How Circular Economy Models Hand Businesses a Lifeline
Circular economy models are handing UK businesses a lifeline to solve efficiency, cost and sustainability challenges.
That's according to research from Ivalua, a global leader in spend management, which commissioned Sapio Research to survey 300 supply chain and procurement decision-makers in the UK.
The benefits of circular economy
Ivalua's research discovers that firms implementing circular economy models report higher revenue (56%), more efficient material usage (56%), reduced carbon footprint (52%) and lower costs (49%).
Worryingly, however, most are struggling to set up circular economy practices and reap the rewards. Almost half of those surveyed say progress towards implementing a circular economy has stalled, leaving many to miss out on economic and sustainability benefits.
Overall, just a quarter of decision-makers have implemented a circular economy model; almost half (49%) say they are in the process of, or planning to, implement a circular economy model; 22% still have no plans to do so at all.
Meanwhile, Ivalua's findings indicate that the circular economy slowdown stems from basic sustainability shortcomings.
UK businesses currently lack comprehensive and fully-implemented plans for using renewable energy (75%), buying recycled materials (76%) and exchanging resources with suppliers (81%).
Prime Minister Sir Keir Starmer recently spoke on new climate change targets at COP29 in Azerbaijan, emphasising his desire for the UK to lead on cutting emissions, with a target of 81% reduction by 2035.
Optimising supply chains
Jarrod McAdoo, Director of Product at Ivalua, sheds further light on the situation facing UK firms.
"Against persistent inflation and rising energy and fuel costs, UK businesses must urgently find new ways to optimise their supply chains," says Jarrod.
"In our 'survival of the fittest' economy, circularity will improve the financial and environmental standing of businesses – particularly those who can gain a first-mover advantage.
"In fact, our data shows more than half (51%) of UK businesses say that, if they don't implement circular economy models, they'll be overtaken by greener, more efficient competitors."
Circular economy: A 'pipe dream'
According to Ivalua's research, the main roadblocks to success when implementing a circular economy model are:
- Rresistance to change from suppliers (37%)
- Competing priorities (34%)
- Suppliers not understanding their own environmental impact (31%).
Challenges relating to supplier collaboration on sustainability have resulted in 58% of UK businesses saying circular economy initiatives are a "pipe dream".
The data also suggests that the circular economy slowdown is a top-down issue, with 54% saying circular economy models will never gain momentum without more support from the C-suite and the board.
Despite these challenges, the majority (57%) of UK businesses agree that the cost of inaction will far outweigh the cost of implementing circular economy initiatives.
Jarrod adds: "To turn this around, businesses must secure buy-in from leadership and sceptical stakeholders, convincing them that circularity aligns with ethical and environmental objectives, while also making the business resilient, regenerative and competitive in today's volatile market.
"Once buy-in is secured, businesses must invest in the tools and processes needed to enable closer collaboration with suppliers and greater supply chain visibility. Only then can they identify opportunities to minimise resource wastage and their environmental footprint throughout their supply chain lifecycle."
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