This article originally appeared in the State of Green Business 2021. You can download the entire report here.
As the circular economy ramps up, we’ve seen impressive innovation in materials, products, models and processes — but innovation on how we treat people has been notably absent.
However, as companies, cities and countries alike adopt a more holistic lens and embrace circular principles, they are recognizing the opportunity to drive social change in lockstep with an economic transformation that puts people at the center.
In the context of sourcing and supply chains, we’ve seen this movie before. Facing legal pressure from governments, reputational risk from consumers and pushback from NGOs, the past two decades have seen a dramatic shift in sourcing protocols and upstream supplier engagement in an attempt to eradicate forced and child labor, conflict minerals and other human rights violations in supply chains. Yet, these efforts traditionally have acknowledged only one phase of a material’s life.
In a circular supply chain, sourcing no longer focuses exclusively on virgin materials. As companies take responsibility for the entire lifecycle of their products, hazardous conditions in which a child disassembles a smartphone is as problematic as cobalt sourced using forced child labor in a conflict zone to make the smartphone in the first place. While the Basel Convention criminalized transboundary movement of hazardous waste (of which most electronics are classified) to limit some human health implications of electronics waste streams, plastic waste is another story, only recently having been included in the convention.
In the absence of formal materials management infrastructure, waste collectors — skilled entrepreneurs in the informal economy that gather, sort and sell used bottles, caps and other valuable materials, sometimes culling them from landfills — have filled in a necessary gap to slow the leakage of plastic waste into waterways and through coastal communities. And as a growing number of companies commit to recycled plastics targets and circular plastics aspirations, the opportunity and necessity of partnering with these communities is becoming increasingly clear.
Companies are beginning to expand the scope of sourcing considerations, deploying what they have learned in sourcing virgin materials to sourcing from previously used products and materials and applying these learnings downstream.
HP Inc. offers a now-iconic example of meaningful downstream collaboration in Haiti, having partnered with waste-collection communities with the help of First Mile Coalition, an initiative of the nonprofit organization Work, to support the social infrastructure of plastic waste as well as the physical infrastructure of materials recovery.
In 2019, HP invested $2 million in a new plastics washing line in Port-au-Prince to support the collection of ocean-bound plastic in the community, which the company buys from a local business to use in its laptops and ink cartridges.
The effort not only has provided HP with a reliable supply of post-consumer recycled plastics to slowly wean itself off virgin materials, it’s also created more than 1,000 new jobs in Haiti by expanding the region’s recycling capacity.
HP’s investment is an example of how capital is being deployed differently in the fight against plastic waste, focusing on community leadership rather than solely a technical, infrastructure development intervention. We’re seeing a similar, holistic approach to capital deployment to address the plastic waste crisis globally, including the Alliance to End Plastic Waste’s stated commitment to community engagement.
Just as companies have prioritized transparency and traceability in upstream operations to address human rights, a circular supply chain calls for the same level of scrutiny downstream. Companies are beginning to expand the scope of sourcing considerations, deploying what they have learned in sourcing virgin materials to sourcing from previously used products and materials and applying these learnings downstream.
But the opportunity for economic improvement isn’t limited to efforts in the Global South, and currently national governments are leading the way in a human-centered circular economy transition.
At the forefront is Europe’s Green Deal, the policy framework intended to bring the European Union to net-zero greenhouse gas emissions by 2050 while decoupling economic growth from resource extraction and leaving no person or place behind. The aim is not one or the other, but rather an integrated approach to resource stewardship, responsibility and climate mitigation.
The European Commission’s associated Circular Economy Action Plan emphasizes the opportunity for social and economic development through circular value chains — to the tune of 700,000 new employment opportunities by 2030 in Europe alone.
Circular business models require a suite of new expertise, from repair and refurbishment to disassembly, recovery and recycling, making way for a new class of sustainable and dignified jobs. One U.S.-based example is Homeboy Electronics Recycling, a social enterprise offering e-waste management and IT disposal while providing employment and training to people who face systemic barriers to work.
A human-centered circular economy can’t focus solely on jobs and material management, but also must ensure access to the benefits of these new models.
Consider the benefit to consumers of saving money by buying in bulk: Whether you’re buying dog food, rice or ibuprofen, buying more than a single serving upfront saves money and packaging. But without the cash to invest upfront, low-resource communities are burdened with a poverty tax in the form of a markup — up to 50 percent — for buying food and other necessities in small formats rather than in bulk.
Chilean startup Algramo aims to address this by offering consumers the ability to buy the exact quantity they need but allowing them to pay the bulk price. Algramo partnered with consumer goods companies, including Colgate-Palmolive, Nestlé, Clorox and Unilever, to make heir products and reusable packaging formats available and accessible to everyone.
The circular economy is a means, not an end, offering strategies and frameworks to create economic flows on top of material flows in support of a more sustainable, resilient and prosperous system. It works only if it can transform systems, not reinforce existing ones.
As human rights, economic inclusion and social equity come into focus within circular initiatives, the opportunity for a holistic understanding of what circular economies can enable is becoming increasingly clear.
