Supporting circular economy innovation: An analysis of a circular economy intervention in Wales

Walpole, Gary; Treadwell, Peter; Steffes, Laura; Bacon, Emily; Clifton, Nick Article Supporting circular economy innovation: An analysis of a circular economy intervention in Wales Welsh Economic Review (WER) Provided in Cooperation with: Cardiff University Press Suggested Citation: Walpole, Gary; Treadwell, Peter; Steffes, Laura; Bacon, Emily; Clifton, Nick (2024) : Supporting circular economy innovation: An analysis of a circular economy intervention in Wales, Welsh Economic Review (WER), ISSN 2397-8716, Cardiff University Press, Cardiff, Vol. 29, pp. 36-49, https://doi.org/10.18573/wer.270 This Version is available at: https://hdl.handle.net/10419/314321 Standard-Nutzungsbedingungen: Die Dokumente auf EconStor dürfen zu eigenen wissenschaftlichen Zwecken und zum Privatgebrauch gespeichert und kopiert werden. 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If the documents have been made available under an Open Content Licence (especially Creative Commons Licences), you may exercise further usage rights as specified in the indicated licence. https://creativecommons.org/licenses/by/4.0/ 36 Supporting circular economy innovation: An analysis of a circular economy intervention in Wales. Gary Walpole1, Peter Treadwell2, Laura Steffes1, Emily Bacon3 and Nick Clifton1 1 Cardiff Metropolitan University 2Treadwell Consulting 3Swansea University Doi: https://doi.org/10.18573/wer.270 Accepted: 15/1/2024 Abstract The Intergovernmental Panel on Climate Change (IPCC) recently advised that “climate change is a grave and mounting threat to our wellbeing and a healthy planet” (2023, p.6). This threat underlines the importance of developing businesses innovation capabilities and implementing Circular Economy (CE) principles. Organisations that have developed innovation capabilities are most likely to implement CE principles within their organisations. However, the UK has suffered a ‘long tail of productivity’ largely due to the UK’s relatively low levels of innovation across the firm population. In Wales, the location of this study, output per hour worked was almost 16% below the UK average in 2021, suggesting that the levels of innovation capability might hinder CE implementation. Therefore, evidence on programmes that support organisations to develop their innovation capabilities and their CE understanding should be of interest to policymakers, academics, and practitioners. This paper presents data collected from a university designed CE innovation programme, the Cardiff Circular Economy Network, and suggests that the novel approach adopted enhanced the innovation capabilities and CE knowledge of participants. Introduction The recent IPCC report advised: “climate change is a grave and mounting threat to our wellbeing and a healthy planet” (2023, p.6) underlining the importance of organisations developing Circular Economy (McArthur, 2015) innovation strategies and operational plans. The Welsh Government has clearly stated its aim of transitioning to a CE within their ‘Beyond Recycling’ strategy (Welsh Government, 2021). Businesses will need to develop their innovation capabilities and understanding of CE to support the stated aims of the Welsh Government and yet most organisations lack a clear understanding of CE principles (Clifton & Walpole, 2023). Organisations that have developed innovation capabilities are most likely to implement CE principles within their organisations (Goyal et al, 2021). However, the UK has for many years suffered a ‘long tail of productivity’ largely due to the UKs relatively low levels of innovation across the firm population (BEIS, 2021). In Wales, the location of this study, output per hour worked was 15.9% below the UK average in 2021 (Office for National Statistics, 2023) suggesting that the levels of innovation capability are likely to hinder CE implementation. There is a paucity of published literature that focuses on supporting organizations to develop CE understanding and implement of CE principles (Goyal et al, 2021). This paper suggests that policymakers should better understand and promote the most effective approaches and interventions This work is licensed under the Creative Commons Attribution 4.0 International License. To view a copy of this license, visit http://creativecommons.org/licenses/by/4.0/. 37 that support CE implementation to help avert the stark warning from the IPCC (2023). The Ellen MacArthur Foundation defines the CE as ‘an industrial system that is restorative or regenerative by intention and design. It replaces the ‘end-of-life’ concept with restoration, shifts towards the use of renewable energy, eliminates the use of toxic chemicals, which impair reuse, and aims for the elimination of waste through the superior design of materials, products, systems, and, within this, business models’ (Ellen MacArthur, 2013). The numerous academic definitions of the CE have not helped practitioners engage with the concept (Garcia-Barragan, Eyckmans & Rousseau, 2019) despite the theory being promoted as critical to organisational and national economic sustainability. There is a paucity of published academic research, and theory is needed to inform practice (Klein, Ramos & Deutz, 2020). Most papers written on the development