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Come play with us! A grassroots research agenda for accounting and the circular economy

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Diane-Laure Arjalies discusses the important role of accounting in achieving a CE (circular economy)

Image courtesy of interviewee. May 2, 2024

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This video video discusses the transition from a dominant linear capitalist economic model, characterized by rapid production and waste disposal, to a circular economy that seeks to minimize waste and maximize resource reuse. In a circular economy, materials are repurposed, much like processes observed in nature where nothing is wasted.

The speaker emphasizes the need for a change in how value is assessed and distributed, moving from an individual-centric perspective to a collective one that considers the well-being of entire systems. This video video involves developing new accounting practices that account for ecological and social impacts, as current methodologies often neglect the social dimension and focus mainly on environmental metrics.

Despite existing research on circular economy accounting, the findings are fragmented across various disciplines. The speaker and their colleagues sought to bridge these gaps through interviews with professionals in the field, which highlighted key challenges such as the need for cultural shifts within organizations, support from management, and the development of holistic measurement systems that span entire supply chains.

Professionals expressed a desire for more involvement from accountants, especially those who are socially and ecologically minded, to create standards and tools that facilitate the transition to circular practices. They also underscored the importance of intertwining ecological transition with social justice, advocating for a comprehensive approach to system change.

Overall, the text outlines a call for greater collaboration among disciplines and the active participation of accountants in shaping circular economy practices, as well as a recognition of the existing research challenges in the field.

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X-TIMESTAMP-MAP:LOCAL=00:00:00.000,MPEGTS=900000

00:00.145 --> 00:03.885
The dominant capitalistic economic model is branded in

00:04.015 --> 00:07.845
rapid cheap production for mass repeated consumptions,

00:08.725 --> 00:10.925
followed by easy and ineffective disposal.

00:11.625 --> 00:16.445
And we know this, tech, make waste as we say it,

00:16.585 --> 00:20.925
as well as had detrimental consequences and ecosystems

00:20.985 --> 00:24.165
and human population, with the amount of waste

00:24.165 --> 00:25.405
and garbage and pollution.

00:26.065 --> 00:29.685
And so we know our planetary boundaries limited,

00:30.265 --> 00:33.805
and we have to drastically reduce our conception

00:33.805 --> 00:34.965
of natural resources.

00:35.905 --> 00:40.325
And so, shifting from what we say tech make waste,

00:40.565 --> 00:44.885
capitalistic economic model toward a circle economy means

00:44.955 --> 00:48.525
that we are gonna reuse what is supposed to be a waste.

00:49.105 --> 00:51.925
And it's become food. It's become food for something else.

00:51.985 --> 00:56.245
So for instance, let's imagine you farmer, you had manure,

00:56.705 --> 00:59.885
and then manure can become, something

00:59.885 --> 01:01.885
that's gonna help you produce crops.

01:01.945 --> 01:03.205
You know, that's the spirit

01:03.385 --> 01:05.885
of the circle economy is, is to be the color.

01:06.425 --> 01:09.885
And if you think about nature, there's no waste in nature.

01:10.185 --> 01:13.725
You know, like when the leaves fall from the, the, the tree,

01:13.875 --> 01:15.845
then the nature, the soul, and,

01:16.105 --> 01:19.205
and then there would be, mushrooms and then animals.

01:19.305 --> 01:20.765
So there's no waste in nature.

01:21.385 --> 01:23.285
And so that's what we try to achieve.

01:23.505 --> 01:27.765
So to shift this model, we need basically

01:27.785 --> 01:31.405
to change the way we assess and distribute value.

01:31.405 --> 01:35.965
Because so far in our society, west is,

01:36.145 --> 01:39.565
is called waste because this is non valuable resources.

01:39.565 --> 01:41.085
It's even a costly resources.

