A new leadership paradigm is required, and that paradigm must have ethics at its heart, writes Ron Botes

The current global economy is a linear one, built on a model that extracts raw materials from nature, turns them into products, and then discards them as waste. Less than 10% of used materials are recycled. The concomitant burden on the environment continues to exacerbate the climate change, biodiversity, and pollution crises. And if this doesn’t change, experts predict that we’ll need three planets by 2050 to fulfil our resource demands.

     Given that’s not possible, something has to change.

     The new, or sustainable circular, economy has introduced us to emerging trends such as generative AI and climate change impact, alongside geopolitical and labour turmoil. Meantime, the aviation industry is adopting sustainable fuel to reduce carbon emissions. This fuel, made from biological material, can now be used with existing aviation infrastructure. It’s one of a number of emerging trends driven by innovation, sustainability, and adaptability.

Continued evolution

It’s the product of nonlinear thinking. The continued evolution of the new economy requires leadership thinking that can deal with its unique challenges and opportunities.

    It requires leaders who:

• Respond rapidly to changing circumstances, disruptive technologies, and shifting market dynamics, and therefore with agility and adaptability;
• Understand digital technologies and data analytics that inform decision-making and drive innovation;
• Are purpose-driven, inspiring teams by connecting their work to a higher purpose, and prioritising social impact, sustainability, and ethical practices;
• Foster collaboration across industries, organisations, and disciplines, recognising interdependencies and leveraging collective intelligence; and
• Champion sustainable practices, circular economy models, and responsible resource use, considering long-term impact beyond short-term gain.

     The circular economy and ethical leadership are interconnected concepts that play crucial roles in shaping sustainable business practices. The circular economy is an economic model that aims to minimise waste, promote resource efficiency, and create a closed-loop system. Instead of the linear take-make-dispose approach, the circular economy focuses on designing products, processes, and systems that keep materials in use for as long as possible – in other words, reduce, reuse, recycle.

Not always perfect

Implementing a circular economy presents several challenges, especially from a leadership perspective.

     Writer Karen Bartel notes that the closed loop supply chain cannot always be perfect, particularly where chemical and biological processes are concerned, and because material degradation and mixing over time requires injection of new materials and energy into the supply chain to maintain quality. Nonetheless, remanufacturing can cut demand for virgin materials and their associated carbon emissions, and sharing resources – from premises that are not at 100% capacity, to social capital and expertise – can inject new life into the economy.

     Transitioning from a linear economy to a circular one requires a fundamental mindset shift. Leaders must move away from short-term profit maximisation and embrace long-term sustainability.

     Ethical leaders can drive this shift by emphasising the value of resource efficiency, waste reduction, and environmental stewardship. Shifting organisational culture to embrace circular values requires leadership commitment, employee engagement, and alignment with purpose.

     Ethical leadership refers to leading with integrity, honesty, and a genuine commitment to ethical principles.

     Ethical leaders’ decision-making considers the wellbeing of all stakeholders, including employees, customers, communities, and the environment. Ethical leaders are transparent, accountable, empathetic and fair, and exercise these characteristics to shape the culture and values of their organisations.

Fallout

Unethical leadership violates moral standards with exploitative, self-serving action that encourages subordinates to follow suit, creating an organisational culture that is toxic, unprofessional, and oftentimes inept.    

     The fallout from unethical leadership can be devastating. Events at Volkswagen (VW) provide a case in point. The discovery that VW was installing software in diesel vehicles to defeat emissions testing, and that former CEO Martin Winterkorn was aware of it – though he continues to deny this – has so far cost VW almost $35-billion in fines and lawsuits. The company’s share price plummeted, and its reputation was severely damaged. And nine years on, Winterkorn has yet to stand trial in VW’s home country for fraud.

Stakeholder trust

Ethical leaders, in the context of the circular economy, champion sustainability, promote responsible resource use, and prioritise long-term benefits over short-term gains. They encourage circular practices within their organisations such as waste reduction, responsible sourcing, and ecofriendly product design.

     Their ethical leadership complements circular economy efforts by ensuring that environmental and social considerations are central to decision-making. The two go hand in hand. And staff, following the tone at the top, and are more likely to adopt sustainable practices, helping their leaders build stakeholder trust and satisfaction.