of CE capabilities begin by placing it within the teaching of sustainable development and are associated with further and higher education, within schools of engineering, management, and urban geography (González-Domínguez et al., 2020; Sumter et al., 2021). To address the existing research gap, this paper contributes to literature by outlining a novel approach to developing innovation capabilities and CE understanding. This approach provides reference to underpinning literature as well as presenting empirical data on the efficacy of the intervention evaluated, namely the Cardiff Circular Economy Network (CCEN). Kirchherr and van Santen (2019) called for insights on CE interventions that could begin to address the paucity of CE implementation reports. The paper also answers the call of Franzo et al. (2023) for empirical research that contributes to the understanding of how publicly funded collaborative projects can support businesses to develop innovation capabilities. Therefore, this study offers a contribution by presenting empirical data on the development of CE implementation capability of practitioners. The paper should be of interest to practitioners and policymakers within a region of the UK, Wales, where a CE transition strategy has been published (Welsh Government, 2021). Moreover, the paper aims to contribute to that reviews the efficacy of approaches to implement CE within organisations (Scalabrino et al. 2022). This study aims to address the following research question: What pedagogical methods and published theories can be introduced to practitioners to support the development of CE implementation capabilities? Literature review The necessity to transition to a CE is evident, and yet the term remains contested both theoretically and practically. Authors have favoured the above definition of the Ellen MacArthur Foundation (2013). Most CE innovation within organisations has involved establishing ‘green’ and ‘sustainability policies’, focusing primarily on the procurement of products that are refurbished or contain recycled materials (Nandi et al., 2020), or the implementation of services with overtly environmental objectives like waste management services or low carbon transport systems (Klein, Ramos and Deutz, 2020). These innovations are important, and local authorities in Wales have performed well in reaching the Welsh Government target of 65% recycling of domestic waste. The Welsh Government ‘Beyond Recycling’ (2021) strategy states that far more needs to be done to transition to a circular economy. The CE is conceptualised as a series of ‘loops’ in which smaller loops represent more efficient circulation of resources, recycled and remanufactured materials sit on the outermost loops. Nandi et al. (2020) described the value of commercial organisations collaborating to implement CE principles; they argue that the waste generated by the health sector during the pandemic has highlighted the need to apply CE principles and practices to medical waste and develop regional supply chains. The post-pandemic economy will require considerable economic impetus, which should 38 embed CE principles to reduce waste and develop capacity in regional supply chains (Ibn-Mohammed et al. 2020). Ibn-Mohammed et al. (2020) argued considerable investment and thought leadership is required from policy makers to accelerate progress towards a CE through innovation across multiple domains. A recent systematic review by Suchek et al. (2021) emphasised the link between innovation and CE can only be fully established through a multi-level approach where public and private sector actors actively engage; yet nascent engagement with innovation models and methodologies to embed CE requires further practical and theoretical development. Additionally, existing discourse suggests organisations need to become more sustainable in their operations (Gelderman et al. 2017), yet very few studies outline how this can be achieved. The contemporary literature primarily focuses on how to develop the CE through the teaching of sustainable development principles to students and practitioners. However, contemporary authors argue sustainable development teaching is very unlikely to transform mindsets and achieve CE transition, as this will require different teaching approaches (Kopnina, 2018). The literature suggests that in addition to moving on from education as usual and embedding systems and critical thinking, application of new pedagogies should be explored. Lange et al. (2022) in their article Re-Organise suggest that prevailing educational taxonomies, such as Bloom’s (1956) taxonomy and iterations of this (Krathwol, 2002) may not be sufficient to align with CE learning and development because it lacks a high-level focus on system thinking, self-organisation, emergent and selfdirected learning. Lange et al. (2022) argued that CE requires working with a diverse group of people, worldviews, and technologies, and therefore a different taxonomy of learning is required. All education programmes and interventions are underpinned by theories of learning (pedagogies) to achieve learning outcomes (Wenger, 2000). Research on the application of contemporary pedagogies in teaching CE suggests systems thinking, critical thinking skills, collaborative problem solving, decision making, and