Circular Economy in the European Union: Organisational Practice and Future Directions in Germany, Poland and Spain (Routledge Research in Sustainability and Business) [1 ed.] 1032532742, 9781032532745

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Circular Economy in the European Union

Circular Economy in the European Union: Organisational Practice and Future Directions in Germany, Poland and Spain presents the EU’s journey towards a circular economy (CE), identifying significant organisational practices in this gradually adopted field among member countries. The book also aims to develop and propose innovative initiatives and practices for implementing CE across various economic sectors in selected EU countries, such as Poland, Spain and Germany. Covering topics which include the implementation of CE in the EU and worldwide, green employee behaviors, corporate social responsibility in creating pro-­environmental attitudes and models of eco-­digital factory transformation in SMEs, the book emphasises the importance of innovative, environmentally friendly, low-­waste, and low-­emission technologies. Consisting of thirteen interconnected chapters, it discusses the challenges and opportunities of CE, the importance of business engagement in addressing social and environmental problems, and provides practical examples of innovative solutions in various sectors. This volume will be of great interest to students and scholars of circular economy, corporate governance, business ethics and sustainable ­business, as well as entrepreneurs, managers, government representatives, and ­non-­governmental organisations active in CE. Dagmara Lewicka is a Full Professor in the Department of Business and Enterprise Management, Faculty of Management, AGH University of Krakow, Poland. She is an expert in Human Resources Management (HRM), training and development and organisational behaviour with more than 20 years of experience as a consultant and business coach. Her research interests include organisational commitment, engagement, HRM practices, organisational trust, green employee behaviour, and green HRM. She is the author of over 200 publications including 5 monographs. Joanna Zarębska is an Associate Professor in the Department of Environmental Management and Public Economy, Faculty of Economics and ­Management, University of Zielona Góra, Poland. In her research she combines aspects of technical (engineering) knowledge with economic sciences (environmental

economics) and commodity science (product ecology). Her research interests focus on sustainable development, the circular economy, environmental and natural resource economics, environmental management and its tools (e.g. CPcleaner production, ISO 14000 series standards and EMAS, LCA-life cycle assessment, eco-labelling of products, ecological design) and municipal waste management and especially packaging. Her scientific output includes more than 100 publications. Roman Batko is an Associate Professor in the Department of Business and Enterprise Management, Faculty of Management, AGH University of Krakow, Poland. He is an expert in the Future Industry Platform, a certified ADMA auditor, and a Member of the Culture and Media Management Committee of the Polish Academy of Arts and Sciences. He specialises in process management and digital transformation management. His research interests include AI, robotisation, new forms of communication, changes in the labour market, and the creation of technological networks in which the position of the human changes radically. He is the founder and CEO of Energreen, a consulting company whose task is to create digital solutions that change and develop organisations and contribute to the popularisation of the use of renewable energy sources. Beata Tarczydło is an Associate Professor in the Department of Business and Enterprise Management, Faculty of Management, AGH University of Krakow, Poland. She specialises in management and marketing, with particular interest in brand management and building a unique brand image. She is the manager of the research project ‘Trends in contemporary marketing activities’. Tarczydło has authored over a hundred scientific publications and actively participates in the transfer of knowledge from science to practice. Maciej Woz ́niak is an Assistant Professor in the Department of Business and Enterprise Management, Faculty of Management, AGH University of Krakow, Poland. His research interests cover a wide area of public policy and small and medium-sized enterprises. The findings of his research have been published widely in books and academic journals. He cooperates with foreign universities and has given lectures in Finland, Italy and Spain, among other locations. He has participated in multiple scientific conferences and seminars around the world. He was a coordinator of scientific partners in the Difass project, which covered financial support instruments for small and medium-sized enterprises in the European Union Member States. Dariusz Cichoń is an Assistant Professor in the Department of Business and Enterprise Management, Faculty of Management, AGH University of Krakow, Poland. His PhD thesis was Integrated system of development and management of residential real estate in Poland. He is the President of the

Association of Real Estate Administrators and Managers in Krakow, Consultant at the Ministry of Construction, Court expert at the Regional Court in Krakow. He has participated in multiple scientific conferences and seminars around the world. He has authored 5 monographs and more than 50 scientific publications in the field of real estate market. Monika Pec (MSc. Eng) is a PHD candidate at AGH University of Krakow Poland. A practitioner with 20 years of experience in large corporations, she specialises in the area Human Resource Management, especially in training and development, green product marketing, and sustainable marketing. As a trainer, she focuses on green competences both in product training and soft skills.

Routledge Research in Sustainability and Business

Corporate Regulation for Climate Change Mitigation in Africa A Case for Dilute Interventionism Kikelomo O. Kila The Role of Business in Global Sustainability Transformations Edited by Dalia D’Amato, Anne Toppinen and Robert Kozak Understanding Sustainability Performance in Business Organizations Implications for the Sustainability Service Industry Jean-Pierre Imbrogiano Comparative CSR and Sustainability New Accounting for Social Consequences Edited by Gabriel Donleavy and Carlos Noronha Environmental Disclosure Critical Issues and New Trends Luigi Lepore and Sabrina Pisano Sustainable Football Environmental Management in Practice Luca Marrucci, Tiberio Daddi and Fabio Iraldo Circular Economy in the European Union Organisational Practice and Future Directions in Germany, Poland and Spain Dagmara Lewicka, Joanna Zarębska, Roman Batko, Beata Tarczydło, Maciej Woźniak, Dariusz Cichoń, and Monika Pec For more information about this series, please visit: www.routledge.com/ Routledge-Research-in-Sustainability-and-Business/book-series/RRSB

Circular Economy in the European Union Organisational Practice and Future Directions in Germany, Poland and Spain

Dagmara Lewicka, Joanna Zarębska, Roman Batko, Beata Tarczydło, Maciej Woźniak, Dariusz Cichoń and Monika Pec

First published 2023 by Routledge 4 Park Square, Milton Park, Abingdon, Oxon OX14 4RN and by Routledge 605 Third Avenue, New York, NY 10158 Routledge is an imprint of the Taylor & Francis Group, an informa business © 2023 Dagmara Lewicka, Joanna Zarębska, Roman Batko, Beata Tarczydło, Maciej Wożniak, Dariusz Cichoń and Monika Pec. The right of Dagmara Lewicka, Joanna Zarębska, Roman Batko, Beata Tarczydło, Maciej Wożniak, Dariusz Cichoń and Monika Pec to be identified as authors of this work has been asserted in accordance with sections 77 and 78 of the Copyright, Designs and Patents Act 1988. All rights reserved. No part of this book may be reprinted or reproduced or utilised in any form or by any electronic, mechanical, or other means, now known or hereafter invented, including photocopying and recording, or in any information storage or retrieval system, without permission in writing from the publishers. Trademark notice: Product or corporate names may be trademarks or registered trademarks, and are used only for identification and explanation without intent to infringe. British Library Cataloguing-in-Publication Data A catalogue record for this book is available from the British Library ISBN: 978-1-032-53274-5 (hbk) ISBN: 978-1-032-53276-9 (pbk) ISBN: 978-1-003-41123-9 (ebk) DOI: 10.4324/9781003411239 Typeset in Times New Roman by SPi Technologies India Pvt Ltd (Straive)

Contents

List of figures List of tables

ix x

Introduction 1 1 Circular economies in the world and Europe

4

2 Challenges on the road to a recycling society

20

3 Barriers, challenges and opportunities to accelerate the realisation of a circular economy

42

4 Sustainable business models: Design, implementation and performance management

57

5 The eco-digital factory transformation model in small and medium-sized enterprises

78

6 Organisational support for employee green behaviour

98

7 Support for enterprises in circular economy industries

117

8 Brand projects supporting the circular economy on the basis of the clothing sector: A case study of 4F Change and other research results

130

9 Implementing a circular economy in the construction sector: A case study of Porto Office B by Sol e Mar and SAO investments 151

viii Contents

10 A circular economy in property management

182

11 Circular economies in the plastics, packaging, batteries and electronics sectors: A case study of Kärcher

203

12 E-commerce in the development of green competences of companies, their customers and employees based on the example of the Strix agency

222

13 The young generation and a circular future

242

Future Directions

256

Index 265

Figures

2.1 The place of the circular economy in the stages of shaping the environmental policy of enterprises 2.2 Circular economy model with particular emphasis on the consumption stage and waste management 3.1 Increasing the efficiency of waste segregation – respondents’ proposals 6.1 Factors shaping EGB 9.1 Cooling system impact on CO2 reduction 9.2 Fewer leak checks for R32 – saving on operating costs 9.3 Additional scoring for BREEAM- and LEED-certified buildings 9.4 Design features of the heating system in the new building 9.5 Design features of the cooling system in the new building 11.1 The way of implementing of green actions 12.1 Cooperation and flows of Strix-customer competences

22 24 52 106 162 163 163 164 165 215 234

Tables

2.1 Municipal waste generated in selected European countries [in kg per capita] 2.2 Municipal waste recycled in selected European countries [%] 2.3 Packaging waste generated in selected European countries [in kg per capita] 2.4 The recycling rate of packaging waste in selected European countries [%] 2.5 The recovery rate of packaging waste in selected European countries [%] 3.1 Packaging included in the deposit system in selected European countries 3.2 Barriers and opportunities for the implementation of circular economy in European countries 3.3 Suggestions for ways to reuse packaging 3.4 Advantages of CE implementation in three pillars of sustainable development 6.1 Description of the variables of the testing model 6.2 Statistical evaluation of constructs 6.3 Model fit statistics 6.4 SEM model estimates 6.5 Total effects 7.1 Characteristics of the respondents 7.2 Preferred support to start a company in Poland and Spain 7.3 Relation between preferred support to start a company and source of income in Poland 7.4 Relation between preferred support to start a company and residence in Poland 7.5 Relation between preferred support to start a company and sex in Poland 7.6 Relation between preferred support to start a company and sex in Spain 9.1 Certification levels 9.2 Preliminary timeline

28 30 32 34 36 45 48 52 53 107 108 109 109 110 124 124 125 126 126 127 156 158

Tables  xi 9.3 9.4 9.5 9.6 9.7 9.8 9.9 9.10 9.11 9.12 9.13 9.14 12.1 13.1 13.2 13.3 13.4 13.5

Project scores for sustainable sites Project scores for water efficiency Project scores for energy and atmosphere Project scores for materials and resources Project scores for indoor environmental quality Project scores for innovation and design Project scores for regional priority Overall project score Water baseline calculated Requirements for adhesives and sealants as applicable to the project scope Requirements for Aerosol Adhesives Overall classification results Strix Green Practices Characteristics of the respondents A lifestyle conducive to a circular economy or not The relation between a lifestyle that is conducive to a circular economy and source of income The relation between a lifestyle that is conducive to a circular economy and residence The relation between a lifestyle that is conducive to a circular economy and date of birth

167 168 168 169 169 170 170 170 171 178 178 179 233 248 248 249 250 250

Introduction

Circular economy (CE) concerns a wide group of people who are interested in limiting the extraction of non-renewable Earth resources (e.g. rare earth minerals, oil, coal) and waste generation. While originally the phenomenon of waste did not occur in natural ecosystems, it was a man who introduced waste to the environment. Therefore, cognately, it is man who should make changes in his management in such a way that the repetition of this waste in the environment is as little as possible or not at all. Striving for the recycling society assumed by the European Union, we are able to do it (COM, 2014, p. 398). The exact definition of the circular economy and its ‘circularness’ remain topics of ongoing debate, while current research on CE focuses mainly on strategies to move away from linear production in favour of extending the life of circular resources. Such an approach contributes to the transition from unsustainable production and consumption intensively, even using natural resources, to a sustainable and rational economy (Blomsma & Brennan, 2017; Korhonen et al., 2018). This includes extending the life of products and their components by implementing the circular economy model proposed in 1976 by Walter Stahel and Genevieve Reday as an alternative to the ‘cradle to cradle’ (C2C) model or the later proposed 6R model comprising: rethink, redesign for cleaner production, less waste (refuse), reducing the consumption of raw materials (reduce), reusing (reusing), repairing (recovery) and closing material loops through recycling (recycle) (Stahel & Reday-Mulvey, 1981; Bi, 2011; Nußholz, 2017; Zarębska, 2019). Circular economy products can be understood as products designed in a thoughtful way, with care for the environment, which are long-lived, and which are suitable for repair, reuse and the recycling of valuable waste generated from them, i.e. secondary raw materials (Bocken et al., 2016). This monograph is of a holistic nature because its purpose is to present not only the past changes in the European Union’s (EU’s) pursuit of the circular economy but also to point to good organisational practices in this area which are slowly but systematically being implemented in the Member States. International cooperation and the flow of information on good environmental practices will allow in future the achievement of a sustainable level of organisation and a recycling society not only in the entire EU, but across the globe. Therefore, it is extremely important to disseminate innovative good practices at DOI: 10.4324/9781003411239-1

2 Introduction every level: local, regional, national and global, but also among politicians, scientists, enterprises, local governments and various organisations. Environmental communication between organisations will allow for industrial symbiosis and the duplication of good practices which will be so important for the future of our clean world. The monograph consists of thirteen substantively interconnected chapters. The main topics are: the implementation of CE in EU countries and the world; the challenges faced by the recycling society; the barriers but also opportunities for accelerating the implementation of CE, including the business world in responsibility for solving important problems; social and ecological business models (SBMs); eco-digital factory transformation models; supporting the green behaviour of employees in organisations; and examples of corporate social responsibility (CSR) in creating green jobs. In addition, practical examples of innovative solutions are presented which prove the promotion of the CE idea in EU countries, namely: brand marketing projects supporting the circular economy using the example of the clothing industry; the construction sector in CE in practice using the example of SAO Investments and Porto Office B by Sol e Mar; modern housing trends geared towards green building; CE activities in the plastics, packaging, batteries and electronics sector as related to a case study of Kärcher. The implementation of innovative low-waste, low-emission technologies that save non-renewable resources and are environmentally friendly are the only solutions to achieve CE. The education and attitude of the young generation, which is our future, is also important. Therefore, the monograph is summed up in a chapter entitled ‘The young generation and a circular future’. The education of the younger generation is crucial for social development and securing a circular future. Among the young generation (those still learning), the question of shaping ethical values and the idea of respecting the environment and making conscious use of the values of the material (economic) and natural (environmental) worlds assumes great importance. It can be assumed that changing the behaviour of the younger generation will be crucial in shaping a future based on the idea of CE. References Bi, Z. (2011). Revisiting system paradigms from the viewpoint of manufacturing sustainability. Sustainability, 3(9), 1323–1340, Retrieved February 14, 2023, from http:// www.mdpi.com/2071-1050/3/9/1323/htm Blomsma, F., & Brennan, G. (2017). The emergence of circular economy: A new framing around prolonging resource productivity. Journal of Industrial Ecology, 21, 603– 614. https://doi.org/10.1111/jiec.12603 Bocken, N. M. P., de Pauw, I., Bakker, C., & van der Grinten, B. (2016). Product design and business model strategies for a circular economy. Journal of Industrial and Production Engineering, 33, 308–320. https://doi.org/10.1080/21681015.2016.1172124 COM (2014). 398 final, 2014, Towards a circular economy: A zero waste program for Europe, Communication from the Commission to the European Parliament, the

Introduction  3 Council, the European Economic and Social Committee and the Committee of the Regions, European Commission, Brussels. Korhonen, J., Nuur, C., Feldmann, A., & Birkie, S. E. (2018). Circular economy as an essentially contested concept. Journal of Cleaner Production, 175, 544–552. https:// doi.org/10.1016/j.jclepro.2017.12.111 Nußholz, J. L. K. (2017). Circular business models: Defining a concept and framing an emerging research field. Sustainability, 9, 1810. https://doi.org/10.3390/su9101810 Stahel, W. R., & Reday-Mulvey, G. (1981). Jobs for tomorrow: The potential for substituting manpower for energy. Vantage Press. Zarębska, J. (2019). Packaging waste management in the context of a circular economy – The essence, tools, environmental communication. University of Zielona Góra (in Polish).

