Deliverable 6.2 : summary of key factors of CEBM

Abstract

R2π – Transition from Linear to Circular is a European Union Horizon 2020 project focused on enabling organisations and their value chains to transition towards a more viable, sustainable and competitive economic model to support the European Union’s strategy on sustainability and competitiveness. The aim of this report is to obtain both cross-cutting and context-specific insights on the Circular Economy Business Model (CEBM) based on 18 case studies which were identified by the project. The report is accompanied by an inventory database of all case studies under analysis, consisting of a tabular collection of the main attributes and context of each of the case studies’ characteristics. The preparation of this report involved an in-depth review of all case studies to identify the similarities, differences and patterns across cases. This comparison included the examination of categorical attributes, the analysis of which allows the extraction of the most pervasive benefits, enablers, as well as barriers of the collection of case studies. Section 1 of this report provides an overview of the method. The selection of the 18 studies sought to ensure coverage of the seven business model patterns defined by the R2π project, namely re-make, re-condition, circular sourcing, co-product recovery, resource recovery, access, and performance; to cover all five priority areas highlighted in the EU Action Plan on the Circular Economy namely plastics, food waste, biomass/bio-based, critical raw materials, and construction & demolition (C&D). The case studies, presented in Section 2 were to already be implementing a relevant circular economy business model, to be geographically situated in Europe/Isreal, and to offer access the right people within the organisation. The environmental, social and economic benefits that the case-study proponents identified are provided in Section 3. While all case studies made mention of environmental benefits, fewer explicitly mentioned social benefits. Macro-economic benefits such as the creation of employment opportunities were mentioned by some of the cases, while micro-economic benefits such as consumer benefits and firm-level gains were mentioned by several of the case-studies. Key enablers are discussed in Section 4. For the cases studied in this report, they include business targets, the prospect of cost reduction and engaged and loyal customers at the business level; positive demographic trends, environmentalism and burgeoning waste volumes, as well as a spectrum of enabling sectoral conditions at the contextual level; and the presence of EU policy and pro-circular policy and incentives at the national level. Section 5 focuses on the key barriers which, for the cases in this report, include disadvantageous cost-benefit ratios at the business level; lack of infrastructure, technology, financial support at the contextual level. These together with a range of sectoral conditions, dynamic changes and problematic consumer preferences create a significant number of barriers at the Contextual level. Furthermore, the absence of regulation, the lack of fiscal measures that internalise external costs, and the extent of obstructive policy and bureaucracy militate against the transition to CEBM by policy itself. Section 6 shuffles the enablers and barriers across the CEBMs, the CE priorities and also provides an examination of the issues by case study size. In this cases study sample, policy emerges as a more important enabler and barrier for SMEs rather than large businesses. For larger firms, the issue of policy at EU level - harmonization and uncertainty was increasingly relevant. While enablers tend to be consistent across all CEBMs in these case studies, certain barriers tend to be more CEBM-specific. In this analysis, the re-conditioning CEBM recorded the lowest number of enablers and one of the highest number of barriers. The distribution of enablers across the five CE priorities also varied, emphasizing the need for targeted policy interventions within each area. Within this selection of case studies, businesses within the critical raw materials priority mentioned the highest number of barriers and the lowest number of enablers, which suggests that more attention may need to be given in this area. Section 7 concludes the report, pointing out that in the absence of time series information, data on the impact and reach of each of the case studies, as well as controls which did not adopt CEBM but remained linear, the success, or otherwise on circular objectives is difficult to ascertain. The findings nonetheless point towards a few clear insights for the future of business and policy in the quest to transition to CEBM. At the business level it seems pertinent to encourage enterprise to set circularity targets, to better understand the benefit-cost ratio of circularity and to engage loyal, pro-environmental customers. At the policy level the challenge is for governments to address present policy barriers to scale-up targeted, sectoral intervention with a view to internalising environmental externalities and favouring CEBMs over linear business practises - at both the national and the European Union level.