Digital Technology and Acceleration of the Circular Economy

It is estimated that only 8.6% of the 100 billion tonnes of resources consumed by society get back into the economy. This is the reality with the current linear economy in operation, which generates much waste with its attendant consequences on the environment and human population. Circular economy (CE) has emerged as an alternative to this linear economy. The chapter’s objective is to examine how economies could leverage the power of emerging digital technologies to accelerate the CE agenda and ensure the attainment of the SDGs. The study found that adopting CE could result in meeting most of the Sustainable Development Goals (SDGs) and potentially create economic opportunities. It was further established that digital technologies such as artificial intelligence, the Internet of Things, blockchain technologies and big data analytics are key technological enablers for CE. It was revealed that digitalisation could empower companies to redesign their products and employ business models that would result in the most efficient use of the company’s resources. The application of digital technology could complement human skills capability to establish a circular-based operations decision. Digital technology could help provide past and real-time data, which could assist management in predicting and managing inventory demand and usage to operate efficiently by minimising waste. The study further identifies key challenges inhibiting the adoption of CE activities, including lack of consensus on what constitutes CE, cultural barriers, financial constraints, limited government support and information and limited technological skills. It was found that governments can promote CE both directly and indirectly. Directly, the government can integrate critical metrics of sustainability practices in its procurement process, while indirectly, it can introduce some incentives to promote its adoption by individuals and corporate entities. The private sector, particularly the financial sector, can also incorporate environmental sustainability measures in evaluating funding for investment projects.