3rd PLATE Conference
September 18 – 20, 2019
Berlin, Germany
Nils F. Nissen
Melanie Jaeger-Erben (eds.)
Universitätsverlag der TU Berlin
Agathou, Natalia; Constandinou, Andri : Circularity in business: a
framework for assessing the circularity potential of small and medium
enterprises (SMEs) and its relation to product lifetime extension . In:
Nissen, Nils F.; Jaeger-Erben, Melanie (Eds.): PLATE – Product Lifetimes
And The Environment : Proceedings, 3rd PLATE CONFERENCE, BERLIN,
GERMANY, 18 – 20 September 2019. Berlin: Universitätsverlag der TU
Berlin, 2021. pp. 17 – 23. ISBN 978-3-7983-3125-9 (online). https://doi.
org/10.14279/depositonce-9253.
This article – except for quotes, fi gures and where otherwise noted – is
licensed under a CC BY 4.0 License (Creative Commons Attribution 4.0).
https://creativecommons.org/licenses/by/4.0/.
17
3rd PLATE 2019 Conference
Berlin, Germany, 18-20 September 2019
Circularity in Business: A Framework for Assessing the Circularity
Potential of Small and Medium Enterprises (SMEs) and its Relation
to Product Lifetime Extension
Agathou, Natalia; Constandinou, Andri
London Waste & Recycling Board (LWARB), London, United Kingdom
Keywords: Circular Business; Product Lifetime Extension; Theory of Change; Framework; SMEs.
Abstract: This study explored the potential outcomes of circular business activities, of small medium
enterprises that are operating in London, United Kingdom and examined how they relate to product
lifetime extension. The data sample consisted of 89 start-up companies, trading for 1–4 years and
either at seed or growth stage. The analysis was based on the ‘Theory of Change’ framework and a
logic model was created to illustrate the causal links between circular business activities, circular
outputs and outcomes. The results of the study demonstrated that several outcomes can be attributed
to circular business activities beyond product lifetime extension, including (i) material, (ii) space and
(iii) packaging lifetime extension but also reduction and elimination of lifetimes. In addition, results
suggested that predominantly those outcomes are linked to circular business strategies that tend to
focus on resource recovery and resource efficiency, while there are fewer examples demonstrating
business innovation through circular design, circular revenue models and clean resources strategies.
The results also suggested that the main outputs of circular business activities are (a) prevention, (b)
reusability and (c) recyclability.
Introduction
This study demonstrates that circularity of
resources in a business could lead to different
outcomes other than extension of a product’s
lifetime (e.g. material lifetime extension). In
addition, the paper introduces a Circularity
Framework for businesses and highlights the
elements of the circular activities of a business
that are more likely to contribute to different
lifetime extension outcomes (i.e. product,
material, space) on the basis of data collected
during the first two years (2017–2018) of the
Advance London business support programme
for small and medium enterprises (SMEs) in
London.
Methodology
The methodology used to cluster and analyse
the business data was based on the ‘Theory of
Change’ (TOC) framework (Anderson A, 2005)
that defines long-term goals (i.e. outcomes:
product lifetime extension) and then maps
backward to identify necessary preconditions
(i.e. inputs: business activities). A logic model
(Coffman J., 1999) has been used to illustrate,
in a simplified way, the hypothesis or ‘theory of
change’ that circular business activities could
be connected/lead to a product’s lifetime
extension or other types of outcomes. It
should be noted that the ultimate long-term
goals (impacts) of ‘product lifetime extension’
– a net positive environmental impact related
to waste diverted from landfill and the avoided
CO2 emissions – are beyond the scope of this
study and hence haven’t been quantified.
The research sample comprised of 89 SMEs
that were supported to either grow their
circular business (product or service based) or
implement circularity initiatives, across five
focus areas including food, textiles, built
environment, plastics and electronics as
defined in London’s Circular Economy Route
Map (LWARB, 2017).
Outcomes
For the purposes of this study, the lifetime of a
product is defined as the cycle that begins with
the product’s introduction into the market,
continues with the product’s growth as it
captures the attention of the target audience
(Sampson Q, 2019) and ends with the disposal
of the product by its user/owner. However, this
study highlighted that business circularity
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3rd PLATE Conference Berlin, Germany, 18-20 September 2019
Agathou N., Constandinou A.
