We must help SMEs to seize the opportunities of a circular economy
Not only are we living through a global pandemic, but we are also facing a climate emergency. In response to both these pressing issues, supporting ‘circular’ SMEs can help us to recover from the economic shock of repeated lockdowns – and do so in a way that builds a greener economy, delivering significant reductions in the amount of carbon emissions that we contribute to global heating through our consumption of stuff.
Circular economy business models reduce consumption-based emissions, which are those associated with raw material extraction, production, shipping, use and finally disposal at the end of an item’s life. Crucially, these emissions are caused by the consumption of goods and services ‘ including the clothes, food and other products we use every day. For most cities and territories in the global north, these emissions usually happen remotely ‘ not within their geographical boundary ‘ and often in the global south.
To put this into context, the C40, a network of around 100 of the world’s biggest cities, have shown that 85% of the emissions associated with goods and services consumed in C40 cities are imported from elsewhere. It found that, in order to limit global heating to 1.5 degrees, we need to reduce consumption-based emissions by 50% by 2030 and by 80% by 2050. This is obviously a huge challenge to our current lifestyles.
The Ellen Macarthur Foundation note that in combating climate change, the world has focused mainly on a transition to renewable energy and energy efficiency measures ‘ a major first step to deal with 55% of global GHG emissions. However, according to research carried out by Material Economics for the Ellen MacArthur Foundation, producing stuff ‘ such as cars, clothes and food ‘ accounts for around 45% of global CO2e emissions. There is currently no easily available technological change that can cut these emissions. The only way to reduce them is to reduce the production of high carbon intensity food, textiles and plastics, or to reduce the need for steel, aluminium and cement production. And there is the rub.
Without a system that enables us all to thrive economically, how can we stop buying and consuming stuff? And there will always be loads of waste to dispose of, right?
This is where the circular economy plays a unique and essential role. By replacing linear production and use with circular production and use, the circular economy will enable us to massively reduce consumption-based emissions (and the resulting waste) – and still be economically productive. It does this through three essential principles: designing out waste and pollution; keeping products and materials in use; and through regenerative natural systems.
There are five essential circular economy business models: the use of recycled materials for making new products; making products themselves recyclable; making stuff that is repairable or durable; the sharing economy; and leasing goods or servitising products (for instance, renting washing machines instead of buying them, so that the provider is responsible for their maintenance, take-back and re-use or recycling; or streaming music for a monthly fee instead of buying lots of individual CDs).
The challenge for us all is to provide businesses and citizens with the tools they need to massively reduce waste by helping to promote and use circular economy businesses and their services. Whether that means buying durable items and getting them repaired; renting or sharing clothing; designing buildings that can be taken apart, relocated and rebuilt elsewhere; sharing excess food through online apps; or simply composting and recycling our waste ‘ the circular economy allows us to truly design out waste from the system.
Circular businesses and those that wish to transition to circular business models should be given technical and financial support and promoted to residents, as well as engaged by both public and private sectors to provide more circular services. There are almost 6 million SMEs in the UK ‘ over 99% of all businesses ‘ so SMEs have a critical role to play in delivering the circular economy.
As part of the successful transition to a circular economy, we must ensure that people have the skills needed to benefit from a growing green sector so that everyone can access circular and clean tech job opportunities, and that nobody is left behind in this transition. There is already some excellent work being done on jobs and skills, including by WRAP and Circle Economy, who have created an important framework to understand the circular jobs sector, by segmenting jobs into core, enabling and indirect.
London is one of the best cities in the world for thriving green businesses and in June, London’s Deputy Mayor for Energy and Environment, Shirley Rodrigues, signed a letter along with other politicians and the CEOs of some of the world’s biggest companies which said: “As the world faces unprecedented challenges, we are more committed than ever to accelerating the transition to a circular economy, creating solutions that combine economic opportunity with benefits to wider society and the environment. At the same time, we will be contributing to a green recovery in which we can build back better.”
To back this up, the Mayor of London announced a first tranche of funding under his green new deal programme. The London Waste and Recycling Board (LWARB) have received some of that to provide free advice and financial support to SMEs in London who are already using, or who want to adopt, circular business models. The funding will help London’s thriving low carbon circular sector to keep innovating.
LWARB’s Advance London programme has already supported more than 200 SMEs to transition to circular business models, or scale their existing circular economy ventures, creating a strong circular business ecosystem with a combined turnover of £50 million and supporting more than 800 jobs. If you are interested in finding out more or applying for support, you can register your interest here: https://advancelondon.org/our-services/green-new-deal/
Our current ‘take, make, dispose’ model isn’t working; we need a profound change, and we need it quickly. This isn’t a choice between a healthy environment and thriving economy ‘ but it is a choice between the old linear, wasteful economy, and the new resilient and sustainable circular economy. Empowering SMEs to be the backbone of the circular economy is a win-win for everyone.
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