=Paper=
{{Paper
|id=Vol-3049/paper19
|storemode=property
|title=Digital Infrastructures for Governance of Circular Economy: A Research Agenda
|pdfUrl=https://ceur-ws.org/Vol-3049/Paper19.pdf
|volume=Vol-3049
|authors=Boriana Rukanova,Yao-Hua Tan,Robin Hamerlinck,Frank Heijmann,Jolien Ubacht
|dblpUrl=https://dblp.org/rec/conf/egov/RukanovaTHHU21
}}
==Digital Infrastructures for Governance of Circular Economy: A Research Agenda==
https://ceur-ws.org/Vol-3049/Paper19.pdf
Digital Infrastructures for Governance of Circular
Economy: A Research Agenda
Boriana Rukanova*, Yao-Hua Tan*, Robin Hamerlinck**,
Frank Heijmann***, Jolien Ubacht*
*Delft University of Technology, The Netherlands {B.D.Rukanova@tudelft.nl; Y.Tan@tudelft.nl;
J.Ubacht@tudelft.nl}
**Ministry of Infrastructure and Water Management, The Netherlands
***Customs Administration of The Netherlands, The Netherlands
Abstract: Circular economy and sustainability are high on the political agendas of governments.
Governments, but also other actors like banks, insurance companies, and auditing firms play a
key role in setting (regulatory) requirements, instruments and incentives, as well as monitoring
mechanisms to stimulate and monitor CE activities. Governance of CE for ensuring that CE
regulation and instruments are properly implemented is key, however, lack of visibility in CE
flows poses a major challenge. Digital infrastructure innovations hold potential to provide
visibility into the CE flows. However, so far, in the IS and eGovernment research, there is very
limited research on how digital infrastructure innovations can enable and support CE governance.
In this paper, therefore, we provide a framework and outline a research agenda on that topic.
Keywords: Circular economy, governance, monitoring, digital infrastructures, data pipeline.
Acknowledgement: This research was partially funded by the PEN-CP (nr. 786773) and the PROFILE
Project (nr. 786748), which are funded by the European Union’s Horizon 2020 research and
innovation program. Ideas and opinions expressed by the authors do not necessarily represent
those of all partners.
1. Introduction
Our society is facing big challenges today of how to combat climate change and move towards a
sustainable way of living and circular economy (CE). Circular economy can be defined as “an
industrial system that is restorative and regenerative by design. It rests on three main principles:
preserving and enhancing natural capital, optimizing resource yields, and fostering system
effectiveness” (MacArthur, 2016, p. 32). At an international level, developments such as the Paris
agreement have put these issues as high priority on the political agenda. In the EU, the ambitious
Green Deal of the European Commission sets the targets for Europe to move to circular and climate
neutral economy by 2050. Governments, but also banks providing green loans play a key role in
developing instruments to stimulate businesses and citizens to move in that direction. For example
Copyright ©2021 for this paper by its authors. Use permitted under Creative Commons License Attribution 4.0 International (CC BY 4.0).
192 Ongoing Research
the European Commission is now introducing new instruments such as the Carbon Border
Adjustment Tax that will be imposed on imports of carbon-intensive goods such as steel and cement,
with the idea to protect EU industries from cheaper foreign goods from countries where no carbon
taxes are in place. These instruments will only be effective if proper monitoring mechanisms are in
place to reduce adverse effects. Governance of CE, for ensuring that instruments and measures that
are put in place to stimulate CE, coupled with the appropriate monitoring measures is key for
achieving the transition towards CE. Governance can be broadly defined as all processes of
governing, whether undertaken by a government, market, or network, whether over an entire
system, formal or informal organizations, or individuals part of such a system, and whether through
laws, power, contracts, norms, language (adjusted from Bevir, 2012, p. 1). In our context, we will
limit that definition to the context of CE. In our understanding governance applies to governments,
but also other actors such as banks, insurance companies, and auditing firms, which have a keen
interest in CE. Governance of CE is very challenging due to the lack of visibility in the CE flows.
While digital technologies hold great potential for enhancing visibility, the area of CE governance
and the role of digital technologies to enable that is an area that is largely unexplored in the
Information Systems (IS) and eGovernment research and this is an area which we set to explore.
