The circular economy: An opportunity for renewal, growth, and stability

• Published date: 01 September 2018
• DOI: http://doi.org/10.1002/tie.21912
• Author: Terence Tse,Mark Esposito,Khaled Soufani
• Date: 01 September 2018

COMPANIES IN THE CIRCULAR ECONOMY

The circular economy: An opportunity for renewal, growth, and

stability

Mark Esposito

1,2

| Terence Tse

3

| Khaled Soufani

4

1

Division of Continuing Education, Harvard

University, Cambridge, Massachusetts

2

Grenoble Ecole de Management, Grenoble,

France

3

ESCP Europe Business School, London, UK

4

Judge Business School, University of

Cambridge, Cambridge, UK

Correspondence

Mark Esposito, Division of Continuing

Education, Harvard University, 51 Brattle

Street, 02138 Cambridge, MA, USA.

Email: markesposito@fas.harvard.edu

Though governments and research institutions are giving more consideration than ever to the

regenerative prospects of the circular economy, efficient solutions are still in need. A perfunc-

tory look at the numbers shows some unsustainable and troubling math. It has been estimated

that growing global consumer demands will require the natural resources of two Earths by the

year 2030. Creating a circular economy that can meet those demands in the face of resource

scarcity requires more than creating products from recycled plastic or building sustainable

homes and offices.

KEYWORDS

circular economy, sustainability

1|INTRODUCTION

Since the industrial revolution, we have been living in a linear econ-

omy. Our products and “single-use”lifestyles have made the planet a

“take-make-dispose”world. For those unfamiliar with the phrase, it

refers to a very one-directional model of production: natural resources

provide our factory inputs, which are used to create mass-produced

goods to be purchased and typically thrown away after a single use.

Thrown away, though, does not capture in any capacity the reality of

what happens; what remains after use is christened as trash and goes

on to spend the rest of eternity in a landfill instead of having parts

reclaimed or remanufactured for other uses. It becomes obvious very

quickly that the mode of a linear economy is unsustainable. Our model

of mass production and mass consumption is testing the physical

limits of the globe and threatening the stability of our future.

Fundamental resources such as water, food, and energy are at

stake. The energy that we expend today to operate cars, airplanes,

overhead lights, and other modern-day technologies took billions of

years for the planet to collect and to store in plants and fossil fuels.

Now we spend that energy at a much faster rate than the planet can

produce.

Resource scarcity is a real problem. The nonprofit group Forum

for the Future estimates that we are consuming resources 50% faster

than can be replaced. By 2030, our demand will require more than

two planets' worth of natural resources if they are to be met, and by

2050, three planets' worth (Voices, 2015). Moreover, according to the

Organisation for Economic Co-operation and Development (OECD),

the global middle class will have doubled by the year 2030, which will

drive demand for resource-intensive goods such as vehicles and other

contemporary conveniences that many of us in advanced industrial-

ized countries enjoy today.

It gets worse. It isn't just that we are using resources faster than

the Earth can possibly produce; our global economic productivity is

also falling, despite technology and efficiency improvements invented

over the decades. Because our natural capital is rapidly depleting and

affecting our world ecology even as we continue to invent and inno-

vate, our output is no longer as great as it used to be, in an ironic

backslide in productivity across time. For instance, in spite of techno-

logical advances in fertilization and irrigation, productivity gains in

grain crops have fallen 66% since the 1970s. In another example, con-

stant mining of the earth has also taken its toll. The average percent-

age of metals retrieved from mining has slowly been falling in terms of

both quality and concentration, making mining a more expensive

proposition. Productivity is also beholden to the planet: when a

drought kills entire crops in a region or a widespread disease kills tens

of thousands of livestock, those foods become more expensive for

everyone, or in many cases, not available at all.

But despite these sobering statistics, all is not lost. Thanks to

organizations like the World Economic Forum and the Ellen

MacArthur Foundation, research on a different model of consumption

and production, called the circular economy, is gaining more attention

recently.

DOI: 10.1002/tie.21912

Thunderbird Int Bus Rev. 2018;60:725–728. wileyonlinelibrary.com/journal/tie © 2017 Wiley Periodicals, Inc. 725