1

Circular economies in the world and Europe

1.1 Introduction Natural resources, like all natural goods on Earth that can be used by humans, are the basis for the functioning of economies around the world and have an impact on the quality of human life. Resources include not only non-renewable (limited) raw materials such as fuels, minerals and metals but also renewable (continually or seasonally replenished) materials such as vegetation, animals, soil, water and air. The demand for resources (especially mineral deposits) is increasing constantly as the world’s population is growing, as is the need to meet its needs. With the industrial revolution a linear model became established in economies. This assumed a universality and abundance of resources, which resulted in the emergence of a ‘robbery’ economy based on the principle ‘extract resources, produce goods, consume and throw away’. The pressure exerted on our planet by this irrational economy and the intensive use of resources led to the emergence of many threats to the environment, the most visible of which are smog, the greenhouse effect, unprecedented extreme weather events, loss of biodiversity, the depletion of fisheries, the pollution of rivers and oceans, and, in particular, the generation of large amounts of waste. Each country tries to counteract these threats in its own way. Therefore, in the context of the example of waste management, we distinguish between various waste management systems. However, all existing systems should strive for sustainable development (SD), which combines social, economic and ecological goals. In European Union (EU) countries, despite a common economic policy based on the idea of sustainable development, the efficiency of waste management varies. Published in July 2014, a Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions – Towards a circular economy: A zero waste programme for Europe – aimed to increase the efficiency of waste management by increasing the amount of waste recovered and recycled and reducing the amount of waste landfilled to the necessary minimum. Circular economy (CE) systems preserve the added value of products for as long as possible and eliminate waste. They preserve resources within DOI: 10.4324/9781003411239-2

Circular economies in the world and Europe  5 the economy when the product life cycle comes to an end, allowing them to be productively reused many times and thus creating further value. (COM, 2014, p. 2, 398) According to a report by the European Environment Agency (EEA, 2016, p. 10), in the years 2000–2014 consumption of raw materials in the EU ­decreased by 12%, and the productivity of raw materials increased by 34% (mainly after 2007, as a result of the Global Financial Crisis). This means that there was an increase in GDP with a simultaneous decrease in domestic consumption of raw materials. However, human pressure on the natural environment continues to grow exponentially. Humanity crossed the limit of so-called ‘safe exploitation’ of the Earth in the early 1970s. Global population growth has led to a decline in natural resources. According to the World Wildlife Fund for Nature (WWF), in 2012, a biological potential equal to 1.6 Earths (in 2022 1.75 Earths) was needed to provide the natural resources and ecosystem services used by humanity. This means that the Earth needs 19 months to regenerate the resources used every year (WWF, 2016, p. 75; WWF, 2022, p. 66). Moreover, according to the National Intelligence Council, as reported in its publication Global trends 2030: Alternative Worlds, by 2030 humanity will need 35% more food, 40% more water and 50% more energy (Global trends, 2030, 2012). According to reports by the Ellen MacArthur Foundation, the growing amount of waste is becoming a challenge. 60% of used material in the world is either landfilled or incinerated. Plastic litter in the oceans is a good illustration of the global waste problem. 95% of plastic packaging is used only once, so USD 80–120 billion worth of raw material becomes waste annually, and the negative externalities generated by it are estimated at USD 40 billion. If nothing changes, it is predicted that by 2050 the oceans will contain more plastic than fish (Ellen MacArthur Foundation, 2013, p. 17). The answer to contemporary ecological threats, which make the environment an increasing barrier and not a development factor, is the circular economy model. This draws attention to reducing the negative impact of production and consumption on the environment, in particular in the context of greenhouse gas emissions and waste generation. Therefore, this new approach is in line with the UN Sustainable Development Goals (SDGs), not only those regarding sustainable consumption and production patterns but also water and energy management. It is also a new approach to climate protection and partnerships that are necessary to undertake necessary systemic integrated actions. 1.2 Methodology This first chapter is a theoretical chapter, the task of which is to introduce the topic of circular economies based on a review of world literature on the subject. A review of literature, communications from the European Commission, reports by various non-governmental organisations in the field of circular economies, the websites of ministries from selected countries (Polish, Spain,

6  Circular economies in the world and Europe Germany) and the competences necessary to act in the spirit of sustainable development makes it possible to identify the current state of knowledge and research in this area. An analysis of documents makes it possible to determine the directions of systemic and educational changes towards CEs which must be implemented in order to achieve the intended EU aims faster. 1.3 Circular economy ideas in the scientific literature The concept of a circular economy has been discussed since the 1970s. One significant contribution to the development of the idea was made by economists D.W. Pearce and R.K. Turner (1990), who studied the impact of natural resources on economic systems and their use in linear (open) processes. K. E. Bouding (in 1966) also influenced this thinking, because he had studied the Earth as a closed circular system with limited assimilation capacity and concluded that the economy and the environment should coexist in balance (similar to the current concept of sustainable development) (Geissdoerfer et al., 2017). Other researchers, Stahel and Reday-Mulvey (1981), saw opportunities to use features of a circular economy in the industrial economy. They imagined the economy as a closed loop with a circulation of materials (recycled waste), which prevents the generation of waste, creates new jobs, achieves resource efficiency and dematerialises the industrial economy. Industrial plants in a circular economy can profit from the use of waste without having to pay attention to the external costs and risks associated with disposing of waste (Geissdoerfer et al., 2017). Originally, the concept of a circular economy was based on the so-called 3R principle (reduce, reuse, recycle), but this has recently evolved into the 6R principle (reuse, recycle, redesign, remanufacture, reduce, recover) (Lienig & Brümmer, 2014; Jawahir & Bradley, 2016; Zarębska, 2019). The need to implement the concept of a circular economy appeared as a response to the need to face the shortcomings of the current linear economy (linearity of the economic system, i.e. the concept of ‘from cradle to grave’). In contrast to linear production methods, in a circular economy system the value of products remains constant as long as possible in order to completely eliminate the generation of waste and the need to manage it later. The CE model is based on concepts such as cradle-to-cradle (C2C), in which a waste-free industry operates, meaning that there is no impact on the natural environment (Kranert, 2017; McDonough & Braungart, 2002). C2C means designing and manufacturing products in accordance with the concept of sustainable development (eco-development), i.e. so that after being used they can be put back into circulation (the so-called closed loop) and they do not become waste. It consists of closing the life cycle of products so they does not end up in the bin and landfill after use but are reused by being recovered and recycled. ‘The concept also applies to manufacturing companies for in-production recycling and so-called waste exchanges. An important element in the above concept is effective product design. In the

Circular economies in the world and Europe  7 design, it is assumed that the final product is to have the lowest possible environmental impact throughout its life cycle and a smaller negative effect after the period of use (design in terms of increasing the efficiency and productivity of products – maintenance, re-use/multiple use, refurbishment/rework, recycling)’ (Zarębska, 2017, p. 288). A circular economy can be defined in various ways. Y. Geng et al. (2009) say that it is ‘an economy based on a spiral loop, i.e. a system that minimises matter, energy flow and environmental degradation without limiting economic or social growth and technological advancement’. The Ellen MacArthur Foundation (2021) describes a circular economy as a ‘regenerative’ industrial economy in its design or objectives: ‘The circular economy is based on three principles driven by design: 1) Eliminate waste and pollution – maintain, share, reuse, repair, refurbish, remanufacture and as a last resort recycle. Food and other biological materials that are safe to return to nature can regenerate the land. 2) Circulate products and materials (at their highest value) – retain the value embedded in products and materials. By doing so, we keep finite materials in the economy and out of the environment, and safely return biodegradable materials to the earth. 3) Regenerate nature – if the economy follows circular principles, the more we do the greater the benefits. It is underpinned by a transition to renewable energy and materials. A circular economy decouples economic activity from the consumption of finite resources. It is a resilient system that is good for business, people and the environment.’ Although the circular economy concept is widely present in EU documents and legislation, the authors’ ideas regarding improvements and implementation of CE differ (EASAC, 2016; Haupt et al., 2016; Kovanda, 2014; Hashimoto et al., 2009; Yuan et al., 2006; Ghisellini et al. 2016). Most studies on the implementation of the CE concept focus on individual products or production processes, so ideas of improving or implementing the concept are based on the production processes analysed (Huysman et al., 2017). Knowledge on CE implementation in recent years has significantly expanded to include elements in the production cycle and implementation in specific companies or industries (Pauliuk et al., 2012; Lieder & Rashid, 2016; Weetman, 2020). Some authors deal with strategies at the national or macro level and measure the amount of CE eco-innovation (especially at the regional level) (Hass et al., 2015; Hashimoto et al., 2004; Smol et al., 2017). Other authors analyse strategies and innovations in circular economy business models and theories of sustainable innovations. They contribute to the operationalisation of circular business models using already established frameworks (Henry et al., 2020; Kopnina & Poldner, 2022; Tonelli & Cristoni, 2020). Konietzko et al. describe a concept called a circularity deck. This is a tool similar to a deck of cards which is used to help companies analyse and formulate ideas and use

8  Circular economies in the world and Europe them like a deck of cards to help them develop their businesses in a closed loop with potential innovations (Konitzko et al., 2020). Webster (2017) states that ‘the goal of the circular economy is to create products, components and materials with the highest use value’. Some authors believe that ‘waste is food’ – this is one of the guiding principles of circular economies. It enables the use of all consumed materials and products, and those the life cycle of which is approaching the end or ending, for reuse as inputs (recycled materials returned to the beginning of the system/cycle) for the production of the next generation of products (Tukker, 2015; Van Weelden et al., 2016). Therefore, the involvement of consumers plays an important role in the implementation of a circular economy (Sijtsema et al., 2020, p. 286). Moreover, Webster (2017) holds that the main aim is to build a system that enables the regeneration of materials, product components and products in such a way that their highest value is preserved for as long as possible. At the same time, resources should be able to be transformed and reintegrated in the economic system or used as nutrients for nature. 1.4 A circular economy – a European Union priority objective A circular economy is a priority in current European Union economic policy. The European Commission is working on improving and disseminating this idea. The EU circular economy action plan covers the entire product life cycle from production (product and process design) to consumption to waste management and the market for secondary raw materials. As a result, by 2030 the European Commission aims to achieve reuse and recycling of 65% of municipal waste, reuse and recycling of 75% of packaging waste, 10% of municipal waste landfilled and 0% of segregated waste landfilled. Implementation of the CE will require a long-term commitment at all levels, from Member States to regions and cities to businesses and citizens (COM, 2015a, 595 final; Jastrzębska, 2017). According to the European Commission (COM, 2015b, 614 final), ‘in a circular economy, the value of products and materials is kept as long as possible. Waste and resource consumption are minimised and when a product reaches its end of life it is reused to create further value.’ This can bring major economic benefits by contributing to innovation, growth and job creation (Kirchherr et al., 2018) and increasing competitiveness, protecting enterprises from scarcity of resources and price volatility and providing new business opportunities and more efficient ways of production and consumption (COM, 2015b, 614 final). Efficient waste management can significantly contribute to an efficient use of resources and thus to a reduction of environmental pollution. In European environment policy, the key elements are environmentally friendly waste management and the reuse of materials that are recovered from waste. Creating new products from such materials through a recycling process allows us to use fewer raw materials and reduces air pollution caused by waste incineration and

Circular economies in the world and Europe  9 water and soil pollution resulting from landfilling waste. The EU waste policy aims to stimulate recovery and recycling, improve waste management and reduce landfilling (COM, 2015a, 595 final). The benefits of a circular economy and the uses of new business models are numerous. Mayer et al. (2019) estimate that increasing resource efficiency could save 17–24% of raw materials and €630 million in costs in Europe alone. Using product modelling, it has been estimated that application of the circular economy concept could increase European Union GDP by 3.9% by 2030 (Ellen MacArthur Foundation, 2013). The European Environment Agency supports this European policy and provides knowledge and necessary information in its reports. According to a recent report entitled Emerging Challenges of Waste Management in Europe. Limits of Recycling. Final Report (Williams et al., 2020), there is much potential to increase the amount of material collected for recycling in Europe. The amount of municipal waste and electronic waste recycled could double and the amount of construction and demolition waste could increase by 30%. The most important obstacle to increasing the amount of secondary raw materials is the low price of natural raw materials. In addition, processing mixed waste and waste with a complex composition is challenging. This should be supported by existing EU policy targets that already set high standards as they aim to tap into the currently untapped recycling potential (e.g. municipal waste recycling targets for 2035). Municipal waste accounts for about 10% of all waste generated in Europe (Eurostat, Waste statistics, 2023). Nevertheless, reducing the amount of municipal waste or increasing the percentage of it which is recycled could significantly contribute to reducing its negative impact on the environment. The European Union is making efforts to transform its economy into a CE in order to achieve better sustainability and better stability. The European Commission has adopted a number of pieces of legislation related to the circular economy, such as a ban on single-use plastic, improved rules on the prevention of waste generation and the use of critical raw materials and better monitoring of circular economy indicators in the EU (Meyer, 2012). In order to implement a circular economy more effectively in Europe, in 2015 the European Union adopted a strategy entitled Closing the loop – An EU action plan for the Circular Economy (COM, 2015b, 614). This strategy stipulates that actions should be taken to implement recycling and disposal plans in the EU in order to achieve a zero-waste economy in accordance with the CE concept. In addition, measures to effectively close the loop in CE product handling are defined at all stages of the product life cycle, from production and consumption to waste management. The package of European regulations aims at reducing the generation of waste, achieving better-quality waste management, saving energy and reducing resource consumption by 2030. Alongside this strategy, the EU adopted a new legal framework in which investments encourage the transition of the economy into a CE in order to strengthen it, increase competitiveness and ensure economic growth in the future. The strategy

10  Circular economies in the world and Europe ensures that advanced economies increasingly move away from linear economy models based on the take–make–dispose principle. In this way, much less waste is generated while the use of natural resources in the production process is avoided (Report from the Commission to the European Parliament, 2019). Hartley et al. set extensive standards for procurement, allowances, taxes, production and expansion of circular products. They also recognise that the waste trade has been liberalised, in the sense that it can be better facilitated through virtual means and that it can be used to support awareness-raising campaigns and to create eco-industrial parks (Hartley et al., 2020). Further work by the European Commission led to the publication in 2020 of A new Circular Economy Action Plan: For a cleaner and more competitive Europe (COM, 2020, 98 final). The new action plan has measures covering the entire life cycle of products and aims to adapt the European economy to a green future and strengthen competitiveness while protecting the environment and giving consumers new rights. Building on work in progress since 2015, the new plan focuses on the design of a circular economy and manufacturing to ensure that, once used, resources are used for as long as possible. The transition to a CE in Europe has been ongoing for some time, with leading businesses, consumers and public authorities benefiting from this sustainable model. The European Commission has proposed measures to [1] ensure that sustainable products become the norm in the EU. The Commission has proposed rules for a sustainable product policy to ensure that products on the EU market are more durable, easier to reuse, repair and recycle, and use recycled materials instead of virgin raw materials as much as possible. Production of single-use products will be reduced, premature shortening of product life cycles will be eliminated and the destruction of unsold durable goods will be banned. [2] empower consumers. Consumers will have access to reliable information on issues such as the reparability and durability of products, which will help them make environmentally sustainable choices. Consumers will benefit from a real ‘right to repair’. [3] focus on sectors that use the most resources and where the potential for circularity is high (electronics and ICT equipment, batteries and vehicles, packaging, plastics, textiles, construction and buildings, food). [4] reduce the amount of waste. Efforts will focus on avoiding waste ­altogether by converting it into high-quality secondary raw materials through a well-functioning secondary raw material market. The ­Commission will explore the possibility of establishing a model for ­separate waste collection and labelling harmonised at the EU level. It will introduce an action plan with a series of measures to minimise waste exports from the EU and tackle illegal shipments of waste. As part of the Strategy for Responsible Development by 2020 (with targets for 2030) published in 2017, the key CE project is the ‘Roadmap for transformation