teamwork have all featured in contemporary CE curriculum (Scalabrino et al, 2022). Critical thinking and systems thinking are crucial to transition from unsustainable business models and lifestyles to a functioning circular economy (Kirchherr and Santen, 2019). Scalabrino et al. (2022) highlights the need for critical thinking and disruptive innovation in many global consumer-based and production-focused organisations. Research suggests that ‘tier one producers’ can influence and encourage transition to a circular economy if they can develop more critical and reflective leadership throughout their organisations to support the transition to a circular economy (Huckle 2012; Kopnina, 2018). Peer to peer interaction, individual feelings, human values, systems perspectives, and the need for reflective and critical thinking are crucial parts of contemporary CE pedagogy (Walpole et al., 2022; Scalabrino et al., 2022; Bugallo-Rodríguez and Vega-Marcote, 2020; Kopnina, 2018). CE pedagogy needs to offer in-depth CE experiences that stimulate transformative, high level learning experiences (Liu et al, 2022). Scalabrino et al. (2022) suggests pedagogies that engage students in applying models and embed reflective learning are often both inspirational and challenging, as they ask learners to question organisational and personal assumptions as well as existing strategic priorities. Walpole et al (2022) suggest interventions that embed Social Learning theory (Bandura, 1977) and reflective practice (Gibbs, 1988) within a programme that formally creates and supports ‘networks of change makers’ (Hanna et al., 2018), can bridge the gap between national and regional development, in the form of Communities of Practice (Lave & Wenger, 1991). Programme Communities of Practice (Smith et al, 2018) offer a novel approach for introducing theoretical content and for connecting practitioners with a shared interest (domain) within a community that can share knowledge 39 and provide a support mechanism for implementation of new services solutions. Innovation across the private sector is less than ideal and usually on an ‘ad-hoc’ basis, often in response to regulatory change or demand for new services (BEIS, 2021). The BEIS (2021) report on innovation revealed that only 10% of all businesses are engaged in product and process innovation and unfortunately, businesses in Wales perform less well than their English counterparts. The report asked businesses to rank constraining factors on their innovation activities and identified barriers to innovation. The report highlighted the innovation challenges that businesses face and suggested this ‘market failure’ presents policy makers in the UK, and in particular Wales, with a productivity challenge as highlighted above (ONS, 2023). The main constraining factors outlined were:  Cost factors (including ‘direct innovation cost too high’ and ‘excessive perceived economic risks’).  Knowledge factors; (including ‘lack of qualified personnel’, ‘lack of information on markets’ and ‘lack of information on technology’).  Market factors (including ‘market dominated by established businesses’ and ‘uncertain demand for innovative goods or services’).  Other factors (UK Government regulations and EU regulations). The CCEN programme was designed to mitigate the above outlined innovation barriers in several ways. The project was designed to mitigate cost factors by offering a fully funded programme and signposting businesses to existing support within higher education institutions, Welsh Government and UK Government schemes. The perceived economic risk challenge was mitigated by outlining previous successful projects that demonstrate significant return on investment of time invested. The project mitigated knowledge factors by transferring knowledge from higher education institutions and facilitating the sharing of knowledge (promising practices) within participants on the programme. The CCEN programme The novel CCEN was designed and delivered by Cardiff Metropolitan University to create an inter-organisation Programme Community of Practice (PCoP, Smith et al, 2018) within the Cardiff Council boundary. The programme brought together different businesses and schools within two ‘streams’ to form a pilot Cardiff Circular Economy Network to facilitate a collaborative regional network, operationalising the conceptual findings of Arundel, Bloch and Ferguson (2019). The programme aimed to create and support ‘networks of change makers’ (CLES, 2019), to bridge the gap between national and regional development, in the form of Communities of Practice (Lave & Wenger, 1991). CoPs offer an established foundation for connecting practitioners with a shared interest, hitherto primarily used to facilitate knowledge transfer across expert communities which enabled participants to improve their reactions to uncertain and complex situations (Agrifoglio et al., 2021). The CCEN content combined theory from operations management, product design and organisational development. The programme taught the Design Thinking framework (Lewrick et al, 2020), ordinarily confined to product design programmes, and supports participants to develop their new service solutions (NSSs) through each of the four workshops (see figure 1). CE theory and practice (the Golden Thread) is introduced in the