Remodelling society through a circular economy
Everything that everyone does, every single day, could be done more sustainably if they are presented with a better way – it’s down to the choices offered by business and enabled at a policy level. When we buy a coffee, when we travel somewhere, when we order something online, or when a business manages its scopes 1-3 – these all have repercussions, and many of them are felt by the environment or have a wider impact on people around the world.
There are multiple well-publicised ways for governments, businesses and consumers to reduce their impact on the environment. One area that’s scaling is the circular economy, a systems solution framework that’s crucial to reducing emissions and hitting national and global targets. But it goes further than just carbon cutting – it creates an opportunity to build a thriving economy based on three principles — eliminate waste and pollution, circulate products and materials, and regenerate nature — which has the power to tackle global challenges including climate change and biodiversity loss, create jobs, regenerate cities, towns, and communities, and build resilience and prosperity.
This growing movement away from a take, make, waste linear economy to a circular economy has become even more important as we are moving from hundreds of millions of sellers – large and small – to billions of sellers around the world. Technology has enabled anyone to be a seller, from people using recommerce business models such as resale, rental, refurbishment, and repair; people working in the gig economy; or those in the creator economy. In the current cost-of-living crisis, circular economy and recommerce, can help people make their money go further and Visa is working to provide services at scale to reach all sellers and help them flourish.
A recent report from Visa has shed light on consumers’ changing preferences in the world of fashion and their impact on the development of the circular economy. Following the pandemic and resulting high inflation, budget-conscious consumers inevitably started substituting new goods with secondhand goods at a time when incomes were also not keeping up with inflation. According to Visa data using Visa-branded credentials, card transactions in the United Kingdom for used merchandise stores grew by 300 percent in March 2022, when clothing inflation surged1. The report predicts this consumer behaviour, supplemented by growing technologies such as AI and blockchain, could usher in the next wave of the circular economy.
A behavioural change for a greener future
Given the world is consuming more than it can replenish, a shift is required in the way we make and use things, towards a circular model that enables businesses and individuals to more easily consider the small changes they can make towards recommerce activities like resell, repair, rental, refill, return and redistribute. The key role is for businesses and governments to increase the number of more sustainable choices (rooted in circularity), informing and engaging citizens, enabling individuals to make the choices which are right for them and deliver best benefits.
The World Economic Forum estimates that only 8.6% of the global economy is circular, a figure that needs to almost double to keep the planet sustainable (keep global warming to no more than 1.5°C). Their research2 showed that the transition to a circular economy could generate $4.5 trillion in additional economic output by 2030, decoupling from linear growth that depletes planetary resources.
At the ReLondon organised CE Week 2023 in London, Visa’s Sonia Brown, Head of Government Engagement for the UK and Ireland, outlined the importance of local engagement with circular actions and how it can generate so much more than environmental impact, for instance delivering jobs and future-proofing local economies but also improving community cohesion and upskilling residents.
Collaboration: the key to unlocking progress
Visa, with the support of Strategic Partner, the Ellen MacArthur Foundation, recently launched the Recommerce Behavioural Insight Lab, an initiative running rapid real-world experiments to understand and share how businesses can help consumers actively engage in the transition to a more circular economy. We are working with partners to test and identify business models in experiments which focus on resale, rental, repair, refill, return and redistribution, that encourage consumers to participate in the circular economy, with the aim of closing the intent-to-action gap when it comes to sustainable habits.
Supporting SMBs to help them better understand customer preferences and the impetus for sustainable choice will help them to unlock the economic potential of the circular economy. One of the great examples is The Circular Startup Index, also launched by The Ellen MacArthur Foundation. This database is designed to help businesses discover startups and find new collaborators to facilitate innovation, scale solutions, and accelerate the transition to a circular economy.
Working with governments to support urban renewal
Circularity in towns and cities is critical for inclusive growth and a sustainable future that benefits all. It will take business, government and communities working together to rethink and facilitate a more far-reaching change to help our towns and communities adopt more sustainable behaviours.
In Visa’s Let’s Talk about Towns report, a part of the business environment indicator puts a spotlight on digital enablement of small businesses across the UK by embedding digital skills in local business peer networks. Regenerative business models have incredible economic opportunities, but small businesses in towns need support and leadership to make their infrastructure and economies more environmentally sustainable and prosper in the long term.
Whilst the ongoing need to drive digital enablement of small businesses is apparent, national government, local government and businesses can work together to address this by ensuring that digital adoption is a key priority. SMBs are great catalysts of change and innovation and London (with its 600+ high streets) is an epicentre of this opportunity, a key discussion point during CE Week. Coordination and collaboration at city and community levels on circular economy action can have real results, boost economic performance and build resilience for the future.
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1 Visa, 2023: Fashion resale apps enable circular economy’s broadening appeal
2 World Economic Forum, 2021: https://www.weforum.org/agenda/2021/02/circularity-gap-report-2021-strategies-climate-breakdown/