Ricardo Weigend Rodriguez, Sophie Tips, Patrick Moloney
October 23, 2023
Empowering organisations to navigate a circular future
Understanding circular foresight can enable an organisation to shape its future proactively, adjust to shifting dynamics, and plot a path towards a successful shift to a circular economy.
The transition to a circular economy is gaining momentum, supported by the growing understanding of its many benefits. Regulation and policy have also facilitated this momentum, primarily emanating from the EU’s Green Deal and its EU Circular Economy Action Plan. With the recent introduction of a specific European Sustainability Reporting Standard for circular economy (ESRS 5) via the Corporate Sustainability Reporting Directive, the circular economy is now an integral component of the transition to a low-carbon and green economy for organisations across the EU – and indeed globally. From an investor perspective, an EU Taxonomy for the transition to a circular economy (adopted in July 2023) clarifies what is a circular investment. The true impact of both the ESRS 5 and the circular economy taxonomy is expected to be felt in 2024.
A circular economy is a sustainable economic paradigm that seeks to decouple economic growth from consuming finite resources, which means it aims to optimise the utilisation and value of resources while designing out waste.
Some of the many benefits associated with a circular economy include:
- Promoting sustainable resource management,
- keeping resources in use for as long as possible,
- fostering the preservation of natural resources for future generations,
- and contributing significantly to reducing greenhouse gas emissions.
“Adopting foresight is a strategic decision that should harmonise with an organisation's vision and goals, ensuring a tailored fit for maximum effectiveness.”
As companies increasingly embrace circular economy principles to drive innovation and address global environmental challenges, it is essential to recognise that this approach isn’t without criticism. While the circular economy promises superior welfare, environmental benefits and social outcomes compared to the traditional linear economy, its vision can sometimes appear overly optimistic. Therefore, it is important to acknowledge that the transition to a circular economy represents an evolving economic paradigm with inherent challenges. Overcoming such challenges requires examining potential trade-offs, tensions, and paradoxes that may emerge as the circular economy progresses. This is precisely where the concept of foresight can play a valuable role.
Foresight is the systematic approach to studying possible, probable and preferable futures, including the worldviews and myths underlying each future1.
Foresight is also known as Futures Studies, Strategic Foresight, or Futures. It has been a subject of study for over six decades, over which time the field has evolved by incorporating new disciplines such as systems thinking, sociology, management, ecology, ethics, philosophy, and planning. Foresight acknowledges that human actions have the power to construct a desirable future rather than being passive responders. Its value lies in its proactive nature, with the potential to shape a positive future through intentional actions in the present. This is why applying foresight can help companies become more resilient to upcoming possibilities by creating diverse futures.
It is essential to note that foresight differs from planning or forecasting. While a forecast is a calculation or estimate of future set events, foresight includes an aspect of uncertainty, encompassing not only what is probable but also what is uncertain in an effort to foresee the occurrence of potential events.
Foresight's aim does not consist of ascertaining what the future will be like (which seems impossible within an ever-changing, complex global context) but of asking what the future might be like. To apply foresight, you must navigate your decision-making around your preferred future.
- Strategic foresight is a systems thinking approach to support resilient organisational futures
- Foresight and strategy are complementary parts of one process in pursuit of future organisational success
- Strategic foresight looks beyond the traditional strategic planning time horizon
- Strategic foresight is not about making predictions of the future, but rather exploring plausible futures
- Strategic foresight focuses on exploring the future before considering implications for the present
- Strategic foresight seeks to challenge mental models and organisational perspectives
Incorporating foresight methods into an organisation's circular strategy enables the identification and mitigation of future risks while supporting the creation of resilient circular strategies. Analysing emerging trends and weak signals through this approach helps businesses adapt their strategies, ultimately enhancing decision-making processes.
Connecting the circular economy with foresight yields a robust strategy that comprehensively understands challenges from various perspectives. Embracing this systemic approach empowers an organisation to harness the circular economy's potential, guiding towards the desired future and equipping the circular transition with new tools for a strategic outlook.