Circular economies in the world and Europe  11 towards a circular economy.’ The activities indicated in the roadmap are related to implementation of the main priorities in the field of CEs (Roadmap for ­transformation, 2019): • innovation, strengthening cooperation between industry and the science sector, and as a result implementing innovative solutions in the economy; • creating a European market for secondary raw materials; • ensuring high-quality secondary raw materials; • developing the service sector. The CE roadmap recognises the need to reorganise the functioning of individual market participants, including entrepreneurs, public institutions and consumers. A division into priority areas has been made (Wdowin et al. 2021; EEA Waste Management 2023): 1) Sustainable industrial production (waste from mining; processing industries and energy; extended producer responsibility; environmental life cycle assessment – ELCA); 2) Sustainable consumption (municipal waste; food waste; education); 3) Bioeconomy (key activities creating the conditions for the development of the bioeconomy; activities in the area of building local value chains and raw material bases; activities in the area of energy; activities in the area of industry); 4) New business models (value delivery to the customer; activities ‘closing the circle’); 5) Implementing, monitoring and financing CE (implementing CE; monitoring CE; financing CE). Further work by the European Commission in line with the European Green Deal as part of the implementation of the CE model led to the publication in 2020 of such documents as - COM (2020) 301 final, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions A Hydrogen Strategy for a Climate-neutral Europe; - COM (2020) 380 final, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions EU Biodiversity Strategy for 2030: Bringing nature back into our lives; - COM (2020) 381 final, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions A Farm to Fork Strategy for a fair, healthy and environmentally-friendly food system; - COM (2020) 663 final, Communication from the Commission to the ­European Parliament, the Council, the European Economic and Social

12  Circular economies in the world and Europe Committee and the Committee of the Regions on an EU strategy to reduce methane emissions. Smol, Kulczycka and Avdiushchenko (2017) hold that ‘from a practical point of view, the CE approach is vital because in the twenty-first century science is currently looking for effective restorative approaches to give future generations the possibility of more sustainable development. Turning waste into a resource is one key to a CE’. After all, the 21st century is to become the century of sustainable development and society – a ‘recycling society.’ Unfortunately, there are numerous barriers to the implementation of a CE. These have been increasingly discussed in the literature. Kirchherr et al. (2018) find that high initial investment costs, time-consuming investments and the need for specialised human resources (creating so-called green jobs and properly trained employees) are cited as among the most important challenges and barriers to the implementation of CE. Winans et al. (2015), Niero and Rivera (2018) and Zarębska and Lewicka (2020) mention a poor flow of information and the need for greater cooperation between science, business and society as important obstacles to the successful implementation and assessment of a CE. Cultural factors are mentioned by Kristensen et al. (2020) and Sanger (2008) as barriers against implementation of a CE, particularly reluctance to change and to learn something new, an emphasis on availability and decision-making by employees, the low value given to discovering new opportunities and a lack of rewards for innovation (lack of employee motivation and rewards in relation to requirements). Therefore, it is a challenge to eliminate these barriers against CE implementation as soon as possible. 1.5 Research on the Circular Economy in selected EU countries 1.5.1 Poland

In Poland, the Interdepartmental Team for a Circular Economy (CE) was established in an ordinance by the Minister of Economic Development of 24 June 2016. Its tasks include: defining opportunities and threats and strengths and weaknesses of Poland in transforming towards a CE; developing a position on EU initiatives regarding the transformation towards a circular economy; and developing an action plan to implement the circular economy, in particular specifying objectives and action priorities along with their time horizons and the institutions responsible for implementing them. The main aim of the model is to achieve a zero-waste economy in which each product used is also secondary raw material with a market value. In 2019, the Council of Ministers adopted a ‘Roadmap for the transformation towards a circular economy’ for Poland. In 2019, the European Commission presented a new strategy for growth in a communication entitled the ‘European Green Deal’, which aimed to ­‘transform the EU into a fair and prosperous society living in a modern,

Circular economies in the world and Europe  13 resource-efficient and competitive economy’. The Ministry of Economic ­Development and Technology plays a leading role in coordinating the ­economic transformation of Poland towards a CE and promotes joint implementation of a CE in Poland by engaging various actors at the local, regional, national, EU and global levels from the world of science and public sector administration and entrepreneurs and citizens (Ministry of Economic ­ Development and Technology, 2023). The result of these activities was a two-year-long project called ‘oto-GOZ’. This project was implemented by a consortium led by the Ministry of Economic Development and Technology (in Polish: Ministerstwo Rozwoju i Technologii – MRiT) and its partners, the Institute of Mineral Resources and Energy Management of the Polish Academy of Sciences (in Polish: IGSMiE PAN), the Central Statistical Office (in Polish: GUS) and the Cracow University of Economics (UEK). The main objective of the project was to develop a system of indicators enabling assessment of progress in the transformation towards a circular economy and the impact of the circular economy on socio-economic development at the microeconomic (regional) and macroeconomic (national economy) levels. Eight CE indexes were introduced as a result of the project and were used by institutions at the following levels: 1 local – implementation of the strategy in the city of Krakow (2 indexes) and Krakowski Holding Komunalny S.A. (2 indexes); 2 regional – implementation of the strategy in Małopolskie Province (2 indexes); 3 national – 2 indexes integrated with the Productivity Strategy Project. The Ministry of Economic Development and Technology coordinates work on developing Poland's position in discussions on the package of proposals, i.e. related initiatives on sustainable products – COM (2022a) 140, Regulation on ecodesign of sustainable products, COM (2022c) 142, EU strategy towards sustainable and circular textiles and COM (2022b) 141, revision of the Construction Products Regulation COM (2022d) 144. More documents developed as part of the project can be found on the website of the Ministry of Economic Development and Technology. 1.5.2 Spain

Spain faces many challenges in the area of climate and environmental ­policies. One of these is to increase energy efficiency. Furthermore, the transport ­sector should be more sustainable. It also faces challenges in the area of ­biodiversity and needs to enhance water and waste management. Therefore, the Spanish government decided to increase the share of renewables in the energy mix (https://ec.europa.eu/info/business-economy-euro/­recoverycoronavirus/­recovery-and-resilience-facility_en, accessed: 12 April 2022). In connection with this, in 2020 the Spanish Government started to implement

14  Circular economies in the world and Europe the new Strategy for a Circular Economy in 2030. The strategy includes ­objectives for 2020–2030, which should reduce, compared to 2010, national consumption of resources by 30% and waste generation by 15%. The strategy contributes to transitioning Spain to a sustainable decarbonised ­resourceefficient c­ ompetitive circular economy (https://www.miteco.gob.es/es/calidady-evaluacion-ambiental/temas/economia-circular/espanacircular2030_def1_ tcm30-509532.PDF). There are also regional projects. One of them was implemented on the basis of a two-year policy dialogue with the city of Granada. It provides interesting recommendations and a vision of the transition to a circular economy and it is connected to Granada’s experience of transforming a wastewater treatment plant into a bio factory in 2015. That project contributed to increased water reuse and the production of new material from waste. In the new project, the city of Granada plays the role of promoter, facilitator and enabler of the circular economy, which requires a collective and coordinated approach involving all stakeholders and levels of government (OECD, 2021). 1.5.3 Germany

Germany faces the challenge of decarbonising its industry. The importance of the circular economy has created an opportunity to adopt a new perspective and to contribute to other international debates such as the Sustainable Development Goals of the United Nations, the 1.5 degree global warming target and the protection of biodiversity. Therefore, Germany has implemented a national circular economy strategy. This includes programmes on resource efficiency, waste prevention and sustainable consumption and a raw materials strategy. Comprehensive public funding strategies have been launched and a growing number of initiatives and actors are working on the issue. The result is a Circular Economy Roadmap for Germany in the Circular Economy Initiative Germany (CEID). This is a forward-looking framework for action that clearly identifies important needs to transform politics, business and science. As the German economy is export-oriented, the circular economy can best develop its full potential with international cooperation. Therefore, the Circular Economy Initiative was implemented to reduce the contradiction between prosperity and environmental and resource conservation. Under the Circular Economy Roadmap for Germany, many experts from industry, science and civil society have synthesised findings by various interdisciplinary and cross-sectoral working groups in the CEID into a consolidated statement with societal relevance. The focus of the roadmap has been to create a common target of a circular economy by 2030, identify central focal points for action and formulate recommendations for decision-makers from politics, industry and science (https://www.circular-­economyinitiative.de/circular-economy-in-germany, accessed: 1 April 2023). Moreover, the German government has decided to spend €3.3 billion of the Recovery Fund on decarbonising the economy with a focus on renewable hydrogen. Therefore, €1.5 billion will be invested to help the German economy

Circular economies in the world and Europe  15 make the leap towards renewable hydrogen in all stages of the value chain. Furthermore, Germany’s recovery and resilience plan contains financial support to buy more than 560,000 electric vehicles. The scheme will reduce the purchase prices of electric vehicles, which are usually higher than the prices of petrol vehicles and stimulate the market. The problem is that the price of cars with internal combustion engines is lower. This will be complemented by financing the installation of 50,000 publicly accessible recharging points and 400,000 further recharging points in residential buildings (https://ec.europa.eu/ info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-­ facility_en, accessed: 12 April 2022). One of the most promising projects is being realised by Holcim. It includes technology involving a range of material solutions to scale up circular construction and reduce the use of natural resources in construction and the environmental footprint. Moreover, all its products contain from 10% to 100% recycled construction material from demolition. Holcim recycled almost 7 million tons of construction material from demolition in 2022 and aims to reach at least 10 million tons by 2025. This enables closing the loop in construction to build new from old and reducing the amount of waste sent to landfill and dependence on virgin raw material. Furthermore, it will make a positive impact on biodiversity by extracting fewer natural resources (https://www.holcim. com/ accessed: 1 April 2023). 1.6 Conclusions An extensive analysis of world literature has indicated a great interest in the ­circular economy concept all over the world. We are aware that despite the extensive list of references this is only a fraction of the publications that have appeared on the world market on this topic. The analysis has made it possible to fully define the concept of sustainable development as the leading idea behind creating a circular economy, a new approach to management and thinking in terms of the entire life cycle of products. The importance of eco-designing products moving from a linear to a circular life cycle of products and production processes has been emphasised. The chapter has outlined the changes so far (involving politics, institutions and enterprises) in EU countries’ pursuit of circular economies. The aims in achieving CEs are still being set (so-called CE roadmaps) with particular emphasis on greater industrial symbiosis, institutional cooperation, achieving a zero-waste economy (described in more detail in Chapter 2), sustainable consumption, a lower-emission economy and more education in this area. References COM. (2014). 398 final, Towards a circular economy: A zero waste programme for Europe, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, European Commission, Brussels.

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18  Circular economies in the world and Europe McDonough, W., & Braungart, M. (2002). Cradle to cradle: remaking the way we make things. North Point Press. Meyer, B. (2012) Macroeconomic Modelling of Sustainable Development and the Links between the Economy and the Environment; GWS Research Report Series 12-1; GWS-Institute of Economic Structures Research: Osnabruck, Germany, pp. 54–95. Retrieved from http://www.gws-os.com/discussionpapers/gwsresearchreport12-1.pdf Niero, M., Rivera, X. C. S. (2018). The role of life cycle sustainability assessment in the implementation of circular economy principles in organizations. Procedia CIRP, 69, 793–798. https://doi.org/10.1016/j.procir.2017.11.022 OECD. (2021). The Circular Economy in Granada, Spain, OECD Urban Studies, OECD Publishing. https://doi.org/10.1787/5f8bd827-en Pauliuk, S., Wang, T., & Muller, D. B. (2012). Moving toward the circular economy: The role of stocks in the Chinese steel cycle. Environmental Science & Technology, 46, 148–154. Pearce, D. W., & Turner, R. K. (1990). Economics of natural resources and the environment. Harvester Wheatsheaf. Report from the Commission to the European Parliament. (2019). The Council, The Europe Economic and Social Committee and the Committee of the Regions on the implementation of the Circular Economy Action Plan; European Commission: Brussels, Belgium, 2019. Retrieved 10 January 2023, from https://eur-lex.europa.eu/ legal-content/EN/TXT/PDF/?uri=CELEX:52019DC0190&from=EN Roadmap for transformation towards a circular economy 2019, in Polish: Mapa Drogowa transformacji w kierunku gospodarki o obiegu zamkniętym. (2019). Załącznik do uchwały Rady Ministrów z dnia 3 wrzes ́nia 2019 r., Retrieved 12 March 2023, from https://www.gov.pl/web/rozwoj-technologia/rada-ministrow-przyjela-projektmapy-drogowej-goz Sanger, M. B. (2008). From measurement to management: Breaking through the barriers to state and local performance, Public Administration Review, 68. https://doi. org/10.1111/j.1540-6210.2008.00980.x Sijtsema, S. J., Snoek, H. M., de Haaster-Winter, M. A., & Dagevos, H. (2020). Let’s talk about circular economy: A qualitative exploration of consumer perceptions. Sustainability, 12, 286. Smol, M., Kulczycka, J., & Avdiushchenko, A. (2017). Circular economy indicators in relation to eco-innovation in European regions. Clean Technologies and Environmental Policy, 19, 669–678. Stahel, Walter R., & Reday-Mulvey, Geneviève. (1981). Jobs for Tomorrow, the potential for substituting manpower for energy. Vantage Press. ISBN 533-04799-4. Tonelli, M., & Cristoni, N. (2020). Strategic management and the circular economy. Routledge. Tukker, A. (2015). Product services for a resource – Efficient and circular economy – A review. Journal Cleaner Production, 97, 76–91. Van Weelden, E., Mugge, R., & Bakker, C. (2016). Paving the way towards circular consumption: Exploring consumer acceptance of refurbished mobile phones in the Dutch market. Journal Cleaner Production, 113, 743–754. Wdowin, M., Koneczna, R., Cader, J., Hanc, E., Olczak, P., & Kunecki, P. (2021). The concept of regional support for the implementation of the circular economy in the Wielkopolskie Voivodeship (p. 26). Contractor: Institute of Mineral Resources and Energy Economy, Polish Academy of Sciences in Kraków (in Polish). Webster, K. (2017). The circular economy: A wealth of flows (2nd ed.). Ellen MacArthur Foundation Publishing.

