The Circular Economy: Cities Leading The Transition

Marta Suplicy • October 21, 2022

Marta Suplicy, Municipal Commissioner of International Affairs for the City of São Paulo, asserts that cities—even megacities such as São Paulo—can lead the transition to a circular economy. Drawing from Sao Paulo's impressive initiatives, Suplicy shares the inspiration and the road map for regenerative urban policy, with no one left behind.The circular economy is a key to not only fighting climate change and implementing sustainable development, but as a tool for transforming our reality and the cities we live in. It is an instrument that allows a municipality to harness the potential of food production, food security with a shorter production chain, and lower emissions. It can open new perspectives and opportunities as well as offer ways of building a new economic model. The transition to a fair and responsible circular economy also involves the study, planning, and setting of priorities with the effective participation of civil society.


Latin America is a region with great biological diversity, allowing truly transformative experiences to create regenerative value chains from our abundant resources while promoting and fostering local economies. Over the years, São Paulo has been paying close attention to issues such as regenerative agriculture and waste management to build well-structured urban policy. In recognition of this leadership, we signed a Cooperation Agreement with UN-Habitat. And in early 2020, we were recognized as Strategic Partners with the Ellen MacArthur Foundation, alongside London and New York City.


Connecting The Dots: A Robust Public Policy

In addition to these potentials, São Paulo has already approved and is developing a circular food system across our city. It is promoting new businesses, jobs, training, and education opportunities by creating a system of positive overflows. The Connect the Dots project is one of our biggest success stories in recent years and is now entering a next phase. The initiative was the winner of the Bloomberg Philanthropies' Mayors Challenge Award in 2016 and subsequetly was featured in the BBC's documentary series Transforming Cities. After several successful years and with the end of Bloomberg’s financing, São Paulo is preparing to make Connect the Dots a lasting public policy. Cases like this will serve as inspiration for the development of urban and sustainable food systems.


Another food circularity initiative in São Paulo is our Combatting Food Waste program, which leverages the hands-on knowledge of our public agencies overseeing our food supply logistics. São Paulo's food waste is delivered to the Municipal Food Bank, where it goes through screening before 85% is donated to those facing food insecurity. The 15% unfit to distribute for meals is then delivered to the city's sustainable composting yards. This residual food waste is transformed into high quality organic compost, used throughout our city's parks and distributed for free to our residents.


Rainforest and Plastic 

With over 12 million inhabitants, São Paulo has the potential to significantly reduce climate impacts through circular economy systems that offer a sustainable model for urban public policy. The city is one of the first and remains one of the few regional metropolises to commit to a circular model for plastics and to enact the reduction and elimination of single-use plastics. Our main partners for developing São Paulo's circular economy include the Ellen MacArthur Foundation and the United Nations Environment Programme, with whom we have collaborated since 2019 in The New Plastics Economy. This partnership applies a circular economy model to areas beyond the food initiative, transforming São Paulo into a circular capital.


The circular economy also provides opportunities to foster more sustainable land use, one that cultivates organic food from regenerative agriculture while ensuring income generation for farmers and protecting native rainforest. This path is transforming São Paulo into a green capital and enabling a just and equitable economy. As recognition of that, São Paulo received the title Ibero-American Green City from the Union of Ibero-American Capital Cities (UCCI) this past September.


Communication and Public Engagement

In early May 2022, we hosted the inaugural Circular Economy Week in Latin America, offering a spectrum of circular economy panels with experts from academia, civil society, business, and the public sector. To engender broad public engagement with the UN Sustainable Development Goals (SDGs), São Paulo hosted the first “Virada” SDG Event in July 2022, with 10 event hubs throughout the city. Partnering our municipal school system, Virada brings meaningful education and understanding in the SDGs to our youth living across the farthest reaches of metropolitan São Paulo.


We believe that these types of events and public communication initiatives offer both the inspiration and the dialogue necessary to engaging our city's diverse stakeholders and to furthering effective policies. Yet more than that, education is one of the main pillars of this circular transition. It is only by fostering knowledge around climate change and the importance of sustainable business that we will be able to make the powerful shifts towards a circular economy. This is made possible with the help of schools, theatres, live events, televised talks shows, and even TV soap operas. All these platforms help us to address and engage with the range of topics at hand.


Conclusion

As you can see, São Paulo is harnessing many innovative solutions to address climate change and sustainability through a circular economy approach. From best practices to success cases, these initiatives create a whole series of incentives that drive the development of circular solutions for the city. For cities like São Paulo, there are incredible opportunities for wealth generation through the broad implementation of the circular economy and the ongoing dialogue between municipal leadership and citizens. We have a plan and a commitment with our community, and we are driven to deliver it.


