Ethical Drivers & Societal Expectations for the Circular Economy - A White Paper

In this white paper, we dive into the moral and ethical drivers and motivations to adopt Circular Economy (CE) practices. What’s more, we characterise the societal expectations and reflect on the level of influence that these societal expectations may have in adopting CE practices. We focus on a specific niche in the CE system - the role of water. Wastewater can be considered a largely untapped resource that can provide a major contribution to tackling challenges of water and resource scarcity, pollution and climate change while creating and maintaining vital services, economic growth and employment. More specifically, we consider the role of wastewater as a reusable resource and as a vector for energy and materials to be extracted, treated, stored and reused within an industrial context. This is ‘Water Smart Industrial Symbiosis’ (WSIS). The original title of the deliverable, as conceived in the grant agreement, “societal expectations and challenges around WSIS, and potential societal impacts of WSIS adoption” has been revised to make it more concise and to align it with the shift in emphasis towards moral and ethical drivers.

In this white paper, we examine two intertwined aspects of the transformation towards a CE:
(i) Moral and ethical drivers and motivations for companies to adopt CE practices (with a particular focus on examples of WSIS);
(ii) Societal expectations regarding the adoption of such CE practices.

Moral and ethical drivers are explored through the concepts of sustainability (within planetary boundaries), Corporate Social Responsibility (CSR) and Responsible Research and Innovation (RRI). State-of-the-art research is presented concerning environmental and social boundaries, what constitutes a sustainable CE, and ways to interpret and address societal expectations. Due to both environmental and societal challenges, the main takeaway is that a CE is not a synonym for sustainability. A sustainable CE requires an understanding of the interlinkages between global challenges and regional problems. This white paper reflects on ways to increase the sustainability of firms and projects working towards a CE with reference to both regional situations and the broader geographical sphere.

CSR is a commonly applied concept, often loosely used to express and legitimise corporate practices, ambition, and identity. Yet, to contribute towards achieving a CE, CSR ambitions and practices require transparent communication, not only focusing on contributions but also highlighting limitations to and ways of improving circularity. A more comprehensive analysis and transparent reporting of how different practices contribute to a CE is essential to avoid potential greenwashing practices. In this way, companies need to be prepared to be held accountable for their CE and sustainability claims. Beyond the benefits of enhancing CE innovations and practices, such a strategy may help contribute to a firm's positive public image in the long run. Hence, one can argue that it is in the interest of the firms as well as society as a whole that corporate communications are specific about CE goals, practices, and the methods of evaluating progress within their CSR strategy.

RRI implies that researchers, citizens, policymakers, business and third sector organizations work together throughout the research and innovation process to better align both the process and its outcomes with the values, needs and expectations of society. RRI is compulsory in most projects financed by the EU’s H2020, including the ULTIMATE project. This promotion of RRI and its guiding principles can therefore act as a moral driver for companies and research to invest in novel public engagement and governance aspects of CE systems, particularly as part of their innovation processes.

Partners in ULTIMATE and other CE projects recognise a moral obligation to contribute to a sustainable CE. Nevertheless, there are pitfalls on the path towards a sustainable CE. We highlight specific challenges and trade-offs that become evident when considering the CE within environmental and social boundaries, which are both under pressure. CE practitioners, and ULTIMATE partners and stakeholders, in particular, can contribute to more meaningful outcomes if they are aware of potential mismatches between sustainability and CE principles. In this respect, there are two key points to take into account:
- A CE does not necessarily reduce the extraction of raw materials, the use of energy or the consumption of materials. Overcoming resource scarcity requires a more comprehensive set of ambitions;
- A CE that contributes to environmental sustainability, may reduce social sustainability. Such trade-offs can be better accounted for explicitly rather than implicitly.

To enhance the sustainability of CE schemes, partners and firms have to consider these possible pitfalls and trade-offs. Through our investigation of CSR and RRI, we arrive at specific suggestions for reflection, which can be used to raise awareness on how to enhance the sustainability of a CE, by refining or modifying a project or an approach. Thus, the recommendations of this white paper can be exploited by the project partners, and outside ULTIMATE in relevant projects and policy spheres within the EU, as ex ante, intermediate and ex post assessment criteria for various CE initiatives, projects and programmes.

