Rethinking economics is not about finding the correct school of thought (because it doesn’t exist), it’s about choosing or creating one that best serves our purpose – reflecting the context we face, the values we hold, and the aims we have.”
- Kate Raworth, Doughnut Economics
Cities on Planet Earth have a unique opportunity to secure our future for this century and well beyond. That’s because they’re home to 55% of the world’s population and responsible for more than 60% of global energy use and 70% of our global greenhouse gas emissions. So, they’re perfectly positioned to do something truly transformational for our collective “good.”
The numbers really tell the story. In 2010 our planet’s cities needed 40 billion tonnes of natural resources to sustain themselves and that will likely rise to 90 billion tonnes by 2050 – more than double. That’s unsustainable and unacceptable by any standard. But cities can turn this around. They can opt to reverse course with transformational change to tackle this crisis head-on instead of living through the progressive environmental decline we’re experiencing now.
In 2020, the City of Amsterdam was one of the first cities to take a transformational step. Along with pioneers Philadelphia and Portland, it joined the Thriving Cities Initiative (TCI), which is a collaboration between C40 Cities, Circle Economy and Doughnut Economics Action Lab working to help these cities become healthy, resilient and sustainable places where people and nature can co-exist and thrive together.
The starting point in the TCI scheme is the creation of a City Portrait, or “City Doughnut,” to use Raworth’s metaphor, which is a holistic snapshot of the city modelled on her Doughnut Economics work that presents the goals for our species in the shape of a doughnut. In the middle, is a safe and just place for humanity where a “regenerative and distributive economy” happens. And that’s bounded on the outer edge which is the outer edge of our ecological safe zone. What lies beyond is “critical planetary degradation.” So, our critical goal is to stay inside the doughnut ring to avoid social inequality or suffer natural deprivations (lack of food and water), or to experience a level of growth that will hasten environmental collapse. Put another way, instead of growth (as measured by GDP) being the key indicator of societal health, wellbeing should be measured by the relative balance of socio-economic and ecological health, and our ability to manage all of our resources effectively.
As Raworth and many others point out, our modern economic system is fundamentally flawed. It’s founded on a self-defeating value chain model with profit maximization and endless growth as its goal, which inevitably exploits the Earth’s natural environment and resources. Our linear “take-make-waste” mantra is inherently wasteful and inefficient because it uses our scarce raw materials indiscriminately and in isolation from the other crucially relevant fields, such as habitat and ecology. In the linear system, conservation is not a priority and that’s why it simply cannot be sustained in the long term.
In just over 200 years, our society has gone through three Industrial Revolutions and is working on our fourth, which means we’ve evolved from being dependent on nature for our survival to being in charge of it, using it as we see fit. However, treating our precious resources without a care to their limitations carries a very steep price. In 2019 alone, we extracted over 92 billion tonnes of materials out of the ground for processing, which made up about half of our global CO2 emissions and over 90% of biodiversity loss and water stress.
What does that mean? Simply put, it means that we’re putting back or “reinvesting” less than 10% back of what we’re taking out. That tells you that what we’re doing cannot last: if we keep doing it, we’ll get to the point of no return – damaging the planet irreversibly – pretty quickly, in around 10 years. Sticking to the linear status quo and maximizing the profit motive above all else just isn’t a winning strategy.
We must change course. We must move away from the linear model and adopt the circular economy in its place. It’s the smart thing to do because it embraces conservation as its guiding principle with the goal of continuous positive development and achieving optimization of resource yields. It’s a highly realistic roadmap for transforming the global economy into a regenerative and restorative system by “designing out” waste and other negative externalities, preserving and enhancing natural capital, circulating products, components and materials at their highest level of utility and value.
Achieving this transition won’t be straightforward because it requires us to fundamentally redesign the economic system that we have now. Instead of endlessly extracting resources for a transactional chain, “going circular” means relying on a system where materials are a renewable resource, reused over and over again in a closed loop, by design. In the hierarchy of circularity, our economic behaviour becomes transformed from single-use and landfill to a loop of reducing, reusing, repairing, refurbishing, remanufacturing, recycling, repurposing and regenerating of all of our resources and materials.
A fully functioning circular economy mimics the natural ecosystem of cyclical resource deployment and zero waste. In the natural world, resources work in closed loops and the circular economy needs to do the same by ensuring manufacturers become circular actors, by instilling “circularity” into their materials and product lifecycles by extending their useful lives well beyond sale and use. This represents a profound transformational shift in approach to our thinking around industrial production. But it is a critical step that we must take if we’re going to embrace sustainability and continue to support life on Earth.
For the next generation of circular-thinking businesses, this coming mindset is about a lot more than being more conscientious about recycling. It opens up new possibilities for significant value creation opportunities over the long term, and across the extended lives of products. Closed-loop manufacturing offers multiple value-creation opportunities with new scalable revenue streams coming from new market innovations, such as product-service systems like SaaS (software as a service) that can provide customers with all the benefits of use without any of the burden of ownership for as long as they want them.
In a new ecosystem defined by circularity, the successful businesses in this transition will be those that emphasize products that are built to last. Those that are durable, repairable and adaptable, modular in design and easy to upgrade. Circular product design will focus on building in features that create an emotional bond with their product to establish a connection that will be secure for the long term. Design will be about creating product attachment, as well as keeping them functional and able to perform at their highest utility and value at all times. This circular marketplace will be the new competitive arena for businesses, where all stakeholders – customers, employees and suppliers – can be active partners in articulating value creation and maximizing utility.
Circular design innovation isn’t just about coming up with new products and services themselves – although this will be critically important – it’s also about creating the social context that surrounds them. With the emphasis squarely on sustainability and building an interactive relationship with users, circular design has the chance to connect brands with stakeholders through a new generation of sustainable products and services that can redefine quality user experience for the long term.
Going circular is a vital and necessary step for us all to take, in the macro sense by government and industry and at the micro level for individuals and communities, if we’re going to build a new post-linear system that’s connected to the natural world. Only by awakening our natural instincts, embracing a circular mindset, and putting it to work through design, can we activate these values and transform the world to make it work better for us.