Alliances for Responsible Production and Consumption in Latin America

Combining circular economy and humanistic management benefits the value chains and the stakeholders of Latin American companies

Alliances for Responsible Production and Consumption in Latin America

PetStar is a PET plastic bottle recycling company that has implemented a circular business model, based on a “bottle-to-bottle” strategy. This means that the value chain is fully integrated, from the collection of used bottles to production. Waste pickers or collectors are at the core of this strategy, having been incorporated into the process under a humanistic approach to a collection partnership program.

For its part, Heineken México has focused on responsible water consumption through alliances with small producers, integrating technologies and methods such as drip irrigation, crop rotation, and the use of the Internet of Things in its crops. It has also prioritized local suppliers and facilitated programs for financing and negotiating favorable prices for farmers.

Finally, Natura is an example of how to fight deforestation in the Amazon by collaborating with indigenous communities to create a fair, transparent supply chain. Among other actions, the company has promoted environmentally-friendly farming and contracts with European chocolate manufacturers. As a result, the biocapacities of habitats and working conditions have been improved.

These three companies have successfully implemented a comprehensive approach in their supply chain through a humanistic and circular economy approach. In addition, they have been guided by compliance with the UN Sustainable Development Goals (SDGs). PetStar has addressed SDGs 2. Zero Hunger; 3. Good Health and Well-being; 12. Responsible Consumption and Production; 14. Life Below Water; and 15. Life on Land. For its part, Heineken Mexico has tackled SDGs 1. No Poverty; 8. Decent Work and Economic Growth; and 10. Reduced Inequalities. Finally, Natura has focused on SDGs 2. Zero Hunger and 13. Climate Action.

Another common strategy they share is combining circular economy with humanistic management, two approaches that merge operational innovation and responsible production with the creation of stakeholder well-being rather than the creation of wealth. This is the central theme of a chapter I wrote together with my colleague Ana Rosa Leal, from Universidad de Monterrey, recently published in the book Humanistic Management in Latin America (“Supply Chain Management. Humanistic Management and Circular Economy: Fostering Industry Innovation and Decent Work through Responsible Consumption and Production Through Partnerships,” Routledge, 2021).

Supply chain management involves various actions that include production, transportation, and sales functions, involving stakeholders such as producers, distributors, retailers and customers, and service providers. Traditionally, supply chain management has been based on generating efficiencies and cost reduction, but this efficiency scheme has created negative impacts, called externalities. To avoid this, the sustainable development approaches of the value chain have gradually evolved over the years, giving rise to different paradigms such as:

  • Green supply chain management: Seeks efficiencies while reducing the impact on the environment. However, it fails to address social problems by focusing solely on environmental and economic aspects.
  • Sustainable supply chain: Applies the triple-bottom-line logic: economic, environmental and social. However, it continues to direct its efforts towards the search for efficiencies.
  • Humanistic management: Concerns the influence of ethics on management’s decisions and the creation of well-being for stakeholders, moving away from mechanistic paradigms.
  • Circular economy: Represents an industrial system that is restorative or regenerative by intention and design, which addresses the dynamics of the value chain by focusing on maximizing what is already in use, from source to consumption. According to this model, product prices should include negative externalities to reflect their cost, which would be an incentive to foment cleaner, more ethical production.

In conclusion, humanistic management and circular economy are two sides of the same coin. Although circular economy focuses more on finding innovative ways to regenerate natural capital while preserving economic logic, it also ensures that collaboration with suppliers pursues a common benefit, thereby consolidating their competitive advantages. Circular economy innovations also drive responsible consumption and production, which, in turn, generates a cascade effect among Latin American suppliers and consumers.

The author is professor of Sustainability and Technological Innovation at EGADE Business School.

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