of Indonesia announced an action plan to achieve near zero plastic pollution by 2040; their strategy entailed leveraging a multi stakeholder approach with a systems change scenario process. In effect, the integrated approach to achieve the collective target is significant and offers a living case study on working on portfolio spectrum by design. On the other hand, from a financing perspective, the cost of transformation, or investment into uncertainty, can be complicated. However, there are also emergent financial instruments under development that offer a glimpse into new 21st century economy infrastructure. If, as noted in the Climate KIC White Paper, ‘the world still faces a multi-trillion investment gap to meet the ambitions of the SDGs’, then what is on the horizon offering an alternative investment logic to match the speed and scale of the complex challenges, yet with directionality as a fundamental anchor? Already pilot cases exist for transformational capital as a new investment logic, one that deploys deliberately ‘to unlock combinatorial effects and nested within a broader system intervention approach’.
“the story which brings it all together is yet to be written”- Ken Webster, former Head of Innovation at the Ellen MacArthur
The views above do not represent or act as an official statement of the United Nations.