Circular economies in the world and Europe  19 Weetman, C. (2020). A circular economy handbook: How to build a more resilient, competitive and sustainable business (2nd ed.). Kogan Page. Williams, R., Artola, I., Beznea, A., & Nicholls, G. (2020). Emerging Challenges of Waste Management in Europe. Limits of Recycling. Final Report. Trinomics B.V., European Environment Agency (EEA), Rotterdam, the Netherlands. Retrieved from https://­ trinomics.eu/wp-content/uploads/2020/06/Trinomics-2020-Limits-of-Recycling.pdf Winans, K., Kendall, A., & Deng, H. (2015). The history and current applications of the circular economy concept. Renewable and Sustainable Energy Reviews, 68, 825– 833. https://doi.org/10.1016/j.rser.2016.09.123 WWF. (2016). Living planet. Report 2016. Risk and resilience in a new era. WWF International, Gland, Switzerland. Retrieved 1 February 2023, from http://­d31xsb0nj2b4l8. cloudfront.net/downloads/living_planet_report_2016_summary.pdf WWF. (2022). Living Planet Report 2022. Building a nature – Positive society. Almond, R.E.A., Grooten, M., Juffe Bignoli, D., & Petersen, T. (Eds.). WWF, Gland, Switzerland. Retrieved from https://wwflpr.awsassets.panda.org/downloads/lpr_2022_full_ report.pdf Yuan, Z., Bi, J., & Moriguichi, Y. (2006). The circular economy, A new development strategy in China. Journal of Industrial Ecology, 10, 4–8. Zarębska, J. (2017). Gospodarka o obiegu zamkniętym drogą do zrównoważonego rozwoju, Systemy Wspomagania w Inżynierii Produkcji, 6(7), 286–295. Retrieved from http://yadda.icm.edu.pl/baztech/element/bwmeta1.element.baztech-2f642db5beb0-4e45-9350-66681cc98e33 Zarębska, J. (2019). Packaging waste management in the context of a circular economy the essence, tools, environmental communication. University of Zielona Góra (in Polish). Zarębska, J. & Lewicka, B. (2020), Changes in waste packaging management and ­implementation to achieve a circular economy – polish case study, Acta Innovations 34, 50–57; DOI: 10.32933/ActaInnovations.34.5; Retrieved from http://www.­ proakademia.eu/gfx/baza_wiedzy/550/nr_34_50-57_2.pdf

Websites EEA, Waste management. Retrieved 1 February 2023, from https://www.eea.europa.eu/ themes/waste/waste-management/waste-management Eurostat, Waste statistics. Retrieved 1 February 2023, from https://ec.europa.eu/­ eurostat/statistics-explained/index.php?title=Waste_statistics Retrieved 12 April 2023, from https://ec.europa.eu/info/business-economy-euro/­recoverycoronavirus/recovery-and-resilience-facility_en Retrieved 1 April 2023 from, https://www.circular-economy-initiative.de/circular-­economyin-germany, https://www.holcim.com/ Retrieved 1 April 2023, from https://www.miteco.gob.es/es/calidad-y-evaluacion-­ambiental/ temas/economia-circular/espanacircular2030_def1_tcm30-509532.PDF Ministry of Economic Development and Technology. (2023). in pol.: Ministerstwo Rozwoju i Technologii – MRiT. Retrieved 1 April 2023, from https://www.gov.pl/web/ Rozwoju-technologia/gospodarka-o-obiegu-zamknietym-1

2

Challenges on the road to a recycling society

2.1 Introduction The Earth is a balanced ecosystem in which the phenomenon of waste did not exist until the appearance of man and his irrational management and excessive consumption of natural resources. An ecosystem is a system in which there is a balanced symbiosis, and waste is a disturbing element. Waste is ‘any substance or object which the holder discards or intends or is required to discard’ (Directive, 2008/98/EC, Article 3). Regardless of the type of waste, its source is natural resources (renewable and non-renewable) which have lost the character of free goods, having become economic goods and therefore subject to management. Natural resources, which are subjected to various types of processing, take the form of products that meet the specific needs of consumers, and then after a certain period of time they become waste (according to the linear life cycle of products). The irrational or even wasteful use of natural resources accompanying economic development has led to the creation of a huge amount of waste on a global scale, which, in some parts of the world, is referred to as an ecological crisis. The European Union is attempting to prevent this situation and so it is striving to improve the quality of life of its inhabitants, but it is also working on a model of development that will ensure sustainable development (SD) and a circular economy (CE). Management is the basic process of human activity. It enables existence and development in the biological and social sense. In economic theory, management is treated as a process of decision-making conditioned by unlimited human needs and limited resources. According to European Union guidelines (Directive, 2008/98/EC), EU inhabitants are to become a recycling society through effective and sustainable management of available resources that meet human needs and by avoiding the generation of waste. New European Commission plans assume improved products, changed consumption structures, improved production efficiency and waste transformed into resources, and they support research and innovation in pursuit of a resource-efficient society (COM, 2011, 571). Therefore, the CE concept, which assumes minimisation of the environmental impact of manufactured products by selecting components and designs that will enable the extension of their useful lives (extending the DOI: 10.4324/9781003411239-3

Challenges on the road to a recycling society  21 life cycle of products), reuse through recovery and recycling of secondary raw materials, is gaining priority in modern management. This second chapter presents the place of the circular economy in shaping environmental policy, as well as its impact on waste management. In the CE model, the stages in the product life cycle and their importance for economic development are indicated, with particular emphasis on the eco-design, production, consumption and waste management stages, with a preference for a closed circuit in each of them. In addition, a compilation and analysis of Eurostat data makes it possible to assess the progress made so far by European Union countries in implementing COM (2020) 98 on the way to a ‘recycling society’. 2.2 Methodology This chapter is divided in two parts. In the first part, on the basis of a literature review the transition from passive to active environmental policies in global economies is described. The place of circular economy in environmental policy development stages and their impact on waste management is shown. The importance of the different stages in the life cycle of products in CEs is identified, taking into account tools such as design for environment (DfE) and life cycle assessment (LCA) and thinking in terms of 6R and extended producer responsibility (EPR). All these tools are intended to bring European society closer to the new aims set out in COM (2020) 98. In the second part of the chapter, an analysis of EU reports, as well as the Eurostat 2023 database, makes it possible to determine the place of European countries on the road to a recycling society. A critical analysis of data on the levels of recovery and recycling of municipal waste and packaging waste in selected EU countries in the last decade or so is performed. 2.3 Circular economy in the stages of shaping environmental policy and their impact on waste management The question arises of what we, as Europeans, have done so far towards implementing CEs because the 21st century was supposed to be the century of sustainable development and cleaner production (CP). It turns out that as early as the early 1990s many companies realised that they had to take an active, not passive, position on solving ecological problems. Environmental protection management in companies took on a completely new dimension and followed a long evolutionary path from dilution processes, or the so-called ‘end of the pipe’, following linear production (left-hand side of Figure 2.1) to a dynamic recycling model with cleaner production, and then to the concept of a circular economy, referring to thinking in terms of C2C (from cradle to cradle) (righthand side of Figure 2.1). Figure 2.1 presents the stages of environmental policy that companies have gone through and still have to go through in order to achieve CE objectives that are components of SD. Active ecological policies

22  Challenges on the road to a recycling society

Figure 2.1 The place of the circular economy in the stages of shaping the environmental policy of enterprises.

and acceptance of pro-ecological forms of behaviour, including the implementation of initial forms of recycling, cleaner production and the concept of a circular economy were already observed at the end of the 20th century, but it was only in the stage called ‘Green Apple’ that changes in the awareness of society intensified and enterprises and politicians adopted a systemic approach to implementing innovative solutions. At this point the implementation of environmental management systems (e.g. EMAS, ISO 14000) became standard in the policies and competitive struggles of enterprises. Then the introduction of many Communications (COM) and EU Directives (as described in Chapter 1) led to intensification of these activities after 2014. The CP strategy was (and is) focused primarily on preventive actions ‘at the source’, i.e. in the place where environmental hazards arise. This appeared as a response to the disappointment caused by the common ‘method of removing the effects’ of production activities, i.e. the introduction of wastewater and gas treatment technologies, which are basically accompanied by the generation of new waste, very often outside the production plant. In the present world of global competition, cleaner manufacturing and cleaner production at a global standard are not easy, especially for small and medium enterprises. The development and use of low-waste and non-waste technologies and the production of environmentally safe products requires consistent consideration of the following principles (Chojnacka, 2021; Geissdoerfer et al., 2017; Zarębska et al., 2021; Grabowska & Saniuk, 2023; Marinina et al., 2021):

Challenges on the road to a recycling society  23 1) closed-cycle management (CE), i.e. designing products with an optimal lifespan, multiple uses and subsequent recovery and recycling in mind (thinking in C2C terms) and recognition of a systemic approach to ecological prevention. Such management should be used instead of accumulating waste on the surface of the earth, which poses a threat to people and the environment; 2) reasonable accounting of costs, i.e. including all environmental costs, in the total expenses in commercial activities; 3) stable material cycles, i.e. using a comprehensive approach to life cycle assessment, aimed at ensuring maximum closure of material cycles in the chains of individual products. Figure 2.2 shows CE and society's transition to a ‘recycling society’ (according to 2008/98/EC). At the top of the figure is an ecological life cycle assessment (ELCA) design. Designing is the most important stage in creating a product because it is when the concept or idea is implemented in a series of activities in order to obtain the final effect with the required technical and quality parameters. In addition, over 80% of the environmental impact potentially generated in the life cycle can be shaped at the design stage (Kurczewski & Lewandowska, 2010). Taking into account the entire life cycle of a newly created product or when it is being redesigned is purposeful and desirable in the context of the creation of a CE. The transition to a circular economy, seen as concretisation of an industrial symbiosis (such as in the city of Kalundborg in Denmark), results in a reduction in consumption of natural resources, longer retention of materials in the technosphere and a reduction in waste and emissions (Directive 2009/125/EC; Rybaczewska-Błażejowska & Mena-Nieto, 2020). This is possible by taking into account recycling in designing, which is consistent with thinking about the product in terms of C2C, which is also called design for recycling (DfR), design for environment (DfE) or design for remanufacture (DfRem), or designing with ecological imagination – eco-imagination. The more eco-innovations and pro-ecological technologies used, the more consistent the design is with the idea of sustainable development, the more it enables the use of elements of products recognised as waste, and the more it saves energy, water and other primary resources of the Earth (optimal design) and promotes an increase in production value (Arnette et al., 2014; Telenko et al., 2008; Iacovidou et al., 2017). Each finished product has an environmental impact and most have a long complex life cycle. This includes, e.g., the following phases: product design, raw material extraction, product manufacturing, packaging, distribution and sale of the finished product, use, waste generation, collection, repair, recycling and disposal. Therefore, it is necessary to strive to minimise the impact of a p ­ roduct on the environment in all the phases in its life cycle, and especially in the phases where the impact is greatest, and to take action in this area in the most effective way possible. This approach should lead to a reduction in the costs of waste production, use and disposal, and to an improvement in the competitiveness of

24  Challenges on the road to a recycling society

Figure 2.2 Circular economy model with particular emphasis on the consumption stage and waste management.

enterprises. Therefore, Zarębska (2019) proposes creating a ‘CE passport’ (production passport), especially in the case of packaging design, taking into account LCA prepared for the purpose of controlling production and taking responsibility for quality with a detailed description of the materials used for production and also the possibility of their reuse, recovery as secondary raw material and subsequent recycling. Common access to information about the goods (in this case, the packaging) will greatly facilitate the cooperation of companies in so-called industrial symbiosis. In the case of consumers it will facilitate making purchasing decisions and decisions related to the subsequent form of recovery. It is important to include information for the consumer on in

Challenges on the road to a recycling society  25 which container the used packaging should be disposed of. The greater flow of information, the creation of databases and the availability of high-quality data on the life cycle of goods (especially packaging) are mentioned in 2013/179/EU. Directive 94/62/EC proposes a design that contributes to minimising the weight of packaging, prevents the generation of waste by reducing ‘at source’ and above all increases companies’ responsibility for the product by thinking in terms of 6R or more Rs. 1 Rethink – think about how to design the product so that it has a long life cycle and is suitable for repair or recycling. 2 Repair – a modular approach with an appropriate after-sales service. 3 Reconditioning – renewable parts allow for a significant reduction in consumption of materials and energy. 4 Reduce – reduce the consumption of materials for production of the product and of waste. 5 Reuse – reuse for the same purpose (e.g. a glass beer bottle) or for another purpose. 6 Recycle – products suitable for reuse. 7 Remanufacture – create a new product from an old one (e.g. granules are made from plastic bottles, from which toy boxes are then produced). 8 Recover – repair what can be repaired and thus extend the life cycle of the product. The next step in Figure 2.2 is to acquire raw materials for the production of the products designed. Production companies play an important role here, especially those that follow extended producer responsibility (EPR) principles. As was previously mentioned, using innovative production technologies, applying the best available manufacturing techniques (BAT), inter-company recycling and also ‘waste exchange’, i.e. the resale of waste (sale of by-products) for companies that treat a given company's waste as raw material for production, are all ways to bring companies closer to CE. EPR creates an opportunity for the development of appropriate management systems and operating models that fill the niche between the production of products (especially packaging) and the management of waste generated at the consumption and post-consumer stages. Directive 2018/852, which lays down rules on the management of packaging and packaging waste, and Directive 2019/904 (Article 8) on reduction of the environmental impact of certain plastic products play important roles in Europe’s pursuit of a recycling society. In both cases, some of the responsibility is transferred to producers. The Directives aim to prevent the generation of packaging waste and to promote the reuse, recycling and other forms of recovery of packaging waste, thereby reducing final disposal of it in order to contribute to the transition to a circular economy. Member States are required to introduce measures, such as national schemes, EPR incentives and other economic instruments to prevent the generation of packaging waste and to minimise the

26  Challenges on the road to a recycling society environmental impact of packaging. By 2025, the amount of plastic beverage bottles with a capacity up to 3 litres collected will be equal to 77% of the weight of such products put on the market in a given year, and by 2029 this ratio will increase to 90%. According to COM/2020/98, by 2030 Europeans are to recycle 70% of municipal waste and 80% of packaging waste, and from 2025 there will be a ban on landfilling recyclable waste. The next step in Figure 2.2 is the consumption stage, which determines how much the 6R principles will be used, how much waste will be recovered and recycled, and whether the waste hierarchy will be maintained. The amount of consumption and recycling in the consumption phase (see Figure 2.2) is the CE stage where the consumer can: a) extend the life of products by repairing and replacing parts and so restoring their functional characteristics for reuse (e.g. cars, desktop computers, washing machines, clothes, paintings); b) use the product repeatedly, e.g. shopping bags (made of natural material such as linen or large polyethylene bags), bottles and other glass packaging, cardboard packaging, containers with a dosing valve for cleaning agents, containers for washing capsules. c) use products for purposes other than primary, i.e. convert waste (full-value secondary raw materials) into useful products and sometimes even small works of art, or process waste, which will create new items of much higher value than raw materials (waste) that have been processed. The purity of the waste, and in particular collection of packaging ‘at source,’ is important for the quality of the raw material that the processing company will receive for recycling. It is well known that the purer the waste (the secondary raw material), the higher its market value and often the longer its life on the market (Iacovidou et al., 2017; Zarębska, 2019). In the case of some packaging (e.g. glass bottles for beer), we can talk about multiple rotation, i.e. using the same packaging for the same purpose even 30–50 times. Much depends on the participation of society (consumers) in the municipal waste management system, including how clean the packaging is, how much waste is generated, and how much is disposed of and how. The final step in Figure 2.2 contains processes related to the collection of municipal waste by companies specialised in transport and management. They transport waste to the place where it is disposed of in accordance with the disposal technology available, which depends on the level of technological advancement in the given EU country. In the case of waste sorted ‘at source,’ recycling at this stage is recycling of full-value secondary raw materials, the market value of which depends on the degree of waste treatment and segregation. Mechanical sorting plants, magnetic separators and other devices do not have the same efficiency and purity of raw material as waste collection ‘at source’ by consumers.