first workshop and threaded through each subsequent workshop for participants to fully understand CE principles. The participants were introduced to reflective practice (Schon, 1983) and encouraged to adopt an iterative approach to their practice and new service solution development. The impact event gave participants the opportunity to capture their learning and learn from other participants within the programme, embedding reflective 40 practice principles and extending their network to facilitates further boundary spanning activities. The programme was designed to develop the innovation knowledge and skills of participants by introducing intuitive models that enabled them to produce outputs that would support new service solution (NSS) implementation, outlined in figures 2 and 3. The programme was designed to enhance participants understanding of CE principles and practices through the introduction of case studies accompanied by speakers from the case study organisations. Participants engaged with four workshops over a four-month period. The programme was developed from a critical realist epistemology, which avoided advocating normative models and encouraged participants to adopt an abductive approach to their NSS development (Smith et al, 2018). The CCEN pedagogy was informed by Social Learning theory (Bandura, 1977), and aimed to addresses the ‘Knowing Doing Gap’ (Pfeffer and Sutton, 1999) practitioners face by supporting participants to produce outputs specific to their context. The participants were introduced to the CoP framework (Wenger & Wenger-Trayner, 2020) and given formal CoP roles to cede agency and to provide the participants with self-governance mechanisms. The programme delivered an ‘Education stream’ which involved seventeen teachers from twelve schools in the Cardiff City boundary. The workshops were designed to provide educators with the tools to embed circular economy principles across the curriculum and facilitated the sharing of curriculum resources linked to the CE. The teachers were supported to develop new lesson plans to build CE understanding and practices for their students. This focus contributed to the implementation of the One Planet Cardiff Strategy and educational resources for the new Welsh Curriculum for schools (Welsh Government, 2022). The ‘Business stream’ workshops engaged thirteen organisations. Six were SMEs, two medium sized businesses and five large businesses from construction, utilities, and financial services. The participants developed new service solutions that would reduce their carbon footprint or enhance biodiversity. Methodology To address the research question, a mixed methods methodology was employed. The data was analysed with the theoretical framework of Interpretative Phenomenological Analysis (IPA). Quantitative data was obtained via an online post workshop feedback survey, distributed to programme participants. Whilst there is an inevitable danger in verifying the ‘truth’ of such virtual feedback to on-line Figure 1: Cardiff Circular Economy Network conceptual framework 41 survey questioning, Hookway suggests the replies “tell us something about the manner in which specific social and cultural ideas are constructed” (Hookway, 2008, p.78). The study also conducted semi-structured interviews with six programme participants to compile a transcription for thematic analysis. The transcriptions were complemented by short video interviews, captured prior to the ‘impact celebration event’, published on the CCEN website (CCEN, 2022). This research adopted thematic analysis (Flick, Kardoff and Steinke, 2004) to analyse the qualitative data obtained from the semi-structured interviews and video interviews, to develop key themes. The main findings from the workshop feedback surveys and thematic analysis are summarised below. This research assumes successful implementation of CE principles within organisations and the positive themes outlined can act as a proxy for the efficacy of the programme. Workshop feedback The aggregated workshop feedback survey data suggests the pedagogical approach of CCEN, which incorporated a programme community of practice approach, enabled participants to effectively develop understanding and implement CE principles. Fifty-eight completed surveys were received and 98% of responses were either satisfied or very satisfied with the workshops overall. Similarly, 98% stated that they felt engaged or very engaged with the interaction and discussion aspects of the workshops. All participants stated that the subject matter of the workshops was important to them on a personal level and 97% stated that the workshop content was relevant to their organisation. Interview analysis – themes and narratives The analysis of the semi-structured interview data and video clips revealed key themes and narratives that emerged. The key narratives and themes are outlined below and separated into the themes from the business stream and education stream. Business Cohort Business participants reported the value of an opportunity to meet practitioners from different businesses and sectors to share knowledge. The workshops lead to a greater breadth of knowledge due to the different backgrounds of participants and the different perspectives on how to tackle climate change and sustainability issues. Change of