Circularity in business: A framework for assessing the circularity potential of
Small and Medium Enterprises (SMEs) and its relation to product lifetime
extension
activities could lead not only to the extension of
a product’s lifetime but also to other outcomes
related to material, packaging and space
lifetime (Figure 1). Evidence was also collected
to demonstrate that the expected positive
material outcome could be related to the
reduction of a lifetime (e.g. bio-based materials
substituting fossil-based materials) or the
elimination of a lifetime (i.e. reusable
packaging), or the maximisation of a product’s
use (i.e. reuse of product’s that their owners do
not want to dispose). Therefore, the definition
of the anticipated circularity outcome – the
extension of the product lifetime – was
extended to include:
• Material lifetime extension, referring to
the potential conversion of a material
(extracted from a non-functional
product) to a new product.
• Packaging lifetime extension, referring
to the extension of the lifetime of the
packaging (primary or other) used to
complement a product but not
necessarily the product’s lifetime.
• Space lifetime extension referring to
the activities converting an idle or
‘wasted’ space (e.g. rooftops) to a
product/service.
• The reduction of a product’s/material’s
/packaging’s lifetime, connected to
business activities that tend to
substitute technical for bio-based
materials (e.g. offering a
biodegradable alternative to
traditionally polymer-based solutions
such as alginate based versus
Polyethylene terephthalate (PET)
based packaging).
• The elimination of a material’s or
packaging’s lifetime altogether,
referring to activities that lead to the
prevention of the existence of that
material or packaging (i.e. single use
packaging), avoiding the material or
packaging to be needed for use in the
first place (i.e. through packaging-free
solutions).
• The maximisation of the use of a
product during its lifetime, without
extending its lifetime. The outcome is
relevant to idle assets that their
owners still make use of but not
constantly, allowing for an increased
use of their asset during its existing
lifetime by another user.
All outcomes defined above, have a positive
material footprint – raw material use is
prevented – through the extension of the
lifetime of products/packaging/materials
/spaces and waste is diverted from landfill or
incineration. However, further research needs
to be conducted on the wider environmental
impact of the business activities deployed in
achieving lifetime extension. It should be noted
that the term ‘resources’ used below, will refer
from now on to all of the following product
/packaging/material/space.
Figure 1. Extended focus areas of lifetime
extension activities assessed in the study.
Outputs
Three main outputs –the direct results of
circular business activities – on the resources
were identified and included: recyclability, re-
usability and prevention. The recyclability
aspect refers to the material recycling as
defined in the European standard EN 13430
and EN 16848 (European Commission, 2004)
and results in the mechanical or chemical
conversion of a resources for a different
purpose (e.g. from chicken feathers to thermo-
packaging, from food waste to building
materials) and it covers both technical and
biological cycles, as defined by the Ellen
McArthur Foundation in 2013. The re-usability
aspect refers to the use of the resources for
the same purpose (e.g. from cup to cup) and
the prevention output to the avoidance of using
a resources (e.g. packaging-free groceries).
Circularity Business Activities
The outputs above resulted from a wide range
of circular business activities on the input
resources. The occurrence of those business
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3rd PLATE Conference Berlin, Germany, 18-20 September 2019
Agathou N., Constandinou A.
Circularity in business: A framework for assessing the circularity potential of
Small and Medium Enterprises (SMEs) and its relation to product lifetime
extension
activities within the business sample of the
study is showed in Table 1.
Circularity Business
Activity
(%)
Material conversion 26 %
Redistribution 8 %
Renewable inputs 8 %
Modularity 7 %
Packaging reuse 7 %
Product as a service 6 %
Refurbishment 6 %
Material monitoring &
tracking
4 %
Sales of
used/refurbished
products
4 %
Customer education 3 %
Recycled inputs 3 %
Behaviour monitoring 2 %
Material repurposing 2 %
Reuse 2 %
Second hand
purchasing & sale of
refurbished products
2 %
Take-back scheme 2 %
Asset rental 1 %
Data monitoring &
Tracking
1 %
Expandable design 1 %
Recyclable inputs 1 %
Sharing platform 1 %
Space repurposing 1 %
Table 1. Circularity Activities deployed by SMEs
in London © LWARB, 2019.
