Introduction
Environmental problems are among the most pressing ones as they require immediate action to avoid disaster. At the same time, companies and corporations significantly impact the environment as they impose consumption trends on the society and generate a substantial amount of waste. The challenge for today’s governments and businesses is to design and select strategies to solve environmental problems. Consequently, this report will analyze the United Kingdom’s policy for the implementation of circular economy strategies as one of the most appropriate business approaches to contribute to the sustainable development of the planet.
Background
The industrialization and development of manufactures in the twentieth century caused the growth of the world economy and led to significant negative consequences for the environment. For this reason, most countries in the twenty-first century are concerned about the impact of corporations and consumption trends on the environment. Modern linear economic activity means that companies spend millions of tons of resources every day to meet customer demand, and humanity generates millions of tons of waste. For example, the total annual material input value is $3.2 trillion, and only 20% of these expenses are recovered (“Explainer,” 2018).
Simultaneously, the population on the planet is rapidly growing, which also means an increase in consumption and waste. Consequently, one of humanity’s main goals is to change current trends and find new ways of doing business that will reduce the consumption of exhaustible resources and the pollution of the planet. If these changes are not implemented in the near future, such problems can lead to a global catastrophe.
One of the suitable options for business is the transition to a circular economy. This approach is beneficial for the environment as it is based on the reuse of resources and recycling of waste. Nevertheless, at the moment, the circular economy has a relatively limited application in the world and the UK due to a lack of understanding by a business of its advantages, as well as the need for systemic changes. For this reason, the UK government needs to focus its efforts on adjusting environmental policies and their application to practice to involve companies in the transition to a circular economy and contribute to sustainable development.
Circular Economy Policies in the UK
The UK is one of the leading countries that care about the social, economic, and environmental well-being of its citizens. For this reason, the UK participates in various programs and discussions to reduce a negative impact on the environment and develops appropriate policies. One of the latest policies being considered and implemented is the Circular Economy Package.
Currently, the UK accepts amendments and prepares to implement various changes aimed at the transition to a cyclical economy. The Circular Economy Package is a revised legislative framework that defines steps to reduce waste and recycle it. Each country in the United Kingdom has its specific development plans; however, they all have the same direction. The necessary steps include doubling resource productivity, eliminating disposable materials, introducing a Deposit Return Scheme for product containers, improving logistics for waste recycling and landfill management (“Circular Economy,” 2020). All these measures have been taken by England, Scotland, Wales, and Northern Ireland and have both short-term goals and a long-term plan to transition to a circular economy.
However, these goals require systemic changes that can be costly and difficult for many companies. Consequently, the UK needs to use incentive approaches to encourage companies to move to a circular economy. Such methods can include both material incentives and the promotion of an environmentally friendly approach to production. The next section will discuss the business benefits of the circular economy that can be used to promote changes by public policy.
Concept of a Circular Economy
Over the past decades, the world has been concerned about environmental problems and has been developing new policies and concepts to protect nature. Circular economy policies are not unambiguously determined, but Kirchherr et al. (2017) found that the economy is most often defined as a combination of waste reduction, reuse, and recycling activities. At the same time, the main focus is on the economic benefits of this approach, while the environmental advantages are secondary (Kirchherr et al., 2018). Nevertheless, these two aspects are interrelated, which demonstrates the main features of a circular economy.
The main features are that states and enterprises use technologies that reduce the consumption of resources for manufacturing and the amount of waste from the consumption and production of goods. In other words, the linear approach of withdrawal of raw materials, production, consumption, and disposal of the product is replaced by a life cycle approach that has the stages of “production- use- recapture” (Stoyanova, 2019).
In addition, a fundamental feature of this policy is that it aims to create two material flows, such as biological nutrients, which re-enter the biosphere, and technical nutrients, which will be used cyclically (Murray et al., 2015). This approach significantly reduces the cost of production while saving raw materials and reduces the amount of waste from use. For example, in the UK, it is common practice to add a few cents to the price of plastic bottles that can be returned by its recycling (“Circular Economy,” 2020). Thus, a company receives recycling materials and reduces the amount of waste.
