This Blog follows the recent release of a report for IUK by Professor Nick Clifton and Dr. Gary Walpole.
The IPCC (UN) Climate Change Report (2023) generated stark headlines, warning of future existential crises if public and private sector actors do not make radical operational and strategic changes regarding all aspects of production and consumption. Put simply, coordinated action is needed in order to reduce waste, pollution, keep products and materials in use longer, and to regenerate natural systems.
Reaching collective goals through the circular economy
This is where the concept of the Circular Economy (CE) comes in, with its key aims to “…redefine growth, focusing on positive society-wide benefits. It entails gradually decoupling economic activity from the consumption of finite resources, and designing waste out of the system. Underpinned by a transition to renewable energy sources, the circular model builds economic, natural, and social capital.”
This then is an economic model hugely different to the conventional, linear – take, make, waste – economy that we have participated in for the quarter of a millennia since the dawning of the industrial age. In its widest sense, the CE is thus a means to a broader system change – in contrast with a sometimes-reductive popular use of the term CE as synonymous with recycling (i.e. a better use of waste) – rather tackling the much more systemic problem of reducing waste in all forms, at source, through product lifecycles and across the value chain. New economic models require new approaches to innovation; these in turn require a shift in innovation policy itself.
As constellations of actors, networks, markets, and institutions, regions are by their very nature the locus of innovation policy. This is particularly true for CE innovation with its inherent focus on place-based approaches to connecting producers, suppliers, and customers to realise previously wasted sources of value.
Responding to societal challenges
Whereas previous paradigms stressed (economic) competitiveness, “Innovation policy 3.0” seeks to address broader sustainable development goals, which in turn implies a whole-system change with the explicit mobilisation of science, technology and innovation for societal challenges. It implies the mobilisation of a much broader set of actors, with new challenges around governance, dealing with the discontinuation of existing systems, structures and institutions, and a much greater emphasis on experimentation, reflexivity and evaluation.
In the light of the above drivers, the aim of the report is to provide insights to Innovate UK regarding how policy can support a CE paradigm shift that can fundamentally change the social and business mindsets around sustainability and CE implementation. As its starting point, it reviewed the practitioner-focused Circular Economy Innovation Communities (CEIC) programme run by Cardiff Metropolitan University with Swansea University, which supports public and third sector organisations focusing on delivering CE solutions via collaborative working, establishing communities of practice to strengthen knowledge links, and enhancing innovation capabilities. The CEIC project can be conceptualised as a novel, large-scale regional innovation system intervention. However, effective innovation systems comprise a full range of ‘triple-helix’ actors (government and knowledge generators such as universities as in CEIC) but also businesses.
Therefore, the fundamental aim of this Thought Leadership project was to scope out the transferability of the CEIC learning as an intervention for SMEs, to realise improved innovation collaborations and implications for CE growth.
Practical insights regarding how communities of practice were operating within the CEIC project were augmented by an extensive literature review focusing on regional innovation systems, barriers and enablers of CE transformations, communities of practice, CE policy interventions, supply-chains, and business models. As a double-loop learning exercise, reflective consultations were undertaken with a range of Cardiff Circular Economy Network businesses to gain their views – the key themes, challenges and potential opportunities for further research to address in developing the CE at the business and system levels. The evidence from CEIC, the literature review and feedback from the interviews were synthesised into a framework designed to underpin a future research agenda for CE SME innovation.
Our findings in summary
CE is a misunderstood term: it should be defined holistically as the movement from linear to circular economic models, but is often applied reductively to narrow activities such as recycling. To be most effective, future research – and the consequent interventions arising – will need to be cross-cutting and thematic, rather than restricted to a purely CE silo. It will also need to generate standalone projects that are manageable and achievable, with defined and measurable outcomes; one way to do this is to examine the underlying drivers (and barriers) at each of the three levels (firm, network, system).
Enhanced Circular Economy Innovation Communities – ecosystems facilitated at the local or regional level – offer a potentially transformative place-based mechanism. These should go beyond a narrow remit of facilitating innovation in CE SMEs to one of driving CE innovation across all SMEs – i.e. cross-sectoral (horizontally) and through whole value chains (vertically).
Nick Clifton (Twitter @FrannysTash) is a Professor of Economic Geography and Regional Development. His research interests lie in the fields of regional economics, small business and entrepreneurship, networks, business strategy, innovation and creativity. Nick has undertaken funded research for Innovate UK, Economic and Social Research Council (ESRC), The Scottish Executive, the Welsh Government, Higher Education Funding Council for Wales (HEFCFW), Federation of Small Business (FSB), Research Councils UK, and the National Endowment for Science Technology and the Arts (NESTA). He is Co-Director of the Regional Innovation & Regeneration Centre.
Dr. Gary Walpole (Twitter @walpoleg) is Director of the Circular Economy Innovation Communities (CEIC) project, which is creating regional collaborative innovation networks across public service organisations to co-produce new service solutions that implement Circular Economy (CE) principles. He also directs the Cardiff Circular Economy Network that created a CE community of practice within the Cardiff Council are. He is Co-Director of the Regional Innovation & Regeneration Centre.
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