• EN
Tìm kiếm

[Podcast] Circular economy – The key towards achieving sustainable development

16 August, 2024

Keywords: sustainable development, circular economy, sustainable finance, sustainable governance, UEH SFI

Sustainable development is no longer a choice; actually, it is almost mandatory in most countries around the globe. To achieve this goal, the circular economy model has emerged as an important tool.

The global GDP in the 1900 – 2000 period increased 20 times. The extracting resources from the ground is 1.7 times higher than that of its actual capacity (Watts, 2018). This is a consequence of the traditional economic model (linear economy) with the exploiting – producing – consuming – disposing approach. In this model, natural resources are exploited in an unsustainable manner, leading to the decline and the depletion of many important resources listed as minerals, energy, water and land; The environment is seriously degraded, the climate is changing, the ecosystems are threatened, and the quality of human life is negatively affected.

In this context, sustainable development is no longer a choice; actually, it is almost mandatory in most countries around the globe. Sustainable development is the development that ensures the current generation and the future generations have the necessary resources, listed as food, water, health care and energy, without putting any strain on the processes of the Earth system (Dirk Schoenmaker, Willem Schramade, 2018). To achieve such goals, circular economy emerges as an important tool.

A circular economy is the one that uses a systems-focused approach and life-cycle thinking, including industrial processes and economic activities that are resilient or regenerative by design, allowing resources used in those processes and those activities can maintain their highest value for the longest possible period, with the aim of eliminating waste through superior material design, products and systems (including business models). A circular economy reduces material use, redesigns materials and products to use fewer resources, and recovers “waste” as resources to produce new materials and products (EPA, 2021). The transition from a linear economy to a circular economy can be visualized through the following diagram:

To achieve a ‘looping’ system like this, sustainable design becomes a very important stage, which includes product structural design, selection of raw materials, of input materials, and the most suitable producing technology so as to achieve sustainability. In other words, sustainable design refers to bringing sustainability into the entire product life cycle, towards achieving an optimal balance between the three goals of economy, society and environment. The designer will support the product’s durability by taking into account reuse, repair and the product’s ability of being refurbished, and improving the recyclability of materials. For each step in the life cycle, the designer will try to reduce inputs listed as energy, water and materials/supplies and to reduce the amount of emissions and wastes that the process produces.

Applying circular economy models not only is an action to concretize the Government’s strategy but also helps businesses position their brands, enhance their competitiveness and the ability to withstand changes from the outside. By applying circular models, businesses can reduce production costs, optimize resource use, and create added values from recycling and reusing materials. Circular economy also opens up new opportunities in developing products, services and markets. As consumers become increasingly interested in sustainable products, businesses that adopt a circular model will have a superior competitive advantage. Innovation does not simply stop at applying technology; actually, innovation includes changing thinking and ways of doing business. This requires business leaders to have foresight, understand market trends and be willing to invest in sustainable solutions.

However, in addition to opportunities, the transition from a linear economy to a circular economy also brings in many challenges. Challenges and solutions to handle challenges will be presented in the next article!

This is an article by the Sustainable Finance Institute of the University of Economics Ho Chi Minh City (UEH SFI) – the first educational organization in Vietnam to conduct consulting, training and research activities on sustainability management, sustainable finance and related fields. To the current time, the Institute has achieved many successes in all three areas: training, research and consulting. In particular, the Master Degree program majoring in Corporate Sustainability and Environmental Management increasingly attracts a large number of candidates and is highly appreciated by students and employers. The Institute has also actively participated in international forums, establishing partnerships with prestigious universities around the world; providing consulting and technology transfer services for international organizations listed as the International Finance Corporation/World Bank (IFC/WB), Frankfurt School of Finance & Management, the University Network for Strengthening Macro-financial Resilience to Climate and Environmental Change, Global Green Growth Institute (GGGI). The Institute also became one of the five founding members of Eurocham’s Sustainable Finance Committee. Concurrently, with the goal of spreading knowledge and leading in the field of sustainable management and sustainable finance in Vietnam, the Institute focuses on providing: (i) short-term training courses specializing in finance sustainability, impact investing, financial risk management related to climate change, sustainable business strategy, sustainable development reporting and so on; (ii) consulting services suitable to the requirements of each business, the government and the local authorities on sustainable management.

This article is part of a series of articles spreading research and applied knowledge from UEH with the message “Research Contribution For All – Research For The Community”, UEH respectfully invites our dear readers to look forward to the upcoming UEH Research Insights newsletter.

News and photos: Author, UEH Department of Marketing and Communications