Sustainability and Economic Recovery: The Value of the Circular Economies

Updated: Nov 2



As countries mandated self-isolation and quarantine rules at the onset of the COVID-19 pandemic, the world observed improvements to air and water quality. In China, the reduction in the number of vehicles on the street and the decline in factory operations resulted in a sharp decrease in emissions. This led to a dramatic decline in pollutants such as nitrogen dioxide and fine particulate matter. The Venice Canal ran clear and rare aquatic life returned to the Italian coastline. This improvement was attributed to a decrease in tourism and reduction of boat traffic that typically disturbs sediment in the surrounding waters. These positive changes shed light on what we could achieve if the world came together to reduce our environmental impact. It is not realistic to ask everyone to stay at home every day and wait for nature to heal itself, but it indicates that there is hope for us to restore our planet.


Image of nitrogen dioxide density level in China before and after COVID outbreak (NASA, https://eoimages.gsfc.nasa.gov/images/imagerecords/146000/146362/china_trop_2020056.png)
Image of Venice without tourist and boat activities (Lopez Robin, Unsplash)

We live on a planet that has finite resources and our current consumption rate exceeds what the planet can produce. Earth Overshoot Day marks the date our resource use has exceeded what the planet can replenish in a year. All consumption past that day creates a deficit in resource stock and a surplus of carbon dioxide in our atmosphere. For the past two years, Earth Overshoot Day fell on July 29th, however this year it was almost a month later on August 22nd. This improvement can also be attributed to the decrease in human activity during the pandemic. However, to ensure that future generations can thrive on a healthy planet, we cannot wait for a disaster to slow down our activities; we must act proactively to delay Earth Overshoot Day. COVID-19 has disrupted our economy and has presented a unique opportunity to rebuild with new innovations. Is there a solution that can reduce our consumption of resources without sacrificing economic growth? A circular economy could be the solution we are looking for to utilize sustainable business practices as a means of economic recovery.


What exactly is a circular economy?

Circular economies focus on creating a closed loop between make and use. They are based on concepts of reuse, repurpose, and recycle to extend the lifespan of resources and minimize waste. Why throw away something that can be used again?


Most business models focus on low-cost sourcing and high turnover rates. Certain industries such as fashion, plastic, and technology produce more waste than others. An example of a destructive linear economy is fast fashion; clothing trends change rapidly, so new designs are constantly created. Most fast fashion companies compromise the style and low production cost for quality. Their clothing is designed to last only a few wears, as they usually go out of style very quickly and end up in landfills.


Let’s go through the journey of a shirt. According to National Geographic, it takes 2,700 liters of water to make one cotton shirt, which is enough water for one person to drink for two and a half years. Producing one cotton shirt also contributes to 2.1 kg of carbon dioxide emissions. The shirt then gets shipped to a retailer and eventually, a consumer will purchase it and bring it home. After a few months, the shirt will be thrown out and the fabric, which contains plastics such as nylon and polyester, can take anywhere from 20 to 200 years to degrade.


Image of factories contributing to carbon dioxide emissions during manufacturing (Marcin Jozwiak, Unsplash)

McKinsey & Company conducted a study that indicated that the average consumer bought 60% more clothing in 2014 compared to 2000, but the lifespan of clothing is half as long. After facing criticism about their waste generation, fast fashion companies like Zara and H&M have implemented programs to collect and recycle clothing. These programs began to close the loop by incorporating used fabrics into their supply chain, however they still require large amounts of energy and water.


When comparing types of circular economies, recycling is one of the biggest loops. It requires many energy inputs and creates pollution as outputs. We can shrink the loop by extending the life of products through reuse or repairing products. We need to fix the problem at the source by extending the life span of consumer products. Patagonia’s Worn Wear Program is an excellent example of how industries can support this. The program provides repair services for jackets and encourages customers not to buy new jackets unless they really need one. Think about the last time you threw out a winter jacket. Had it actually reached the end of its life, or did you get rid of it because it because it wasn't "cool" anymore?


The graph below projects that the sales of second hand fashion will exceed fast fashion by 2029, thus boosting economic growth while reducing the environmental impact of the industry. As consumers trade-in and purchase second-hand clothing at larger scales, reusing clothes may become the new norm.