mindset: Participants overwhelmingly agreed that a change of mindset is necessary to tackle climate change and that with a different mindset and perspective, solutions can and will look differently in every industry or business. “Even as a service industry, there are still plenty of opportunities where we can look to reduce the impact that we have on the environment from the comms that we sent out to our customers to the way that we manage our IT infrastructure and our assets. What I've learned is that that there is still more that we can do as an organisation, and I found some good things that I can take back and build into some campaigns for promotion and greater awareness among my colleagues.” (Business participant, Service Industry) Power of collaborative approaches: Business participants realised through the workshops that a systems change is necessary to implement CE solutions. Business participants understood that a systems change is easier to achieve collaboratively as solutions need to tackle the whole supply chain. Networking is an integral part of collaborative approaches, and it was useful for participants to connect with new people who have similar ambitions. “We understand that the circular economy is not possible by us to deliver by ourselves in isolation. We need to be able to collaborate cause collaboration is a key principle of circularity.” (Business Participant, Construction Industry) “I think already we're seeing the networking having some impact. So, we're getting involved in several external events where we're talking more about what (the business) 42 does and how we can impact what the supply chain does through the lending and the funding that we do. So, I think some of the contacts we have especially within the construction industry will help to inform the decisions we make about what projects we fund going forward.” (Business Participant, Service Industry) Optimisation through circularity: Business participants reported that a change of mindset and a willingness to consider circularity, will present multiple business opportunities. Moreover, they realised that implementing CE principles can lead to more efficiency and greater benefits for stakeholders. “We own a wide range of properties throughout Wales that support businesses. They occupy the offices and workshops. And what we're trying to do is to make those offices more energy efficient. So, we've installed solar panels. We try and upgrade the buildings so the more energy efficient and more important we try and reduce our cost and pass those benefits on to the tenants.” (Business Participant, Service Industry) “The actions that I plan to take are around optimisation and the reason I'm saying that is because we are a paperless organisation, and we are doing everything virtually. But now that we're moving towards hybrid meetings and we are growing, I’ve realised through these workshops that we can do a bit more to save our time and then focus on things that matter most to us, which is working with the client.” (Business Participant, Service Industry) Figure 2 outlines the outputs from each workshop that participants developed. The programme outputs were taken by participants into their business to form part of their clean growth strategy. The figure also outlines the models and frameworks introduced to participants. Education Cohort Greater knowledge and confidence to teach future generations: Education participants reported that they enhanced their CE knowledge greatly and have gained confidence to embed CE across the curriculum. Many education participants have shared their newly gained knowledge with teaching colleagues at their schools. Moreover, education participants understood the relevance of CE to the New Curriculum for Wales and the importance of making future generations aware of CE principles and practices from an early age. “After the workshops, I went back, and I fed back to all of my colleagues, and we took some time after school to see where it was applicable for us and then to implement some of the circular economy principles into the curriculum.” (Teacher, Primary School) “It's really about passing on that knowledge so that the children run with it the rest of their lives and they can build on that throughout their lives.” (Teacher, Primary School) Seeing the bigger picture and implementing small changes: Education participants explained that the workshops have opened their eyes to the importance of the CE. Especially the knowledge exchange with the business network members has helped them to understand the CE from a systems perspective. Through understanding the bigger picture, participants were able to better understand the impact of minor changes, be it in their personal life or at school. “For me it's been more about thinking before acting. So, before you buy things, ask yourself ‘What impact is that going to have if I buy this or should I look for an alternative first?’ and that’s the main one, I've taken personally as an individual. As a teaching practitioner, what the workshops have done is put those circular economy principles at the forefront of the mind. So, when we're planning lessons to think ‘How to put in some circular economy principles in what we're planning to teach?” (Teacher, Primary School) 43 Figure 2: Key Milestones of Business Network