The Circular Economy - where waste is minimised, and the value of products and resources are kept in the system for as long as possible - offers a number of benefits to Europe. These include the potential for economic growth and job creation, encouraging innovation, enhancing the security of supply chains and building economic and environmental resilience. It offers an opportunity to make the European economy more competitive and more sustainable - bringing benefits to industry, businesses and citizens.
According to the recent European barometer, focusing on circular economy and SMEs and published in June 2016 in Europe, nearly three quarters of SMEs (73%) have undertaken some activities related to the circular economy in the past 3 years. The most common activities include minimising waste by recycling, reusing or selling it to another company (55%) or re-planning energy use to reduce consumption (38%). Although the majority of the companies in the 25 Member States have undertaken some activities, there are still large variations across the EU. Looking for instance at some of the CESME project member countries, in the UK and Greece, two third of the companies are already taking actions (84% and 73% respectively). In Bulgaria, on the other hand, less than half of the SMEs are taking steps to become more circular (44%).
Amongst companies which have undertaken activities related to the circular economy, 61% say they have encountered at least one or several issues. The most mentioned potential obstacles are complex administrative or legal procedures (34%), the cost of meeting regulations or standards (32%) and the difficulties on accessing finance (27%).
Amongst companies that have not undertaken activities related to the circular economy, the most mentioned potential obstacles are the lack of clear idea about cost benefits or improved work processes (27%), the lack of or clear idea about investment required (27%) or the lack of expertise to implement these activities (26%). The CESME project offers some relevant solutions to meet some of these challenges.
Accessing the circularity of SMEs
In order to know if SMEs are fit for circular business models, it is important to know how to assess the level of their green profile. Do companies invest in renewable energy? How is waste recycled during the production process? Is the company promoting repair/reuse to keep their products in use for a longer period? This first set of questions may be of high relevance to already acknowledge the first efforts done by a company before starting its circular transformation. At the same time, it is essential to measure and track the progress in order to get a roadmap of possible future actions.
Several tools have been developed, tested and used in the recent years. Some are qualitative in essence, others focus on quantitative results. A number of organisations such as Ellen MacArthur and McKinsey, but also minor organisations have developed tools to score the green profile of a company. They all differ in terms of focus, level of details, output format, etc.
As there are several tools on the market already, there is no need to develop yet another tool. The CESME project has examined the different tools in order to identify one that is:
In order to identify the existing tools on the market, different contacts were held with direct sources:
Some publicly founded projects have also been analysed to identify relevant tools: H2020, FP7, Erasmus+, Leonardo da Vinci, Interreg with deliverables including some green evaluation tools.
Based on the identification of the tools, they were all cross-evaluated according to the criteria mentioned above. In the framework of the CESME project, an online tool was favoured. A tool focusing exclusively on circular economy was also considered preferable. Following this first filtering exercise, two tools remain: 1) The Circular Economy Toolkit and 2) The Circle Assessment.
As the latter is currently be adapted to be made available in an open source version ready by summer 2017, it is the first advised to use The circular economy toolkit.
The Circular Economy Toolkit
The toolkit is developed by Cambridge University and is located on the link: www.circulareconomytoolkit.org
The toolkit is an online self assessment tool, free of charge where no qualitative data are needed. The challenge is broken down into seven key opportunities.
The Circular Economy Toolkit supports businesses in developing more environmentally sound decisions which will create new opportunities, save money and attract customers. With the vast number of possibilities for creating value out of circular economy and cradle-to-cradle thinking, it can be challenging to asses all the options. The Circular Economy Toolkit has consolidated all the opportunities and provided information on how companies can benefit from circular economy.
The website provides a '5 Minute Assessment Tool' which analyses the products and services sold by a company and gives guidance on potential improvement areas. The 'Workshops' section encourage companies involve themselves by downloading all the materials they need to run their own workshop and start finding opportunities for themselves.
The opportunity assessment tool has combined literature, survey results and observatios from workshops. The assessment tool provides an indicator of potential areas for business opportunities or improvements according to the product design and the business operations. Greater benefit may be seen according to industry, product, positioning in the value chain, relation with the customer, etc.
The tool provides a large set of dimensions related to circular economy. The toolkit offers relevant information and training material associated with the assessment tool.
The overall approach focuses mainly on manufacturing companies, whereas the tool is less relevant for companies with a strong service approach. It should be noted that the assessment tool considers the result against best practice e.g. using 100% fully recycled materials even though it might be technologically unachievable as the assessment tool is unable to assess the difficulty for the business to further stretch the product or service performance. This needs to be undertaken in a more thorough discussion and analysis.
The Circle Assessment Tool
The toolkit is developed in the Netherlands and is located on the link: www.circle-economy.com
The tool is available on request. An open source version will be available from September 2017. The full version approach comes against a fee. A lighter open source version is available free of charge.
It is an online tool to help businesses understand the different operational and organisational aspects of the circular economy, following the seven specific categories defined as key elements of the circular economy.
The Circle Assessment Tool enables investors to review the circularity of companies within their portfolio and collaborate with investees to improve their circular performance in order to reduce their risks, capitalize on new opportunities and enable long-term growth.
It is the first ever automated online tool designed to assess the circularity of a company through a set of six key indicators known as the C.I.R.C.L.E framework which allows the company to evaluate their performance through an online survey. Companies are evaluated based on the extent to which they are pursuing and implementing various circular business strategies and investors are able to review the circularity of their investees and identify areas in which they can improve the overall performance of their portfolio.
The results of the tool score the companies on their current circular thinking as well as educates companies on potential circular opportunities to explore further. The assessment can be completed for the entire organisation, completed across multiple business divisions as well as completed over time to track the progress.
The tool in its full version may also provide relevant information for business advisors who may get overall insights on strengths and weaknesses of SMEs at local level.
As the tool is focusing on a qualitative assessment, it may be relevant to combine it with a quantitative approach as well.