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Towards the circular economy: what UK SMEs need to know

The ‘circular economy’ is an increasingly popular term as consciousness of sustainability grows. What is the circular economy and what opportunities does it offer UK SMEs?

Circular economy definition

‘Reduce, reuse, recycle’ is an ever more familiar mantra as environmental awareness increases. Reduced to its simplest form, the circular economy is an expression of these principles.

Unlike a traditional ‘linear economy’ – where the mantra may be fairly be expressed as ‘make, use, dispose’ – a circular economy keeps resources in use for as long as possible, extracting the maximum value then recovering the maximum amount of materials to use them again (recycle, reuse).

As sustainability focused charity Wrap explains, the benefits of a circular economy include:

  • creating new opportunities for growth
  • reducing waste
  • delivering a more competitive economy
  • building resilience to emerging resource security/scarcity issues
  • reducing environmental impacts of production and consumption


Circular economy design

There are both ‘push’ and ‘pull’ factors moving us towards a circular economy: the push is the increasing price – both monetary and economic – of the old ‘take, make, waste’ economy; the pull is the untapped opportunity to offer products and services that fit into a circular economy.

Perhaps unsurprisingly, the environmental focus of the EU will steadily increase the ‘push’ impetus. As recently reported, the European Commission has argued that a circular economy is necessary in a world with finite resources and a booming population. The EC’s new circular economy package will include fresh legislation on waste, fertilisers, and water reuse, “strong commitments” on eco-design, strategies for handling plastics and chemicals, and “major” funding for innovation.

Documents quoted by edie suggest there will be “targeted action” in food, construction, industrial and mining waste, and public procurement.

While measures will likely initially focus on larger corporates, small to medium sized enterprises should examine their consumption, especially if they are in the aforementioned ‘priority’ sectors. Current best practice should be followed and may be adequate for initial EC rules.

The proposed Eco-design plan (for 2015-17) is trickier to predict. The focus will be on developing product requirements but, while the current Eco-design directive focuses only on energy efficiency, the next one will consider resource efficiency issues such as reparability, durability, and recyclability.

Manufacturers would be advised to consider changes to their products, bearing in mind that Extended Producer Responsibility schemes will mandate producers to pay for the recycling of their products.

But the circular economy goes further than this: innovative companies can revolutionise the way they interact with customers, potentially boosting profits as they do so.

Circular economy products

You may think that your business could not offer anything relevant to the circular economy. But even simple strategies could make a difference. In addition to recycling your own waste, you could take customers’ too: options range from old bottles to used-up aerosols and more. Done correctly, you might be able to actually make money, allowing you to incentivise customers, reduce prices or increase profits.

Going one step further, some companies have already chosen to take back their used products at the end of their life, offering a discount on new purchases in exchange. This can be a win-win if the producers can reuse or recycle components.

One step further is a new model of collaborative consumerism, which, as a report from the Ellen MacArthur Foundation explains, means a move away from ownership. Instead, consumers access products on demand, essentially renting or leasing them. For businesses, this opens the door to more frequent touch points and greater brand loyalty.

Green business energy

For many SMEs, this may seem unattainable. If the digital revolution is anything to go by, a few disruptors may blaze a trail into the circular economy that others follow later (and less profitably). For most of the UK’s smaller companies understanding the shift to circularity and making some modest initial changes should be enough (for now).

Awareness of environmental issues is central to the circular economy. Renewable business energy arguably plays a crucial role in this, and showing your company’s commitment can help you stay ahead of the competition.

Perceptions of green business energy as overpriced and unreliable are now outdated. A substantial and growing proportion of the UK’s business electricity comes from renewable sources. SMEs may be surprised at how cheap green business electricity can be. offers a comprehensive comparison of sustainable business electricity deals – including 100% renewable deals – and switch supplier in just 20 minutes. Just complete the form at the top right of this page or call 0330 010 0251.

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