The economic benefits of a circular economy are reflected in several aspects. First, the use of recyclable materials is more cost-effective due to the lower expenses of recycling than buying new raw materials (Ranta et al., 2018). Secondly, reducing the quantity of waste diminishes the cost of its disposals. Third, a cyclical economy assumes a lower level of resources and electricity usage for production, which reduces its cost. Consequently, despite the assumed costs required for systemic changes in production, the profits from using a cyclical economy shortly exceed the expenses. This scenario is possible because there are several effective ways to cut production costs. Hence, policymakers can use these arguments to inspire companies to use circular economy strategies.
Concept of Corporate Social Responsibility and Its Benefits Related to Circular Economy
Concept of Corporate Social Responsibility
Corporate Social Responsibility (CSR) has become one of the key aspects of any company’s activities as it affects its image and, therefore, the interest of customers. The definition of corporate social responsibility is rather vague, since different scholars focus on various aspects of this issue. However, in general, corporate social responsibility can be defined as a set of decisions and actions of an organization aimed at bringing benefits to society (Stoyanova, 2019). In other words, any company policy aimed at improving certain aspects of the lives of stakeholders, such as employees, customers, and community residents, is a manifestation of CSR.
At the same time, scientists identify two motives or reasons for companies to manifest CSR, such as intrinsic and extrinsic reasons. Extrinsic motivation is based on the external manifestation of the company’s social responsibility as it allows it to attract the interest of buyers and stakeholders, improve its reputation, and increase profits (Del Baldo & D’Anghela, 2020). In other words, buyers are more interested in giving their money to companies that invest it in community development or social problems. The intrinsic motive is the internal values of the company and its founders, which aim to bring benefit to society (Del Baldo & D’Anghela, 2020).
In such cases, the manifestation of CSR may be less noticeable; for example, the company may display its contribution to charity only in financial statements but not in its news. However, these motives can often be combined and challenging to distinguish, since CSR is an effective incentive for a business to work, even if its founders’ goal is primarily social initiatives.
Manifestations and Benefits of Circular Economy as Part of Social Corporate Responsibility
CSR of a company aimed at environmental initiatives can manifest itself in different actions. A company can invest in waste sorting and recycling the organization internally or for the whole community. The company can also reduce the use of resources and waste production due to the manufacture of goods by changing technology. Another option is to create recyclable, reusable, or long-lasting products to reduce consumer waste. All of these measures individually have a positive impact on the environment. However, the choice of a circular economy strategy brings them all together and gives significant benefits to the company and the environment.
Consequently, applying a circular economy is one of the most profitable CSR strategies as it reduces costs of production and improves the company’s reputation simultaneously. CSR, in turn, gives many benefits to a company, both for the internal organization of the business and for its external influence. Employees of a socially responsible company are more loyal to the organization for several reasons (Stojanovic et al., 2020).
First, if a company cares about a safe and comfortable work environment, employees have an incentive to put more effort into their work and productivity. Second, employees can take pride in what the company does and the benefits it brings to society. Third, employees are most often involved in social initiatives, such as volunteering or sorting waste, which gives them the opportunity to feel their responsibility and influence on the development of the community in which they live. Thus, a socially responsible company has less staff turnover and high productivity of the employees, which helps to bring more profit.
The next benefit manifests itself in attracting the attention of customers and the public, which improves the popularity and reputation of a company. At the same time, the company’s customers can be directly involved in the process of making social initiatives, which encourage them to feel useful to society. For example, buying a recyclable product reduces pollution, and donating a part of its cost to charities helps people in need. Consequently, the company attracts buyers, which brings profit while also benefiting the community.
Another advantage is that socially responsible companies are more attractive to investors and partners and the authorities of the states or cities in which they operate. Investors and partners are interested in the profitability of the company and its reputation, since these aspects also affect their activities. The authorities are interested in companies’ social responsibility because their social initiatives contribute to the development and maintenance of the normal functioning of a city or country. At the same time, the authorities can facilitate a company’s activities, for example, by providing incentives or reducing taxes. Consequently, the CSR of a business is beneficial for all parties that are directly or indirectly related to its activities, and this argument can be used by the UK government to promote circular economy policies.
