Circular and Solidarity Economy

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For the past fifty years or so, the United States has subscribed to a linear economy. With the realities of climate change, however, the linear model is quickly becoming insufficient to a prosperous economic future. Another model – a circular and solidarity economy – is a much more sustainable approach, with many benefits for both climate and people.

Unlike a circular and solidarity economy, a linear economy looks just like it sounds. Raw materials are mined, products are created and purchased, and once consumed, the remains are thrown away. In other words, take, make, and waste. In fact, one of the largest consequences of linear, consumer-driven economies is the vast amount of waste generated, which then in turn harms environments and people. Unfortunately, this consumer-driven economy benefits very few, creating only more harm and inequality over time. Valuable resources and food are quickly wasted while vulnerable, poorer populations fall farther and farther behind.

So, what is a circular and solidarity economy? How might it change the impact of sustainability and climate efforts? And are there countries already implementing circular economies successfully? How so?

Read on to learn everything you need to know about the principles and many benefits of circular and solidarity economies.

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What Is a Circular and Solidarity Economy?

A circular and solidarity economy is one that links the end and beginning of the linear economy cycle. Unlike a linear economy, a circular and solidarity economy keeps goods in circulation for as long as possible in order to maximize sustainability and reduce waste. For example, reusing and repurposing old products and recycling materials such as plastic and metal to ensure fewer natural resources are extracted and eventually ended up in landfills.

A circular and solidarity economy can also affect food production. In today’s world, one-third of all food that is produced goes to waste. Additionally, the energy used to produce food accounts for around 10% of all energy used worldwide. Wasted food naturally strains resources and reduces food security for so many around the globe. A circular and solidarity economy, however, helps reduce food waste as well as create more sustainable markets so that more people can have food access and security. In agriculture, for example, initiatives that help promote circularity also tend to promote transparency and an emphasis on local sourcing, such as farmer’s markets or sustainably sourced products.

As far as the solidarity aspect, a circular and solidarity economy prioritizes social profitability, rather than economic profitability. Decisions in a circular and solidarity economy are made through democratic means. In addition to sustainability, the primary goal of a circular and solidarity economy is to serve the members of the community. This focus on social profitability protects vulnerable populations and ensures a more equitable society, that also holistically cares for the environment.

Countries with Circular and Solidarity Economies

For almost a decade, the European Union has been taking steps toward more circular and solidarity economies. In 2020, the European Commission approved the Circular Economy Action Plan as part of the Green Deal, with provisions for designing and producing goods more sustainably. Additionally, each country in the European Union was able to create its own additional provisions. Out of the EU, the following countries have made the most progress toward a circular and solidarity economy:

• The Netherlands: With an ambitious goal to be 100% circular-economy-based by 2050, the Netherlands has passed several measures to reach that goal. For example, government buildings will be built with zero emissions, using as many recycled materials as possible. While nationally, these goals will need much more time, on the local level Netherland towns have made huge strides in sustainable energy.
• France: As part of its own efforts toward a circular economy, France banned the destruction of unsold, non-food products. Instead, the products must be donated, reused, or recycled. France also government plan, the Roadmap for Circular Economy (2018), that contains 50 measures and actionable steps to get them to a completely circular economy.
• Luxembourg: Luxembourg is prioritizing eco-innovation and circular economy, focusing on these main sectors: food, industry, construction, energy, transport, and finance.
• Portugal: With a high degree of government support, and a similar action plan to that of France, Portugal has made some huge strides toward a circular economy. Such as improved local resource management, from encouraging and optimizing the recycling industry to launching programs to help local farmers learn more sustainable practices.
• Spain: Spain has implemented many policies that promote sustainable development, ecological design, and recycling, from working to ban single-use plastics to supporting textile recycling

Circular Economy Principles

The concept of a circular economy is built on three main principles.

1. Elimination of waste and pollution. This means minimizing the use of resources as well as using clean, renewable energy.
2. Circulation products and materials at their highest value. Products are used as long as possible. Once they are no longer usable, their raw materials are recycled.
3. Regenerative nature. With less waste and products being circulated, there is less pressure on natural resources. Additionally, less land is needed for mining and other extractive practices. The natural environment can regenerate, which benefits both current and future generations.

Benefits of a Circular Economy

Transitioning to a circular economy takes lots of effort and private, public, and governmental cooperation. However, a circular economy comes with very rewarding benefits for everyone involved. Some of these benefits include:

• Job creation: The recycling industry already employs around 534,000 people, and that’s with only a third of recyclable materials being recycled. More jobs will be created to take on the important role of recycling materials to prevent waste.
• Sustainability: One of the huge focuses of a circular economy is a move toward renewable energy, which helps protect the environment as well as ensures that future generations will have what they need to survive.
• Waste reduction: A focus on creating durable products as well as reusing materials as long as possible decreases the amount of waste produced. This in turn prevents the overfilling of landfills and pollution of our oceans and natural resources.
• Decreased pressure on natural resources: In our linear economy, there will come a point where non-renewable resources will run out. However, with a more concerted effort to reuse products, there is less need to extract natural resources.
• Shared prosperity for all: Instead of benefiting only those in the oil and mining industry, a circular and solidarity economy focuses on prosperity for all. For example, in terms of food production, a shorter food circuit means increased income for farmers with fair prices for the consumers.

Potential Cons of a Circular Economy

Although a circular economy is a brilliant way toward a more sustainable future, there are some challenges. In order to transition to a circular economy, these hurdles will need to be overcome:

• Cost to invest: In order to close the loop and transition to a circular economy, money will need to be invested in a few places. Recycling is one of the key ways to enable a circular economy. Unfortunately, only 30% of recyclable things are actually recycled in the United States due to lack of infrastructure. Investing in more recycling facilities and infrastructure will play a key role in establishing a circular economy in the U.S.
• Time to establish: In order to transition away from the linear economy, it’s going to take time. Food systems need to be redesigned. Government regulations need to be passed to support the transition. And perhaps most important of all, people’s mindsets need to be changed to think circularly.
• Resistance from extraction companies and landfill owners: The people who benefit the most from a take, make, waste economy are those that extract natural resources (oil and mining industries) and landfill owners. They may resist a transition to a circular and solidarity economy because it will mean a drop in their profits.
• More government support is needed: One of the biggest hurdles for the transition to a circular and solidarity economy is the need for government support. According to the United Nations, we need “determined actions to revamp production and consumption patterns.” This will take legislation on both the national and local levels.

The Circular Economy and BanQu

Transitioning to a more circular and solidarity economy is essential to the future of ensuring the health of the planet and the prosperity of all. Traceability solutions, such as BanQu, can play a huge role in this transition, from tracking materials through the stages of recycling to increasing visibility for all actors in the supply chain. BanQu’s sustainable sourcing platform improves end-to-end traceability throughout your entire value chain, greatly supporting and proving your efforts toward a more sustainable business, economy, and future.

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