Circular economy is becoming more mainstream and we see that more and more circular concepts are finding their way to market. Businesses and organizations see opportunities for new products, services and business models, which consumers are happily experimenting with and using to their advantage. With the concept gaining ground come the critics who are pointing out so called ‘unintended consequences’: ranging from loud AirBnB guests to less food for the foodbanks and the people depending on them if we reduce food waste upstream. These people turn to governments for regulation and legislation to control these ‘excesses’ of the circular or sharing economy.
Governments on the other hand, are also struggling with their role in this new system. They are aware of some of these unintended consequences, but also want to contribute to a healthier system and stimulate circular practices. As an entrepreneur in the circular economy, I often get asked by government representatives ‘What can we do to help spur the transition to a circular economy?’.
To be able to answer this question, we should take a look at the broader concept. Circular economy is often presented in a simplified manner that just talks about product lifecycles, design and waste management. In that regard, it is often suggested governments should stimulate or even impose circular practices on the markets. Unintended consequences should then be regulated as was always done and excesses of a few will lead to rules that hinder the well-intended majority.
If you look at it from a conceptual point of view though, we are talking about a systems change unprecedented in history. It entails a fundamental shift in the way we live, think, behave, and fulfill our needs. Where the linear system values command-and-control top-down leadership, a strong perception of competition and an everyone for themselves mentality, in a circular economy values like collaboration, situational leadership and a win-win mentality become leading. This is a bottom-up movement, meaning it comes from individuals, entrepreneurs, employees with vision and courage (intrapreneurs); people who intuitively FEEL the changing times we are in and want to ACT to make it happen.
For businesses these new values lead to models with a so called ‘triple bottom-line’ or shared value: they will not only care about their financial results, but also about ecological and social impact. Businesses and business schools all around the world are validating these models and businesses are now experimenting to give shape and form to this new way of administration and presenting results.
This inherently means, that with businesses moving into the social domain and taking responsibility, many of the so-called unintended consequences of CE that people so badly want regulated will be prevented or simply be non-existent.
Well, and therein lies the answer to the question as to what role government should take. Should it actively push or even impose circular practices? No, because it will work counterproductive. I like to use the analogy of my 2-year old son who tries to cram the triangle shape through the square opening: no matter how stimulating he addresses the pieces, or how much brute violence he applies, it will never fit and deep frustration is inevitable. Governments trying to top-down impose circular practices on people and business who are not yet ready are using linear means to circular ends; inevitably leading to friction, irritation and possibly in the end even to the conclusion that this whole circular economy-thing apparently isn’t working after all.
Circular economy is a dynamic new concept, we are only even beginning to grasp its vast potential and effects it will have on society. We can only make hypothetical assumptions about what it will bring us when fully matured. It’s a system in evolution, and for an evolution to take place, it needs space and time. By regulating it now, when it is still in childhood, we’ll end up with some consensus model that eventually works for nobody.
So, what should governments role be? My advice: facilitate, don’t regulate. It may be a little scary and out of character in the beginning, but seen in the light of true circular values it makes perfect sense. Try it out, stick with it, resist the critics and don’t fall back on old behavior at the first bumps in the road: live the new values and a circular economy will blossom.
