Destroying the circular economy in order to save it - three challenges for accurate investment decisions that have emerged in recent years

The circular economy concept, as presented by the Ellen MacArthur Foundation (EMF), together with many other organisations, could be threatened by opportunists and fantasists. In essence, anyone with an aversion to seek to scientifically clarify the present state of the planet, society and economy. Existing approaches might therefore be in need of destruction (and subsequent rebuild) or modification. The eloquent promotion of the Circular Economy concept by the EMF has undoubtedly captured the attention and imagination of many business leaders, entrepreneurs, researchers, students and policy makers. Many organizations highlight and showcase their interest in a transition to a circular economy, which itself poses the risk of the concept being a victim of its own success. If everything is deemed important, then nothing is. What’s worse: a scattered focus takes away the awareness of the ‘wicked’ 21st century challenges that are at the heart of the circular economy. This paper aims to discuss three challenges to the circular economy framework that can be considered to be the most threatening to the survival of the circular economy going forwards. Firstly, there are significant limitations concerning the available data in the public domain. Databases lack the level of detail, geographical coverage and accuracy needed. This means that in decision making, theoretical, conceptual thinking takes the place of verifiable fact- finding. Secondly, there is an absence of an answer to the question: ‘how should we define circularity, even if we did have the right data?’. Although propositions for indicator frameworks are available, (e.g. “measuring circularity” report of the EMF, 2015) there is no agreement for a framework amongst experts. The very term ‘circular economy’ is poorly defined in scientific literature and the range of interpretations from different stakeholders makes constructive debate and consensus building very difficult. Thirdly, even if we could develop a clear definition of circularity, we have an inability to establish a framework of welfare optimization. We need to consider and account for corporate confidentiality, privacy needs, operationalise negative externalities and incorporate the nature and pace of disruptive innovations. The inability to do so has resulted in an unbalanced and suboptimal allocation of public resources, aiming for solutions that too often do not harmonise with the ideas based on a circular economy concept.