Circular Economy Remains Out of Reach for UK Businesses, with Only 1-in-4 Able to Implement
Nearly half of UK businesses say progress towards implementing a circular economy has stalled, leaving many to miss out on economic and sustainability benefits.
London, U.K., 14 November, 2024. Research from Ivalua, a global leader in spend management, has found that circular economy models are giving UK businesses a lifeline to solve efficiency, cost and sustainability challenges. Firms that have implemented circular economy models report higher revenue (56 %), more efficient material usage (56 %), reduced carbon footprint (52 %), and lower costs (49 %). But, worryingly, most are struggling to set up circular economy practices and reap the rewards.
The study of 300 UK supply chain and procurement decision-makers found that just 25 % have implemented a circular economy model. Almost half (49 %) say they are in the process of, or planning to implement a circular economy model, while 22 % still have no plans at all.
The findings indicate that the circular economy slowdown stems from basic sustainability shortcomings. UK businesses currently lack comprehensive and fully implemented plans for using renewable energy (75 %), buying recycled materials (76 %) and exchanging resources with suppliers (81 %).
“Against persistent inflation and rising energy and fuel costs, UK businesses must urgently find new ways to optimise their supply chains,” says Jarrod McAdoo, Director of Product at Ivalua. “In our ‘survival of the fittest’ economy, circularity will improve the financial and environmental standing of businesses – particularly those who can gain a first-mover advantage. In fact, our data shows more than half (51 %) of UK businesses say if they don’t implement circular economy models, they’ll be overtaken by greener, more efficient competitors.”
Missing links in the circular supply chain
The main roadblocks to success when implementing a circular economy model are resistance to change from suppliers (37 %), competing priorities (34 %) and suppliers that don’t understand their own environmental impact (31 %).
Challenges in supplier collaboration on sustainability have led to 58 % of UK businesses saying circular economy initiatives are a 'pipe dream'. The data also suggests that the circular economy slowdown is a top-down issue, as 54 % say circular economy models will never gain momentum without more support from the C-suite and the board.
Despite these challenges, the majority (57 %) of UK businesses agree that the cost of inaction will far outweigh the cost of implementing circular economy initiatives.“To turn this around, businesses must secure buy-in from leadership and sceptical stakeholders, convincing them that circularity aligns with ethical and environmental objectives, while also making the business resilient, regenerative and competitive in today’s volatile market,” continues McAdoo. “Once buy-in is secured, businesses must invest in the tools and processes needed to enable closer collaboration with suppliers and greater supply chain visibility. Only then can they identify opportunities to minimise resource wastage and their environmental footprint throughout their supply chain lifecycle.”
About the research
The survey was conducted by Sapio Research on behalf of Ivalua from the 29th of April to the 10th of May 2024. It is based on a survey of 300 supply chain and procurement decision-makers in the UK.
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Ivalua is a leading provider of cloud-based, AI-powered Spend Management software. Our unified Source-to-Pay platform empowers businesses to effectively manage all categories of spend and all suppliers, increasing profitability, improving sustainability, lowering risk and boosting employee productivity. We are trusted by hundreds of the world’s most admired brands and recognized as a leader by Gartner and other analysts. Learn more at www.ivalua.com. Follow us on LinkedIn and X.
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