The Developing Importance of Ethics Alongside the Circular Economy in Management with Society

The developing importance of ethics alongside the circular economy in management with society’s increasingly disposable lifestyle

Introduction

One of the most pressing ethical issues facing society and business is social, economic and ecological sustainability. In the organizational world, a variety of labels relate to this area, including ‘triple bottom line’, ‘corporate citizenship’, ‘social reporting’, ‘corporate sustainability’ as well as that which seems to have gained the most traction, ‘corporate social responsibility’ (CSR). Ethical theory offers a common underpinning to these, via the discipline of business ethics.

However, it is possible to argue that the ‘social’ aspect of many of these fields of enquiry is being pushed out by the dominance of economic considerations, to the detriment of the ability of ethics to make a meaningful contribution. In fact, business ethics is often conceptualized as being in the service of economic activity (Etzioni 1988) and has been accused of losing its critical capacity as a result (Jones et al 2005).

This essay focuses on another emerging discourse and area of practice, namely the ‘circular economy’, arguing that there is a similar danger of the ‘social’, and therefore ethical, aspect becoming sidelined by the more economic and technical aspects of the field. The illustrative practical example explored here is that of ‘fast-fashion’, a trend that “embodies unsustainability” according to Joy et al (2012).

Circular Economy and Ethics

The circular economy (CE) “represents a theoretical concept which aims at creating an industrial system that is restorative by intention.” (Genovese et al, 2015, p. 344) and is usually concerned with recycling, re-use and re-manufacture. The antonym of the ‘linear’ perspective is characterized sometimes as ‘take, make and dispose’.

CE has received surprisingly little attention in the business and management literature, despite being a well-developed debate in various facets of engineering and ecology (Murray et al 2015). This means there is currently virtually no intersection with ethical theory and organizational context. The existing literature does overlap with industrial ecology and industrial operations. There are also a number of studies reporting on the implementation of CE principles, frequently categorizing the landscape at the firm, cluster or regional/global levels (Ghisellini et al, 2015), a typology rooted in industrial ecology. Another feature of the CE literature is the predominance of Chinese contributions, especially among papers reporting on the implementation of CE, arguably explained by the Chinese regulatory environment (Lieder and Rashid, 2015).

However, the main concern for this essay is the absence of the ethical dimension in the emerging CE literature (Murray et al 2015). Furthermore, it is argued that related fields such as CSR and corporate sustainability have seen the ethical and social dimensions pushed out by economic considerations. It is important that CE does not share the same fate.

CSR organizational literature has been dominated by a search for the ‘business case’ for CSR (Carroll and Shabana 2011). This has developed as a response to Milton Friedman and his assertion that ‘the social responsibility of business is to make a profit’ (1970). It is almost as if we have forgotten the importance of CSR for moral reasons, instead trying to prove the economic and strategic benefits of being a socially responsible corporation (Martin, 2014). Friedman’s article allowed for the ethical and societal context of profit-seeking activity, but academics have nevertheless focused their responses around proving the economic benefits of CSR. In this sense Friedman has ‘won’ in that he framed the debate in economic terms and foreclosed meaningful discussion of the ethical dimension in the rush to prove him wrong (Brooks, 2010)

Similarly in the related field of corporate sustainability, the triple bottom line concept (Elkington, 2004) is based on the social, ecological and economic impact of organizations. However, the triple bottom line, and the discourse of corporate sustainability more broadly has, like CSR, seen economic considerations colonize the debate (Hahn et al 2015).

Context needs to be considered throughout this essay, with the production and selling of these products being relatively separate creating the moral distance between the social responsibility and the consumer.

Fast-fashion

Through its innate reliance on disposability, fast-fashion epitomizes the linear economy. High-street fashion focuses on low cost, high speed to market and low price. Fast-fashion is based upon low cost clothing that imitates luxury fashion trends (Joy et al, 2012).

Historically, the fashion industry and have been no strangers to controversy and accusations of ethically questionable practice. Arguably the highest profile polemic against corporate wrong-doing, and the garment retail industry in particular, came from Naomi Klein’s research into responsible and sustainable business through her book, ‘No Logo’ has brought her opinions into the populous. No Logo created a great impact on consumer opinions in regards to ethical business introducing millions of readers to cases of child labour, which she argued were avoided by news channels as a sensitive topic (Klein, 1999). Klein’s more recent book “This changes everything” details environmental implications with a management perspective. However, Klein herself recognizes that more research in regards to CSR, ethics and sustainability is needed (Klein 2015).

The circular economy poses an opportunity for further research, with little management focus, fashion retailers should acknowledge the social implications of the quantity and quality of products they produce. As highlighted above, there is little reporting of research into western implementation examples of circular economy practice, and at the time of writing, none to be found in the area of fast-fashion. The majority of literature focuses on mid development economies such as China where factory practice and mass production is an important focus, see for example Rivela et als lifecycle assessment of the tannery industry (Rivela et al (2004)). Due to worldwide environmental problems, an increasing importance of the whole product cycle and its responsibility to the circular economy should become a developing literature.

