Businesses may have more than profit on their mind when they look at circular economy

Current business support guidance may be missing opportunities to engage companies with circular economy practices by assuming that business managers and owners are solely motivated by money.

A circular economy can help companies minimise their input of natural resources, reduce waste, and optimise the use of materials and products throughout their lifecycle. Current business support guidance, such as that provided by the European Commission and Ellen MacArthur Foundation, suggests companies should be tempted to consider circular economy practices primarily by the potential for cost savings and business growth.

However, in a recently published paper by RRfW we argue that this perception of the motivation for businesses to engage with circular economy is out of step with experiences on the ground and risks missing opportunities to increase uptake of circular economy practices.

Business support projects in Yorkshire and Cornwall regularly observed that economic growth was not the main reason for many small and medium-sized companies to start exploring circular economy practices. Some did not want to ‘disrupt’ their relatively successful businesses by becoming, as they saw it, less personable and more complex to manage. Other business managers and owners took pride in their regional identity and were more motivated by wanting to support other local businesses and their communities. Evidence suggests that in the UK 22% of the ca. 5 million small businesses are led by environmental and social missions and may be looking to join up socially-oriented entrepreneurship with circular economy practices. Such companies may be less receptive to circularity arguments focused on economic growth.

Formal business support services able to explain the benefits of circularity and help businesses implement resource efficiencies are fundamental to accelerating wider participation in a circular economy. Companies need such support to develop the knowledge and skills to transform their activities and contribute to a sustainable, circular economy. This is particularly true of smaller companies who regularly work at the margins and are not blessed with the time, people or financial resources required to explore the changes needed for the adoption of more circular practices.

We suggest that guidance for the initiation stage, in which business managers and owners explore circular economy solutions, should be expanded with a broader range of arguments that go beyond the purely economic to attract their initial interest for circular economy. Business support should be more sensitive to the diverse motivations that business managers and owners can have to look into circular economy, including environmental and social as well as economic reasons. Otherwise, the growing proportion companies – from small to medium-sized, large and multi-national – that are socially orientated may fail to be drawn to a circular economy and the significant potential benefits this provides.

Lead author Dr Anne Velenturf notes “There are large sways of business owners and managers who want to contribute to a better environment and stronger communities as well as economic prosperity. This is an untapped potential that could accelerate a move towards circular economy.”
“Guidance has to be evidence-based and not based on tired stereotypes of business behaviour. There is a risk that without government support companies remain stuck in old growth centred narratives, but with the current business support that is on offer, that risk may be equally high.”

Read the full article at:
Velenturf et al. (2019). A Call to Integrate Economic, Social and Environmental Motives into Guidance for Business Support for the Transition to a Circular Economy. Administrative Sciences. 9(4), 92; doi: 10.3390/admsci9040092, Open Access. This article belongs to the Special Issue Industrial Ecology and Innovation

Feature image (top) by Alexsander-777 from Pixabay