Growth and circularity
The relationship between output and the full cost of growth on natural capital and waste requires a forensic reassessment. Gross domestic product provides a guide to the expansion or contraction of an economy, but it is not, nor is it intended to be, a reliable measure of the full costs of growth. Further development of accounting, evaluation, and reporting methods capturing the full cost of production, consumption, and exchange potentially offers an enlightened model that will improve decision-making and policy formation in commercial organisations and statutory bodies. Whilst a consensus has not been reached on the system for calculating green GDP across the globe, the linear model measure of progress is being questioned, and alternative methods are being proposed (Bleys, 2012; Fioramenti, 2013).
Whilst other measures such as Human Development Index are useful in measuring indicators such as a long and healthy life and a decent standard of living, the full-cost capture of the production and consumption circle, including externalities, remains elusive. Kate Raworth’s work on doughnut economics (Raworth, 2018) and the UN's Gapframe go some way in challenging the orthodox linear model, but more might be revealed from the rapid take up of digital and data analysis, new productive methodologies, and consumption shifts from purchasing to renting or doing without to inform the practical applications and solutions derived from the circular economy.
A range of surveys on millennial and post-millennial attitudes to the environment have heightened concerns about sustainability in all parts of life. Generational expectations concerning corporate social responsibility (CSR) and responsible consumption are increasingly influencing policy in public and private organisations. The shift from the purchase of goods model to renting is reshaping orders, inventories, and sales. Sustainable prosperity for the future will need to engage with a generation questioning the suitability of a linear model in meeting contemporary and future growth challenges. This is likely to involve new kinds of public debate based on a diversity- of voices based on movements such as the Citizen's Assembly on Climate Change.
In the private sector, trading facilities such as FTSE for Good promote responsible business and encourage reputational risk protection and sustainability. The linking of finance to a range of environmental, social, and governance (ESG) issues is expanding to other areas of sustainable finance. Insurers, underwriters, and risk assessors are increasingly attributing high risk to organisations that are environmentally reckless. The success of the exchange has encouraged good corporate governance and smart growth. Internationally, the move to a global circular economy is still in its early stages, but global policies amongst international governmental organisations and agencies within the United Nations system are initiating structural changes to require multinational companies to improve procurement and global supply chain strategies to meet sustainability indicators and policies. This is influencing risk models in trade finance. Corporate entities such as Unilever and Patagonia have been proactive in embedding sustainable policies in business models, strategically and operationally.
The leading UK market research agency Ipsos Mori has established a Sustainable Development Research Centre to capture data on the economy and environmental impacts. Generational change and a range of targeted education initiatives in higher education are shaping a professional awareness of sustainability, SDGs, and the principles of responsible management (PRME). This is being noted by personnel departments and human resource management agencies. The growing impact on decision-making that stems from intelligence gleaned from multiple surveys and data analysis on a range of environmental impacts appears to be influencing consideration of models related to the circular economy, responsible trade, and sustainable growth. On the operations side, the circular economy provides the potential for intellectual engagement with innovators, engineers, and inventors in dealing with a range of technical possibilities and global challenges.
International trade and growth: trends and anomalies
Trade restrictions, protectionism, tariffs, non-tariffs, custom unions, and trade impediments continue to operate throughout the international trading system. Whilst the World Trade Organization seeks to promote free trade, trade in goods and services is not free of political interferences, technical impediments, reciprocal disincentives, complex documentation, and uneven representation.
Economists such as John Galbraith and David Pearce have previously warned of the depletion of natural resources and the impact on human society from non-sustainable trade and consumption. Economics and the environment cannot be separated in the long term. The academic literature covering the circular economy repeatedly illustrates the relationship between trade, the environment, and legislation. For example, in vivo studies on the impact of transportation on biological entities through forensic analysis are increasing environmental awareness. The empirical focus that underpinned the United Kingdom's ship recycling strategy is an example of how biological studies and industry analysis are changing business models. Of the closed-loop archetypes (closed regional and local loops, closed global supply loops, geographically open cascades, etc.), the ones that are organised locally rather than globally should, in theory, exhibit superior economies. Typically, the greater the distance, the more the transport and indirect costs. But this is not always the case. Global trade volumes are increasingly containerised, and empty containers need filling to offset the structural imbalance of trade flows (WEF, 2014). Logistics closes loops, but it fails to do so fully despite technological innovations. This is due to the lack of market actors that are willing to entirely embrace the full remit of circular economy principles (Fennemann et al., 2018).
A deep understanding of the construction of markets and a dedicated resource base shed light on the use of forensic analysis in undertaking investigations and implementing sustainable solutions as a market device to the economisation of recycling (Gregson et al., 2013).
Emphasis within the literature is placed on approaches that engage with the sustainability of global value chains (GVCs) and global production networks (Gl’Ns), which potentially allow for higher levels of long-term returned investment based on stable growth. Several mechanisms are available to trade delegations aiming to reduce trade barriers created by regulations: harmonisation, mutual recognition and equivalency, and regulatory cooperation are among the main ones (Couvreur, 2015). New trade agreements may facilitate stronger circular economies of scale (Dhingra et al., 2018), which is particularly relevant in navigating the labyrinth of custom papers, completing compliance regulations, and pervasive non-tariff measures that complicate trading activity (Owen et al., 2017).
Where disputes in the terms of trade appear intractable, alternatives drawn from the circular economy may provide solutions to issues of resource scarcity, sustainable trade, and environmental protection.
