With a circular economy, we can bin overconsumption and boost equality

By Ana Birliga Sutherland (Editor, Circle Economy)

This article was originally published on the Green Forum.

The current buzzword of climate talks is overconsumption — and for good reason: we’ve collectively surpassed the 100 billion tonnes mark in fulfilling our wants and needs for goods, both the necessary (housing and food) and the trivial (consumables like fast fashion and disposable items). Just five decades ago, this figure was a third of what it is now — and its inflation isn’t due to population growth. Since 1970 the American population has grown by 60%, disproportionately matched by an increase in consumer spending of 400%: a trend common among nations with an expanding middle class. And we know that these richer nations have historically contributed to the bulk of emissions — the world’s poorest 50% only having contributed 7%. So how can we shift our consumption patterns in a way that puts people front and centre? This article explores how various mechanisms — from taxes and tax breaks to shopping habits — can be balanced with equity concerns to create a more just — and greener — world.

Energy isn’t the only culprit: overconsumption has a huge role in our world’s emissions profile

We can rally behind clean-energy efforts — and we should, but not without recognising what’s at the heart of the climate catastrophe: over 70% of emissions stem from material use and handling. Our extraction of resources from the earth, which we then use to produce the cars we drive, build the homes that shelter us, run the farms that keep us nourished and make clothing, homewares and other every-day items that we often treat as disposable, has ruined the planet. It’s clear: we need to cut consumption to get climate change under control.

We must focus on making the most of what we already have to cut consumption. Photo by Visual Stories || Micheile on Unsplash

As a system that can maximise the value of what we already have, make waste obsolete and relieve pressure on limited resources, the circular economy can transform how we use materials. But it is not a panacea for all our challenges, environmental or otherwise: the integration of social considerations will require thought — and a revision of how we frame our relationship with the world, currently deeply enmeshed with how we extract resources and produce goods.

A circular economy that champions the rights of people, as part of the planet

Our recent paper, Why we need to rethink the ‘technical’ circular economy, explores just this: a systems-thinking approach to the circular economy that puts people at the centre. This is a circular society. The paper considers how we can create the necessary societal conditions for the roll-out of a circular economy by redefining our relationship with ‘stuff’ and rethinking how we give meaning to prosperity. While it’s clear that a change in the way we consume — as well as produce — goods is needed, talk on the subject can often target those with less responsibility for the crisis, with the danger of making the transition we’re working towards an inequitable one. The circular economy exemplifies the changes in consumption we need to see — but it’s also about exploring how we can put people at the heart of an economic system.

It has become increasingly apparent that policy and other actions aimed at environmental sustainability may actually have adverse effects on society. Especially parts of society that the linear economy has failed. Consider this: if all of Europe were to sever its reliance on certain parts of the value chain which are integral to the salaries of some workers in Asia, can the move truly be considered as sustainable? This article considers if there are sustainable modes of consumption that benefits people as much as the planet, and the means we must utilise — or drop — to get there.

Environmental taxation isn’t a silver bullet — but does it do more harm than good?

A political favourite to influence consumption behaviour: taxation. Sin taxes — those applied to vice products like cigarettes, alcohol and even sugar — are a well-established practice historically. With origins in the 1500s, the tactic took on its more recognisable modern image in a 1791 measure proposed by American statesman Alexander Hamilton: an excise tax on alcohol intended to cut consumption and raise revenue in tandem. And now, as our collective understanding of the environmental impacts of certain products — like meat — grows, calls for taxation have emerged — and they haven’t fallen on deaf ears. In early 2020, the Dutch cabinet considered proposals from the True Animal Protein Price Coalition on fairly pricing meat, while governments in Denmark, Sweden and Germany have been mulling over the issue for some years.

The idea has also faced staunch opposition, particularly from farming bodies and industry lobbyists — as well as researchers claiming that such a tax would be ineffective, and importantly, inequitable. The burden to change behaviour would fall on lower-income households — which typically spend a higher fraction of their disposable income on food — while higher-income consumers wouldn’t be swayed by a hike in prices. There’s also the likelihood that those impacted by the tax would reallocate their purchasing to cheaper or more processed cuts of meat, which usually would have been produced with environmental standards far more lax. Is there a way, then, to ensure the measure’s equitability — and to ensure price increases would indeed have the desired effect of redirecting consumption to plant-based proteins?

As meat’s environmental impact has become more known, calls for a tax have emerged across Europe. Photo by Darth Liu on Unsplash

While some commentary has played with varying economic structures — arguing for the benefits of VAT over excise, or even setting a minimum price per unit to minimise regressive effects — the key is understanding that fiscal instruments alone aren’t a magic bullet. We can instead imagine a holistic system that draws on complementary measures, from awareness-raising to eco-labelling, in combination with a tax-subsidy model — where tax revenue would be ‘recycled’ to slash the cost of healthy, plant-based proteins and organic produce for lower-income consumers.

The upstream impacts of fiscal measures — such as those on farmers — cannot be forgotten: incentives for farmers to participate in the transition away from meat-heavy diets are as crucial as those for consumers. Our current system of subsidies, targeted at livestock farming in the EU, is broken — ecology is an afterthought and farmers are unable to profit. And the decrease in consumption that could stem from a tax could be counterproductive for the areas that — save for grazing cattle — would be unsuitable for food production.