01:41.585 --> 01:43.725
But if you want to transition towards circular economy,

01:43.985 --> 01:47.405
we have to change the way we account for this economy,

01:47.405 --> 01:49.645
which means how are we gonna account, for instance,

01:49.705 --> 01:51.965
the pollution negative externally,

01:52.545 --> 01:54.325
but also how are we gonna account for

01:54.425 --> 01:55.805
how people are gonna work together?

01:56.545 --> 01:59.565
So one is key with circle economy is that

02:00.105 --> 02:01.405
in the economic system,

02:01.585 --> 02:04.405
you only have one organization, one individual.

02:04.545 --> 02:07.805
So you can access the success of this organization,

02:08.185 --> 02:09.925
how much profit they make, you know.

02:10.385 --> 02:12.725
But if you think circle economy, you have

02:12.725 --> 02:14.365
to think about the wellbeing of the system.

02:14.575 --> 02:17.725
Again, thinks about nature is the first of the ecosystem.

02:18.185 --> 02:19.565
So accounting is here,

02:20.025 --> 02:23.365
should you shift the way we assess value

02:23.955 --> 02:26.245
from an individual to a collective,

02:26.705 --> 02:29.725
but also from a linear model to a model.

02:29.985 --> 02:31.165
So that's really interesting

02:31.165 --> 02:34.405
because, secular economy has existed

02:34.745 --> 02:37.925
for mostly 50 years in different forms.

02:38.545 --> 02:40.725
And, one of the key,

02:41.225 --> 02:43.485
person we've been talking about is,

02:43.485 --> 02:44.845
Boulder in the 1960s,

02:45.785 --> 02:50.285
but also, what is typical of the economy is that

02:50.825 --> 02:52.605
it varies across disciplines.

02:52.825 --> 02:56.925
So because it's a collective, systems view,

02:57.425 --> 02:58.765
but you might have some fiscal

02:58.765 --> 03:00.965
Economy in operation management,

03:01.065 --> 03:03.805
you might have it in ecological economics,

03:03.825 --> 03:05.245
you might find it in accounting,

03:05.265 --> 03:08.245
you might find it an engineer of forest management.

03:08.705 --> 03:10.965
And so that a bit, the, the trends,

03:11.065 --> 03:14.165
but also the challenge of the theoretical approach

03:14.305 --> 03:15.565
or this paradigm change.

03:15.625 --> 03:20.285
It has been disperse across disciplines, depending,

03:20.705 --> 03:22.365
who is working on which topic,

03:22.935 --> 03:26.445
which makes the political economy like a fun

03:27.355 --> 03:28.925
theoretical apparatus.

03:28.925 --> 03:31.405
If I, if I may like, it's not like one discipline.

03:31.405 --> 03:32.925
This is what it means in accounting

03:32.925 --> 03:36.445
or this, what it means in management or in ecology.

03:36.595 --> 03:37.925
It's, it's, it's diverse.

03:38.505 --> 03:42.085
So as we find it in literature about circle economy,

03:42.305 --> 03:44.485
we find the same thing in accounting.

03:44.705 --> 03:47.205
So again, we've seen some,

03:47.205 --> 03:49.605
topics in circle economy in accounting

03:49.625 --> 03:52.685
for the past 50 years, but again, quite diverse.

03:52.825 --> 03:57.045
So we have some research on lifecycle performance,

03:57.365 --> 03:59.485
material flow accounting, which basically accounting

03:59.505 --> 04:02.045
for the material flows across the supply chain

04:02.305 --> 04:03.765
or accounting for supply chain

04:03.825 --> 04:07.005
or carbon accounting are accounting for externalities.

04:07.185 --> 04:10.565
So we have had some like pieces of the puzzles,

04:10.585 --> 04:12.485
but quite,

04:13.965 --> 04:15.605
fragmented and quite narrow.

04:16.185 --> 04:18.845
And we have missed, a broad overview.

04:18.915 --> 04:20.965
Like what, what does it mean?

04:20.965 --> 04:23.565
Like what is the paradigm change? What is the big picture?

