Business Models

Want to build a circular economy? A focus on cars won’t help.

13 Jun , 2017  

Once there was a Zen master who met his archery teacher on a cliff overlooking the ocean. At the edge of cliff was a target. The archery teacher demonstrated a perfect shot, firing an arrow directly into the target’s center. Then, the teacher handed the bow and an arrow to the Zen master, asking him to demonstrate his skill. The Zen master, with intense focus, steadied his bow and pulled the arrow back on its string and released. The arrow zoomed into the air, over the cliff, and out into the ocean. When it splashed into the water, the Zen master cried out, “Bullseye!”

Zen stories don’t always come with obvious moral instruction, but I took the Zen master’s seaward shot to mean that the targets that have been set up for you are often not the most meaningful or worthwhile. And I thought of this teaching when I read that Renault, a major European car manufacturer, had renewed its “commitment to a circular economy” via a partnership with the Ellen MacArthur Foundation (EMF). The connection between the two requires us to look at what Renault’s aims (or targets!) are in aligning with the circular economy. What would the sustainability master do, when faced with a “circular economy” target for the automobile industry?

Zen story and image adapted from Fishing for the Moon, by Lulu Hansen

We should be able to assume that supporters of the circular economy are also supporters of global sustainability; that is, the effort to bring human society’s development in line with a functioning planetary ecosystem. This assumption is the key to the circular economy’s role in the larger sustainability movement. If circular economy efforts are aimed solely at a single product (eg. Renault cars) or even a single product type (eg. automobiles), then they will only be minor improvements of an unsustainable system. If the larger system of changes needed for global sustainability is ignored in this process, then circular economy advocates cannot make any claims beyond business-as-usual efficiency improvement.

Knowing this, let’s step back and look at Renault’s commitment to a circular economy as revealed through statements on the EMF website:

Renault now generates revenue of Euros 0.5 billion per year from its recycling and manufacturing operations, demonstrating the economic benefit of adopting circular economy practices.

Here we have the classic problem of confusing single-product efficiency gains with global sustainability efforts. Humans have been recycling, repairing and remanufacturing since the very first tool was invented. Putting a “circular economy” label on this work is simply an attempt at differentiating Renault from its competitors within the automaker silo. In other words, it’s marketing.

The real economic success of Renault will not hinge on its ability to implement circular economy mini-projects, it will depend on its ability to sell cars. Take this logic one step further and we see that any effort that drives down production costs for Renault, improves their ability to sell cars. Now their circular economy involvement is revealed as not only marketing, but wholly car-centric.

You would be hard-pressed to find a sustainability report that lists car usage as a priority for the future. Here are just a few “sustainable transportation hierarchies” out there:

Sustainable transportation hierarchies: Calgary, Portland, Scotland

Single-occupant or individually owned automobiles rank lowest on every hierarchy. The last one, from Scotland, even demonstrates how the arrow of government spending points in the opposite direction of sustainability! Thus, the sustainability master knows to aim far wide of car-centric targets, opting rather for the vast ocean of alternative transportation possibilities.

There is hope, however, in other aspects of Renault’s circular economy commitment:

Renault was the first carmaker to develop an industrial system that has, and will, enable it to meet expected future mobility needs in a time of increasingly scarce natural resources.

The key term here is “future mobility needs” – a glimmer of hope that Renault, its contribution to the Ellen MacArthur Foundation, and even its own R&D budget might be directed to efforts further up the transport hierarchy. Hopefully this statement was written to keep that possibility open, even if employees and shareholders would likely be shocked to hear of a Renault solar pathway project or an expansion of the currently meager line of Renault bicycles.

If Renault was serious about providing mobility solutions applicable to a planet of 7.5 billion humans and aimed at bringing economic activity within planetary boundaries, we would most certainly see them making such a shift. The signals are there, though they do not arrive in the form shareholders and CEO’s are used to. In order to buck the trend, Renault and EMF’s work could simply be focused on aligning economic indicators with true sustainability. That would also count as aiming in the right direction, and avoiding the car-centric target.

Here again, we have a semblance that Renault and EMF could consider just such a bold move:

Renault shares with the Foundation's network its broad-based manufacturing and remanufacturing expertise and case studies to assist with promoting the circular economy among economic decision-makers.

The focus on knowledge-sharing and promoting alternative views on economic value is important. Presumably, the term “economic decision-makers” means those with the power to usher in new metrics of economic health. There are many possibilities for augmenting or replacing Gross Domestic Product, including the Genuine Progress Indicator and Happy Planet Index.

Perhaps, the decision-maker term means the very architecture of the (financial) economy. Here, a move away from the growth imperative is needed, considering the planet cannot function normally, or equitably, under growing material demands. A major environmental problem, symptomatic of the growth imperative and its financial underpinnings, is the fact that fossil fuel companies are currently operating with the assumption that they will refine and sell all the petro-resources to which they’ve laid claim. In essence, the current financial health of fossil-centric companies is tied to future resource consumption. As Bill McKibben famously pointed out: “We have five times as much oil and coal and gas on the books as climate scientists think is safe to burn. We'd have to keep 80 percent of those reserves locked away underground to avoid that fate.”

A similar paradox exists for the car industry. As outlined, improving car efficiency in order to fuel growth in car demand cannot count as “sustainability,” no matter how you go about the efficiency gains. No approach – not circular economy, not electrification, not autonomous vehicles – will make more cars fit within planetary boundaries. We know this from everything we are told by sustainable transport experts (see sustainable transport hierarchies). Or, we could look to the economists who have pointed out that increasing the efficiency of resource consumption tends to fuel a total increase in consumption. This is called the Jevons paradox, described by William Stanley Jevons as he studied the coal industry in England in the 1860’s. Jevons is considered an early pioneer of economic sciences. Economist Nicholas Georgescu-Roegen was more straightforward when he wrote that relying on technology improvement to support limitless growth was the “most blunt form of linear thinking” he could imagine.

Georgescu-Roegen was writing in 1975 and foresaw that better ecological accounting would reveal the importance of aligning economic systems with planetary functioning. Today, we have the ecological accounting, the rumblings of planetary dysfunction, and plenty of ideas for economic alignment. Renault, under the banner of circular economy, would do well to abandon its linear, car-centric targets and plunge into the sea of alternatives aimed at true global sustainability.


Two types of sustainable transportation targets. Only one gets at true, global sustainability

One Response

  1. John says:

    Just reading an old quote from Bill McDonough that gets at a similar point:
    “If you want to go to Mexico, and you’re driving toward Canada, even if you slow down you’re still going to Canada.”

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