Implementing regenerative systems in small and medium-sized businesses

As pollution increases and the climate crisis intensifies, there is an intensifying need for imaginative strategies for waste reduction. Current models of production and consumption are extractive and wasteful of natural resources and energy. However, some industries are shifting from this linear model of “make, use, throw away” to a more sustainable circular economy model. A circular economy prioritizes maximum use of materials by reusing waste in business supply chains. While there is plenty of research on circular economy efforts in large industries, there has been little research on these efforts in small and medium-sized enterprises (SMES). These enterprises constitute 90 percent of the world’s businesses and are responsible for more than 70 percent of industrial pollution. These large percentages create huge potential for increasing sustainability in global business operations.

A study published in the March 2020 Business Strategy and the Environment led by Dr. Prasanta Kumar Dey and his colleagues at Aston University explores the challenges and opportunities for implementing circular economy models in SMES. They specifically analyze manufacturing SMES in the Midlands of the United Kingdom. The researchers use a combination of survey, focus group, and case study methods to collect and analyze data on the current state of sustainability efforts in SMES. They define the fields of action in a circular economy as: take, make, distribute, use, and recover. 

The study investigated how SMES utilize the five fields of action in their business models. Using the combination of research methods, the researchers evaluated sustainability measures such as resource and energy efficiency and waste reduction. Researchers found that make and use field actions were linked to sustainable outcomes for circular economy elements. Take, distribute, and recover did not support these outcomes. Most SMES were focused on immediate profits, growth, and cost-reductive measures – actions associated with the make and use actions – rather than long-term sustainability. Therefore, an emphasis needs to be placed on take, distribute, and recover field actions – actions that support long-term sustainability – to strengthen circular economy practices within SMES. Common roadblocks toward implementing circular economy models include wide-spread lack of financial resources, technical expertise, and incentives from external government policies.

The researchers also found that successful implementation of a circular economy in SMES will need to involve pressure from customers, suppliers, and policy makers. Some SMES have adopted circular economy measures without pressure because it is cost effective to do so. However, more research is needed to further develop cost-optimization strategies that benefit SMES. Additional financial and public support would be required to support cost-intensive measures such as sustainable product designs and the installation of renewable energy facilities. Further strategies involve enhancing customer-informed sustainability measures and strengthening an approach that involves reusing products and materials after user-disposal.

Although this study focuses on SMES in the United Kingdom, the findings can be applicable to SMES in other countries. Considering the increased interest in sustainability at the consumer level, there is a push for SMES to improve production and recovery methods. An increased understanding of the current limitations and potential for SMES to transition toward a circular economy creates opportunities for consumers, business leaders, and policymakers to work together toward more sustainable solutions.