2. CE in IS and eGovernment Research
While digital technologies hold great potential to support CE, this is still an area that has not received
much attention in the IS community. To address this gap a recent paper published in one of the top
IS journals (Zeiss et al., 2020) called for mobilizing IS scholars for CE. Still, in this call limited
attention is paid to the role of IS and digital technologies to support CE governance. Similarly, the
topic has also received very limited attention in the eGovernment literature. When conducting a
SCOPUS search on publications (including journals and conferences) with Circular economy (in
title, abstract, keywords) and Government (in source title) we identified only 22 papers, majority
appearing in proceedings of the International Conference on E-Business and E-Government, ICEE
in 2010 and 2011). After that there appear to be limited follow-up research on circular economy in
conferences or journals containing government in their title. We do see a growing interest in the
eGovernment community on the broader topic of sustainability (e.g. in D.go2021 a dedicated track
on Digital Government and Sustainable Development Goals), however this is still on a broad range
of topics and not specifically directed towards CE and CE governance. While we do acknowledge
that our literature search is limited, it does indicate a gap in the existing IS and eGovernment
literature on CE goevrnance and how IS and digital innovations can support it.
Ongoing Research 193
3. Foundations for Understanding CE Governance
3.1 Understanding CE System
For understanding CE governance, it is crucial to make the CE flows explicit. The Circular Economy
Systems Diagram1 of the Ellen MacArthur Foundation, which is widely used in research and
practice, provides a solid base to make the CE flows explicit. The model contains two loops. One
focusing on finite materials and one on renewables. It allows to trace how materials and renewables
are used in the processes of parts manufacturing, product manufacturing, and service provisioning
with the goal to minimize waste. This is done by stock management of the finite material flows,
which can be via prolonged use to refurbishment and recycling, and management of the renewable
flows ensuring an environmentally-friendly return of the flows to the environment. This model can
help actors to better understand which part of the process they are focusing on. Let's take export of
plastics from the Netherlands to a third country outside of the EU. This would relate to the part of
the model that refers to reuse and recycling. In practice, the CE flow of plastics is part of international
supply chains where many borders are crossed. The crossing of borders is a key step where
government authorities (in our example customs, as well as the Human, Environment and Transport
Inspectorate) play a key role in monitoring the CE flows. Such cross-border aspects, however, are
not captured explicitly in the CE model and need to be made explicit when discussing governance
of CE. To be able to better monitor the CE flows and ensure that the CE instruments that are put in
place (such as subsidies, taxes and penalties) are applied correctly, government authorities need to
have access to information and obtain more visibility on the (cross-border) CE flows. However,
looking at some recent scandals with export of plastics it becomes evident that it is very hard for the
authorities in the country of export to monitor what actually happens with this plastic when it enters
the third country and whether it is indeed used for recycling as stated on export documents, or
disposed as waste. Next to the border crossing, there is another aspect, i.e. the aspect of visibility
and the use of digital innovations to enable visibility of CE flows. The visibility aspect is not captured
in the CE model but is crucial for the governance of CE flows.
3.2 Digital Trade Infrastructures as Potential Enablers for CE Governance
Digital innovations (digital infrastructures and platforms, internet-of-things, physical internet,
blockchain) have a great potential to create visibility. However, for CE governance we need to get a
visibility and understanding of CE flows that cross international supply chains and how
governments and other agencies can use such visibility for CE governance. To understand these
aspects we draw upon a stream of research from the international trade domain, namely research
on digital trade infrastructures (Rukanova et al., 2018)2. The research on digital trade infrastructures
1 See https://www.ellenmacarthurfoundation.org/circular-economy/concept/infographic (last
visited 27-5-2021)
2 This research builds on the information infrastructure research from the IS literature but has a specific
focus on international trade and the role of government.
194 Ongoing Research
has been developed in a series of EU-funded innovation projects (ITAIDE, INTEGRITY,
CASSANDRA, CORE, PROFILE and PEN-CP), a key example being the so-called data pipeline
concept (Klievink et al., 2012, Hesketh, 2010). The ideas have been further extended to focus on
voluntary business-government information sharing (Rukanova et al., 2020), big data analytics
(Rukanova et al., 2021a), as well as on the use of blockchain-enabled data pipelines (Tan et al., 2019).
