Circular Economy And Global Governance: Promoting Sustainable Development Through International Cooperation


Our current economic structure is perforated. The COVID-19 pandemic has made our healthcare, social, economic, financial, and political systems vulnerable. Working together to create a more resilient economy that is centered on increased sustainability, welfare, and regeneration is crucial right now if we want to achieve a better balance between people, the earth, and wealth. The solution to this is offered by means of a sustainable circular economy (CE) model working on the principle of sustainable production, reasoned consumption, and efficient waste management. Certainly, the application and feasibility of this model should be seen in the broader objective of sustainable development, particularly in essence of the Sustainable Development Goals. Therefore, what is needed to achieve this overarching goal of sustainability is international cooperation and innovative solutions to the problem of overgrowing consumerism and depleting resources. However, gathering end-of-life products and materials and returning them to a useful form calls for the use of additional resources and energy inputs. With this context in mind, the aim of this paper is to first give the case for a CE and establish its relation with sustainable development. This paper will also talk about various initiatives and policies adopted by intergovernmental organisations like European Union’s Green Deal and the World Economic Forum, and also take heed of best practices being carried out by individual countries to actualise the goal of a sustainable CE.  This paper will also make an attempt to understand sustainable CE better through a case study. The paper then goes on to analyse the obstacles to change and how to get beyond them via a variety of governance activities that seek to offer practical solutions. This is done in order to give practical solutions and gain insights to make better policy decisions on a global as well as national level.


A World Bank report published in 2018, titled, “What a Waste 2.0:  A Global Snapshot of Solid Waste Management to 2050” highlighted that without urgent efforts, global waste will increase by 70 per cent over on current levels by 2050. If this waste is not collected and managed properly, it can contaminate and affect ecosystems and waterways for hundreds, or possibly thousands, of years. Approximately 90 percent of marine debris is plastic. The report emphasises the harm that waste management does to our water supply and oceans as well as its effects on the most vulnerable populations. Additionally, it raises awareness of the ways in which organisations and sectors can set an example for waste reduction globally while also managing economic development and innovation.

The root cause of this incessant waste generation lies in the linear model of consumption that had been followed vigorously, especially in the 19th and 20th centuries. This model underlines a take-make-dispose pattern that has plummeted the world into severe environmental disasters, adverse impacts on human health, and rapid depletion of natural and non-renewable resources. As a result of concerns about the inherent limitations of the linear mode of production, what emerged was an alternate mode of economical advancement founded on the bedrock of 3 R’s- reduce, reuse and recycle, in other words, circular economy (CE) coupled with sustainable development. 

CE and sustainable development are two concepts that have been intertwined since the early discourse on environmental economics dating back to the 1960s and 1970s. Circularity began to be promoted in the 1970s by a man by the name of Dr. Walter Stahel, known as the “father of the circular economy”. In a 1982 study titled “The Product-Life Factor,” he introduced the phrase “closed loop economy,” which is now used to characterise circularity. A closed-loop economy is “an economic model in which no waste is generated; everything is shared, repaired, reused, or recycled. What would traditionally be considered “waste” is instead turned into a valuable resource for the creation of something new.”

Governments began passing laws relating to circularity and sustainability as a result of rising public awareness of these issues. As the CE began to be debated in environmental circles as a means of reducing waste, the European Union created its first Waste Framework Directive in 1975 with the goal of establishing a CE for Europe by 2020. 

While a challenge of a generally agreed upon definition of CE still persists, the commonly used definition proposed by the Ellen McArthur Foundation in 2015, in the backdrop of UN SDGs, holds relevance. The EMA report defines CE as:

“Looking beyond the current take-make-waste extractive industrial model, a circular economy aims to redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources, and designing waste out of the system. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural, and social capital. It is based on three main principles: i) Design out waste and pollution, ii) Keep products and materials in use, and iii) Regenerate natural systems.”

Meanwhile, the UN’s sustainable development objectives call for raising human well-being, refocusing economic prosperity, and safeguarding a healthy environment. CE initiatives should be incorporated into global agendas on sustainable development and climate change because neither can succeed without a sustainable CE. This will give national governments and businesses more motivation to accept responsibility. 


The values and guiding concepts that continue to guide the conversation about sustainable development were outlined in the WCED (1987) study, Our Common Future, also known as “the Brundtland report.” The statement that “Humanity has the ability to make development sustainable to ensure that it meets the needs of the present without compromising the ability of future generations to meet their own needs” was a response to the serious concerns expressed in the 1960s and 1970s by authors for the Club of Rome. Post that various organisations emerged that sought to draw attention of global leaders and citizens to the ongoing crisis of integrating economic development with sustainability. 

Fig 1. Source: UNCTAD

Resource efficiency and sustainable consumption & production, which are key ideas for achieving sustainable development, are foundational components of the CE. A CE is especially relevant to key goals like SDG 12 on “Ensuring Sustainable Consumption and Production Patterns,” as the targets depend on recirculating what was formerly thought of as waste back into the economic space through closed loop processes that reduce negative externalities. 

Without a question, the CE has great sustainability potential. However, because of a weak conceptual foundation and connection to sustainable development, “CE solutions” have been proposed that have a negative impact on sustainability. In these situations, it is debatable whether the wider trade-offs of CE practices exceed the advantages for sustainability. Because of their inherent limits, the evolving ideas of CE and sustainable development must also continue to change in order to address the expanding complexity of the sustainability issues. 

While the environment is the primary driver of the transition to a CE—cutting the danger of resource depletion, decreasing pollution, and reducing GHG emissions—there are several significant co-benefits. The values to be captured and money saved are the most obvious, in addition to other societal goals that can be achieved. Entrepreneurial activity is projected to develop in fields like product customization, sharing economies, refurbishing, remanufacturing, and repair, in turn increasing net employment. There will be a lot more contact between citizens in a society where the economy is increasingly based on the provision of services rather than products and on the idea of a sharing economy, which is expected to improve quality of life and, more specifically, the degree of trust.



Since 1997, the EU has been striving to create a variety of texts that address aspects of CE, sustainable development, and now the green deal. The Green Deal was developed by the European Union as a green growth initiative, and as such, it calls for behavioural changes among consumers, businesses, and decision-makers within the EU as well as outside its boundaries to deal with the menace of unsustainable development. It will be crucial for the EU and its member states to get ready for follow-up measures at the UN, WTO, OECD, G7, and G20 levels in order to guarantee that the transition to a CE would be compatible with international rule-making. In its Action Plan for the CE, the European Union makes it very clear that it cannot fulfill the objectives of the Green Deal on its own. 

Another step taken by the EU in this direction is the Carbon Border Adjustment Mechanism (CBAM), set to start being implemented from October 2023. CBAM aids in addressing the problem of carbon leakage, which happens when domestic companies move to nations with laxer climate regulations, increasing worldwide emissions. CBAM intends to prevent carbon-intensive sectors from moving production to nations with weaker environmental standards by imposing carbon-related charges on imported goods, hence minimising carbon leakage. 

Sustainable finance entails investing and making financial decisions that take the environment’s effects and repercussions into consideration. Investments made with a social conscience allow organisations that adhere to the principles of sustainable development to lessen their negative effects. As a result, the development of a CE is made possible by the financing and insurance of businesses operating in this field, as well as by a strategy for sustainable financing that is based on the incorporation of environmental, social, and governance performance (ESG) in decision-making to make sustainable development a reality. 

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Author: Prachi Bhuckal