enabalers / barriers
What are the Enablers and Barriers of circularity?
As was noted in the previous section on the experiences of individual business, the R2Pi consortium completed 18 individual case study reports about firms that were using CEBMs as part of their business strategy. A key finding of these reports are the enablers and barriers of said CEBMs. Enablers are factors that create the right environment for circular business models to both be initiated and to thrive, whereas Barriers inhibit or stall the adoption of different CEBMs.
In the report titled, Summary of key factors of CEBMs, the R2Pi consortium summarized the enablers and barriers of CEBMs that emerged from the 18 case study reports. The next set of slides highlights the Enablers and Barriers, as well as provides links to the full summary report where interested parties can read more about the R2Pi consortium’s findings. Note that the Enablers and Barriers are both composed of three factors: Internal Economic, Contextual and Policy. These factors are in-turn broken down into specific elements.
Internal Economic enablers
- Business targets Having clear & defined internal business targets as part of the business strategy (such as the desire to achieve a better environmental performance).
- Cost Management CEBMs can contribute to making costs more predictable and also lead to significant cost savings via the use of renewable materials.
- Customers The commitment of customers willing to acquire a CE solution seems fundamental to the survival of several of the BMs, which are based on groundbreaking proposals.
- Demographics Increased population & urbanization put pressure on resources.
- Waste volumes Planned obsolescence, more consumerist lifestyle, innovation causing products to be outdated.
- Sectorial Conditions New models of business such as leasing instead of purchasing.
- Environmentalism Both at firm and individual level and enhanced by media campaigns leads to demand for sustainable products / services.
- Circularity Policy The existence of regulatory frameworks with strategic objectives moving towards a CE to help to create political commitment, allowing companies to safely direct their efforts towards this model.
- Dis/incentives Economic incentives both for companies promoting a CE strategy and against those who have not yet adopted such a strategy. Includes: green taxes, product levy, subsidies, creating a level playing field.
- EU Policy Important for firms with business models dealing with waste management and recovery or that have a strong environmental impact.
Internal Economic Barriers
- Cost Issues Implementing circular elements in a firm’s business operations can increase relative costs due to: costs of sustainably sourced materials, higher costs of operations and lack of high income predictability.
- Consumer Issues Lack of consumer understanding of what circular sourced products as well as negative perceptions of “second-hand” products.
- Sectorial Issues Issues related to the degree of competition in the market. Many firms are catching up and becoming mature, with more players entering the market (such as with recycling).
- Infrastructure Inexistence of supporting infrastructure such as the lack of infrastructure for recovery, reuse and recycling activities in construction.
- Technology and dynamic aspects Outdated technology does not allow further elements of circularity to be implemented. Inadequacy of current technology can also respond to internal limitations of the firms, such as the lack of a platform to encourage innovation among suppliers.
- Finance Obstacles to accessing the funding and financial support needed to undertake the shift to a CEBM. Sometimes, asset-heavy cost structures represent a barrier to obtaining finance because of the difficulties of gauging risk using conventional models.
- Obstructive policy & bureaucracy Policy which continues to favour linear BMs or otherwise penalize the implementation of CE and CEBMs. Strict planning and permission hurdles are faced by certain industries, which are considered innovative by way of the CEBM.
- Externalities Lack of fiscal tools for internalizing environmental costs, which puts CEBMs at a disadvantage with respect to linear economy firms.
- Missing regulation Absence of consistently applied standards and protocols creates a challenge for refurbishment; also, some environmental standards can make it difficult to capture economic value of products after initial use.
- EU Policy Heterogeneous application of EU legislation makes the replication of business models hard to expand internationally.