© Jakob Utgård 2025

Contents
Business example: Circular economy at H&M
The circular economy
Industrial ecology
Consumption and environmental sustainability
Why do we consume so much?
Consumer knowledge, attitudes and behaviour about sustainability

The circular economy

The circular economy is an economic system that tries to optimize resource use by reusing, repairing and recycling products and materials, rather than discarded. This is different from the current mainly linear economy, in which resources are extracted, transformed into products, and then discarded as waste after their use, leading to significant environmental problems (Ellen MacArthur Foundation 2024). The principles of the circular economy:

• Minimise waste: Products and services are designed to minimise waste and harmful environmental impacts. This is done by using fewer resources, selecting sustainable materials, and designing products that can be easily disassembled, repaired, and recycled
• Keep materials in use: Repair, reuse, remanufacturing, and recycling extend the life of products and materials. Products should be designed making it easy to replace or upgrade parts or components, making it easy to repair instead of disposing of products
• Regenerate natural systems: The circular economy returns biological materials to natural systems, such as through composting, and by adopting sustainable agricultural practices that enrich the soil and protect biodiversity.

The circular economy can reduce waste and pollution, including carbon emissions (Ghisellini et al., 2016). The circular economy gives business opportunities in areas such as repair, recycling, remanufacturing, and product-as-services (Bocken et al., 2016), and can reduce reliance on specific resources and countries (where raw materials are extracted) (Stahel, 2016). Companies and consumers can, and do, adopt circular economy principles, but the circular economy is still a small part of the total. Challenges are lacking incentives for businesses and consumers to adapt circularity, currently it is more profitable and easier to follow the linear model. To change this, governments must probably introduce measures such as extended producer responsibility, taxes on resource use and waste, or tax benefits for companies that adopt circular approaches (Ghisellini et al., 2016).

Industrial Ecology

Industrial Ecology seeks to model industrial systems after natural ecosystems, aiming to reduce environmental impacts. Just as in natural ecosystems where waste from one organism becomes a resource for another, industrial ecology advocates for industrial systems to function in a closed-loop manner, where the waste generated by one process is used as input for another. This relates closely to the circular economy, emphasizing that resources should remain in use for as long as possible, minimizing waste and resource extraction (Ehrenfeld & Gertler, 1997). Important concepts in industrial ecology are:

• Life Cycle Assessments (LCA) evaluate the environmental impacts of a product or system across its entire life cycle—from raw material extraction to disposal. By analysing the entire life cycle, LCA helps identify the stages where environmental impacts are highest and can be improved (Guinée et al., 2011).
• Material and energy flow analysis tracks the movement of materials and energy through industrial systems. This helps identify opportunities for reducing waste or reusing resources (Brunner & Rechberger, 2004)
• Industrial symbiosis is the collaboration between firms or industries to use each other’s waste products or by-products as raw materials, creating a network of resource exchanges. The Kalundborg Symbiosis in Denmark is a famous example, where multiple industries share resources such as water, energy, and materials, reducing waste and lowering production costs (Neves et al 2020).
• Design for environment focuses on integrating environmental considerations into product design. This includes designing products that last and that are easier to disassemble, repair, or recycle, improving resource efficiency and reducing waste.

Consumption and environmental sustainability

Household/individual consumption is an important cause of environmental problems. Consumers are directly behind much of pollution and carbon emissions (think about waste or carbon emissions from car fuel), and also indirectly behind much of industrial pollution, which takes place because they produce products or services for consumers.

There is a strong relationship between the level of wealth and resource use and climate emissions. This is the same at the country and individual level. The In 2019, the top 1% richest globally on average were behind 101 tonnes CO2 (and 16,9% of total emissions), while the bottom 50% caused only 1,4 tonnes CO2 each (and 11,5% of total emissions) (Chancel 2022). 

The main areas of household carbon emissions (and probably other types of environmental impact) are transportation, food, and housing. This is also the case in Norway (Steen-Olsen et al 2016). In transportation, the main sources are fuel for cars, public transport, and flying. In food, meat and dairy products in particular has a big impact. Housing impact mainly comes from heating.

When it comes to emissions from products, most emissions take place at the raw material and production stages, while transportation, packaging or use has a lower impact. A study of running shoes found that 97% of emissions took place at the raw material and production phase (Cheah et al. 2013).

Why do we consume so much?

There are many different theories about consumption. These theories can also shed some light on the issues surrounding consumers and sustainability (Jackson 2005, Ehrhart-Martinez et al 2015).