Challenges on the road to a recycling society  27 2.4 European Union countries on the way to a 'recycling society' – data analysis How far some European Union countries are from constituting ‘recycling societies’ can be seen in the following tables on waste management. Tables 2.1–2.5 present Eurostat data on the level of generation of municipal waste and packaging waste and also on its recycling and recovery. According to Eurostat data, in the European Union (27 countries from 2020) in 2021, 236,801 thousand tonnes of municipal waste were generated (233,206 thousand tonnes in 2020). It must be emphasised that municipal waste accounts for only about 10% of all waste generated. Comparing the amount of municipal waste generated in 2021 to 2010 (222,009 thousand tonnes), when it was 14,792 thousand tonnes less, it is clear that Europeans produce more and more waste every year. Regardless of the economic crisis or the COVID-19 pandemic, it can be clearly stated that more and more municipal waste is generated in Europe, and also per capita (Table 2.1). The data in Table 2.1 cover the years 2010–2021. In 2010, there was an average of 503 kg of municipal waste generated per EU inhabitant (28 countries) and in 2021 (27 countries) 530 kg. In 2021, the largest amounts of (per capita) waste were generated by the residents of Norway (799 kg), Luxembourg (793 kg), Denmark (786 kg), Belgium (759 kg), Sweden (704 kg), Germany (646 kg), Cyprus (633 kg), Malta (611 kg) and Finland (609 kg). The least amount of municipal (per capita) waste was generated by the inhabitants of Estonia (395 kg, Poland (362 kg), Albania (311 kg) and Romania (302 kg). Bulgaria and Denmark recorded a stable decrease in the generation of per capita municipal waste in the last 11 years. In other countries in the Eurostat databases, there are slight fluctuations at a similar level or increases in waste generation. Not only do differences in municipal waste generation reflect differences in consumption patterns and economic wealth but they also depend on how municipal waste is collected and managed. Even though more waste is being generated in the EU, the total amount of municipal waste landfilled has diminished (by ann average of 3% a year). 49.6% of municipal waste in the EU was recycled (material recycling and c­ omposting) in 2021. Table 2.2 presents data on municipal waste recycled in 2010–2021 [%]. Some EU directives introduced in recent years have aimed to bring about a change in waste management from landfilling to more recovery and recycling. The aims have been, among others, to recover at least 60% of all packaging on the market by 2008, to recycle 65% of packaging waste by 2025 and to reduce the amount of biodegradable municipal waste sent to landfills to 10% by 2035. Directive 2019/904 on reducing the impact of certain plastic products on the environment (the Single-use Plastics Directive, SUP) applies to single-use plastic products such as cups and beverage packaging, cutlery, plates, straws, food packaging and cotton buds. The Directive obliges Member States to reduce the use of certain products, restricts the marketing of them and introduces specific product and labelling requirements. The Member States are required to take

Country\Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

European Union – 27 countries (from 2020) Belgium Bulgaria Czechia Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden Iceland

503 456 554 318 lod 602 305 624 532 510 534 379 547 695 324 404 679 403 623 571 562 316 516 313 490 319 470 441 484

499 455 508 320 862 626 301 616 503 485 534 384 529 676 350 442 666 382 622 568 573 319 490 259 415 311 505 453 495

488 445 460 308 806 619 280 585 495 468 527 391 504 664 323 445 652 402 612 549 579 317 453 251 362 306 506 454 511

479 436 432 307 813 615 293 lod 482 454 520 404 491 618 350 433 616 378 602 526 578 297 440 254 414 304 493 455 516

478 425 442 310 808 631 357 562 488 448 517 387 488 602 364 433 626 385 628 527 565 272 453 249 432 320 482 443 535

480 412 419 316 822 632 359 lod 488 456 516 393 486 620 404 448 607 377 641 523 560 286 460 247 449 329 500 451 588

493 419 404 339 830 633 376 581 498 463 553 403 497 633 410 444 815 379 642 520 564 307 474 261 457 348 504 447 655

499 411 435 489 820 627 390 576 504 473 558 416 488 625 411 455 798 385 666 513 570 315 486 272 471 378 510 452 656

500 409 407 494 814 606 405 598 515 475 557 432 499 646 407 464 803 381 672 511 579 329 507 272 486 414 551 434 702

504 416 442 500 844 609 369 625 524 472 555 445 503 648 439 472 791 387 697 508 588 336 513 280 504 421 566 449 lod

521 729 408 543 814 641 383 644 lod 464 538 418 487 609 478 483 790 403 643 533 834 346 513 290 487 478 611 431 614

530 759 lod 570 786 646 395 lod lod 472 561 446 lod 633 461 480 793 416 611 515 lod 362 514 302 511 496 609 418 lod

28  Challenges on the road to a recycling society

Table 2.1  Municipal waste generated in selected European countries [in kg per capita]

Norway Switzerland United Kingdom Bosnia and Herzegovina Montenegro Albania Serbia Turkey

469 711 509 332 lod lod 363 407

485 692 491 340 525 lod 375 416

477 697 477 340 496 lod 364 410

496 706 482 311 499 325 336 406

423 733 482 349 479 425 299 405

422 728 483 340 498 491 259 400

754 723 483 354 493 452 268 426

748 709 468 352 490 436 306 425

739 706 463 356 516 462 319 424

776 709 lod 352 545 381 338 424

604 706 lod lod 486 369 427 415

799 704 lod lod 515 311 lod lod

Source: own research based on Eurostat (2023). Notes: The countries in bold are Germany, Poland and Spain and the largest amounts of municipal waste generated in selected European countries in 2021.

Challenges on the road to a recycling society  29

lod – lack of data.

Country\Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

2021

European Union – 27 countries (from 2020) Belgium Bulgaria Czechia Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden Norway

38.0 54.8 24.5 15.8 lod 62.5 18.0 35.7 17.1 29.2 36.0 4.1 31.0 10.9 9.4 4.9 46.5 19.6 8.9 49.2 59.4 16.3 18.7 12.8 22.4 9.1 32.8 47.8 42.1

38.9 54.4 26.2 16.9 42.4 63.0 23.3 36.1 17.8 26.7 36.8 8.3 35.5 11.0 9.7 20.0 46.4 22.0 15.4 49.1 56.7 11.4 20.1 11.7 35.7 10.9 34.8 47.0 39.9

40.9 53.4 25.0 23.2 42.5 65.2 19.1 36.6 17.0 29.8 37.7 14.7 38.4 12.5 14.6 23.5 47.4 25.5 14.8 49.4 57.7 12.0 26.1 14.8 42.1 13.4 33.3 46.9 39.8

41.5 52.8 28.5 24.2 43.3 63.8 17.6 lod 15.8 32.5 38.7 14.9 39.4 13.9 25.9 27.8 46.3 26.4 12.5 49.8 57.7 15.1 25.8 13.2 34.8 10.8 32.5 48.2 39.2

43.4 53.8 23.1 25.4 45.4 65.6 31.1 39.8 15.4 30.8 39.7 16.4 41.6 14.8 27.0 30.5 47.7 30.5 11.7 50.9 56.3 26.5 30.4 13.1 36.0 10.4 32.5 49.3 42.2

44.9 53.5 29.4 29.7 47.4 66.7 28.3 lod 15.8 30.0 40.7 18.0 44.3 16.6 28.7 33.2 47.4 32.2 10.9 51.8 56.9 32.5 29.8 13.3 54.1 14.9 40.6 47.6 42.8

45.9 53.5 31.8 33.6 48.3 67.1 27.9 40.7 17.2 33.9 39.7 21.0 45.9 16.1 25.2 48.0 49.2 34.7 12.7 53.5 57.6 34.8 30.9 13.4 55.5 23.0 42.1 48.4 38.2

46.3 53.9 34.6 32.1 47.6 67.2 28.2 40.4 18.9 36.1 40.2 23.6 47.8 16.0 24.8 48.1 48.9 35.0 11.5 54.6 57.8 33.8 29.1 14.0 57.8 29.8 40.5 46.8 38.8

46.4 54.4 31.5 32.2 49.9 67.1 28.0 37.7 20.1 34.8 40.7 25.3 49.8 16.7 25.2 52.6 49.0 37.4 10.4 55.9 57.7 34.3 29.1 11.1 58.9 36.3 42.3 45.8 40.7

47.2 54.7 34.6 33.3 51.5 66.7 30.8 37.4 21.0 38.0 41.0 30.2 51.4 16.6 41.0 49.7 48.9 35.9 9.1 56.9 58.2 34.1 28.9 11.5 59.2 38.5 43.5 46.6 40.9

49.2 51.4 65.5 40.5 45.0 70.3 28.9 40.8 lod 40.5 41.7 29.5 51.4 16.6 39.7 45.3 52.8 32.0 10.9 56.9 62.3 38.7 26.8 11.9 59.3 45.3 42.2 38.3 41.0

49.6 53.3 lod 43.3 34.3 71.1 30.3 lod lod 36.7 45.1 31.4 lod 15.3 44.1 44.3 55.3 34.9 13.6 57.8 lod 40.3 30.5 11.3 60.0 48.9 37.1 39.5 38.2

30  Challenges on the road to a recycling society

Table 2.2  Municipal waste recycled in selected European countries [%]

Switzerland United Kingdom Montenegro Albania Serbia Turkey

50.5 40.2 lod lod 0.0 lod

50.1 42.0 lod lod 0.0 lod

50.0 42.6 lod lod 0.0 lod

51.0 43.2 lod lod 1.0 lod

53.5 43.4 lod lod 0.7 lod

52.7 43.3 lod lod 0.8 lod

52.5 44.0 lod lod 0.3 9.2

52.5 43.8 lod lod 0.3 9.2

52.5 44.1 3.7 lod 0.3 11.5

53.0 lod 5.3 lod lod 11.5

52.8 lod 4.6 18.1 15.4 12.3

53.3 lod 4.7 18.7 lod lod

Sources: own research based on Eurostat (2023). Notes: The countries in bold are Germany, Poland and Spain and the largest amounts of municipal waste recycled in selected European countries in 2021. lod – lack of data.

Challenges on the road to a recycling society  31

Country\Year

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

European Union – 27 countries (from 2020) Belgium Bulgaria Czechia Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland

157 154 43 90 159 205 145 189 78 153 197 lod 196 89 105 97 202 84 128 165 147 121 148 49 101 82 132

155 154 45 92 160 206 149 176 70 144 187 47 191 87 105 101 203 102 125 164 149 123 145 53 98 83 132

157 156 48 96 159 212 170 188 68 144 184 47 190 91 114 108 206 103 134 167 150 127 149 53 97 82 132

161 155 52 97 161 220 173 208 69 148 188 48 197 86 111 118 227 110 134 165 153 127 151 63 102 86 134

165 155 55 103 155 222 172 209 69 154 187 51 203 86 118 121 218 118 141 182 152 134 153 70 105 91 130

169 157 59 109 163 221 169 208 70 156 190 55 210 86 118 127 222 122 147 184 153 149 160 69 108 95 129

174 157 64 115 168 227 175 216 73 162 193 64 217 90 122 128 225 129 147 183 157 154 166 72 113 95 135

173 158 71 122 173 227 158 208 76 161 195 68 211 87 134 127 224 138 147 165 160 144 173 80 115 102 128

178 161 79 125 169 228 158 228 81 170 187 74 216 92 137 134 217 143 154 170 162 172 172 104 117 105 131

178 167 lod 124 179 226 155 224 lod 168 188 66 209 92 143 137 205 155 140 174 157 lod 175 116 118 104 158

32  Challenges on the road to a recycling society

Table 2.3  Packaging waste generated in selected European countries [in kg per capita]

Sweden Iceland Liechtenstein Norway United Kingdom

109 139 158 147 173

111 139 142 139 167

109 148 152 146 162

113 129 155 149 177

113 141 173 153 176

132 147 166 150 175

131 150 170 163 174

133 147 175 161 178

134 149 178 166 lod

132 131 195 173 lod

Source: own research based on Eurostat (2023). Notes: The countries in bold are Germany, Poland and Spain and the largest amounts of packaging waste generated in selected European countries in 2020. lod – lack of data.

Challenges on the road to a recycling society  33

Country\Year

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

European Union – 27 countries (from 2020) Belgium Bulgaria Czechia Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland

77.9 95.5 62 77.9 108.1 95.7 61.6 73.7 58.8 70 70.3 lod 74.7 50.1 52.7 60.9 90.3 62.3 29.2 96.8 92.2 53.7 61.3 48.3 65.8 47.5 85

79.1 96.9 65.6 75.2 90.5 97.4 67 79 62.1 72.1 71.2 lod 74 52 53.7 62.9 92.5 62.9 44.7 95.2 93.7 55.9 62.9 54.4 70.5 65 89.6

80.2 97 67.5 73.6 89 96.8 67.8 86.6 58.6 72.5 74.7 59.7 76.3 55.7 54.6 62.5 93 60.1 47.5 92.7 94 57.1 59.9 57.4 78 70 93.3

80.1 96.6 66 74.7 93.4 97.7 77.7 88.1 52.8 73.1 75.4 58.8 76.5 56.6 54.5 53.9 91.8 60.3 38.2 94.2 96.1 50.4 64.8 54.5 92.5 69.5 93.2

81 99.2 62.2 78.6 92.2 97.8 82 90.6 54.3 75 74.6 52.8 76.4 58.7 58.4 57.9 92.3 55.2 41.3 94.2 96.2 60 64.1 56.4 88.1 68 98.3

81.2 99.3 64.1 79.5 94 97.2 80.1 91.4 60.7 73.4 75.5 60.1 77.9 59.9 62.1 60.2 91.9 58.1 37.2 95 96.3 60.9 60.2 56.9 77.4 66.7 102.2

81.7 99.8 63.8 79.9 96.1 97.2 83.8 87.6 67.2 76.8 75.6 54.7 78 67.6 60.2 69.7 92.7 59.9 39.7 94.7 95.7 61.7 64 62.3 80.9 69.5 109.8

81.6 99.6 65.8 77.1 92.9 97 81.3 85.8 71.6 74.2 78 53.3 77.6 68.7 60.9 69.1 93 60.1 35.6 95.5 95.3 60.8 65.5 62.9 75.3 68.6 112.1

80.4 99.6 60.5 73.9 87.9 96.9 86.5 91.1 63.6 74.5 72.3 58.4 77.6 70.1 64.3 68.6 94.1 55.1 35.7 94.3 95.2 63.4 66.8 60 80.5 69.1 114.6

80.7 99.5 61.4 75.5 86.8 94.9 99.8 94.4 60.1 75.5 77.9 48.9 79.1 71.6 65.5 70.5 94.3 56 33.7 95.3 95.4 59.9 72 47.2 80 69.7 115.1

79.9 98.9 lod 77.3 91.7 96 95.5 93.4 lod 70.2 75 54.7 80.8 64.4 65.4 69.8 95.1 55.3 40 92.5 94.4 lod 68.9 42.5 85.1 74.1 97.9

34  Challenges on the road to a recycling society

Table 2.4  The recycling rate of packaging waste in selected European countries [%]

Sweden Iceland Liechtenstein Norway United Kingdom

97.6 47.1 91.4 88.8 67.3

100.8 63.8 91 88.1 67.1

98 57.2 90 92.7 69.1

78.2 54.6 90.9 93.2 72.7

77.9 56.9 91.2 96.7 64.1

79.5 63.7 92.2 95.5 64.7

71 66.9 92.2 96.2 71.4

72.5 62.6 92.4 93.9 70

63.1 72.1 92.7 94.2 68.2

62.4 66.5 93.1 97.3 lod

63.7 73.5 93.6 85.9 lod

Source: own research based on Eurostat (2023). Notes: The countries in bold are Germany, Poland and Spain and the largest of the recycling rate of packaging waste in selected European countries in 2020. lod – lack of data.

Challenges on the road to a recycling society  35

Country\Year

2009

2010

2011

2012

2013

2014

2015

2016

2017

2018

2019

2020

European Union - 27 countries (from 2020) Belgium Bulgaria Czechia Denmark Germany Estonia Ireland Greece Spain France Croatia Italy Cyprus Latvia Lithuania Luxembourg Hungary Malta Netherlands Austria Poland Portugal Romania Slovenia Slovakia Finland Sweden

62.6 79.1 45.9 68.8 84 73.5 57.2 64.9 52.3 60.3 56.4 lod 64 42.2 44.9 57.7 61 51.1 36 74.9 66.9 36.8 59.9 40.5 49.6 59.9 55.5 58.9

64 79.8 61.6 70 84 72.7 56.1 66.2 58.7 61.9 61.1 lod 64.4 50 48.9 60.4 66 58.7 28.5 73.9 66.6 38.9 55.5 43.4 61 45.7 55.4 69.2

64.2 80.2 65.1 69.7 54.3 71.8 62.9 70.9 62.1 63.9 61.3 lod 64.5 52 50.9 62.2 66 59.3 42.3 71.9 65.8 41.2 58.4 50 63.6 62.4 58.7 71.5

65.2 80.3 66.5 69.9 61.6 71.3 61.3 74 58.6 65.5 64.9 59.7 66.6 55.3 51.1 62.2 62.5 48.5 46.6 69.3 65.9 41.4 56.9 56.8 66.9 68.1 59.3 69.6

65.4 78.7 65.7 69.9 69.8 71.8 58.4 70.2 52.4 66.6 66.4 58.8 66.7 56.6 51 53.5 62.8 49.2 38.1 70.4 66.6 36.1 61.5 52.8 69 65.9 58 71.9

66.5 81.3 62 73 69.8 71.4 60.3 68.3 53.8 68.7 65.2 52.7 65.4 58.7 54.9 57.7 66 48.4 41.1 70.5 66.6 55.4 61 54.8 70.4 65.4 57.4 70.5

66.6 81.5 64.1 74.3 73.9 69.3 59 67.5 60.3 68.4 65.5 60.1 66.8 59.8 53.9 59.8 70 50.1 37.1 71.7 67.1 57.6 57.1 55.9 67 64.3 60.9 71.8

67.6 81.9 63.8 75.3 79 70.7 56 67 66.1 70.3 66 54.7 66.9 64.6 57.7 69.5 70.3 49.7 39.7 72.6 66.8 58 60.9 60.4 69.4 65.8 64.7 68.2

67.5 83.8 65.6 72.3 71.5 69.9 53.5 65.6 68.6 68.5 68.1 53.3 67.1 66.2 58.7 61.8 69.7 49.7 35.6 78.1 65.6 56.7 55.3 60.4 70.1 65.7 65.2 71.7

65.6 85.3 60.4 69.6 70.1 68.5 60.4 63.9 63.6 68.8 63.5 58.4 68.3 70.2 55.8 60.7 70.9 46.1 35.7 79.4 65.5 58.7 57.9 57.9 68 66.6 70.2 65

64.6 83.5 61.2 71.2 70.4 63.2 66.2 62.5 60.1 69.6 65.6 48.9 69.6 66.8 62.4 61.9 71.5 47 33.7 80.7 65.4 55.5 62.8 44.6 67.1 67.5 70.6 63.6

64 79.7 lod 67.9 64 68.1 71.4 62.4 lod 68.3 60.3 54.2 72.8 59.9 61.4 61.8 71.9 52.4 40 76.5 63.7 lod 59.5 39.9 67.9 70.8 73.2 60.9

36  Challenges on the road to a recycling society

Table 2.5  The recovery rate of packaging waste in selected European countries [%]

Iceland Liechtenstein Norway United Kingdom

b.d. 50 53.1 61.8

33.9 45.9 56.7 60.7

44 48.7 57.5 60.8

40.7 44.3 55.9 61.4

42.9 50.3 54.5 64.6

42.8 51.9 55.7 59.2

47.4 66.1 55.1 60.6

47.2 65.8 56.3 64.7

44.4 66.7 54.5 63.9

51.2 68 52.9 62.1

46.3 70 53.9 lod

57 72.1 52.5 lod

Source: own research based on Eurostat (2023). Notes: The countries in bold are Germany, Poland and Spain. lod – lack of data.