04:24.305 --> 04:27.885
Uh, what does it, convey in terms of collective change?

04:28.185 --> 04:30.925
That's what we've been missing so far. Yeah.

04:31.025 --> 04:33.685
So, with, Michelle Rod

04:33.945 --> 04:36.045
and Andrea Homi, we've been,

04:36.475 --> 04:40.605
working on this special issue on circle, accounting

04:40.605 --> 04:41.725
for the circle economy.

04:42.025 --> 04:45.005
And so what we've done is that not only we've called

04:45.345 --> 04:48.885
for papers, so we wanted to get, an overview,

04:49.035 --> 04:50.045
like a discipline.

04:50.075 --> 04:52.485
Like we wanted to have a moment in the accounting

04:52.485 --> 04:55.525
discipline, bringing researchers working on the circular

04:55.525 --> 04:57.765
economy and see what's going on there.

04:57.905 --> 05:00.085
So we've organized that for some years.

05:00.185 --> 05:01.485
We organized workshops.

05:01.665 --> 05:03.885
Uh, we called for pa, we had a call for papers,

05:04.025 --> 05:06.965
and at the end of it, we have five really wonderful papers

05:07.115 --> 05:10.005
that gives a, a overview of the discipline.

05:10.005 --> 05:13.725
That's the first step. But the second step was that even

05:13.795 --> 05:16.325
with those papers, we were somehow frustrated

05:16.435 --> 05:18.045
with the project in the sense

05:18.045 --> 05:22.045
that we haven't had the big pictures and the big agenda.

05:22.185 --> 05:24.805
We wanted, like we, we missed a programmatic agenda

05:24.865 --> 05:28.045
for the discipline that something we wanted to achieve.

05:28.625 --> 05:33.085
So we decided to do, some interviews, with,

05:33.355 --> 05:34.605
with, specialists.

05:34.605 --> 05:36.885
And so we did 18 semi-structured interviews

05:36.955 --> 05:38.605
with 23 individuals.

05:39.105 --> 05:42.045
And we didn't talk to accountant in the circle economy field

05:42.045 --> 05:45.205
because there are really few accountants working on the

05:45.205 --> 05:46.885
circle economy in practice.

05:47.505 --> 05:49.525
Um, so we talked to professionals, we talked

05:49.525 --> 05:51.965
to a few accountants, but we asked them, okay,

05:52.035 --> 05:54.805
what do you think should the role of accounting be?

05:55.185 --> 05:57.205
If you could spill to speak to accounting

05:57.245 --> 05:59.645
and researchers, what would you like to tell them?

06:00.305 --> 06:03.605
And so that's the title of a paper. It's Come Play with Us.

06:03.785 --> 06:05.285
So it's one of our interviewee.

06:05.625 --> 06:09.045
We say, yeah, come play with us, like, please,

06:09.065 --> 06:10.925
we need accounts, we need more involvement.

06:11.345 --> 06:14.565
And so in this paper, we normally account

06:14.625 --> 06:17.405
for the process of the special issue of the different papers

06:17.555 --> 06:20.565
that will give the reader a bit like a snapshot

06:20.825 --> 06:22.605
of what's going on in terms of research

06:22.605 --> 06:23.925
and accounts in the circle economy

06:24.065 --> 06:26.005
by the experts colors in the field.

06:26.345 --> 06:28.165
But we also give a snapshot of

06:28.165 --> 06:30.085
what the practitioners sent we should do

06:30.465 --> 06:33.045
and a bit of ideas for the next research program

06:33.385 --> 06:35.405
for yes, for sure.

06:35.745 --> 06:40.205
Um, so first there are like, there's a lot of hopes,

06:40.225 --> 06:41.525
but also a lot of challenges

06:41.905 --> 06:44.165
and the circular economy professionals.

06:44.905 --> 06:48.405
And I will say the main challenges we found was first

06:48.405 --> 06:51.205
there's some values to implement a circular business model.