In the circular economy landscape, proactive strategies are crucial. Here, we explore how foresight drives forward-looking circular approaches:
- Anticipating technological advancements: Foresight enables organisations to stay ahead of technological advancements. By exploring various future scenarios, an organisation can identify emerging technologies that have the potential to reshape circular economy practices. This forward-looking perspective ensures organisations can proactively integrate innovations into their circular strategies, enhancing decision-making through diverse lenses. Consider the battery industry as an illustrative example. It is expected to experience exponential growth in the upcoming years. However, the resources that the industry relies upon today may not be here tomorrow. Those that draw possible and probable futures (neither of which will be the preferred future) can anticipate what minerals might become even scarcer and which could be replaced through technological advancements and thus realign their R&D efforts to ensure they can continue manufacturing batteries, boosting their likelihood of success in potential futures.
- Scenario Planning for Policy Development: Strategic Foresight plays a pivotal role in shaping effective policies and regulations for the Circular economy. It involves developing scenarios based on different future trajectories, allowing decision-makers to craft adaptable policies that support circular principles. These policies could be designed flexibly to address evolving challenges and unintended consequences. Foresight-driven scenario planning ensures that policy frameworks remain responsive to the dynamic nature of circular economy practices and facilitates organisational actions with a common vision, strategy, and shared objectives.
- Identifying consumer trends and behaviour shifts: Foresight is a valuable tool for understanding shifting consumer preferences and behaviours in circularity. A trend represents a novel expression of enduring transformation within an industry, the public sector, society, or how we interact. By anticipating trends, such as changes in consumer willingness to embrace circular consumption practices, organisations can tailor their products and services to meet evolving demands. In this way, foresight empowers businesses to remain agile and responsive to changing consumer expectations and enables organisations to adapt to possible futures and make targeted investment decisions to achieve desired outcomes.
- Supply chain resilience and resource security: Foresight enhances supply chain resilience and resource security. It helps organisations anticipate potential disruptions in material availability and sourcing. By proactively identifying resource scarcity and geopolitical risks, businesses can diversify supply sources, invest in alternative materials, and design products with better end-of-life considerations. In short, foresight-driven insights enable strategic measures to anticipate and mitigate supply chain vulnerabilities, ensuring a more resilient supply chain.
- Innovation, collaboration and partnerships: Collaboration across sectors is facilitated by foresight practices. Foresight initiatives encourage innovation and idea exchange by bringing experts from various domains together. This collaboration can lead to developing cross-sector initiatives, new circular business models, design practices and joint projects, accelerating the circular economy transition. Foresight-driven innovation and collaboration can empower an organisation or a value chain to harness collective expertise and drive a circular economy more effectively. It creates the capacity to anticipate tomorrow's problems, prepare for them, and act today. For example, the construction industry must prepare for a future in which the percentage of reused, remanufactured, or recycled materials in a building significantly increases. Collaboration and partnerships are key to understanding the inevitable demands and anticipating when and how they might unfold. Those who work together today to envision this future can co-create solutions and take action to better prepare for this scenario.
Acknowledging that a 'one-size-fits-all' approach isn't suitable for harnessing the potential of foresight is crucial. The foresight methods should align with an organisation's needs and objectives. Whether the aim is to anticipate technological advancements, formulate robust policies, comprehend evolving consumer trends, ensure supply chain resilience or stimulate innovation through partnerships, foresight provides a customised approach to tackle unique challenges and opportunities.
The circular economy presents a path towards sustainable growth, but numerous obstacles must be overcome along the way. These include the need for critical examination, proactive thinking and openness to alternative futures. Foresight can offer valuable insights and tools for navigating the complexities of circular economy implementation.
Circular strategies need to look beyond the horizon; they need to learn from history, understand the push of the present but also, and, most importantly, anticipate the pull of the future. Circular foresight can guide you to build a more resilient, sustainable, and prosperous future by considering multiple perspectives and intentionally shaping the present to construct your desired futures.
Organisations do have the power to construct a desirable circular future rather than being passive responders!
This article is one of three on circular foresight. Our next article will focus on applying the “futures triangle” to the building industry, exploring the weight of history, the push of the present and the pull of the future.
[1] Inayatullah, S. (2013). Futures studies: theories and methods. There's a future: Visions for a Better World, BBVA, Madrid, 36-66.
Want to know more?
Patrick Moloney
Director, Strategic Sustainability Consulting
+45 51 61 66 46