Developing an ecosystem of business networks to support SMEs transition to the circular economy

The research aims to understand the enablers, challenges, and support required, to the transition to the circular economy to build an ecosystem of business networks supporting Small and Medium-sized Enterprises (SMEs) in this shift.

Overview

The circular economy (CE) has been advocated as a solution to build better resilient economy, that it is distributed, diverse and inclusive. However, it is not clear what actions are required and what support measures exists to accelerate the transition. Despite large-scale calls and support from global leaders to build a CE, progress has been limited. In addition, the role of Small and Medium-sized Enterprises (SMEs) in the transition to the CE has received little attention in comparison to large businesses. This is particularly important given that in the UK SMEs account for 99.9% of the business population and are estimated to collectively account for 50% of all UK business CO2 emissions. Hence, understanding how SMEs can successfully transition to the CE is vital to meet net-zero goals and build a resilient economy. 

Project description

The Covid-19 pandemic has brought unprecedented challenges to our society and made visible the vulnerability of the current linear economic mode of production and consumption. There have been widespread calls to step away from ‘business as usual’ to build back better after the Covid-19 crisis (WRI, 'Coronavirus Recovery', 2020). This is pertinent in the light of bigger future threats due to global environmental change. The circular economy (CE) has been advocated as a solution to build better resilient economy, that it is distributed, diverse and inclusive. However, it is not clear what actions are required and what support measures exists to accelerate the transition. Despite large-scale calls and support from global leaders to build a CE, progress has been limited (OECD, 'Policy Responses to Coronavirus', 2020). In addition, the role of SMEs in the transition to the CE has received little attention in comparison to large businesses. This is particularly important given that in the UK SMEs account for 99.9% of the business population, three fifths of the employment and around half of turnover in the UK private sector (FSB, 'UK Small Busines Statistics', 2021). These smaller businesses are estimated to collectively account for 50% of all UK business CO2 emissions (British Business Bank, 'Smaller Businesses and the transition to net zero', 2021). Hence, understanding how SMEs can successfully transition to the CE is vital to meet net-zero goals and build a resilient economy. The research aims to understand the enablers, challenges, and support required, to the transition to the CE to build an ecosystem of business networks supporting SMEs in this shift. 

Timeline and funding

Timeline

February 2022-July 2022

Funding

HEIF fund co-sponsored by SSRP (£30,050)

Activities

  • SME interviews: Data collection from SMEs understanding their experiences of integrating circular actions (Take, Make, Distribute, Use and Recover), circular business model choices, motivations towards integrating circular actions, and barriers and enabling factors supporting the transition.
  • Stakeholder interviews: Data collection to identify city-wide initiatives, existing support measures for SMEs, and accessibility and relevance of such measures to CE transition in order to understand gaps in the existing support measures.
  • Development of a CE self-assessment tool: Using data from SME and stakeholder interviews to develop an easily accessible, transparent self-assessment tool for SMEs to identify steps to increase circularity in their existing activities. This will be further refined by piloting the self-assessment tool with five businesses.

Expected impacts and outcomes

It has been recognised that focussing on energy alone is not sufficient to meet the net-zero goals. According to the Ellen MacArthur foundation, 55% of the reduction in emissions required to meet net-zero can be achieved by emerging technology and diet shift while 45% is associated with how we make things. A CE offers a systemic and cost-effective approach to tackling the 45% (Ellen MacArthur Foundation, 'How the circular economy tackles climate change', 2021). However, there is a lack of information and strong case studies focussed on SMEs, which is important for learning and realising the practical reality of the CE adoption. The project will directly contribute to creating a SME focused CE knowledge hub consisting of:

  • Database of case studies from different sectors, particularly focussing on SMEs documenting their experience in the transition process, adoption of net-zero practices and CE targets (see above). The Blueprint project has a database of self-selecting businesses but lack details and case studies. There is a potential to link our database to the Blueprint project for wider benefits.
  • Self-assessment tool that can be utilised by SMEs to start the transition process.
  • A selection of possible business ideas targeted at entrepreneurs interested in establishing or transitioning to a CE Business model
  • Support ecosystem linking resources with businesses, expert mentors with nascent entrepreneurs, and support measures to reduce barriers to the transition
  • Contribution to the continued development of Brighton and Hove circular route map and goals

SMEs have shown positive attitudes towards reducing environmental impacts and have adopted a few net-zero practices to reduce their costs. However, lack of information on production processes and low-carbon technology and lack of skills are barriers to the adoption of net-zero practices (Applied Institute for Research in Economics, 'COVID-19, SMEs and net zero', 2021). The findings from the study will provide the necessary CE knowledge, showcase best practices of CE adoption and develop capacity of businesses that will be essential to accelerate the transition for a lasting recovery. The findings will have practical implications through an understanding of what is required to transition, where and how to integrate net-zero practices through CE and what is stopping businesses from transitioning.

The case studies and findings from this project will enable businesses in understanding how CE can provide a framework to achieve carbon emission reductions. Similarly, the self-assessment tool and identification of CE targets will help in identifying different areas that will contribute collectively to a more resilient, cost effective business with lower carbon emissions. These areas would include but not be limited to waste generated, energy consumed, materials recycled, use of virgin material and biological material. This information will support businesses to systemic approach to revaluate their product/service/process design according to CE principles leading to a reduction in carbon emissions.

This project will strengthen a lasting collaboration with Circular Brighton and Hove and Brighton and Hove City Council (BHCC) to develop goals and the route map to CE through supporting SMEs. The project lead has been collaborating with the BHCC in developing a circular route map. As Brighton and Hove has been frontrunner in many initiatives, including a first city in the UK receiving Gold Sustainable Food Places award, the circular knowledge hub could act as a model hub establishing collaboration opportunities for other cities and stakeholders. Building collaborations with businesses in different sectors and other organisations such as Green Growth PlatformBrighton and Hove Chamber of Commerce, and the Blueprint Project to develop a profile of circular businesses and improve support mechanism for SMEs to transition to CE.

The team

Where we worked

Brighton and Hove, United Kingdom.