06:51.905 --> 06:55.005
And, and part of the model, part of the, the barriers

06:55.185 --> 06:58.685
of the need for cultural shifts within organization,

06:58.735 --> 07:00.085
especially corporations,

07:00.425 --> 07:02.965
but also a lack of support from top manager,

07:03.345 --> 07:05.365
but sometime also from the employees.

07:05.745 --> 07:10.205
And so that's something we really, not, not this in our,

07:10.625 --> 07:13.725
research exchange with the, the interview is.

07:14.145 --> 07:16.365
And so what they were asking somehow

07:16.505 --> 07:17.605
for this typical economy

07:17.665 --> 07:22.645
and accountants, they were asking for more work to help them

07:23.375 --> 07:26.005
value differently, provide them with concrete tools

07:26.145 --> 07:30.325
to assess and distribute the value than they can use in,

07:30.345 --> 07:33.165
in the organization and the corporations, they were asking

07:33.265 --> 07:36.005
for more cheaper as well for norm standards.

07:36.385 --> 07:38.005
And this is what accountants can do.

07:38.005 --> 07:39.365
They can develop standards,

07:39.395 --> 07:41.005
they can develop measurement system.

07:41.665 --> 07:43.805
And, and they were asking for more of those.

07:44.095 --> 07:47.405
Especially some will include social issues.

07:47.515 --> 07:51.365
Because so far the research has been,

07:51.465 --> 07:54.045
geared towards ecological assessment,

07:54.305 --> 07:56.325
but not that much in the social piece.

07:56.945 --> 08:00.205
And that's something that struck us as well, is that

08:00.825 --> 08:02.845
almost all our interviewees say

08:02.845 --> 08:06.165
that we won't have a transition, ecological transition

08:06.195 --> 08:07.645
with a ization.

08:08.035 --> 08:10.885
Like we had to bring social justice and,

08:10.945 --> 08:12.805
and so far the research and accounting,

08:12.805 --> 08:15.845
but also like I would say supply chain management has been

08:15.845 --> 08:18.685
really focused on ecological measurement system,

08:18.835 --> 08:20.845
like optimization of waste.

08:21.185 --> 08:23.445
But the social dimension was, was liking.

08:23.545 --> 08:26.645
And there's something that, that really ask for more.

08:27.185 --> 08:28.725
Um, the other thing that we're asking

08:28.945 --> 08:31.565
for more is more holistic approach.

08:31.635 --> 08:33.165
What will be a system change?

08:33.395 --> 08:35.445
Okay, because okay,

08:35.465 --> 08:38.285
you can get a measurement system in one organization,

08:38.385 --> 08:39.765
but as you understood, you need

08:39.765 --> 08:41.245
to get the old system changed.

08:41.865 --> 08:45.525
And so far as assume accounting is not, equipped

08:45.825 --> 08:47.645
to address the system thinking,

08:47.665 --> 08:49.125
the system measurement system.

08:49.825 --> 08:53.085
And, and so that's something they've been asked a lot.

08:53.665 --> 08:54.885
And and

08:54.925 --> 08:55.925
I thing it will be quite

08:55.925 --> 08:57.925
interdisciplinary research for sure.

08:58.385 --> 09:01.885
And the last thing they we're asking as well, is

09:01.885 --> 09:03.485
to have more accountants involved.

09:03.985 --> 09:07.125
Um, so at the beginning that they say, accountants

09:07.125 --> 09:08.885
that you now minded, they're just think about

09:08.885 --> 09:09.965
financial evaluation.

09:10.065 --> 09:12.045
And then we came with some ideas.

09:12.265 --> 09:14.645
We, we showed them ecological and accounting.

09:14.645 --> 09:16.125
They say, yeah, that's true,

09:16.625 --> 09:18.925
but we don't see them, the organizations.

