The informal sector: a blind spot in the circular economy? An innovative response with BIC, King's College London, and Fundação Dom Cabral in Brazil

Corporate sustainability strategies now almost always include a circular economy component. But in many emerging markets, circularity isn't a goal still to be reached : it already exists. For decades, it has rested on millions of workers who are almost always invisible in ESG reports.

This is precisely the observation BIC and Archipel&Co wanted to place at the heart of their work in Brazil, as they design a collection program.

Brazil counts 800,000 catadores, who carry out the bulk of the country's recycling activity. They sort, collect, and resell materials, running a fully-fledged circular system, with no label, no reporting, and no real integration into the value chains of the companies that nonetheless benefit from it indirectly.

When a multinational like BIC launches a collection program, two approaches are possible: building on top of what exists or building in complementarity with it. From the outset, the aim was never to roll out a solution designed in a vacuum, but to understand how to build it alongside the actors already on the ground, particularly those in the informal sector, without erasing their role or disrupting existing balances.

This choice is not symbolic: it shapes the model's effectiveness, legitimacy, and robustness. It is within this framework that the first collaborations began with six cooperatives in Rio, anchored in an action-research project led with King's Business School and Fundação Dom Cabral. The project aims to identify how corporate circularity strategies can connect with informal waste management systems, built on recognition, complementarity, and shared value creation.

One financial point is worth highlighting: Brazil's 2021 recycling incentive law, the Lei de Incentivo à Reciclagem, grants tax benefits of up to 1% of taxes owed to companies that support catador cooperatives : a powerful lever, still largely underused, with real potential to reshape the economics of these kinds of partnerships.

The early results of our fieldwork in Rio confirm what we've observed for years across Africa, India, and Latin America: the informal economy isn't a gap to be filled. It follows its own logic, often more resilient than the models layered on top of it.

Which leaves the real question for companies looking to move beyond circular "greenwashing": how do you create fair, sustainable, and recognized value together with these actors?

 

A heartfelt thank you to our partners, BIC, King's Business School, and Fundação Dom Cabral, as well as the six cooperatives in Rio and their catadores, for their trust, their commitment on the ground, and the rich exchanges that have shaped this project.