How to become a green SME in a circular economy

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2.1. Industrial ecology

Industrial ecology or industrial symbiosis aims to save energy and resources by transforming one company’s waste into another’s resource. Output becomes input in a different part of the ecosystem. The most famous eco industrial park is located in Kalundborg, Denmark. Nowadays, it includes nine private and public enterprises, which are linked together with other 30 material exchanges. For instance, fly ash (volatile ashes) from the Power Station is sent to a local cement company, which turns it into gypsum boards. Also, water re use schemes have been developed within Kalundborg, together, with many other cooperative solutions. The eco industrial park of Kalundborg enabled many economic benefits and environmental savings.

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For example, over 240,000 tons of CO2 emissions are avoided each year, which is equivalent to the emissions of over 32,000 European people. This success is not unique to Denmark; it could be reproduced near you. Have a look at other examples of industrial parks in Europe on the ECAP (Environmental compliance Assistance Programme) website: http://ec.europa.eu/environment/archives/sme/support_networks/eips_eepas_en.htm

Also, some countries specific initiatives have been set up to connect businesses and shape opportunities. To learn about the national industrial symbiosis program in the UK, follow this address: http://www.nispnetwork.com/ or this additional address, which provides guidance by the French Ministry of sustainable development: http://www.developpement-durable.gouv.fr/lecologie-industrielle-et-territoriale

2.2 Reverse logistics

Just as life does not stop at our business’s door, our business does not stop once our product is sold. We may prefer to not think about the future of our products, we may think it’s none of our business. In fact, you could be ignoring a profitable opportunity, since the resources and the products we sell today can be recovered and recycled into resources for products we will sell tomorrow. One option is to create a reverse logistics system on our own or we take back the products that we sell to our customers. This may be easier to do if we are operating in a business-to-business (B2B) operation. If for example we provide company offices with homemade apple juice, we can take back the empty bottles rather than letting our customer throw them away. We could formalise this process through a contract or systems like deposits. Once we get the empty bottles back, we just wash them and reintegrate them back into the supply chain. This is a simple case but if our product is more complex or if our business is too small to set up a reverse logistics circuit on your own, we can pull resources and have a shared organisation that collects and recycles on our behalf. The following example from France is a good one. Six main manufacturers of mobile homes have joined forces to collect, dismantle and recycle old homes. This reverse logistics system is financed through an environmental contribution of 100 euros for each new mobile home sold. Now, whether we apply reverse logistics on our own or if we partner with similar manufacturers. For certain ways flows, you don’t even have a choice. Indeed, there is a principle in Europe known as extended producer responsibility or EPR. According to which, we’re responsible for the products we place on the market at the end of their life. This is the case for a growing number of products including packaging, electric and electronic equipment, batteries, etc. Under these requirements, you have to take back the products we sell ourselves or we have to join an organization, which takes care of waste collection and recycling. Last but not least, be it mandatory or voluntary, be it on your own or with others, reverse logistics ensures that recovered resources feed loops that facilitate better supply. If we start including reverse logistics in our operation, our old products don’t simply become waste; they become raw materials for a new product. We are now at the heart of a circular economy.

2.3. Functional economy

However revolutionary green we have been so far, we may still be selling a product. With a functional economy, we can go one step further. We don’t sell our product; we rent or lease it to customers. Take a German company for instance, which provides chlorinated solvents used for high precision metal surface cleaning. As this industry sales started to decline in the mid 1980s, the newly founded company got the idea to rent their solvent filled containers to their customers. Instead of selling them, this resulted in the short term closed loop lending of solvent containers, in which their customers were able to rent the containers to clean their metal pieces, without worrying about waste disposal. The shift to a service oriented business model made the company a big success story as it achieved a growth in revenues and a decrease in solvent use. If we sell our products and take them back as waste, as we previously defined as reverse logistics, we become responsible for them even after they have been sold to consumers. If we rent our products, we are going one step further by keeping them as our property. This radically changes the way we design our products. If we continue owning our products throughout its functional and end-of-life phases, we will want them to last as long as possible and we will design them so they have as long a life. Furthermore, in some cases, long-term rentals and subscription can provide a steady stream of income, making our monthly accounting more constant and easier to manage.

3. What is the European Union doing for you?

The aim of the circular economy is to minimise the net uptake of resources and their associated negative environmental impacts. SMEs have a crucial role to play in achieving a circular economy and as we can see, there’s a lot of work to be done. Fortunately, as the concept of circular economy is rapidly rising on political agendas, we are not alone in Europe. Just look what the European Union is already doing for us

3.1. Green Action Plan

In July 2014, the European Commission released a general plan targeting SMEs in a green economy. The overall objective of the green action plan is to enable SMEs to turn environmental challenges into business opportunities. It sets out a list of EU actions supporting SMEs in a green economy, ranging from green entrepreneurship to access to the markets for green SMEs. All in all, it provides a favourable environment for green business across the European Union. We can learn more about