2.3 Circular Economy 27
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- Reviewing circular economy from an ethical point of view raises the following
questions:- Do organizations have social and environmental responsibilities? And, more
specifically, should organizations care about concepts such as circular economy?- Is circular economy capable of mitigating environmental problems such as
resource scarcity or do we need to change our minds and behavior about the
environment?Is circular economy which boosts global competitiveness desirable for our society?
The late economist Milton Friedman, a Nobel Prize winner would not haveagreed with organizations engaging in circular economy. Friedman believed that
the only responsibility an organization has is to make as much money as possible
for its stakeholders. A famous quote taken from his book “Capitalism and Free-
dom” reads, “[In a free society]... there is one and only one social responsibility of
business - to use its resources and engage in activities designed to increase its profits
so long as it stays within the rules of the game, which is to say, engages in open and
free competition without deception or fraud” (Friedman and Friedman 1962, p. 133).
In order to maximize profits, Friedman argued that organizations should use what-
ever resources and as much of these resources as is required. However, if we look at
today’s economy it is clear that organizations still of course want to make a profit
but have become more aware of their social and environmental responsibilities (e.g.
minimum wage, protecting the environment) and are committed to fulfilling these.
What explains this move away from Friedman’s view on corporate responsi-bility? The answer can be found in the explications on business ethics described
by Homann and Lütge (2013). A growing awareness amongst organizations of the
social and ecological problems affecting society has led to them pay more and more
attention to ethical concerns. Today, organizations have to integrate these ethical
concerns into their business decisions. By doing so, they are able to prevent loss of
reputation resulting from operating within legal boundaries but outside of ethical
perception (Lütge and Jauernig 2014). Business ethics has become an integral part
of organizational risk management in many organizations. As stated by Homann
and Lütge (2013), business ethics provides guidance on how to positively combine
entrepreneurial success and moral acceptance. According to corporate social
responsibility (CSR) organizations have social and environmental responsibili-
ties. The circular economy offers organizations a way to incorporate social and
environmental priorities and practices into their brand, their products and their
relationships with customers, vendors and employees.
The second question raised from an ethical standpoint is whether or not circulareconomy is capable of mitigating environmental difficulties. In the context of busi-