Once again, holistic solutions are needed that go beyond the core question of reducing consumption, also asking: how can we support agriculturalists in the transition? Which areas are better suited to livestock raising, and which areas could be more prudently used for food production or regenerative practices like agroforestry? How can tax revenue be used to jointly support producers in a transition away from animal farming, and consumers in a transition away from animal eating? Here, one of the core tenets of the circular society can be a guide: rebalancing the local and the global. Global supply chains are complex and fragile — the covid-19 pandemic proved their susceptibility to shocks. Nourishing local systems — and favouring them over agricultural multinationals — can build resilience, strengthen communities and provide a slew of environmental benefits, while also delivering the social outcomes a circular economy should prioritise.

Marketing narratives and policy incentives may be gatekeeping sustainability for the privileged

Taxation may disincentivise unsustainable consumption — but now, certain forms of sustainability can also come with a price. Many environmentally-friendly behaviours — from reusing the jar your condiments came in rather than buying new ones for storage, to eating inexpensive, whole-foods like lentils for protein rather than the newest vegan meat substitute, or ultimately, just buying less — are widely accessible. Yet, manufacturers have cottoned on to consumers’ rising interest in living an environmental lifestyle and are capitalising on the demand, marking up their more ‘sustainable’ products by an average of 85% — with the highest markups occurring in the fashion, beauty and health sectors: well over 200%.

The impact? Many consumers are locked out of sustainable living — at least this form of ‘sustainable’ living that still centres on consumption. While it’s easy to argue that it’s more effective to simply purchase less and make the most of what you already have, certain larger-ticket items — from energy efficient windows and appliances to electric cars — have their benefits, especially if there aren’t even better alternatives such as shared appliances or public transport. And yet those with the privilege to afford such items enjoy tax breaks or other financial incentives that do little to include low-income consumers. While this has been largely effective at changing consumer behaviour — a Norwegian tax/incentive policy worked so well that dealers ran out of electric cars to sell — a just transition needs to see more inclusive measures. European research project CONSEED, for example, has proposed low-cost financing for people to make their homes more energy-efficient, for tactics ranging from solar panel installation to insulation to improved boilers and windows.

The bottom line: where consumption is necessary — and in most cases, it isn’t — doing so sustainably should be accessible to all. How could this look? Mexican company Vinte provides a good starting point: it has launched a pilot for affordable housing with a low carbon footprint, implementing circular principles ranging from efficient spatial orientation and solar panels to eco-friendly windows with polarised films. These carbon neutral homes could mean a 13% reduction in emissions per inhabitant, while still being affordable. This should be the new normal for all housing projects — not just upscale developments marketed to environmental do-gooders.

‘Trendy environmentalism’ is on the rise and it’s hijacking the second-hand market

Certain policy changes supporting environmental outcomes are on the horizon or already in effect — but what about the actions individuals are undertaking to ‘go green’ in their personal lives? Just as many high-income countries are seeing carnivorous diets go out of vogue, fast fashion has entered a similar space of notoriety for its impact on the environment and industry workers alike. Environmental narratives surrounding fashion are straightforward: give clothing a second life by shopping second-hand and avoid buying into the newest trends hitting the racks on a weekly basis.

The attraction to shopping second-hand is growing particularly among Gen X consumers, a group that overwhelmingly believes in the responsibility of companies to address environmental and social issues, according to a recent McKinsey report. They also see consumption as an ‘expression of individual identity’ — a catalyst for uniqueness that thrifting one-of-a-kind items can provide. But the movement’s rise hasn’t been met with congratulations across the board: in our linear, profit-hungry world, an increased demand for second-hand clothes has been met, unsurprisingly, with gentrification and jacked-up prices — pushing the poor out of a market they used to dominate.

Shopping second-hand is rising in popularity — and so are prices. Photo by Shanna Camilleri on Unsplash

The discourse that middle-class thrift shopping is, in essence, ‘stealing from the poor’ is dependent on scarcity: that there aren’t enough second-hand clothes to go around. However, this isn’t the case; overwhelmingly, the opposite is true: thrift shops are inundated with so many items that only 10 to 20% of what is donated sells, with the rest slated for export to lower-income nations. And this creates problems of its own: the influx of donated clothes from the world’s richer countries harms local markets and artisans, and ultimately, many items end up in landfill regardless. Second-hand shopping isn’t the issue, but rather the way certain thrift shops are run: for a collective enterprise that aims to do good, the focus on profit and quick turnover is still all too clear. For the transition to a socially just circular economy to become a reality, action should be spearheaded by resellers themselves by keeping pricing fair in stores and on apps like Vinted or Poshmark — and consumers should continue to shift away from first-hand shopping guilt-free. And of course: doing more with less, prioritising durable items and repairing rips or tears instead of tossing old clothing in the bin should always be front of mind.

The transition to a circular society is just as important as a circular economy — and for both, holistic solutions are key

While current attempts to shift consumption patterns for the better are well-intentioned, many miss the mark, failing to give necessary attention to rebound effects. Measures, for the most part, are still rooted in a need to consume — or if they limit consumption, it’s only for lower income groups. The bottom line: there is a way to shift consumption patterns that benefits everyone — that drives economic prosperity, regenerates natural systems and keeps the wellbeing of people front and centre. From the global to the local to the personal, the circular transition should be ushered in by policies and processes that protect and promote a circular society — where no one is left behind.

Learn more

Our recent paper, Why we need to rethink the ‘technical’ circular economy: A circular economy fit for the 21st-century, urges us to consider how our response to climate breakdown can reduce inequalities — putting social and ethical considerations front of mind. It explores three key pillars for the successful integration of environmental considerations in the circular economy: the needs to redefine prosperity, reintegrate with nature and the commons and to rebalance the local and the global. Interested in reading more? Find the full paper here.

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We empower businesses, cities and nations with practical and scalable solutions to put the circular economy into action.

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