Challenges on the road to a recycling society  37

38  Challenges on the road to a recycling society the necessary measures to ensure separated collection for recycling, so that by 2025 the amount of plastic beverage bottles up to 3 litres collected is equal to 77% of the weight of such products on the market in the given year, and by 2029 this ratio increases to 90%. As a result of these changes, the amount of waste recycled (recycled and composted) increased from 37 million tonnes (87 kg per capita) in 1995 to 115 million tonnes (257 kg per capita) in 2021, at an average annual rate of 4.3%. The share of total municipal waste recycled increased from 19% to 49.6% (Eurostat, Waste statistics, 22 March 2023). In 2021, the recycling rate of municipal waste was below the EU average in Slovakia (48.9%), France (45.1%), Latvia (44.1%), Czechia (43.3%), Poland (40.3%)), Sweden (39.5%), Denmark (34.3%), Norway (38.2%), Finland (37.1%), Spain (36.7%), Hungary (34.9%), Croatia (31.4%) and Estonia (30.3%) (Table 2.2). The leaders in recycling municipal waste in the EU are Germany (71.1%), Slovenia (60.0%) and the Netherlands (57.8%). Most of these countries have improved their recycling rates in the last few years by an average of 2–4%. Unfortunately, the Eurostat data are incomplete. For example, there are no data for 2021 for Austria, which in 2020 showed a recycling rate of 62.3%, and Bulgaria, which recycled 62.2%. It is not known whether the above levels of recycling were maintained or whether they increased or decreased. However, comparing Germany, Spain and Poland, it can be seen that even in 2021 Spain and Poland did not recycle as much municipal waste as Germany had done 10 years previously, i.e. in 2010 (62.5%). The pace of change in waste management in these countries is still too slow when compared to countries with recycling rates higher than the European average (49.6%), such as­ Belgium, Bulgaria, Luxembourg, the Netherlands, Slovenia, Austria and Switzerland. Table 2.3 shows the amount of packaging waste generated by EU residents in 2010–2020. In the EU (27) in 2020, 79,594,000 tonnes of packaging waste were generated (178 kg per capita). Between 2010 and 2020 there was an increase in the amount of packaging waste generated of 10,409,000 tonnes (an average of 21 kg per EU inhabitant). The top generators of per capita packaging waste are Germany (226 kg), Ireland (224 kg), Italy (209 kg), Luxembourg (205 kg), Liechtenstein (195 kg), France (188 kg) and Denmark (179 kg). The countries that produce the least are Cyprus (92 kg), Greece (81 kg), Bulgaria (79 kg) and Croatia (66 kg). Therefore, it is clear that some European countries will have great difficulty in achieving the objectives set in Directive 2019/904 (SUP). We produce more and more waste despite the fact that there are fewer EU inhabitants (447.7 million inhabitants in 2022 as opposed to 501.1 million in 2010) (EU, 2023. https://european-union.europa.eu/principles-countries-­ history/key -facts-and-figures/life-eu_en). The COM/2022/677 final Proposal for a Regulation of the European Parliament and of the Council on packaging and packaging waste, amending Regulation (EU) 2019/1020 and Directive (EU) 2019/904 and repealing Directive 94/62/EC is a new commitment by the EU Member States to reduce the amount

Challenges on the road to a recycling society  39 of packaging waste generated by 5% by 2030 compared to 2018, by 10% by 2035 and by 15% by 2040. According to the European Commission, this would lead to an overall reduction in waste in the EU of around 37% compared to the scenario with no legislation. Proposal COM/2022/677 aims to ensure that by 2030 packaging is fully recyclable. This includes setting design criteria for packaging, creating mandatory deposit systems for plastic bottles and aluminium cans, and clarifying which very limited types of packaging must be compostable so that consumers can dispose of them in bio-waste. As early as 2019 Zarębska (2019) stated there was a need to properly label packaging and waste containers to facilitate the segregation of packaging by residents. COM/2022/677 proposes that all packaging should be labelled with information on what it is made of and which waste stream it should end up in. Waste containers will bear the same labels and the same symbols will be used throughout the EU. All the EU Member States and EEA/EFTA countries were to achieve a 60% recovery rate of packaging waste in 2020. Recovery includes energy recovered from packaging waste, other forms of recovery and total recycling. The average in the EU (27) in 2020 was 79.9% (Table 2.4). The recovery rate was below the target of 60% in Poland (59.9% – 2019), Hungary (55.3%), Croatia (54.7%), Romania (42.5%) and Malta (40.0%). Table 2.5 shows the levels of recycling of packaging waste in European countries in 2010–2020. The EU-27 average level of recycling of packaging waste was 64% and the trend has been downward since 2016 (67.6%). In 2020, the level of recycling was below 64% in Bulgaria (61.2% – 2019), Ireland (62.4%), Greece (60.1%), France (60.3%), Croatia (54.2%), Cyprus (59.9%), Latvia (61.4%), Lithuania (61.8%), Hungary (52.4%), Malta (40%), Austria (63.7%), Poland (55.5% – 2019), Portugal (59.5%), Romania (39.9%), Sweden (60.9%), Iceland (57%) and Norway (52.5%). Admittedly, not all the listed countries belong to the European Union, but the list shows much diversity in the levels of recycling of packaging waste. For example, in 2020 Germany recycled 68.1% and Spain 68.3%, while the highest level was in Belgium (79.7%). 2.5 Conclusions According to a European Environment Agency report, there is much potential to increase the recovery and recycling of municipal waste in Europe, in particular packaging waste. However, the report states that to fully exploit this potential, current barriers need to be overcome, e.g. price competition from virgin resource alternatives, infrastructure capacity and the complexity of certain waste products. This also requires strong implementation of targeted regulations to increase separated collection. Implementing new policy measures, some of which are already included in Europe’s 2020 circular economy action plan, can both directly and indirectly exploit the potential for increased recycling. (EEA, Waste management, 2023)

40  Challenges on the road to a recycling society The literature shows that we Europeans have moved to an active environment policy (at least in theory) and our CE targets are very ambitious. Unfortunately, according to our analysis of Eurostat data more than half the countries in the EU must strengthen actions aimed at minimising waste generation and recovering and recycling more packaging waste. We produce more and more waste, and the level of recycling has not yet stabilised. There is more on overcoming barriers to recycling packaging waste and introducing deposits for packaging in some EU countries in Chapter 3. References 2013/179/UE Commission Recommendation of 9 April 2013 on the use of common methods to measure and communicate the life cycle environmental performance of products and organisations. Text with EEA relevance. Arnette, A. N., Brewer, B. L., & Choal, T. (2014). Design for sustainability (DFS): The intersection of supply chain and environment. Journal of Cleaner Production, 83, 374–390. Chojnacka, M. (2021). Organizacja przyszłosci. ́ Wydawnictwo Akademii im. Jakuba z Paradyża. COM. (2011). 571 final, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, Roadmap to a Resource Efficient Europe. COM. (2020). 98 final, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, A new Circular Economy Action Plan For a cleaner and more competitive Europe. COM/2022/677 final Proposal for a Regulation of the European Parliament and of the Council on packaging and packaging waste, amending Regulation (EU) 2019/1020 and Directive (EU) 2019/904, and repealing Directive 94/62/EC. Directive 94/62/EC of the European Parliament and Council of 20 December 1994 on packaging and packaging waste. Directive 2008/98/EC of the European Parliament and of the Council of 19 November 2008 on waste and repealing certain Directives (Text with EEA relevance). Directive 2009/125/EC of the European Parliament and of the Council of 21 October 2009 establishing a framework for the setting of ecodesign requirements for energy-related products (recast) (Text with EEA relevance). Directive (EU) 2018/852 of the European Parliament and of the Council of 30 May 2018 amending Directive 94/62/EC on packaging and packaging waste (Text with EEA relevance). Directive (EU) 2019/904 of the European Parliament and of the Council of 5 June 2019 on the reduction of the impact of certain plastic products on the environment (Text with EEA relevance). Eurostat. (2023). Retrieved 13 April from https://ec.europa.eu/eurostat Eurostat, Waste statistics. Retrieved 13 April 2023, from https://ec.europa.eu/eurostat/ statistics-explained/index.php?title=Waste_statistics EEA. Waste management. Retrieved 13 April 2023, from https://www.eea.europa.eu/ themes/waste/waste-management/waste-management

Challenges on the road to a recycling society  41 EU. (2023). Retrieved 13 April 2023, from https://european-union.europa.eu/­principlescountries-history/key-facts-and-figures/life-eu_pl Geissdoerfer, M., Savaget, P., Bocken, N. M. P., & Hultink, E. J. (2017). The Circular Economy – A new sustainability Paradigm? Journal of Cleaner Production, 143, 757–768. Grabowska, S., & Saniuk, S. (2023). Business models for Industry 4.0: Concepts and challenges in SME organizations. Routledge – Taylor & Francis Group. Retrieved from https://www.routledge.com/Business-Models-for-Industry-40-­Concepts-andChallenges-in-SME-Organizations/Grabowska-Saniuk/p/book/9781032329314 Iacovidou, E., Velis, C. A., Purnell, P., Zwirner, O., Brown, A., Hahladakis, J., Millward-Hopkins, J., & Williams, P. T. (2017). Metrics for optimising the multi-dimensional value of resources recovered from waste in a circular economy: A critical review. Journal of Cleaner Production, 166, 910–938. https://doi.org/10.1016/j. jclepro.2017.07.100 Kurczewski, P., & Lewandowska, A. (2010). ISO 14062 in theory and practice-ecodesign procedure. Part 2: practical application. The International Journal of Life Cycle Assessment, 15, 777–784. Marinina, O., Nevskaya, M., Jonek-Kowalska, I., Wolniak, R., & Marinin, M. (2021). Recycling of coal fly ash as an example of an efficient circular economy: A stakeholder approach. Energies, 14(12), 3597, 1–21. https://doi.org/10.3390/en14123597 Rybaczewska-Błażejowska, M., & Mena-Nieto, A. (2020). Circular economy: comparative life cycle assessment of fossil polyethylene terephthalate (pet) and its recycled and bio-based counterparts, Management and Production Engineering Review, 11(4), 121–128. https://doi.org/10.24425/mper.2020.136126 Telenko, C., Seepersad, C. C., & Webber, M. E. (2008). A compilation of design for environment principles and guidelines. Journal of Mechanical Design, 5(3), 289–301. https://doi.org/10.1115/DETC2008-49651 Zarębska, J. (2019). Packaging waste management in the context of a circular economy – The essence, tools, environmental communication. University of Zielona Góra (in Polish). Zarębska, J., Zarębski, A., & Lewandowska, A. (2021). Polish society towards the implementation of the circular economy and the change of municipal waste management – Ecological, economic and social aspect. Management, 25(2), 91–112. https:// doi.org/10.2478/manment-2019-0075

3

Barriers, challenges and opportunities to accelerate the realisation of a circular economy

3.1 Introduction The main assumption behind circular economies (CEs) is to drive a change in the economic system from linear to circular, with a priority in consumer behaviour for borrowing, reusing, repairing, refurbishing and recycling existing materials and products for as long as possible. In this way, the life cycle of products is extended and the amount of waste generated is reduced. When a product’s life cycle comes to an end, raw materials and waste remain in the economy through recycling. They can be successfully reused, thus creating additional value as in the case of packaging waste. An example of this is a deposit-refund system for packaging, which is one of the very important CE mechanisms and is consistent with the 2030 Sustainable Development Goals. The pace of implementing the deposit-refund system depends on many factors and varies across European countries. However, the sooner it is implemented on a large scale, the faster raw material packaging will be used. Its life cycle will be extended, which brings measurable economic benefits and helps us achieve the aim of becoming a ‘recycling society’. This chapter also discusses the barriers against implementation of the deposit-refund system and other plans to bring European society closer to a CE. This is necessary as it is impossible to continue the current pace of economic development in the future. Therefore, it is particularly important to be aware of both barriers and opportunities. The results could be useful for decision-makers to create and implement appropriate public policy initiatives. 3.2 Method According to the Sustainable Development Goals 2030, and specifically goal 12.5, ‘By 2030, we are to significantly reduce the level of waste generation through prevention, reduction, recycling and reuse’ (https://kampania17celow. pl/agenda-2030/). The level of recovery and recycling of municipal and packaging waste was described in Chapter 2. This chapter continues the topic of recycling packaging waste. An analysis of the literature on the implementation of the packaging deposit-refund system in selected European countries shows DOI: 10.4324/9781003411239-4

Barriers, challenges and opportunities  43 the pace of changes taking place in this CE area and the benefits that this system generates. The following part of the chapter is a summary of the barriers, challenges and opportunities in CE implementation. A list has been prepared based on the co-authors’ knowledge of CEs. The chapter also uses a survey conducted in Poland in 2019 in which the respondents indicated proposals to increase the efficiency of selective waste collection. 3.3 The deposit-refund system for packaging and its advantages The new Circular Economy Action Plan for a cleaner and more competitive Europe, COM (2020) 98, is a major challenge for many European countries. An example of action for a cleaner Europe is a ‘deposit system’ for beverage packaging. European countries are willing to join it. Currently, some 138 million people in Europe, i.e. over a quarter of the population, use the deposit system. It operates in 13 European countries: Croatia, Denmark, Estonia, Finland, the Netherlands, Iceland, Lithuania, Latvia, Malta, Germany, Norway, Slovakia and Sweden. The solutions applied differ in terms of the obligations, the amount of the deposit, the type of packaging and the types of beverage the packaging of which is covered by the system. Due to restrictive legal requirements in the field of packaging waste, increasing numbers of countries are considering introducing the system, including Austria (from 2025), Spain (2022), Portugal (2022), Scotland (2022), Ireland (2022), England (2024), Greece (2023), Hungary (2023), Romania (2022), Malta (2022) and Poland (2023). The process of implementing the deposit system is very complex and requires not only new legislation but also a reconciliation of the interests of consumers, large and small commercial enterprises (shops) and producers of beverages with various types of packaging. One example is Poland, where implementation of the system was planned for January 2023, but legislative work has been underway since 2022 and full implementation of the system and the deposit is now planned for 2025 (Teraz Środowisko/Now Environment…, 2023). A deposit is required for each product sold in a glass, plastic bottle or can. Each country decides on the amount of the deposit. In Germany, it is 25 cents for disposable packaging, in the Baltic states 10 cents. An act specifies which sizes of shops are obliged to accept beverage packaging and return the deposit added to the price. In Lithuania, the obligation applies to stores with an area over 300 square meters, whereas in Estonia it applies to shops over 200 square meters. The operator, i.e. the entity that operates the deposit system (e.g. an association of beverage producers), regularly collects packaging from stores and then hands it over to recyclers. The same operator settles the deposits paid-up and paid-off by traders and entrepreneurs. Shops can install machines to collect packages and repay deposits. Most often these are facilities with an area over 250 square meters. On depositing a bottle or can in the vending machine, the customer receives a receipt which entitles them to collect the amount stated on it or to spend it on purchases in the store. The manner in which packaging is collected depends on the size of the store and the amount of

