Work

Between you and I: A portfolio theory of the circular economy

Year: 2021

Type: article

Abstract: By using resources more circularly, individual resources users hope to contribute to a more eco-efficient and sustainable resource use. Whether resources are used sustainably is decided at the macro-level, raising the question if, as well as how, the efficient and circular use of resources at the micro-level adds up to their efficient and circular use on the macro-level. Currently, the link between the circular use of resources at micro- and macro-levels is under-theorized. The symbiotic relationship between individual resource users enables a reduction in the resource use at the macro-level. In this conceptual paper, we argue that an analogous link exists in finance where desirable investment return is linked to undesirable investment risk, and that via the generation of efficient portfolios, individual risks are at least partially diversified away. As our main contribution, we theorize the circular economy, both in its perfect and imperfect forms, using modern portfolio theory. Our theory identifies the drivers of circular resource use and shows under which conditions individual resource use contributes to the circular use of resources.

Source: Ecological Economics

DOI: 10.1016/j.ecolecon.2021.107190

Authors: Frank Figge, Andrea Stevenson Thorpe, Siarhei Manzhynski

Institutions: ESCP Business School, Umeå University, Kedge Business School, Macquarie University

Language: English

Topic: Sustainable Supply Chain Management

Subfield: Strategy and Management

Field: Business, Management and Accounting

Domain: Social Sciences

SDG: Responsible consumption and production

Open Access status: hybrid

Estimated APC paid: $3,580