The Enablers and Barriers to Circular Economy Business Practices: Evidence from European Firms

The circular economy concept has garnered significant attention among academics, governments and the general public alike, as a potentially compelling solution to spiralling waste management problems and rampant resource use. Various interventions have been launched, including several at European Union level, aimed at promoting the transition to circularity, and examples of business showcasing circular processes seem to be steadily increasing across the globe. But while the nascent academic literature on circularity across various disciplines has made some inroads to defining circularity and to describing good practice, there is little by way of measurement or systematic analysis of the key factors that may enable or hinder the uptake of circular economy business models. The aim of this paper is to empirically-assess the enablers and barriers to business circularity, as well as the policies that might help facilitate the transition towards more circular business models. To this end, we conducted interviews with 107 high-level executives from European businesses, across several key sectors like manufacturing and construction. The interview covered various aspects related to respondents’ awareness and concern for issues related to the circular economy, efforts to implement circular economy business practices, the key drivers and barriers in this regard, as well as the role of policy at the local and supranational level. Our results indicate that, even among the greener examples of European business, where recycling and reprocessing of components is present, the use of virgin raw materials as inputs is still largely prevalent. When it comes to the enablers and barriers, the results underscore the importance of business leadership and direction from senior executives in terms of driving the shift towards circularity. We also find evidence that a disconnect exists between the environmental and business arms of these firms, which may hinder the shift towards circular economy business models. In addition, respondents believe that consumers are largely indifferent towards key circular economy product characteristics like reparability and recyclability, which may discourage businesses in their efforts to close the loop, although the perceived importance of quality and durability may assist in creating a business case for prolonging product lifespan. Finally, respondents see a minimal role for government policy, although the introduction of quality standards for reused/recycled raw materials and minimum reused/recycled input requirements emerge as the key policies which may assist in promoting circular business. The results have several important implications, notably in terms of focussing policy efforts on encouraging more circular input usage across businesses, while underscoring the need for greater integration of environmental and business roles within entities.