The idea of the data pipeline can be metaphorically seen as a sort of “internet for logistics” which
enables supply chain visibility. The data pipeline concept includes a physical layer where the goods
travel; an organizational layer, capturing key actors like the sellers and the buyer. Understanding
this network of actors is very important for customs as knowing who the real buyer and seller of the
goods are forms a key part of the customs risk analysis. Next, there is an information layer. The data
is captured at the source where the data is produced. Via the data pipeline, parties that hold specific
data (e.g. invoice) can, on voluntary basis, grant access to that data to other businesses or
government authorities. Finally, the data pipeline concept also explicitly includes the authorities,
indicating that different authorities of different countries or regions can set rules and supervise the
flows of goods on their territory. Some blockchain-enabled data pipeline solutions such as
TradeLens have already been commercialized on a global scale. The traditional data pipeline concept
takes as a starting point the seller and the buyer and related visibility. For CE purposes, the data
pipeline concept needs to be extended to capture CE flows such as production, recycling and re-use
and at the border (Rukanova et al., 2021b). Further elaboration of how such extensions can be done
is lacking. Furthermore, the focus on using the data pipeline so far has been limited only to
monitoring and control by government. This provided a limited view on CE governance. In this
paper we broaden this view to other actors and other functions than monitoring.
3.3 CE Governance
In the introduction we started with a broader definition of governance (Bevir, 2012) and we limited
our focus on CE. The definition that we use is broad and allows both government authorities,
businesses and other actors to take part in governance. For our further understanding we will first
focus on the role of government and we will then broaden to other actors. Maciejewski (2017)
distinguishes among three functions of government, namely: “(1) Public supervision – identifying
irregularities (e.g. legal incompliance) and taking responsive action. (2) Public regulation –
regulating social conduct and shaping social relations by means of permits, prohibitions or orders.
(3) Public service delivery – providing certain services or products” (Maciejewski , 2017, p. 124). We
use these functions to define CE governance more precisely. We use these in a broad sense, to include
government, but also other actors, such as banks, insurance companies, and auditing firms. This is
feasible, as e.g., while governments are introducing CE regulation and instruments to stimulate
plastic recycling and re-use, banks are introducing CE regulation and instruments regarding green
loans for plastic, and auditing firms are auditing the more and more looking into the corporate social
responsibility aspects. Second, when discussing CE governance, we are interested not only in the
monitoring, but in all three aspects, namely: (1) regulation including instruments for CE, (2)
supervision, including monitoring of CE activities, (3) CE service delivery. This last can be seen as
CE services that can be provided to businesses and citizen (e.g. assurances about CE flows).
Ongoing Research 195
4. A Framework for Understanding of Digital Infrastructures for
Governance of CE
Figure 1 presents a framework for understanding digital infrastructures for governance of CE. We
distinguish three levels: (1) CE system which would allow to make the CE flows explicit; (2) Digital
infrastructures for CE visibility: here we use the extended data pipeline concept (Rukanova et al.,
2021b) which includes also aspects such as extended visibility on (2a) production; (2b) re-
use/recycling; (2c) at the border; (3) CE governance: inspired by Maciejewski (2017) our framework
explicitly includes three aspects of CE governance: (c1) Regulation (instruments- incentives and
taxes), (c2) Monitoring (by authorities, banks, auditors) and (c3) Service delivery.
For the visibility to the production process a key question is what information can be of value for
CE governance. Possible directions to consider would include information on raw materials and
how these raw materials were obtained, information on ingredients, parts used in manufacturing
and product manufacturing itself. This entails that the information and the stakeholder network
connected to the data pipelines need to move upstream and include information on suppliers of
parts and raw materials. This requires capturing new type of information on the production process
such as information on bill-of-materials, (blending) methods used, types of farming (e.g. intensive
vs. extensive) and harvesting, product recipes, etc. For visibility in re-use/recycling, it would require
a deep understanding of actors and information requirements. These will be new actors that collect,
repair, or re-use products at the end of the lifecycle. Visibility related to earlier phases such as
production and use are crucial for the re-use stage both for the businesses that are involved in the
reuse and recycle processes, as well as for other parties like governments, banks, insurers and
auditors responsible for compliance monitoring of these flows. Of particular interest for governance
of CE is also information on secondary raw materials that are result from the recycling processes. A
third way to improve visibility is to improve visibility of the CE flows at the border. Aspects of this
increased visibility may include data on sustainable certificates (e.g. UTZ cocoa, FSC timber, MSC
fish), digital product passport, chemical composition etc. At the same time, at the borders,
increasingly sophisticated technologies are available at the disposal of governments (such as novel
scanning and detection technologies that can detect the chemical composition of goods, lab
equipment etc.). These technologies offer opportunities to compare the physical and document flows
and identify mismatches and irregularities. For example governments are now using instruments to
stimulate CE products via the classification system of goods descriptions (HS codes).