Inputs
The businesses assessed during this study
either handled products/others made of
technical materials (67%) or biological
materials (33%).
Circularity Strategies
This study recognises a ‘circular’ business as
one that keeps natural resources (both
resources required as inputs and resource
outputs produced from its operations) in
circulation for as long as possible, that defines
its strategic objectives in line with these
principles and/or generates revenue through
multiple sales cycles of the same products. As
such, the ‘circular’ businesses assessed in this
study have deployed any or more of the
following strategies:
At an operational level
− Clean resources (inputs): Ensured that
all inputs into a new product/service are
from renewable and toxic free sources.
− Resource Efficiency (process):
Created, packaged, distributed and
sold products or services through the
most resource efficient processes,
ultimately aiming at reducing energy,
water and material use.
− Resource Recovery (outputs):
Captured all resources that are no
longer needed so they can be used
again either in the business’s value
chain or others.
At a strategic level
− Circular Design: Designed products or
services in a way that allows them to
be used multiple times, easily adapted,
repaired or remanufactured; and when
they are no longer needed, they can be
easily dismantled to allow the
recovered materials to be used again.
At a financial level
− Circular Revenue Model: Generated
revenue through keeping products in
use for as long as possible at the
highest value possible.
Figure 2. Number of businesses deploying
different circularity strategies, © LWARB, 2019.
Results
The study showed that from the four possible
outcomes – extension, reduction, elimination
or maximisation of resources lifetime, 82% of
small and medium businesses, included in the
study, are focusing on extending resources
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3rd PLATE Conference Berlin, Germany, 18-20 September 2019
Agathou N., Constandinou A.
Circularity in business: A framework for assessing the circularity potential of
Small and Medium Enterprises (SMEs) and its relation to product lifetime
extension
lifetimes (Table 2), of which the majority is
most likely to focus on material lifetime
extension (47%), on product lifetime extension
(45%) and to a lesser extent on packaging
(5%) or space (3%). This reinforces the need
for the sector to attribute outcomes to circular
activities that are not only related to product
lifetime extension and distinguish between
different outcomes that include materials,
space and packaging.
Outcome on
Lifetime
% of total
businesses Focus Area
% within
the
outcome
category
Material lifetime 38%
Packaging lifetime 63%
Material lifetime 47%
Packaging lifetime 5%
Product lifetime 45%
Space lifetime 3%
Maximise 2% Use of product 100%
Packaging lifetime 33%
Product lifetime 67%
Eliminate
Extend
9%
82%
7%Reduce
Table 2. Key outcomes attributed to circular
business activities © LWARB, 2019.
The assessment of the various business
activities for both types of inputs – biological
and technical – resulted in the following
observations.
On product lifetimes: The majority of
businesses (82%) with outcomes at a product-
level would extend a product’s lifetime through
achieving reusability of the product (e.g. Rype
Office, Reyooz, Too Good to Go). There are
also businesses that contribute, with their
product, to the extension of the lifetime of
another product(s). This activity has been
demonstrated by Mimica, who through
freshness indicators for all types of perishable
products aims to maximize their lifetime and by
Jiva Materials, who through Soluboard®, a
recyclable Printed Circuit Board (PCB)
laminate, extends the lifeftime of all products
usually attached to a PCB (i.e. microchips).
Some of the businesses (Twipes, Adaptavate,
Green Oil) who are managing products with
biological inputs, by achieving recyclability of
the product, they have demonstrated that they
reduce the product’s lifetime, allowing for the
product to biodegrade at a faster pace or in a
more efficient way, resulting in a positive
material impact.
On material lifetimes: Traditionally a material’s
lifetime is extended through a recycling
process, which is confirmed by 76% of the
businesses of the study who are aiming to
extend material lifetimes. However, 22% of
businesses with outcomes at a material-level
(Eiravato, Customem, Rehandle), aim in
predominantly extending material lifetimes by
enabling the reusability of those materials,
through refurbishment activities, material
monitoring and tracking or through the use of
renewable inputs in the making of the material.