Making the transition to a circular economy can provide a policy response for meeting the multiple crises of both climate change and the Covid-19 pandemic, where cities can be the enablers of the systemic shift that is necessary. We understand the action that is needed. Yet to build lasting change, it is key to have everyone on board and committed to delivering impactful projects and policies for a greener future, with no one left behind.


That is our path. And along it, every citizen’s heart in São Paulo is beginning to embrace the circular economy.


PHOTO: Fábio Andrade | Ibirapuera Park, São Paulo


About the Author:

Marta Suplicy
Municipal Commissioner of International Affairs
City of São Paulo

Read perspectives from the ISSP blog

By Nicole Cacal, MSc, October 30, 2025
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By Sobel Aziz Ngom, CEO, Tostan September 25, 2025
For 35 years, the NGO Tostan has partnered with communities across Africa to define and achieve their own vision of sustainable development based on respect for human rights. In our September ISSP Blog, Tostan CEO Sobel Aziz Ngom shares Tostan's unique approach to enduring community-led development: include all, listen before acting, take time to build trust, and share ownership with humility. Start With Community: The First Mile of Sustainable Development September 2025 Sobel Aziz Ngom CEO, Tostan When I stepped into the role of CEO at Tostan, I did not come in with the illusion that I already understood its unique approach. On the contrary, both our Board and senior leadership advised me to begin slowly, by listening, learning, and asking questions. This guidance resonated with my own experience: that lasting change only happens when communities feel ownership and define priorities in their own voices. For me, these first months have been a journey of re-affirmation and discovery. 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By organizing collectively, the women strengthened their economic group, improved how they managed resources, and increased the income generated from their activities around the lagoon. This story is a reminder that when relationships change, so do livelihoods. Social inclusion becomes the foundation for economic empowerment. Prepared ground, lasting growth It is often tempting to judge progress by what is visible: a new structure built, a service installed, or an activity launched. But the real difference lies beneath the surface, in the preparation that makes lasting results possible. Think of planting a tree. In dry, unprepared soil, even a strong seed struggles to take root. It may sprout quickly but soon withers when conditions become harsh. In well-prepared and nourished soil, the very same seed grows deep roots, withstands storms, and bears fruit for generations. Communities work in much the same way. 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Trust accelerates coordination and makes accountability real. These are lessons for leadership too: trust, fairness, and resilience are as essential inside organizations as they are in village water committees. Avoiding shortcuts (and their costs) Under pressure, it is tempting to cut corners: brief consultations, over-engineered technology, committees without real mandates, or community sessions held in languages people rarely use. These approaches may deliver short-term outputs, but communities often remind us that the hidden cost is confidence. The same temptation exists in leadership transitions: to announce, to prove oneself, to act before listening. But each shortcut risks raising the cost of trust later. Spaces for sharing and mutual learning Practitioners often ask how such community capabilities are built and sustained. At the Tostan Training Center in Senegal, these questions are explored not through formal lectures but through spaces of sharing and mutual learning. In these settings, facilitators and community members sit side by side with practitioners, opening dialogues in local languages and revisiting real experiences from villages that have gone through Tostan's Community Empowerment Program. Instead of theory, people see how conversations unfold, how inclusive decisions are made, and how trust is gradually built. The value lies in what participants carry back: not a prescription, but a set of practices they have witnessed, tested, and adapted to their own contexts. This kind of exchange helps those working with communities to strengthen their partnerships, avoid common pitfalls, and ground their initiatives in methods that last. For me, it is also a reminder that leadership — whether in a village or an organization — grows through shared reflection, humility, and practice, rather than through quick fixes. Closing the loop Sustainability is not only technical or financial. It is civic and relational. 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By Todd Cort, MS, PE, PhD July 25, 2025
Todd Cort, MS, PE, PhD, is a Senior Lecturer at Yale School of Management and Yale School of the Environment and serves as Faculty Co-director of both the Yale Center for Business and the Environment and the Yale Initiative on Sustainable Finance. In our July blog, he sheds light on the fundamental importance of financial modeling for sustainability to be a core part of business strategy. Do the Math: Why Financial Modeling Is Essential for Sustainability As global markets begin to internalize the financial impacts of climate change and other environmental and social risks, I’ve seen expectations rise sharply for companies to provide financially robust disclosures. Standards and regulations are evolving, and the International Sustainability Standards Board (ISSB) has made it clear that sustainability disclosures must be useful to investors by linking environmental and social risks to enterprise value over the short, medium, and long term. Similarly, the EU’s Corporate Sustainability Due Diligence Directive (CSDDD) requires us to identify and mitigate adverse environmental and human rights impacts across our company’s value chain—including integrating these risks into our corporate strategy and financial planning. These frameworks don’t just ask us to be aware; they