• In economics, the consumer is seen as a rational utility maximiser, trying to get as much well-being out of the available income as possible. The consumer, based on individual preferences, will decide how to spend his or her money in the best way. He or she may save some of the income and decide how much to work (vs spare time), but more consumption will always be better.  In this perspective, the level of income is the most important driver of consumption (remember I = PxAxT)
• Sociologists have focused on the importance of a person’s relative position. The have suggested that much of consumption is status-driven, in the way that people want to signal their (high) status relative to others. This can lead to a “rat race” where everybody consumes more of a good (expensive cars, clothes, houses) even if they are not inherently interested in the good.
  • Evolutionary theory supports the importance of status to achieve safety and reproduction
• Sociologists have also noted that much of consumption is “everyday” consumption where people just go on living their normal life with habits and normal ways of doing things without thinking too much about their options or the consumption levels. People wake up in the morning, shower, eat breakfast, drive to work – and use plenty of resources doing so.
• With roots in anthropology and later cultural studies, the importance of consumption as a symbolic marker of identity (towards yourself and others) has also been identified. Possessions have meanings and signal the groups that you are part of and not. Brands are also used for this.

Consumer knowledge, attitudes and behaviour about sustainability

Consumers are increasingly concerned with climate change and see carbon emissions as a part of corporate environmental sustainability However, they often have limited knowledge about climate emissions and find it difficult to evaluate different behaviors and options (Wynes et al., 2020, Grinstein et al., 2018). Therefore, consumers often rely on cues and heuristics to make consumer choices or evaluate options or firms. For instance, consumers most often mention buying organic or local as strategies to reduce emissions from food products, while few mention more efficient strategies such as avoiding meat, dairy and air-transported products (Kause et al., 2019). Products from local and small firms are typically seen as more environmentally friendly, even if this is not necessarily the case (Larranaga and Valor, 2022).

Consumers like (more) sustainable products and services

Being perceived as a sustainable or responsible brand or firm has positive consequences for the firm (Sen et al., 2016). Engaging in socially responsible behavior can benefit consumers’ overall brand attitudes, protect against accidents or crises, improve perceived product quality (Chernev and Blair, 2015), and increase willingness to pay.

A potential exception is for products where strength and efficiency is particularly important for the consumer. The consumer may believe that sustainable products are less efficient, and rate/choose such products less (when strength/efficiency is important). This is called the sustainability liability (Luchs et al 2010). Consumers may also use more of the product, since it is less strong. However, recent research has found that the sustainability liability is very small and unimportant, probably because it has decreased over time as consumers have got used to sustainable products (Chernev et al 2024).

Consuming more sustainably is difficult

The intention-behaviour gap. Many consumers want to be sustainable. However, there is often a gap between the attitudes/intentions and the actual behaviour. This is often called the intention-behaviour gap. There are many reasons for this gap. One reason is a social desirability bias, where people want to present the “correct” opinions in surveys and interviews, meaning that they do not really have the most sustainable attitudes. Other reasons include that the importance of sustainability vary from issue to issue, meaning that consumers may translate it into behaviour in some areas but not others. Changing habits and practices are difficult. The intention does not necessarily mean that the consumer is willing to accept worse products or higher prices. Finally, many purchases happen with limited time or spontaneously, making it more difficult to take ethics into account (Carrington et al 2014).

Strategies to reduce impact from consumption. Thøgersen (2021) summarized research on consumers and climate change. To reduce impact from consumption, consumers can:

• Change lifestyle. Voluntary changes in lifestyle or reduction in consumption levels reduces carbon emissions and is positively related to quality of life. It is difficult for consumers to know how much carbon emissions they are responsible for. Education, labelling and carbon taxes are necessary. There is a negative relationship between prices and consumption, but small price changes have little short-term effect.
• Reduce consumption. Consumers are positive to reduce consumptions in many categories/avoid waste. Consumers are happy to reduce energy and electricity use, but practices are complex and interconnected. Consumers are positive to reduce flying, but also want to travel far. Everybody wants to get rid of food waste, but motivation does not always match with possibilities and knowledge.
• Substitute existing products. There is plenty of research looking at e.g. lab-grown meat. The willingness of consumers to switch animal meat with lab meat varies a lot, and marketing has an important role
• Adopt more sustainable products. The adoption of new and more sustainable products such as electric cars, energy efficient appliances, solar panels, have been studied a lot. Generally the adoption depends on values and attitudes, expected utility, how easy they are to buy and use.

The effects of information. To help sustainable choices, it is often suggested to give consumers more information. This can help, environmental labels can for instance increase the percentage that choose the sustainable option, but the large amount of different labels and information types sometimes make it difficult for consumers. 

Rebound effects. The rebound effect, also known as the Jevons Paradox, is a concept in environmental economics when increased efficiency from technological innovation often leads to increased consumption of the same resource. This happens because efficiency improvements lower the cost of the resource, which typically leads to increased demand for that resource, thereby (partly) offsetting the benefits of the efficiency gains. For instance, a car that is more fuel-efficient may encourage the owner to drive more, thus consuming the same or even more fuel than before. Rebound effects can be direct or indirect. A direct rebound effect occurs when greater efficiency encourages more consumption of the same good. For example, energy-efficient lighting leading to lights being left on for longer periods. An indirect rebound effect occurs when the money saved from efficiency gains is spent on other goods or services that require energy to produce or consume, thereby increasing overall resource use (Sorrell et al 2020). While rebound effects are important they typically amount to much less than the increased efficiency, and normally under 30% (Sorrell et al 2009). 

References

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