09:19.465 --> 09:21.845
And so we would like to have more involvement in

09:21.845 --> 09:23.925
what we call social and number accountants

09:23.995 --> 09:26.245
because this is what we need really.

09:26.745 --> 09:28.285
Um, and so for this perspective,

09:28.355 --> 09:32.085
it's also something we discover is that even the accounting,

09:32.485 --> 09:35.525
academics doing research on this topic, were not publishing

09:35.525 --> 09:37.245
that much in accounting journals.

09:37.435 --> 09:39.205
They were publishing in supply chain.

09:39.205 --> 09:42.125
They were published in ecological economics engineer,

09:42.665 --> 09:46.565
but not that much in, in accounting for a lack of audience.

09:46.745 --> 09:48.925
Uh, because they perceived that there was not welcome.

09:49.025 --> 09:52.325
It was a bit too of the forefront of the cutting age,

09:52.565 --> 09:53.605
I will say, in accounting.

09:53.905 --> 09:56.525
And so this is something we really wanted to create as well

09:56.595 --> 09:59.405
with our special issue was to create an I arena

09:59.785 --> 10:01.685
for those researchers to engage as well.

00:00 - The dominant capitalistic economic model is branded in rapid cheap production for mass repeated consumptions, followed by easy and ineffective disposal. And we know this, tech, make waste as we say it, as well as had detrimental consequences and ecosystems and human population, with the amount of waste

00:24 - and garbage and pollution. And so we know our planetary boundaries limited, and we have to drastically reduce our conception of natural resources. And so, shifting from what we say tech make waste, capitalistic economic model toward a circle economy means that we are gonna reuse what is supposed to be a waste. And it's become food. It's become food for something else. So for instance, let's imagine you farmer, you had manure, and then manure can become, something

00:59 - that's gonna help you produce crops. You know, that's the spirit of the circle economy is, is to be the color. And if you think about nature, there's no waste in nature. You know, like when the leaves fall from the, the, the tree, then the nature, the soul, and, and then there would be, mushrooms and then animals. So there's no waste in nature. And so that's what we try to achieve. So to shift this model, we need basically

01:27 - to change the way we assess and distribute value. Because so far in our society, west is, is called waste because this is non valuable resources. It's even a costly resources. But if you want to transition towards circular economy, we have to change the way we account for this economy, which means how are we gonna account, for instance, the pollution negative externally, but also how are we gonna account for how people are gonna work together?

01:56 - So one is key with circle economy is that in the economic system, you only have one organization, one individual. So you can access the success of this organization, how much profit they make, you know. But if you think circle economy, you have to think about the wellbeing of the system. Again, thinks about nature is the first of the ecosystem. So accounting is here, should you shift the way we assess value

02:23 - from an individual to a collective, but also from a linear model to a model. So that's really interesting because, secular economy has existed for mostly 50 years in different forms. And, one of the key, person we've been talking about is, Boulder in the 1960s, but also, what is typical of the economy is that it varies across disciplines.

02:52 - So because it's a collective, systems view, but you might have some fiscal Economy in operation management, you might have it in ecological economics, you might find it in accounting, you might find it an engineer of forest management. And so that a bit, the, the trends, but also the challenge of the theoretical approach or this paradigm change. It has been disperse across disciplines, depending,

03:20 - who is working on which topic, which makes the political economy like a fun theoretical apparatus. If I, if I may like, it's not like one discipline. This is what it means in accounting or this, what it means in management or in ecology. It's, it's, it's diverse. So as we find it in literature about circle economy, we find the same thing in accounting. So again, we've seen some,

03:47 - topics in circle economy in accounting for the past 50 years, but again, quite diverse. So we have some research on lifecycle performance, material flow accounting, which basically accounting for the material flows across the supply chain or accounting for supply chain or carbon accounting are accounting for externalities. So we have had some like pieces of the puzzles, but quite, fragmented and quite narrow.