demand that we develop a quantitative understanding of how environmental and social risks affect our financial outlook. Simply put: we can no longer talk about sustainability in broad, qualitative terms. We have to do the math. And yet, despite these evolving expectations, I see little movement in risk disclosures and still see almost all in the corporate world treating sustainability as a reporting task, not a financial modeling challenge. The one possible exception being the calculation of appropriate shadow prices for carbon emissions for oil and gas asset planning by companies like Occidental Petroleum and ConocoPhillips. Although even these can be difficult to reconcile with global energy scenarios. The ISSB and CSDDD reference enterprise value, financial planning, and risk mitigation, but I notice that many corporate responses stop at narrative statements—talking about reputational risk, regulatory uncertainty, or stakeholder pressure. While those qualitative insights provide context, they fall short of supporting sound financial decision-making. As a board member, CFO, or investor, I must move beyond vague statements like "climate change may impact our operations" and instead ask: by how much, under what assumptions, and with what financial consequences? Without this level of rigor, we can’t prioritize investments, adjust capital allocation, or weigh transition risks against emerging opportunities. The data challenge I understand the lack of financial modeling and the prevalence of qualitative risk assessment and mitigation narratives issued by corporations today. The data that underlies and explains environmental and social risks feels like it is not up to the challenge of quantitative financial modeling and making statements of financial risk based on shaky data is a good recipe for inviting litigation. Even for the most well documented risks such as climate adaptation, the data can leave enormous gaps in our ability to forecast financial impact. How frequent and of what duration are the expected climate events? Where in my supply chain am I likely to see the greatest disruption? What components or operations will prove to be most vulnerable and most critical in the face of disruption? How will critical stakeholders such as regulators react and respond in the face of severe events? How strained will our backstops such as insurance coverage become in the face of widespread events? These and other questions are important to calculating severity and likelihood of financial risks, but the available data may leave us with enormous sensitivities and error bars in our analysis. However, I have found in practice that the data challenge is frequently not as daunting as it appears. Many variables turn out to be less important to the model, thereby making the data challenge less relevant. In other cases, we are able to find new data sets that provide meaningful insights to critical variables. Even in those cases where the data are lacking and the question is critical, I find that knowing the range and likelihood of outcomes is more useful than an unsubstantiated narrative. Net present value Looking forward, companies must integrate sustainability risk and opportunity into financial modeling tools typically used in capital budgeting and investment analysis to make better strategic decisions. That means projecting the net present value (NPV) of sustainability-related projects, whether it's decarbonizing operations or installing renewable energy systems. NPV is a fundamental tool for companies to assess whether these projects will create or erode value over time, especially when compared to the cost of inaction—such as paying for carbon emissions or recovering from extreme weather damage. A key part of this is choosing the right discount rate—one that reflects our risk-adjusted cost of capital and the long-term calculations of climate investments. If I choose a rate that’s too high, I risk undervaluing the future benefits of resilience; too low, and I might overstate the returns. Embedding sustainability into financial models Practitioners must also recognize that environmental and social risks directly influence key financial metrics like free cash flow, leverage ratios, and cost of capital. For instance, rising water stress and deforestation policies can drive up input costs and squeeze margins in some circumstances and for some companies. Exposure to carbon pricing can increase earnings volatility, which affects beta and ultimately raises the cost of equity. Lenders and insurers are beginning to price environmental risk into debt and premiums, which means corporate cost of capital is increasingly tied to how well companies manage sustainability. If we want to integrate sustainability into our enterprise valuation and ensure that our initiatives are financially sound—not just aspirational—we have to model these dynamics accurately. Equally importantly, we must be cognizant of which financial metrics are most critical to financial health and whether these are the most sensitive factors to sustainability risks. For example, earlier ventures typically live and die by free cash flow whereas larger companies may be much more sensitive to leveraged ratios. Matching the sustainability risk and opportunity to the appropriate line item can be the difference between critical and meaningless insights. At the end of the day, I see financial modeling as the essential bridge connecting sustainability goals, enterprise valuation, and fiduciary duties. By quantifying the financial implications of our net-zero targets, carbon transition risks, nature-positive investments, labor disruptions, and resource constraints, we can move beyond abstract narratives and deliver forecasts that truly guide action. This shift allows wise capital allocation, sets credible decarbonization paths, and communicates sustainability risks and opportunities in ways that matter to investors. For sustainability to be a core part of business strategy—not just a footnote in a report—we must embed it in our financial models. In today’s world of tightening regulation and growing risk, doing the math isn’t optional. It’s essential.
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