Graph on expected growth in market size for fast fashion and second-hand fashion in the next 10 years (Ellen MacArthur Foundation, https://www.ellenmacarthurfoundation.org/assets/images/Finance-Resale-bigger-than-fast-fashion.png)

Many countries have already started adopting this sustainable business model. In 2017, the World Circular Economy Forum was started to bring together business leaders and policy makers from around the world to share knowledge on circular economies. This year’s forum was co-hosted by the Environment and Climate Change Canada, Finnish Innovation Fund Sitra and the Government of the Netherlands. It was scheduled to be hosted in Canada with a focus on key actions and systemic changes required to create the conditions for a thriving global circular economy. Unfortunately due to COVID-19, the live forum was pushed to 2021, and an online forum was hosted from Finland instead.


I had the opportunity to attend the World Circular Economy Forum online in September. It was eye opening to see the way some cities have started to adopt and integrate circular economies into their city planning to tackle our waste problem. The speakers stressed the importance of businesses, government policy, and community working together to accelerate the development of the circular economies and provided many successful examples from Europe and North America. Below are the key takeaways from this forum about how the public and private sectors can contribute.


How the government and private sectors can help

Integrating a circular economy into cities requires effort from both the public and private sectors. The government can provide funding for companies that adopt circular business models and for start-ups developing innovation based on circular economies. Private sectors can connect sustainability and profitability by creating investment opportunities for businesses focused on sustainability.


Even though cities and industries have put together an effort in recycling, it is not nearly enough. A documentary by The Passionate Eye explained that the word recycling is heavily advertised by manufacturers, especially plastic industries, as a marketing tool. If consumers think their products are being “recycled”, they feel less guilty about using plastics. According to a paper by the Ellen MacArthur foundation, we must change the way we make and use products if we want to reach a zero-emission rate by 2050.


During the pandemic, environmental issues took a backseat as governments focused on recovering the economy and slowing the spread of the virus. We must show our government leaders that circular economies can support this economic recovery with additional benefits to society. Ellen MacArthur Foundation has proven that there is an important economic value for cities to adapt to a circular economy model. Besides reducing emissions and resource exploitation, a circular economy has benefits such as cost reduction, new business opportunities to support skill development and jobs, enhanced social interactions, and reduced pressure to source virgin materials. A paper led by the University of Warwick proposed a circular economy framework to be adopted in all industries by leveraging modern technology to improve supply chain resilience and diversification.


How to popularize circular economy

It is clear that circular economies are an excellent way to achieve sustainable economic growth, so why aren’t they more common? Emily Yates, the Smart City Director at the City of Philadelphia, and a speaker at WCEF, shared her story on how they pitched the idea of circular economies to local governments for support. For municipalities that are not as interested in sustainability, speakers have used a circular economy’s side benefits to explain why their city needs to adapt to it. For example, the city council of Phoenix, Arizona was most interested in local employment rates, so the speaker used increasing employment rate and supporting skill development for jobs to sell the circular economy. In 2013, the city launched the Reimagine Phoenix initiative to tackle its waste management problem and planned to go zero-waste by 2040.


Image of food packaging that are not properly recycled and ended up in the landfill (Jasmin Sessler, Unsplash)

As individuals, a great way to contribute to the transition of a circular economy is to make purchases from businesses that follow a circular economy model. This shows municipalities that there is demand and a market for products based on a circular economy. Another great way to spread the word about circular economy is to use social media to repost infographics or examples to your peers. The third way is to invest in companies that focus on circular economy and sustainability to show your support for their cause.


Since COVID, we have become increasingly comfortable with single-use products such as masks and takeout containers due to perceived hygienic benefits. However, these products generate enormous waste and their use does not create a strong framework for economic recovery. “To ensure a sustainable recovery, we need to take decisive measures that encourage the transition to a carbon-neutral circular economy that prospers in harmony with nature,” says Sitra’s President Jyrki Katainen. Disaster should not be the reason we reduce our carbon footprint, it should be purposefully designed. Circular economies are a great way to achieve sustainable recovery. Imagine a world where there is no waste and everything we use gets put back into the system, where every product tells a rich story of where it came from and where it has been.


For more information, stay tuned to this year’s WCEF organizer Finnish Innovation Fund Sitra. They have workshops and after events hosted throughout September to December, with a wide variety of topics ranging from industry specific to national development level such as “reciChain: capturing the value of plastics in the circular economy” on November 12th and “Building a circular North America” on November 19th. If you are interested in learning more about different aspects of the transition to circular economy, the Ellen MacArthur Foundation is another great resource.


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