The circular economy concept tends to polarise supporters of green growth and those of degrowth. As business school professors, Aurélien Acquier and Valentina Carbone navigate between these extreme positions to offer a third way.
Our planet’s natural resources and climate are under enormous pressure that must be quickly reduced: according to the 2019 Circularity Gap Report, more than 90% of the raw materials that we use are not reinjected into the economy.
For this reason, the circular economy concept has generated a great deal of enthusiasm from public bodies, professional associations, non-governmental organisations and private companies over the last few years. It is also gaining ground in the US, albeit more slowly.
Given the scale of the environmental challenge facing our societies, gambling on the circular economy is based on the necessity of rethinking economic systems through three mechanisms: by drawing inspiration from nature (a concept known as biomimicry), optimizing resource use, and reducing impacts along the whole lifecycle of products and services. By investing in the circular economy, companies are moving towards more sustainable business models without, however, writing off the market economy. In practice, this is done by reducing energy and environmental footprints, designing out pollution and waste, or extending product lifetimes.
The sirens of green growth
The circular economy is currently driving the formation of two polarized positions that are hard to reconcile. The current hype around the circular economy in the business world falls within the scope of the “green growth” paradigm, at the risk of moving into a very instrumental use of the concept.
This approach glorifies the entrepreneur as the driver of innovation and disruption, in contrast to the bureaucratic rigidity imposed by excessive regulations. It relies on technological progress and market innovation to provide the most efficient responses to current issues. From a regulatory viewpoint, such an approach encourages the invisible hand of the market and limits the state to a role of supporting the emergence of high-tech sectors with a green promise. This involves preventing any restrictive regulatory intervention, such as a taxation. Finally, in established companies, the circular economy is conditioned by the search for economic profitability or strategic value.
Despite its managerial interest, this approach has numerous limits: there are numerous signs that market prices do not adequately reflect the actual costs of environmental damage, or risks of scarcity of non-renewable resources. And when a technological breakthrough may offer solutions to some environmental problems, it is often at the cost of creating new ones.
Advocates of degrowth
At the other extreme, those favouring degrowth tend to consider that capitalism is “by its very nature” incompatible with respect for the environment. Faced with the risk of environmental and social collapse, this approach highlights the huge gap between environmental urgency on the one hand, and regulatory inertia and the tyranny of “business as usual” on the other.
While the world’s leading climate scientists and the UN Intergovernmental Panel on Climate Change have warned there are only a dozen years for global warming to be kept within controllable limits (an increase of less than 2°C as compared to the preindustrial era), the responses put forward by companies and politicians seem very wide of the mark and absolutely unequal to the issues.
From this point of view, the very concept of the circular economy constitutes a myth or an oxymoron. The future appears gloomy, since the collapse of the ecosystems that support our societies seems difficult to avoid given the inertia of our social, economic and political systems.
In this respect, the solution lies in going beyond the firm, the capitalist model and the consumer society, via degrowth and a return to more local, non-market models, as well as in a more profound redefinition of what constitutes progress and the public good.
Faced with this polarisation of approaches, how can we teach the circular economy in a management school? Should we adopt the managerialist stance and orientate students towards a conciliatory vision that reconciles ecology and market economy? How much emphasis should be given to approaches that are staunchly critical of business and technology?
Business schools have a key role to play in this change
As professors in a European business school (ESCP Europe), we have developed teaching about the circular economy over the last four years. Our educational approach is to span both approaches in order for our students to become aware of the complexity of the issues and the role of companies, regulations and technologies. By doing so, we reintroduce debate and bring together the role of politics and the dynamics of innovation.
Our approach has three distinctive features. First, each edition of the course is built around a particular sector – for example the food industry and food waste in 2019. Beyond the classic relationship between professors and students, we bring a private actor into the course (an established company like H&M or a start-up like Phenix) as well as an institutional actor (government agencies like the French Environment Protection Agency, the ADEME, or other environmental organisations), in order to obtain these different actors’ views on a given subject.
We then adopt a multidisciplinary approach, bringing together different fields of management – strategy, operations, marketing, finance – but also including debates at a more philosophical level: the relationship to progress, the relationship between nature and culture, the social role of technology. By using inputs from these different disciplines, we help the students to make sense of the differences in viewpoints, the contradictions and the complexity of these issues.
Finally, we seek to combine this reflexive approach with one that is orientated towards innovation and action. In order to achieve this, our course partners set our students innovation-related problems. Over a period of ten weeks, students analyse the different facets of a given problem, question an entrepreneur’s strategic or operational choices, conduct international comparisons relating to a circular economy issue, or question the regulatory approach adopted by a state or a local authority. In addition to this analysis, students propose solutions to address the limits of linear, unsustainable models.
This educational innovation is backed up by the ESCP-Deloitte Circular Economy chair. Given the collective and multidisciplinary nature of Circular Economy issues, this initiative is also a call to open business schools up beyond their classic disciplines and skills: beyond management, addressing circular economy requires inputs from engineering, economics, political science, agronomy, etc. Such multidisciplinarity is paramount to collectively change our linear, short-term systems towards more sustainability.