Focusing on Levis with successful integration of the economic cycle in fashion; including their own take on the economic cycle. In every pair of Levi jeans the same label is included which states two main sustainable arguments. Firstly, surrounding their improvements on their water use during the production process, the consumer can also help with this. Levis found during their first lifecycle assessment study in 2007 the greatest energy impact originated from water use in cotton cultivation and consumer use (BICEP, 2016). Jeans originally were designed to be worn to ‘death’ – whether this is the same for high-street denim is arguable. Their research suggested that American consumers can change their impact by 77% by only washing jeans after 10 wears, lowering both energy and water consumption (LCA Jean, 2017). Secondly, recycling and reuse. Levi’s have integrated a “closed loop product cycle” this suggests that the quality of Levi’s jeans allows consumers to extend life of the jeans by repairing or transforming the style and finally consumers can donate or recycle the product. Recycling then returns you to the production from raw material, customers are able to bring clothing to store or given free shipping to Goodwill whom they have a partnership with (Sustainability at Levis (2017)). Levi’s have an incredibly innovative attitude towards sustainability of products and the supply chain.

The case study highlights two key management related point, sustainable supply chain and consumer use. Firstly to approach sustainable supply chains. Much of today’s CSR has been built upon stakeholder pressure to create sustainable production and supply. These stakeholders have created pressure around multiple sections of supply, powerful corporate customers have created strict guidelines and criteria for ethical sourcing (Cashore 2002). Globalisation has also created a need for sustainability with an extended chain of responsibility, corporations can become distant from their supply chain on a global scale (Kovács, 2008).

In regards to consumer use; much of fast-fashion isn’t produced in Western countries, the consumer is morally distant from the production. Multiple ethical ‘nightmares’ have occurred due to the fashion industry, particularly with Primark. Journals have looked into the reputation of Primark prior and post the media reflection of their poor practices. Before mass media surrounding the ethical issues, the consumer remained relatively distant from the production (Jones et al 2009). This article focuses on economic and consumer opinions of the business conducting unethical practices, corporations should not have to plan for ethical issues and should instead develop sustainable and ethical supply chains. For UK consumers the closest to many brands is in store. If UK store assistants were treated poorly rather than those in the factories, would consumers react? Academics have begun to develop ideas around feelings and cognitions of consumers when constructing brand image (Brakus et al, 2009).

Levi’s have integrated an end of life cycle practice. In the UK, many consumers sell their clothes on EBay, alongside charitable donations. Levis have absorbed this responsibility, but whose responsibility is the disposal of used clothes. Is it public or private? There are little government interventions in regards to clothes recycling in comparison to household waste. Are the free bags/clothes donation dumps enough for the consumer to avoid putting used clothes into landfill? Also, when clothes are donated quality is important. For example Oxfam spend on disposing poor quality donations. Oxfam have an initiative with M&S vouchers in return for donation. But, “Waste makes Oxfam angry”, so donations that cannot be sold in store are given to sell in Senegal or recycled. Recycling creates high cost but can used to produce products such as car soundproofing or mattress stuffing (Oxfam.org, 2017). This shows private responsibility (M&S) for end of product life cycle.

Both of Levi’s key points relate to the triple bottom line. Elkington created the concept of the triple bottom line, based on a survey of international CSR experts. Relating back to Friedman’s argument, that sustainable business needs to be profit making (Friedman 1970). However, the triple bottom line gives Profit, People and Planet the same weighting of importance.

The disposable nature in a social context, for the vulnerable group of young people in the market poses a problem. Particularly young girls, fashion often dictates their lifestyle with the need to keep up with current trends. Stores like H&M are making this easier with more affordable clothes, but arguably this affordability has sacrificed the quality of the product, this is great for the high-street stores as consumers return every season. However, for the poorer younger generation is this feasible? Brands like H&M and Zara through brand love have arguably won the hearts of young women, this strong bond has social implications for lower income customers (Ismail & Spinelli 2012).

Fashion has great power, particularly amongst the young. Therefore having moral responsibility to reduce the unhealthy habit of disposable lifestyles. Fashions power and influence could extend power meaning they are also able to extend responsibility. Developments and research into the circular economy could improve consumer attitudes. Fashion brands could benefit by looking into the success of Levi’s vision. Levi’s understand this is a vision, but if this was to become the norm it could be an incredibly successful concept.

Conclusion

This essay has argued that the capacity of ethical theory to contribute to debate in a number of inter-related business topics has been denuded by the dominance of economic considerations. Complex social dimension often absent, and is now becoming apparent in the emerging research into the circular economy. As Murray et al (2015) contest, if the social is absent then so is the ethical.

The practice of fast-fashion has been used to exemplify the traditional linear approach, bringing with it the ethically questionable outcomes of encouraging an attitude of thoughtless consumption and disposal, together with reinforcing individualism and moral distance from the producers of the garment. However, Levi was used to show that alternative models do exist, based on sustainable supply chain management and communications with the consumer.

There is clearly much more work to be done; this essay has only touched superficially on a number of deep and important issues, but the key message must be that on a number of fronts, the application of ethical theory must not be driven out by the seductive focus on economic imperatives.

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