Modern society is increasingly recognizing that the United Nations’ (UN) current efforts to promote sustainable development face constant challenges (Chatham House, 2024). This has prompted a shift in focus as nations realize the circular economy’s potential to steer global economic development and address numerous social challenges (World Economic Forum). A circular economy implies an economic model that involves consumption and production, which is designed to reduce waste. One of the primary objectives of this economic model is reuse, repair and recycling of products and materials. The concept of circular economy is well developed and has been widely considered by most governments. The circular economy is a popular and reliable approach to sustainability compared to other ineffective and destructive economic models of the modern world. Despite the positive outlook for the circular economy, its strategies have remained secondary to the main goal. However, it is possible to formally and fully incorporate the circular economy’s principles into the discussion as the international community continues to discuss how to refocus its attention and attain the Sustainable Development Goals (SDGs). The SDGs are a set of 17 global objectives aimed at addressing urgent social, environmental, and economic challenges by 2030 (United Nations 2015). The circular economy, which focuses on reducing waste, reusing resources, and promoting sustainable production and consumption, directly supports several SDGs—particularly those related to responsible consumption (SDG 12), climate action (SDG 13), and sustainable economic growth (SDG 8)—by creating systems that minimize environmental impact and promote long-term sustainability (Geissdoerfer et al. ). This article examines some of the innovative ways the circular economy can be stimulated, especially by multinational organizations, like the International Monetary Fund (IMF), to transform resource management and ensure sustainable development.
This paper argues that the circular economic model is the best approach that can help attain the SDGs, especially due to the failure of the current linear economic model to address the challenges the world is facing today with respect to climate change. The SDGs are a framework developed by the UN with the aim of ending poverty and other forms of deprivation. The circular economy blends effectively with the SDGs because they are both designed to ensure improved living standards of populations using sustainable means. Since the adoption of the SDGs, there has been little progress in attaining its agenda due to the problems brought about by the current linear strategy of obtaining raw materials, creating products, and producing waste from the unused materials (Schröder & Barrie). The waste is discarded into fields, which become pollutants. Only a small percentage of this waste is converted into usable materials, contributing significantly to the pollution and environmental degradation observed today. The circular economy promises to address these failures by creating a smart system that focuses on minimizing waste, ensuring that the available resources are used in a sustainable way, embracing designs that ensure regeneration of the natural environment, prolonged use of materials and resources, and re-use (Schroeder, Anggraeni, & Weber, 2019).
The circular economy offers a better model that can be used to address the problem of climate change and bring back lost biodiversity. The model is better because it is sustainability-oriented and focuses on economic practices and tendencies that prioritize environmental well-being. Therefore, the circular economy model offers a more promising strategy when it comes to furthering the SDG agenda of promoting effective resource management and ensuring sustainable development. (Geissdoerfer et al.). The circular economy approach not only reduces environmental impact but also fosters economic growth by creating new business opportunities through the reuse, repair, and recycling of products and materials. By shifting away from a focus on extraction and waste, the circular economy creates a more sustainable way to boost jobs, spark innovation, and make better use of resources—helping both the economy and the planet in the long run. (Schröder, Anggraeni, & Weber).
While other organizations such as the Food and Agriculture Organization (FAO) and NGOs can also contribute to the SDG agenda, this paper considers the IMF and other financial institutions like the World Bank as the most suited to stimulate the circular economy. Why? For circular economy initiatives to have an impact at both the national and international levels, they require significant funding. Since many developing countries face economic challenges, they are unable to implement or fund some of the current environmentally sustainable and smart development programs that could advance the circular economy to a point where it brings notable changes in resource use. (Enriquez et al., 2021). As a result, these countries often depend on external funding or partnerships with international organizations to fill financial gaps. However, without strong domestic policies and the proper infrastructure in place, these efforts may not lead to long-term change, making it harder to improve resource use and waste management in a meaningful way.