Circular Economy Benefits: Unilever Experience
Unilever is one of the pioneering corporations that significantly contribute to environmental protection and the development of new technologies for use in a circular economy. For example, Unilever developed the Overall Business Impact Assessment (OBIA) approach, which evaluates the primary environmental impact of a company and helps to selects data-driven sustainability programs (Sim et al. 2016). This approach and the various Unilever programs allow the corporation to bring significant benefits to the environment in practice.
First, Unilever has adopted a series of programs to reduce the use of plastic in manufacturing. These programs aim to develop a new type of packaging, find alternatives, and use plastic with the greatest recycling chance. For example, a new technology for injecting air bubbles into the bottle material has reduced the amount of plastic by 15% (“Explainer,” 2018). Another example is the creation of refill super concentrated laundry capsules and shower gels, which in Brazil reduced the amount of plastic by 75% (“Explainer,” 2018).
In addition, Unilever develops new technologies for reusing materials. For example, Love Beauty and Planet is 100% recyclable and made from recycled materials, while REN bottles are 20% ocean plastic (“Explainer,” 2018). The company gradually introduces this approach into all brands, from tea bags to cosmetics products, and also makes technologies available to competitors.
Another approach of Unilever’s circular economy is the modification of production and supply chains, which allows the reuse of modules and the generation of energy. For example, many of Unilever’s production lines can be easily adjusted to meet the company’s new needs, and Ben & Jerry’s factories convert ice cream bi-products into biogas (“Explainer,” 2018). At the same time, Unilever works with governments and organizations to use circular economy approaches. In this way, foundations and governments finance the creation of sorting stations, the waste of which Unilever uses to produce its products.
Moreover, the circular economy also benefits the reputation and revenues of the company. Buyers are more interested in products that can save the environment, which increases their sales. At the same time, government organizations and foundations contribute to collecting waste, which becomes materials for products. As a consequence, those 28 Unilever’s brands that use the circular economy were “collectively growing 60% faster than Unilever’s total portfolio” in 2019 (George, 2020, para 7). Consequently, Unilever’s experience demonstrates that a circular economy policy positively impacts both the sustainable development of the world and the company’s CSR and its profits.
Challenges to Implementing Circular Economy Policies
Unilever’s experience demonstrates that the transition to a circular economy is a long and complex process with many barriers and challenges. First, many companies with little income do not have enough funds to develop and apply new technologies and produce sustainable products. Consequently, they require funding or changes in the system’s conditions that will allow them to move to new approaches less costly. However, the UK currently does not have a sufficiently developed infrastructure to provide such conditions, although the Circular Economic Package’s adoption shows progress in this direction.
Furthermore, companies that do not have enough intrinsic motivation to move to a circular economy do not have enough information to make an informative decision. Consequently, information policy should also aim to convince both businesses and consumers of a circular economy’s benefits. At the same time, the transition process can take a long time due to the need for systemic changes in the state. Nevertheless, these changes are possible, and a more detailed study of the challenges and ways to address them will reduce the time of their implementation and contribute to the sustainable development of the world.
Conclusion
Therefore, the analysis of concepts of a circular economy, corporate social responsibility, and Unilever’s activities demonstrates that businesses can successfully apply this policy to contribute to sustainable development. The advantage of a circular economy to society is that companies reduce production and consumption waste and use raw material and resources, which is necessary to preserve the environment. Nevertheless, the use and implementation of a circular economy have some challenges, which are manifested in the high costs of systemic changes in supply chains and the lack of developed infrastructure.
Consequently, the UK government should promote and encourage businesses to transition to a circular economy in two ways, such as financing small companies and informing large corporations. Policymakers need to convince business of the benefits of a circular economy, such as cost savings and improved reputation, that will affect their profit. However, the specific steps to overcome the difficulties need to be studied in more detail.
References
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