Alongside the conceptual discussions on moral and ethical drivers, this white paper presents the results of two national surveys undertaken in Spain and the United Kingdom (UK) where ULTIMATE demonstration cases are located. The surveys asked samples of the general public about their awareness of CE, social expectations for CE, alignment with four values perspectives and assessment of the legitimacy of CE systems. The surveys were supplemented by a small number of follow-up interviews in the UK. The results indicate that awareness of the CE terminology is limited among certain demographics (particularly older age groups in the UK), thus there are opportunities for improving awareness through tailored information and outreach campaigns. There is a general desire for companies to be both environmentally and socially responsible, which corresponds with the environmental and social values perspectives the majority of respondents were aligned with. The results also show a preference among many respondents for some level of government intervention in promoting the CE. However, although most respondents agreed with governments encouraging companies to adopt such systems, the level of agreement was less when it came to providing financial incentives, or for direct regulation. A willingness to pay more for circular products was moderate and, although there may be segments of the population that are willing to pay more, many will not (instead, perhaps, opting for lower prices or convenience). These points add value beyond ULTIMATE, as actors wishing to advance CE initiatives in different regions of the EU can use these results to guide their own investigations into societal expectations.

When considering CSR through the lens of organisational and technological legitimacy, our surveys and in-depth interviews indicate that CE systems have higher moral legitimacy. This means that CE systems are judged as the right thing to do and are more aligned with the social values of the respondents. Generalised examples of CE schemes were also evaluated as having a degree of cognitive legitimacy, which means that some respondents comprehend the key goals, mechanisms and urgency. However, respondents were less likely to agree that CE systems provide a personal benefit that encourages them to be involved, thus pragmatic legitimacy is observed to be the lowest of the three forms considered. These results indicate promising opportunities to support the legitimisation of CE systems by further exploiting existing levels of moral and cognitive legitimacy as well as exploring avenues to cultivate pragmatic legitimacy to help people be more involved in CE practices. In this respect, outreach and involvement activities can make a significant difference.

Through investigating the social expectations for CE in two EU countries, we are able to extrapolate to an EU level and suggest that there is potential to support citizens’ awareness of CE and WSIS concepts and to implement engagement strategies that will contribute to the broader legitimisation of CE. Furthermore, this document refers to specific EU policies and our recommendations may help the EU water sector in particular work towards these policy aims as well as contribute towards refining methods for how such policy aims can be met. For example, the Circular Economy Action Plan (European Commission, 2020a, ec.europa.eu/environment/circular-economy/) aims for co-creating outcomes with multiple stakeholders, to which we contribute a fuller understanding of the expectations of citizens and recommendations for building legitimacy. Moreover, building on our findings relating to ethical drivers and social expectations for the CE, novel governance or public engagement processes used in ULTIMATE may, in turn, help inform future developments of EU policy such as public engagement or governance dimensions of RRI (European Commission, 2021, ec.europa.eu/programmes/horizon2020/node/766).

In summary, the recommendations of this white paper have potential to be exploited by other workstreams and partners of the ULTIMATE project, as well as the wider landscape of organisations and policymakers looking to support the wider adoption of CE schemes in the EU (particularly relating to the water sector).

We argue that transformation towards a CE requires the establishment of WSIS. The process of putting WSIS into practice requires the development of new cognitive routines and technological trajectories (i.e. know-how) in the engineering community (core aim of WP1) and systematic technological and design interlinkages need to be established too (core aim of WP2). These interlinkages can be shaped by regulations and standards (task 4.2), new governance arrangements (task 4.3), but, perhaps primarily, by ambitions of both companies, policymakers and other stakeholders that are directly or indirectly involved. Hence, the moral-ethical drivers and societal expectations may form a focal point for innovative stakeholder engagement models in WP3, in particular for the business-to-business engagement in task 3.2, citizen engagement in task 3.3 and their interaction in the Living Labs (task 3.4). Through these stakeholder engagement processes, the moral-ethical drivers and societal expectations outlined in this white paper may form – together with the demonstration of technical-symbiotic systems – one of the key considerations for meaningful interaction around WSIS demonstration cases.