Many businesses today are striving to become greener and more sustainable. Research from Aston University suggests that for small and medium-sized enterprises (SMEs), the best route for them to achieve this is via the circular economy (CE).

“SMEs in the EU countries are likely to have sustainable design practices aligned with the CE philosophy,” the researchers explain. “On the contrary, SMEs in the participating countries are likely to have worst recover function. This implies that customers’ pressure works for SMEs to adopt CE principles as design function in most of the SMEs’ businesses is governed by SMEs’ customers. Whereas effective recover function depends on SMEs’ self-motivation and policymakers’ pressure.”

The researchers gathered data from approximately 100 SMEs from Spain, France, Greece, and the UK, to understand their current involvement with the circular economy. They followed this up with focus groups involving owners and managers from the SMEs as well as customers, suppliers, and policymakers from each country.

Circular adoption

The results suggest that small businesses in each of the countries could find the circular economy an effective route to achieving higher environmental performance.

This could most effectively be achieved by focusing attention on the design of products, processes, and facilities, but the researchers also found that areas such as waste management could also benefit from improvements.

“Although from prior research there is evidence of SMEs achieving superior environmental performance by adopting CE, economic and social performances are not assured,” the authors explain. “This motivated us to undertake empirical research to reveal the means for achieving higher sustainability performance (economic, environmental, and social) through CE adoption.”

“The findings of this research enable us to continue CE adoption not only in other European countries but also in India, Thailand, Vietnam, and Kenya.”

For the circular economy to be widely adopted, the authors believe that a structured approach is needed to better analyze the current state of CE, especially via an analysis of any correlations between organizational values and their sustainability performance. This will allow challenges to be identified and ways for improvement to be proposed.