On packaging and space lifetimes: Businesses
contributing to outcomes on packaging or
space (13/89), are fostering prevention (46%),
reusability (38%) and recyclability (15%) that is
achieved through reuse of the
packaging/space (54%), through renewable
inputs (15%), product as a service or take-
back schemes and circular activities (31%).
Figure 3, illustrates the logic model of all the
circular activities described above, their
expected outputs and respective outcomes.
The study also examined differences in the
logic model between businesses with
biological and technical inputs. As figures 4
and 5 suggest, there are significant differences
both in terms of circularity strategies and
activities deployed by the businesses to deal
with biological and technological inputs but
also in terms of final outcomes.
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3rd PLATE Conference Berlin, Germany, 18-20 September 2019
Agathou N., Constandinou A.
Circularity in business: A framework for assessing the circularity potential of
Small and Medium Enterprises (SMEs) and its relation to product lifetime
extension
Figure 3. Logic Model of Circular Business Activities © LWARB, 2019.
Figure 4. Logic Model of circular business activities with biological Inputs © LWARB, 2019.
The predominant ‘theory of change’ for
businesses handling biological inputs starts
from a resource recovery business strategy
that, through material conversion, a waste
stream will be recycled to a new material,
resulting in the extension of the lifetime of that
material. In comparison, a business using
technical inputs is most likely to deploy a
resource efficiency strategy that through
modularity or material conversion or reuse or
refurbishment, products will be reused,
resulting in the extension of their lifetime. The
results also suggest that businesses with
biological inputs have not deployed any
circularity strategies in circular design, circular
revenue models or clean resources.
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3rd PLATE Conference Berlin, Germany, 18-20 September 2019
Agathou N., Constandinou A.
Circularity in business: A framework for assessing the circularity potential of
Small and Medium Enterprises (SMEs) and its relation to product lifetime
extension
Figure 5. Logic Model of circular business activities with techical Inputs © LWARB, 2019.
Conclusions
Circular business activities can contribute to
outcomes beyond product lifetime extension,
including material, space and packaging
lifetime extension, reduction or elimination.
Businesses in London have demonstrated that
circularity activities can also result in
maximisation of a product’s use within its
current lifetime. This paper highlighted that
those outcomes should all be considered as
equally valuable as a product life extension
outcome when aiming to illustrate and/or
assess the impact of circular economy in a
business context. Further research should be
conducted in order to quantify specific material
impacts and business benefits coupled with
those outcomes.
Based on the sample of 89 small and medium
businesses supported through the Advance
London programme, the main outcome
achieved from circular business activities in
London, is predominantly extension of product
and material lifetimes. The notion of converting
waste streams to new products and therefore
expanding the product or material lifetime is
the most frequently encountered type of
circular business. Both from a design
perspective/available technology as well as a
business readiness perspective, entrepreneurs
are more likely to identify a waste stream and
launch a business that will tackle it.
However, some entrepreneurs have focused
their business activities on eliminating or
reducing lifetimes of packaging and materials.
Fewer entrepreneurs are venturing into
extending the product/material lifetime by
redesigning the product or by offering products
in the form of a service.
The study has also validated that certain
circularity strategies – circular revenue models
and circular design – are applicable to
technological inputs and it is yet to be explored
whether there is a possibility for businesses
handling biological inputs to deploy those
strategies as well.
Acknowledgements
The data for this study were collected during
the implementation of the Advance London
business support programme (2017–2019)
that is financed by the European Regional
Development Fund (ERDF) and the London
Waste and Recycling Board. We thank our
colleagues from the Advance London team of
LWARB who provided insight and expertise
that assisted the study.
We would also like to show our gratitude to Mr.
Sönke Buschmann for sharing his pearls of
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3rd PLATE Conference Berlin, Germany, 18-20 September 2019
Agathou N., Constandinou A.
Circularity in business: A framework for assessing the circularity potential of
Small and Medium Enterprises (SMEs) and its relation to product lifetime
extension
wisdom on ‘Theory of Change’ and logic
models during our past collaboration.
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LWARB (2017). London’s Circular Economy Route
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