In practice, current developments in digital infrastructures such as blockchain-based platforms
like TradeLens for container shipping, FoodTrust for food visibility and Vinturas for second-hand
cars are setting steps towards supply chain visibility. However, these do not, or only to a limited
extent, address the issue of CE governance. Taking the CE view from our framework reveals that
TradeLens covers container level visibility and visibility of documents (e.g. invoice, Bill-of-Lading)
and events (e.g. container loaded). But TradeLens does not cover the production processes, neither
what happens with the product after it is delivered to the buyer.
196 Ongoing Research
Figure 5: A Framework for understanding the governance of CE enabled by digital infrastructures
Other platforms such as FoodTrust for food traceability and Vinturas for second hand cars do
cover item-level tracking but also have a limited CE focus and limited interactions with authorities.
These, blockchain-based, but also other industry-driven initiatives such as One Record of IATA
could provide a good starting point for extending the visibility in the directions needed for CE
governance. Based on the discussion so far, we derive several broad research questions/themes that
can advance the understanding of digital infrastructures for governance of CE.
Ongoing Research 197
Digital Infrastructures for Circular Economy Governance
(I) What are potential data sources that can be used to extend digital trade infrastructures to
include CE aspects to support CE governance?
This could include data sources to help to create:
(1) Visibility on the production processes (e.g. through bill-of-material, product recipes);
(2) Visibility on re-use/recycling (e.g. goods provenance, visibility on secondary raw materials for
recycling/ re-use);
(3) Visibility at the border (e.g. digital product passports; data from detection technology and lab
equipment that can perform real-time analysis of chemical composition of materials at the border).
The exploration of these data sources can include but is not limited to business supply chain or
production data, data from platforms (eCommerce platforms, other platforms), open
(government) data, geo-special data, data from sensors and devices.
(II) What is the role of new technology for CE governance?
The role of technologies such as blockchain technologies for immutability of data, Internet of
Things (IoT) and Physical Internet (PI), data analytics and artificial intelligence (AI), as well as
standards (such as chain-of-custody) in enabling cradle-to-cradle visibility can be examined.
(III) How can digital infrastructures for CE visibility support CE governance?
Topics for further research can focus on: (1) How can CE visibility be used by governments, banks,
insurance companies, auditing firms to set new CE instruments and (regulatory) requirements or
to redesign current CE instruments? (2) How can government, banks, insurance companies and
auditing firms use CE visibility offered by digital infrastructures to monitor, audit and account
CE supply chains? (3) How can this enhanced CE visibility be used by government, banks,
auditing firms to enhance service delivery (e.g. offering CE assurances to consumers)?
5. Conclusions
The transition to CE heavily depends on CE governance performed by actors such as governments,
banks, insurance companies and auditing firms. In this paper we propose a framework and outline
a research agenda on digital trade infrastructures for CE governance. This paper can be seen as a
response to the call for mobilizing IS researchers for CE, where our specific focus is on CE
governance and how digital infrastructures can support that.
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About the Authors
Boriana Rukanova
Researcher at Delft University of Technology, The Netherlands
Yao-Hua Tan
Professor at Delft University of Technology, The Netherlands
Robin Hamerlinck
Team leader market based instruments at the Ministry of Infrastructure and Water Management, The
Netherlands
Frank Heijmann
Director of Trade Relations, Customs Administration of The Netherlands, The Netherlands
Jolien Ubacht
Assistant professor at Delft University of Technology, The Netherlands