NEWSLETTER by Alessia Falsarone. The author acknowledges the team at The University of Chicago Circular Economy and Sustainable Business Management Program and all participants of the innovation knowledge hub for their insights and collaboration.
Industrial upgrading, technological innovation, and the increasing focus on human health and environmental risks have become key themes in the evolution towards a more circular economy. These topics are no longer confined to roundtable discussions in prestigious conferences but are now intricately connected to the ongoing transformation of various industries. However, the concept of a just transition continues to challenge the delicate balance between environmental protection and economic development that policymakers strive to achieve. Investment funds emphasizing circularity may face significant challenges as policymakers are yet to fully incorporate just transition principles into their working agendas.
As we approach the super-election year of 2024, new obstacles may arise that will impact the just transition, whether it is related to circularity or not.
| The Science of Impact
Justice and social equity are crucial for the transition to a circular economy, just as they are for low-carbon and digital economy transitions. Dr. Patrick Schröder, Senior Research Fellow, Environment and Society Centre at Chatham House, addresses the benefits of a circularity transition from the lens of international development in his 2020 research paper “Promoting a Just Transition to an Inclusive Circular Economy”.
Combining the pillars of just transition frameworks – a transition that combines environmental sustainability, decent work, social inclusion and poverty eradication – will need to go hand in hand with the development of new technologies and businesses that keep materials in circulation for longer, the substitution of renewable materials for non-renewable ones, the restoration of natural systems, and the practice of ‘designing out’ waste beyond the commercial and urban spaces of the Global North.
It also means that the contributions of a circular transition to the 2030 Agenda for Sustainable Development will need to be highlighted, consistently accounted for and acted upon, both in public policy settings and in financial terms.
Dr. Schroeder and his colleagues offer a compelling foundation for these contributions as well as the gaps at the individual SDG level. A well-functioning circular economy will only succeed – in terms of its system-level environmental and economic viability – if socially inclusive by design.
| Circularity Roadmaps Explained
The case of lowering urban air pollution and redefining the way industrial and manufacturing processes affect China’s standards of living and working provide more than one point of reflection.
It is fair to say that nowadays air pollution is recognized as a major environmental risk that causes millions of premature deaths worldwide. The World Health Organization (WHO) estimates the combined effects of ambient air pollution and household air pollution to cause 7 million premature deaths annually. In fast-developing countries, such as those in South and East Asia, the death toll is particularly high as air pollution in urban areas exposes inequalities beyond health, in income, employment, as well as in education. In his work, Dr. Schroeder highlights how to combat air pollution in the Beijing-Tianjin-Hebei region, factories in the Hebei province are regularly ordered to halt production, leading to job losses for hundreds of thousands of workers. Given the current air pollution control measures in similar regions of China have also introduced a heavy socio-economic toll, it may be beneficial to address such policy measures through the lenses of a just transition. While the Hebei government is reported to have incorporated support policies in its air pollution action plans, addressing the depth and magnitude of their impact is still quite difficult.
The situation in the Hebei province is just example of the myriad of policy tools scattered across the globe that lack a just societal lens at their core. When we consider that, on average, a mix of policy tools including regulation, taxation, training and development, and outright producer-consumer incentives are considered to be the main instruments that foster a circular economy, the individual benefits to society need to be factored in at the individual policy level, in the short term as well as the longer term.
| Investing in the Circular Economy
Circular economy investment funds and financial programs in support of the circularity transition have fallen behind in terms of the rate of adoption of just transition principles. Their upfront integration in investment due diligence is rarely part of development finance assessments which continue to decouple social development, human rights and the environmental impact of a circular production and consumption model.
Moreover, the area that has stirred most reluctance from the private investment community is surrounding the subtle similarity between investment programmes that adopt tenets of the just transition, and ecological compensation schemes that pursue both economic development and environmental protection goals.
Drawing from the example of China’s policy development highlighted above, as early as 2019, The China Council for International Cooperation on Environment and Development (CCICED) reported* how the country’s economic development had come at a material environmental cost (*link to the full report here).
Implementing Just Transition Principles in direct investments will inevitably lead to a process of ‘industrial upgrading’ of the companies that operate in traditional circularity domains (from waste to industrial chemicals, and basic materials, and their supporting infrastructure), while those that already compete in green industries will need to keep adapting to the pace of technology innovation and the benefit from the synergies in know-how transfer.
| You don’t want to miss this week
From Amsterdam (The Netherlands) to Brussels (Belgium), this week offers new opportunities to connect with fellow circularity practitioners, and stir our world towards a more sustainable economic transition.
Discover, grow and leave your mark!
〉January 23rd: FOODRUS – Second Policy Roundtable: Food, Water and Nutrients. (Livestream) During the 2-hour meeting, partners in the FOODRUS #H2020 Project will present their Recommendations to Overcome Barriers in Food Waste Prevention and Reduction, formulated on the basis of identified barriers in the food value chain. If you are interested in joining the discussion, we encourage you to consult the recording of the first roundtable meeting which was held in October 2023 (recording available below). Lauriane Noirot is the organizer and the go-to person for the event.
FOODRUS First Policy Roundtable: Legal and Economic Barriers to Food Waste Prevention and Reduction
〉January 24th: Circularity Gap Report 2024 – Launch Event. (Livestream) The Circle Economy Foundation and Deloitte will release their 2024 update to the state of global circularity, a landmark study now in its fifth year. The pressing question that the launch report will address this year is: ‘How can we turn these insights into actionable steps? Andrea Liverani, from the The World Bank and Hege Sæbjørnsen, FRSA
from IKEA will share the circularity journey of their respective institutions.
〉January 25th: HOOP Lunch Talks Session 3 – Episode IV: The HOOP Circularity Label (virtual)*. A monthly 30 minutes exchange about the urban circular bioeconomy. The Bio-Circularity Label by the HOOP Project plays a vital role in supporting cities and regions in boosting their circular urban bioeconomy. The label showcases the implementation of circular measures, policies, and initiatives, while highlighting opportunities for further improvement. In this episode, Isabelle Meijer, Innovation Consultant at Bax & Company, will share how to obtain recommendations to enhance the bio-circularity of your territory. Additionally, you’ll hear from other cities and regions that have filled in the label, learning about their data collection process and the most useful recommendations they received. (*) Note: The Lunch Talks Session is open only to members of the HOOP Network of Cities and Regions. Join the network here.
Off to another impactful week!
| brief bio
Alessia Falsarone is executive in residence, practitioner faculty at the University of Chicago, where she leads the Circular Economy and Sustainable Business program. The article is based on the author’s newsletter A Week of Circularity from the innovation knowledge hub.
| All opinions expressed are those of the author and/or quoted sources. investESG.eu is an independent and neutral platform dedicated to generating debate around ESG investing topics.
