Cost of living crisis and the circular economy

The cost of living crisis has had a fundamental impact on most elements of our lives – and this is creating significant fault lines in the way the nation and its people approach sustainability.

It has had both positive and negative ramifications in our drive for greater circularity in the UK, whether that is in consumer behaviours, as people look for more effective ways to spend and save money amid squeezed household budgets, or in the larger scale commercial decisions made in boardrooms.

First and foremost, the huge spike in fuel costs has driven a radical re-alignment and awareness of both our energy usage and sources.

The drive to decrease our reliance on gas has accelerated the development of renewable energy sources. More than ever before, businesses and households are focusing on energy efficiency to cut back on running costs. Whether it is implementing larger scale projects like improving insulation and the installation of solar panels right the way down to more micro adjustments like turning off lights, moving to LEDs, or lowering shower temperatures.

There have also been positive behavioural changes from the consumers in the types of products that they buy and the manner in which they are shopping.

We are seeing this in the explosion of demand for re-use platforms like Vinted, Depop, and Facebook Marketplace as consumers look for cheaper methods of acquisition – shifting to second-hand rather than brand new. There is also a growing emergence of new subscription hire models which often encourage sharing, reuse, and circularity.

Many consumers will be participating in this re-use model without even realising, which could drive longer-term change by embedding these sustainable shopping habits for the future even once financial pressures have eased.

Given the rise in the cost of living, people are also spending less on more expensive luxury items which is in turn reducing demand for packaging and consequently packaging waste.

However, inflationary pressures are also creating some unfortunate side effects.

For example, with the price of food soaring people are zeroing in on cheaper products, which could be more environmentally damaging to produce, alongside carrying higher social impacts.  Whilst consumers look to save money, they continue to create the same volume of waste but from different sources, as they won’t shop for less food, they will shop at cheaper brands.

There is also a greater emphasis on longer-life products, like tinned food, to reduce food wastage. However, the packaging of these products typically involves more energy-intensive processes such as the production of steel to create those cans.

There is no getting around the fact that many circular solutions are more expensive for the consumer. Think about the cost of buying a re-usable item compared to its single-use disposable counterpart or the one-off outlay of buying a re-fillable bottle or food carton.

Even within the clothing industry, the cost of growing and processing organic cotton is substantially higher than for conventional cotton.

If people are prioritising price point over sustainability to free up their budget for essential items, we are inevitably going to see a decrease in circularity.

However, as cost of living pressures ease, we will reach a crucial juncture for the circular economy.

Businesses and governments should work with consumers to entrench the most positive behavioural and systemic changes that have arisen from the current economic landscape. Contrastingly, there should be a focus on re-establishing the more sustainable processes that have fallen by the wayside to ensure the very real progress we have made to date is not permanently lost.

To make a truly sustainable recovery, we should ensure that any step back leads to two steps forward in our ambitions to embed circularity in the UK economy.