44  Barriers, challenges and opportunities packaging. As part of the scheme, stores receive from the operator a so-called handling fee for the collection service. Retail businesses either buy the machines themselves (Scandinavia, Estonia) or receive them from the system operator (Lithuania). The packaging contains special codes (in both manual and automated collection systems) from which the operator identifies specific sellers. According to the amount and type of packaging declared by the company putting it on the market, the operator calculates the cost of collecting and managing it; on this basis, it charges a specific fee every month. The system is financed by approximately 10% of the packaging for which customers do not collect their deposits, administrative fees paid by producers and the sale of collected waste, which can be recycled and sold in the form of a new product (https://kaucyjny.pl/podstawowe-information/accessed 19 April 2023). There are currently around 135,000 packaging collection points in Germany; of these 85% are automated (RVM devices) and 15% are manual. Glass bottles are recycled an average of 45 times, and PET bottles about 20 times (Bielenstein, 2022, p. 7; Malowaniec, 2022, p. 47). In Finland, a reusable glass bottle is filled an average of 33 times before it is recycled. In order to achieve a large number of reusable bottle cycles (30–50 times), it is necessary to organise effective collection of empty packaging. In most European countries, reusable bottles are used for at least 20 cycles. A small number of returnable bottle rotations (8–9 times in Poland) may be for a number of reasons: each brewing concern has its own independent collection system; the bottle is only used for 2–3 years for aesthetic reasons; consumers encounter difficulties when returning packaging (e.g. when the seller fails to provide a deposit receipt); consumers receive a smaller refund when returning packaging at a collection point that accepts bottles without receipts; discount stores sell the same beer but only in disposable packaging; or there is no easily recognisable sign indicating that the bottle is returnable (Malowaniec, 2022, pp. 34–36). Separated secondary waste such as glass packaging and aluminium cans can be recycled an infinite number of times without any loss of quality. By contrast, for example, paper can be recycled 6–7 times before it is considered waste. As much as 75% of the weight of milk and juice cartons is high-quality cellulose, which can be used to make new paper products. Plastics can be recycled around 10 times. Ferrous and non-ferrous metals are also fully recyclable. This full-value waste – secondary raw materials – can be recovered and processed. Table 3.1 shows which materials are included in the deposit-refund systems in different European countries. Of the materials listed in Table 3.1 certain types are included in the system (Malowaniec, 2022, pp. 41–44): - plastics: mainly PET bottles (also HDPE only in Norway); - metals: mainly aluminium cans (marked X in the table); in Croatia, Sweden and Norway also packaging made of tinplate; in Estonia also steel packaging; - glass: depending on the country, e.g. beer, juice, soft drink, weak alcohol (less than 10%) bottles; strong alcohol bottles (only collected in Finland).

Barriers, challenges and opportunities  45 Table 3.1  Packaging included in the deposit system in selected European countries Country

Year of Packaging included in the system introduction Plastics

Metal

England, Wales, 2023/2024 Northern Ireland Austria 2025 Croatia 2006

X

X

X X

Denmark Estonia

2002 2015

X X

Finland

1950

Greece Spain The Netherlands Ireland Iceland Lithuania Latvia Malta Germany

2023 2022 2005 2022 1989 2016

Norway

1999

1996 cans, 2008 PET, X X X X X X X X X + reusable PET X

X cans + galvanised sheet metal X cans + steel packaging X

Poland

2023/2025

PET bottles

Portugal Romania Slovakia Sweden

2023 2022

X X X X

Scotland Turkey Hungary

2022 2023 2023

2022 2003

1984, 1994, 2006

X X X

X X X 2002 X X X X X X

Glass

Multi-material packaging

X

X X X 2012 X X X X X X

X+ galvanised sheet metal X X X X X X X X+ galvanised sheet metal X X X X

beverage multimaterial packaging

Sources: own study based on Making the business…, 2021; Malowaniec, 2022; Bielenstein, 2022.

46  Barriers, challenges and opportunities Unfortunately, the existing deposit-refund systems do not cover all packaging. Most systems exclude milk and milk drinks, and also wines and spirits. Some systems also do not allow juice poured into glass or PET containers. Similarly, reusable PET bottles are not a common type of packaging and are only found in the schemes in Germany and Finland. Half the deposit-refund systems for disposable packaging include or cooperate with operators of reusable packaging systems. Finally, 90% of the European systems are centralised systems with a single operator. According to Deloitte Polska 2017 data (Patorska et al., 2017, pp. 21–61), the average level of collection of all waste in Croatia is about 90%. For the most part, the collection is manual. Retailers have to sort the packaging by type by themselves. There are 14,916 collection points in Finland where empty packaging can be returned, making one collection point for every 362 people. Finland boasts very high packaging return rates. In 2016 for single-use packaging, the figures were 88% for glass, 92% for PET and 96% for metal. Glass bottles are filled an average of 33 times in their life cycles and PET bottles 18 times. In Lithuania, the average returns in 2016 amounted to approximately 90% for all the types of material collected. The seller chooses the type of collection system (manual or automated). At the same time, there is a collection system for reusable packaging – glass beer bottles. In Germany, there is no service charge, i.e. sellers who accept packaging do not receive payment for handling but they are the owners of the waste. In 2014, the return rates for this country were as follows: cans 96%, PET 98%, glass bottles 84%. Collection is 80% automatic using vending machines. In parallel, Germany has an optional collection system for reusable packaging. However, sellers are not obliged to accept such packaging (e.g. reusable bottles or boxes). It is only collected by those participating in the voluntary system. The Swedish system, on the other hand, is self-sufficient. The empty packaging collection system is 95% automatic. In 2016, the collection rate was 82% for plastics and 86% for cans. According to estimates by Deloitte based on Polish and international statistical data, together with numerous consultations with the industry, the following approximate weights of packaging are introduced in the Polish market each year (Patorska et al., 2017, p. 61): - - - -

200 thousand tons of PET bottles, 80 thousand tons of aluminium cans, 500 thousand tons of glass bottles, 75 thousand tons of multi-material packaging.

The total weight of the above packaging is nearly 900,000 tonnes, which represents only about 7% of the total mass of municipal waste. Currently, the recycling rate for this packaging is between 25% and 80%, depending on the material. A simulation of a possible increase in recycling levels in Poland was

Barriers, challenges and opportunities  47 carried out for plastic packaging (PET bottles), household glass and multi-material packaging after the introduction of the deposit-refund system. The results of the simulation show that introduction of the system could improve recycling levels: of plastic packaging by 11.1%, of household glass by 13.8% and of multi-material packaging by 65%. The deposit-refund system will support achievement of the aim of selective collection of beverage packaging made of plastic, and it will also facilitate multiple use of glass packaging. In the draft act amending the act on the management of packaging and packaging waste published on the website of the Chancellery of the Prime Minister (https://www.gov.pl/web/premier/­projektustawy-o-zmianie-ustawy-o-gospodarce-opakowaniami-i-­o dpadamiopakowaniowymi2), it states that the act will specify the conditions that must be met by deposit-refund systems created by entrepreneurs. These will include the universality of the system, non-discrimination and there being no obligation to have a receipt to recover the deposit. The proposed regulations oblige every shop with a commercial area of more than 100 square meters to collect empty packaging and packaging waste covered by the deposit-refund system and to return the deposit. The benefits include an increased level of recycling of packaging waste, less littering with packaging waste, clear and transparent rules for the deposit-refund system which will be uniform throughout the country, and the reduced consumption of primary raw materials, meaning that more will be left for future generations. 3.4 Barriers, challenges and opportunities for the implementation of a circular economy Making European economies more sustainable and better prepared for the challenges of the green transition is a very ambitious European Union aim. Unfortunately, the individual characteristics of the Member States mean that the process proceeds at different paces and encounters various barriers. In some countries, it is implemented successfully, as in the case of the depositrefund system. Unfortunately, there are numerous barriers against the implementation of the CE concept. These have been increasingly discussed in the literature. In Chapter 1 of this study it was stated that the basic barriers are considered to be too high initial investment costs, the time-consuming implementation of investments and the need for properly trained employees who have the appropriate competences to occupy the so-called ‘green jobs’ especially created for them (Kirchherr et al., 2017, pp. 264–272; Zarębska et al., 2021, pp. 91–112). Table 3.2 shows the barriers and opportunities to the implementation of a circular economy. As Table 3.2 indicates, a circular economy is not only a barrier but also an opportunity, something which, if properly implemented, can bring measurable benefits. In the case of introducing a deposit-refund system for packaging, the

Barriers

Opportunities

Diversified levels of economic development of EU Member States Diverse mentalities of the inhabitants of individual countries

Examples of CE good practice to be followed by other countries The successes/benefits of countries from CE are an incentive for other countries to introduce specific actions (e.g. introducing a deposit for packaging) New investments will contribute to more effective work in the CE area Creation of new ‘green jobs’

High initial investment costs, transformation implementation costs Time-consuming implementation of investments, adjustment of infrastructure capacity The need for properly trained employees Greater cooperation between science, business and society Cultural reluctance to change Unwillingness to learn anything new Lack of employee motivation and rewards in relation to the requirements of employers Poor information flow between CE organisations

Training of qualified staff who understand and support the CE assumptions and communicate them to colleagues Greater cooperation between science, business and society New jobs for employees looking for new challenges – so-called ‘green consumers’ supporting the idea of CE Fewer landfills Less plastic in the seas, oceans and our systems (microplastic) Rational use of non-renewable raw materials and rare earth metals Eliminated burning of plastic bottles in household stoves

Disposing of assets (decommissioning) that are still viable and replacing them with resources adapted to the circular economy will result in ‘economic waste’ The systemic transformation will result in the emergence of new leaders in Less waste means fewer landfills and less arson of illegal landfills the market and may cause the current leaders to lose their positions Enterprises in the SME sector that are weak in terms of capital will not Reduction of illegal shipments of waste from other countries be able to make such a transformation on their own without external (waste trade) support

48  Barriers, challenges and opportunities

Table 3.2  Barriers and opportunities for the implementation of circular economy in European countries

Implementation of CE in SMEs in poorer countries will be impossible due to a lack of state support (a threat of oligopoly) The high demand for rare earth metals may lead to an increase in their prices, which will make enterprises in European countries implementing CE uncompetitive compared to enterprises in China and Russia Bankruptcies of enterprises not financed for CE implementation may result in dismissals, an increase in the cost of living and impoverishment of society The complexity of some waste products makes it difficult to reuse and recycle them

Work on modern packaging and innovative technological solutions is conducive to the implementation of CE in many areas Reduced pollution of public spaces

Barriers, challenges and opportunities  49

50  Barriers, challenges and opportunities benefit is an increase in recycling of packaging and so savings of raw materials and lower impacts of the system on environmental pollution. The benefits for companies implementing the circular economy are primarily: 1) profit in the form of a competitive advantage due to the potential preferences of the most important stakeholders – customers, suppliers, financial institutions and investors; 2) the regulations implemented in the European Union leave enterprises no choice i.e. implementation of circular economy principles will allow enterprises to continue to operate while enterprises that do not adapt will disappear from the market. Those that remain in the market will develop. Research by Dey et al. (2022, p. 108496) on CE practices in SMEs in France, Greece, Spain and the UK (100 companies in each country) shows: - circular economy practices can have a positive impact on the environment by improving energy efficiency, saving resources and reducing waste; - climate neutrality by 2050, which is the European Union’s aim, will not be achievable if larger companies do not reduce CO2 by SMEs in their supply chains; - the importance of SMEs in the global economy is enormous – they constitute about 90% of all enterprises in the world and create over 50% of jobs. In the European Union, they create about 56% of GDP and about 66% of jobs. There are around 6 million in the UK. SMEs employ over 16 million people and create about 47% of GDP; - SMEs have a large impact on the environment. They emit approximately 60–70% of pollutants in Europe. Manufacturing SMEs are responsible for 64% of air pollution. Only about 0.4% of SMEs have an environmental policy; - in enterprises in the SME sector, the costs of materials and services account for over 60% of revenue; - 8 in 10 SMEs plan to introduce more flexible and sustainable business practices, but 40% of SMEs believe it is too costly and 42% of UK SMEs believe that the government does not provide enough incentives for businesses to do so; - implementation of environmentally friendly solutions by SMEs is conditioned by their economic results. The research was based on the assumption that circular economy practices can improve achievement of the UN Sustainable Development Goals by enterprises. Unfortunately, as in any social research, the most important thing is human beings, and in this case society, the attitudes and behaviour of which cannot always be predicted. To the general barriers and opportunities for CE implementation listed in Table 3.2 can be added additional barriers and opportunities resulting from the specificities of given communities, mentality, culture, upbringing and education (Böckel et al., 2022; Reller & Holdinghausen, 2011).

Barriers, challenges and opportunities  51 According to Zarębska (2019, pp. 265–305), sometimes the attitude of society in the field of pro-ecological activities is passive and indifferent. People know that collecting wastepaper is pro-ecological and it protects the natural environment and reduces the need for primary raw materials, yet they do not do it and are indifferent (they show a lack of care for the environment). Research shows a lack of consistency in environmental education, which is not conducive to the acquisition of knowledge and consolidation of pro-ecological attitudes. At practically all levels of school education (starting in kindergarten), Poles learn about segregation (selection) of packaging waste. Unfortunately, after leaving the classroom for a break in the corridor, in the park on a walk, in the city, in the cinema and in offices, one meets single waste bins that do not benefit from the knowledge passed on in kindergarten or at school. This situation has improved significantly since 2019 and triple waste containers (paper, plastic and glass) can be found more often in public places and educational institutions. However, this does not occur in homes where small kitchens do not have space for several containers for segregated waste. Research has shown that the reason for the still low level of recovery and recycling of municipal and packaging waste in homes is a lack of faith in the proper functioning of the ‘atsource’ segregation system according to 33% of respondents; a lack of variety and not enough containers in places of residence according to 19.9%; a lack of space in houses for several containers according to 19.1%; lack of proper waste segregation habits according to 8.6%; and no time according to 7%. Only 75% of respondents declared that they segregated municipal waste and only 70% of them segregated waste in all waste groups, while the remaining 30% only segregate paper or plastic or glass, and some only plastic. Figure 3.1 shows the proposals of the people surveyed to increase the effectiveness of waste segregation: education of the youngest (71%), stores (supermarkets) and smaller local stores purchasing selected waste (44%), greater interest among large-format stores (43%), information programmes in the media (40%) and campaigns demonstrating the correct segregation of waste to the public (27%). This is the situation not only in Poland but also in other European countries, as is evidenced by the low levels of recycling of packaging waste in selected EU countries presented in Chapter 2. A good sign of movement towards CE is the emergence of so-called upcycling, i.e. creative recycling, which consists in transforming used products and waste into new materials or products of higher quality and value. In many cases, upcycling activities involve individual processing of products and giving them new functionality (e.g. converting wooden pallets into garden furniture). Each such small action aimed at improving the state of waste management, when it is repeated by many people already has a large environmental impact. A study by the present author shows that 77% of respondents do not pay attention to what material packaging is made of or they only do sporadically. 23% of respondents often pay attention to the material and for these people it is one factor in their final purchasing decisions. Ignorance and lack of interest

52  Barriers, challenges and opportunities

Figure 3.1 Increasing the efficiency of waste segregation – respondents’ proposals.

in packaging are not conducive to the rapid implementation of a circular economy in Poland because as soon as a decision to buy is made the packaging is thrown away (sometimes after only a few seconds). On the other hand, reusing packaging at home is a way to extend its life cycle (Table 3.3). Extending the life cycle of packaging by repairing it, reusing it, replacing some of it or recycling it is a CE practice recommended for all EU members. Table 3.3  Suggestions for ways to reuse packaging Raw material from which the packaging is made

Use

Paper and cardboard

- for writing and drawing, for artwork at school or kindergarten - filler for parcels - for packing - toy boxes - shoe filler - tool boxes, organising various items at home (screws, clothes pegs, blocks, hairbands, jar lids) - storage of frozen fruit - kindling for the fireplace - containers for storing frozen fruit or vegetables - food storage - repeated use of drinking bottles - repeated use of plastic bags and/or use as garbage bags - bottles as pots for seedlings for the garden - for artwork at school, packaging for spices

Plastics

(Continued)

Barriers, challenges and opportunities  53 Table 3.3  (Continued) Raw material from which the packaging is made

Use

White glass

- as vases - storage of juice in glass bottles, for tinctures/wine, preserves for the winter - glasses (e.g. for chocolate cream or coffee) - decoration - as vases, glasses, packaging for liqueurs/wine - in small constructions in the garden, on allotments or balconies - for kindling in home fireplaces or stoves

Coloured glass Plywood and wood Multi-material plastics

3.5 The benefits and the need to move to a CE One may ask why there is a need to move to a circular economy in Europe, and what benefits it will bring. This question has already been partly answered above. For many decades, people have wastefully managed raw materials as a result of the production system (a linear flow of raw materials). Current environmental pollution and shortages of some raw materials have caused companies to have problems with supplies and they are looking for innovative solutions or substitute raw materials. This is not always possible, so an alternative is to save raw materials and recover what is already on the market. Therefore, it was decided to group the advantages of a CE in three categories consistent with sustainable development: the environment, society, the economy (Table 3.4). It is true that it is difficult to specify exactly which category to assign a given advantage to because each of the categories affects the others.