04:16 - And we have missed, a broad overview. Like what, what does it mean? Like what is the paradigm change? What is the big picture? what does it, convey in terms of collective change? That's what we've been missing so far. Yeah. So, with, Michelle Rod and Andrea Homi, we've been, working on this special issue on circle, accounting for the circle economy. And so what we've done is that not only we've called

04:45 - for papers, so we wanted to get, an overview, like a discipline. Like we wanted to have a moment in the accounting discipline, bringing researchers working on the circular economy and see what's going on there. So we've organized that for some years. We organized workshops. we called for pa, we had a call for papers, and at the end of it, we have five really wonderful papers that gives a, a overview of the discipline.

05:10 - That's the first step. But the second step was that even with those papers, we were somehow frustrated with the project in the sense that we haven't had the big pictures and the big agenda. We wanted, like we, we missed a programmatic agenda for the discipline that something we wanted to achieve. So we decided to do, some interviews, with, with, specialists. And so we did 18 semi-structured interviews with 23 individuals.

05:39 - And we didn't talk to accountant in the circle economy field because there are really few accountants working on the circle economy in practice. so we talked to professionals, we talked to a few accountants, but we asked them, okay, what do you think should the role of accounting be? If you could spill to speak to accounting and researchers, what would you like to tell them? And so that's the title of a paper. It's Come Play with Us. So it's one of our interviewee.

06:05 - We say, yeah, come play with us, like, please, we need accounts, we need more involvement. And so in this paper, we normally account for the process of the special issue of the different papers that will give the reader a bit like a snapshot of what's going on in terms of research and accounts in the circle economy by the experts colors in the field. But we also give a snapshot of what the practitioners sent we should do

06:30 - and a bit of ideas for the next research program for yes, for sure. so first there are like, there's a lot of hopes, but also a lot of challenges and the circular economy professionals. And I will say the main challenges we found was first there's some values to implement a circular business model. And, and part of the model, part of the, the barriers of the need for cultural shifts within organization, especially corporations,

07:00 - but also a lack of support from top manager, but sometime also from the employees. And so that's something we really, not, not this in our, research exchange with the, the interview is. And so what they were asking somehow for this typical economy and accountants, they were asking for more work to help them value differently, provide them with concrete tools to assess and distribute the value than they can use in, in the organization and the corporations, they were asking

07:33 - for more cheaper as well for norm standards. And this is what accountants can do. They can develop standards, they can develop measurement system. And, and they were asking for more of those. Especially some will include social issues. Because so far the research has been, geared towards ecological assessment, but not that much in the social piece. And that's something that struck us as well, is that

08:00 - almost all our interviewees say that we won't have a transition, ecological transition with a ization. Like we had to bring social justice and, and so far the research and accounting, but also like I would say supply chain management has been really focused on ecological measurement system, like optimization of waste. But the social dimension was, was liking. And there's something that, that really ask for more.

08:27 - the other thing that we're asking for more is more holistic approach. What will be a system change? Okay, because okay, you can get a measurement system in one organization, but as you understood, you need to get the old system changed. And so far as assume accounting is not, equipped to address the system thinking, the system measurement system.

08:49 - And, and so that's something they've been asked a lot. And and I thing it will be quite interdisciplinary research for sure. And the last thing they we're asking as well, is to have more accountants involved. so at the beginning that they say, accountants that you now minded, they're just think about financial evaluation. And then we came with some ideas.

09:12 - We, we showed them ecological and accounting. They say, yeah, that's true, but we don't see them, the organizations. And so we would like to have more involvement in what we call social and number accountants because this is what we need really. and so for this perspective, it's also something we discover is that even the accounting, academics doing research on this topic, were not publishing that much in accounting journals.

09:37 - They were publishing in supply chain. They were published in ecological economics engineer, but not that much in, in accounting for a lack of audience. because they perceived that there was not welcome. It was a bit too of the forefront of the cutting age, I will say, in accounting. And so this is something we really wanted to create as well with our special issue was to create an I arena for those researchers to engage as well.

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