How to become a green SME in a circular economy

How to become a green SME in a circular economy? In this part, we will talk a lot about SMEs, since they often become transnational firms. We are giving other examples than the ones cited in the conference such as DANONE trying to reduce their water consumption. We neither will explain circular economy according to Helen MacArthur Foundation as explained in the conference. We will try to explain these thanks to our study made for the European SMEs.

        99.8 % of Europe’s private companies are SMEs, accounting for more than two-thirds of employment in the EU 27. Well then, as an SME, what are you doing to become green? How can you be a green SME in a circular economy? Moreover, what is a circular economy?

        A circular economy can be defined as a system in which production, consumption and trade are designed to minimize the net extraction of key resources, such as fossil fuels, raw materials, water, land, the environment and pollutants along with diminishing negative environmental and health impact.

We shall split this section in three parts. Firstly, what can you do on your own? What is in your control? Secondly, what can you do with your business partners? Lastly, what is the European Union doing for you?

1. Improving what is under your control – turning into a resource efficient SME

        You might have noticed that prices of raw materials are increasing. For instance, since 2000, metal prices have risen by 170 %, rubber has risen by 260 % and many other materials are following soon. It is always tricky to put an expiration date on certain resources like there will be no more silver extracted in 13 years. Yet, what is certain is that companies will increasingly have trouble sourcing raw materials at affordable prices. You’ll need to think about improving processes, processes improving design, improving supply chains.

1.1. Improving processes

        We are all familiar to the old saying: “What gets measured gets managed”. Well, the first thing to do on your way to resource efficiency is to map your processes: What natural resources do you use? How much do you need? Where could you improve? Material flow analysis can help you to visualise the material flows and losses of all your processes. Let’s take the example of painting a car in an auto repair shop.

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        The left side shows the flow of paint before the analysis. The red arrows show how much is wasted or lost in emissions. Out of ten kilos of paint purchased, only one kilo remains on the car. The right side illustrates how much of this can be spared. If you reduce losses within the paint’s preparation and application and if you limit overspray, you will only need to buy 3.2 kilos of paint instead of ten.

1.2. Improving design

        Material flow analysis is a good way to reduce material energy and water consumption. Going beyond improving existing processes in redesigning products and systems can bring even greater benefits. This is the principle of eco design, which is illustrated in the following example:

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A refrigerated truck company managed to reduce the weight of their trucks in semi trailers by 16 %. This brought about other positive changes such as less fuel consumption due to their lighter trucks. As the German architect Mies van der Rohe, said: less is more. Better design is another step forward, expanding the focus beyond materials. Eco design considers all the main environmental impacts of a product throughout its life. Such environmental impacts include CO2 emissions, soil and water pollution, acidification and hazardous waste. Based on life cycle analysis, eco design also gives you some influence over what will become of your product once it has left the factory or shop. Eco design can make it easier to reuse or recycle your product at the end of its life.  For instance, one particular company has designed a laptop that, when it reaches the end of its life, is at least 70 % reusable or recyclable. This particular laptop was designed with the support of the EU funded ZeroWIN research project.

1.3. Improving supply chains

        Clearly, redesigning your products and processes to use less material will benefit both the environment and your bottom line. However, improving your supply chain goes beyond simply reducing quantities. Better supply is also about identifying the weakest points within your supply chain. Take rare earth minerals as an example, most SMEs as well as their immediate suppliers are completely unaware of what degree they are dependent on critical raw materials. Some tools have been developed to help SMEs tackle the issue. For instance, am example in France can be found at the following address: http://www.entreprises.gouv.fr/secteurs-professionnels/industrie/chimie/metaux-strategiques 

        Furthermore, in a recent report of the European Commission, 20 raw materials were identified as critical, including cobalt, gallium, indium, tungsten, etc. Let’s use one of these tools to check that our main inputs are not on the list. And what if they are. Well, better supply above all means that you should look for substitutes or other sources of supply, such as from recycling. Instead of buying virgin plastic material, we could buy recycled plastics. Instead of buying virgin paper, we can buy recycled paper. Instead of using fossil fuel in our plant, we could use renewable energy. As for rare earth minerals, there is on-going research and development to find synthetic substitutes to natural elements. Anyways, the changes that you can make will depend on our operations. There is no one-size-fits-all solution. As an SME, we may find it helpful to rely on proven sources to improve our supply. For instance, if we buy products awarded with third-party verified eco labels, it ensures that you use the greenest products that fit your needs. For example, the EU eco label covers more than 30 product groups including detergents, floor coverings, lubricants, paper products and more. Therefore, when launching a procurement process to secure our supply, we could include environmental criteria.

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2. Towards circular economy thinking – opening up to our business partners

        Let’s imagine that we are now fully resource efficient SME, we consume as few resources as possible, we design environmental friendly and easy to recycle products. All of this is as we said in our control. However, there are still many areas where we will need a little help from our business partners to make a change. By definition, we cannot make the change to a circular economy alone. A circular economy is about being open to new business opportunities and there are many ways for us to be part of a broader and cleaner industrial ecosystem. We may wish to turn our neighbours into business partners; this is industrial ecology. Turn products we sell into resources we recover, this is reverse logistics. Turn our business model from “for sale” to “for rent”, this is a functional economy.

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