Table 3.4  Advantages of CE implementation in three pillars of sustainable development Impact category

Advantages of implementing CE

the environment

Recycling waste and reusing products slows down the use of natural resources (especially non-renewable resources), reduces landscape and habitat destruction, and helps reduce biodiversity loss Less waste equals less pollution, fewer illegal landfills and waste trafficking, and a toxin-free environment Recycling waste and reusing products means less energy and resource consumption (the EU emphasises primarily the reduction of CO2 emissions) Production eco-innovations mean less environmental pollution and saving primary raw materials (there is a real need to reduce Europe’s dependence on external raw materials) (Continued)

54  Barriers, challenges and opportunities Table 3.4  (Continued) Impact category

Advantages of implementing CE

society

Increased competitiveness of enterprises that have converted to CE could spur innovation and economic growth, and create new jobs (according to Eurostat, 700,000 jobs in the EU alone by 2030) Providing consumers with more sustainable and innovative products results in cost savings and better quality of life Empowering citizens by giving them ‘the right to repair’ According to the EEA, industrial processes and product use account for 9.1% of EU greenhouse gas emissions while waste management accounts for 3.3%. Implementing a CE should completely reduce greenhouse gas emissions in these areas to zero Reduced energy and resource consumption by implementing ecodesign and so creating more efficient and sustainable products (more than 80% of a product’s environmental impact is determined at the design stage) Reliable products of very good quality that can be reused, improved and repaired would extend the life cycle of products and reduce waste Reliable products of very good quality that can be reused, improved and repaired would extend the life cycle of products and reduce waste According to Eurostat, the EU imports about half of the raw materials it uses and imports more raw materials than it exports. In 2021, this resulted in a trade deficit of €35.5 billion On-site recycling of raw materials (in Europe) reduces supply risks (price volatility, raw material availability issues and dependence on imports). This mainly concerns ‘critical raw materials’ for the production of, for example, electric motors, photovoltaic panels, batteries, electronics and ICT Stimulation of innovation in various sectors of the economy (new solutions, a greater importance of artificial intelligence, but also industry 5.0) The EU called on packaging entrepreneurs to switch to bio-based, biodegradable and compostable plastics from 2022 Support for research and innovation for: (a) recycling processes and technologies; (b) resource efficiency of industrial processes; (c) innovative and sustainable materials, products, processes, technologies and services and industrial expansion of them; (d) bioeconomy; (e) monitoring and assessment of exploitation of primary raw materials and levels of emissions on Earth

the economy

Sources: News. European Parliament, Circular Economy: Definition, Meaning and Benefits (video 24.05.2023, accessed 09.06.2023; Eurostat Statistics Explained 2023, accessed 09.06.2023).

3.6 Conclusions In the general awareness of market participants, both public and private, and natural persons, the market is dominated by trends related to waste management (recycling and recovery) based on selective waste collection. This is only a small part of the whole CE idea, but selective waste collection is at its

Barriers, challenges and opportunities  55 foundation (only properly collected raw material can be recycled). All the barriers to CE implementation discussed in this chapter are surmountable. In small steps, EU countries are able to achieve the CE aims. However, as research by Dey et al. (2022, pp. 1–19) shows, financial support from the Recovery and Resilience Facility is necessary for a smooth transformation. The deposit-refund system introduced in many European countries increases the recycling of all packaging and raises great hopes. As research shows, the system brings measurable financial and environmental benefits. Less pollution of public space, development of pro-environmental attitudes in society, improvement in recycling levels and so a reduction in the use of raw materials are benefits that we are able to achieve as a European ‘recycling society’. This should be strengthened by appropriate public policy. This may include both regulatory changes and financial support. Regarding the latter, the Recovery and Resilience Facility implemented by the European Union represents a great opportunity. After many years of austerity, the European Commission has changed its attitude to public policy. Although each country has prepared its own plan, significant resources are allocated for initiatives connected to the circular economy. Therefore, the Facility may be used to tackle the above-mentioned barriers and explore opportunities. In the case of SMEs, it is important to build a coherent well-functioning support system. This is crucial as some SMEs do not fully recognise the benefits of a circular economy. The necessary support instruments are scrutinised in Chapter 7. However, an important question arises. Should CE incentives be part of an already existing system or should they be another area of economic policy? In Poland, a mixed solution has been implemented. When a company applies for financial support, the application is favoured if CE activities are included in the investment. However, there is also support aimed only at circular economy initiatives. This mixed solution seems to be reasonable. However, evaluation will reveal its effectiveness. Nevertheless, SMEs are usually more flexible than large enterprises so they should be able to implement the CE principles more easily and quickly. References Bielenstein, T. (2022). Refillable bottle systems in Germany – A model for well-designed pool systems in Europe? Zero Waste Europe Webinar, May 10th 2022, Director Public Affairs, Sustainability & Communications, GDB. Retrieved from https://­ zerowastecities.eu/wp-content/uploads/2022/05/220510_Presentation_Zero_Waste_ Europe.pdf Böckel, A., Quaing, J., Weissbrod, I., & Böhm, J. (Hrsg.). (2022). Mythen der Circular Economy. Indeed Innovation GmbH. Retrieved from https://download.­ mythencirculareconomy.com/Mythen_der_Circular_Economy_2022.pdf COM. (2020). 98 final, Communication from the Commission to the European Parliament, the Council, the European Economic and Social Committee and the Committee of the Regions, A new Circular Economy Action Plan for a cleaner and more competitive Europe.

56  Barriers, challenges and opportunities Dey, P. K., Malesios, C., Chowdhury, S., Saha, K., Budhwar, P., & De, D. (2022). Adoption of circular economy practices in small and medium-sized enterprises: Evidence from Europe. International Journal of Production Economics, 248, 108496. https:// doi.org/10.1016/j.ijpe.2022.108496 Eurostat Statistics Explained. (2023). Retrieved June 09, 2023, from https://ec.europa. eu/eurostat/statistics-explained/index.php?title=Material_flow_accounts_ statistics_-_material_footprints#EU.27s_­material_footprint_by_material_category_ over_time https://kaucyjny.pl/podstawowe-informacje/ Retrieved from June 19, 2023. https://kampania17celow.pl/agenda-2030/ Retrieved from June 19, 2023. https://www.gov.pl/web/premier/projekt-ustawy-o-zmianie-ustawy-o-gospodarce-­ opakowaniami-i-odpadami-opakowaniowymi2 Retrieved from May 16, 2023. Kirchherr, J., Reike, D., & Hekkert, M. (2017). Conceptualizing the circular economy: An analysis of 114 definitions, Resources, Conservation and Recycling. 127, https:// doi.org/10.1016/j.resconrec.2017.09.005 Making the business case for packaging reuse systems, Methodology, (2021). Circular Economy Portugal. Malowaniec, B. (2022). Gospodarka odpadami opakowaniowymi po napojach w Polsce: teraz i w niedalekiej przyszłości. Systemy kaucyjne w wybranych krajach europejskich. Wydawnictwo Polskiego Stowarzyszenia Zero Waste. News. European Parliament, Circular Economy: Definition, Meaning and Benefits (video 24.05.2023). Retrieved 9 June 2023, from https://www.europarl.europa.eu/news/pl/ headlines/economy/20151201STO05603/gospodarka-o-obiegu-zamknietymdefinicja-znaczenie-i-korzysci-wideo?at_­campaign=20234-Economy&at_medium=Google_Ads&at_platform=Search&at_creation=DSA&at_goal=TR_G& at_­audience=&at_topic=Circular_Economy&gclid=EAIaIQobChMIuv2mn-q2_ wIVEV8YCh3nywIUEAAYASAAEgL7qvD_BwE Patorska, J., Paca, D., & Bujny, J. (2017). Analiza możliwości wprowadzenia systemu kaucyjnego dla opakowań. Opracowanie eksperckie. Deloitte Polska. Retrieved June 20, 2023, from https://sdr.gdos.gov.pl/Documents/GO/Ekspertyzy/Analiza%20mo%C5%BCliwo% C5%9Bci%20wprowadzenia%20systemu%­20kaucyjnego_06.12.pdf Reller, A., & Holdinghausen, H. (2011). Warum wir unseren Lebensstil ändern müssen, wenn wir überleben wollen. Frankfurt am Main. ISBN 978-3-938060-38-4. Teraz Środowisko/Now Environment…, 2023, Retrieved June 19, 2023, from https:// www.teraz-srodowisko.pl/aktualnosci/system-kaucyjny-w-polsce-projekt-ustawymkis-12490.html Zarębska, J. (2019). Packaging waste management in the context of a circular economy – The essence, tools, environmental communication. University of Zielona Góra (in Polish). Zarębska, J., Zarębski, A., & Lewandowska, A. (2021). Polish society towards the implementation of the circular economy and the change of municipal waste management – Ecological, economic and social aspects. Management, 25(2), 91–112. https:// doi.org/10.2478/manment-2019-0075

4

Sustainable business models Design, implementation and performance management

4.1 Introduction In the past, narratives regarding modernism were primarily centred around a belief in progress, change and objectivity. However, in recent times this once-dominant myth has gradually crumbled and undergone deconstruction. It has become evident that progress, along with its positive connotations, also has a dark side: environmental degradation, oppressive social engineering and an exacerbation of social inequalities. Rather than being seen as a means to attain meaningful social objectives, the concept of change, which was once revered, has now been reduced to a mere linguistic fetish employed by those in power to rationalise their actions (Batko, 2021). The increasing prevalence of environmental problems such as climate change, resource depletion and loss of biodiversity has highlighted the need for businesses to adopt sustainable business models (SBMs) in order to mitigate these challenges and contribute to global efforts towards sustainable development (Rockström et al., 2009). Sustainable business models play a crucial role in addressing environmental problems by employing various strategies. Among the key strategies that SBMs adopt, efficient resource management, circular economy principles, renewable energy and the restoration and protection of ecosystems can be distinguished (Geissdoerfer et al., 2018; Pieroni et al., 2019). Efficient resource management along value chains allows reduction of waste production and of negative environmental impacts, and enables monitoring of the effectiveness of such actions (Bocken et al., 2014). Similarly, circular economy principles are based on minimising waste and extending product life cycles through reuse and recycling. Implementing circular economy principles reduces resource extractions and emissions (Geissdoerfer et al., 2018). Another key value enabled by the application of SBMs is transitioning to renewable energy sources, and consequently reductions in greenhouse gas emissions and a shift towards a low-emission economy. Equally important in this context is restoring and protecting ecosystems. A SBM is a model that encourages organisations to engage in initiatives aimed at protecting and restoring ecosystems and increasing biodiversity.

DOI: 10.4324/9781003411239-5

58  Sustainable business models Looking at the phenomenon of SBMs from the perspective of management science, we can also discern numerous business-level benefits they offer. One of these is a competitive advantage, which involves the ability to stand out against the competition, attract environmentally conscious ­customers, and gain access to new market opportunities and strengthen brands (Fombrun et al., 2000; Porter & van der Linde, 1995). Organisations applying SBMs are better prepared to comply with existing and future environmental protection regulations, manage the risk associated with ­ non-compliance with legislation and avoid penalties and potential reputational damage (Ludwig & Sassen, 2022). Not insignificant in a competitive market are cost savings, which after all mean better resource efficiency and waste reduction (Bocken et al., 2014). Finally, organisations adopting SBMs can build stronger relationships with stakeholders, such as investors, customers and regulatory bodies, which increasingly appreciate sustainable development efforts (Freeman, 2010). By adopting sustainable practices and corporate social responsibility (CSR) initiatives, organisations can contribute to solving socio-ecological problems and create shared value for stakeholders. Socio-ecological problems such as poverty, inequality and environmental degradation are complex interrelated challenges (Folke et al., 2016) which threaten humans and the natural environment as a result of irresponsible human activity. So how can companies engage in solving such problems? They can undertake CSR initiatives, such as programmes supporting local communities, employee volunteering, philanthropy (Carroll & Shabana, 2010) and sustainable supply chain management, which was particularly reinforced by the COVID-19 pandemic and the need to shorten supply chains, making it more local. A relatively new approach is inclusive business models (Dentchev, 2020; Schoneveld, 2020), which integrate low-income people in their value chains as consumers, suppliers or employees, trying to address poverty and inequality. Investment in researching and developing eco-innovations can contribute to creating new products and services with a decidedly more sustainable impact on the environment and human wellbeing, and such engagement in solving environmental problems can attract and retain talented and ideological employees who value their company’s sustainable development and its positive impact on social issues (Schröder et al., 2020). It should also be noted that companies are increasingly adapting their strategies and actions to sustainable development goals to demonstrate their commitment to global sustainable development efforts, including achieving the United Nations Sustainable Development Goals, adopted in 2015, which have become guidelines for enterprises to solve socio-ecological problems (Sachs et al., 2019). The prospect of digital technology development is promising, in particular big data analysis, decision supporting and scenario development using artificial intelligence (AI) algorithms, together with the Internet of Things (IoT), which can support lower energy consumption and limit resource wastage. Companies are also increasingly engaging in partnerships and collaborations with other

Sustainable business models  59 organisations, such as non-governmental organisations (NGOs), governments, and academic institutions, to develop social innovations and conduct research and development in this area (Geradts & Alt, 2022; Grayson et al., 2014). An example of this is IKEA, which has committed to becoming a climate-friendly circular economy business by 2030. The company’s ‘People and Planet Positive’ strategy includes initiatives such as using 100% renewable energy in all its operations, sourcing sustainable materials and designing products with a circular economy in mind (IKEA, 2020). Big companies wishing to build images as responsible and sustainable corporations are undertaking and will undertake numerous initiatives to protect the planet. However, there is a need to transform the awareness of small and medium-sized entrepreneurs (Dentchev et al., 2018), which are often involved in price competition on the market, of including sustainable development in their core business strategies, decision-making processes and organisational cultures, which requires pro-environmental state policies supporting eco-investments and sustainable business models. Government policy can stimulate organisational innovation in sustainable development by providing incentives such as tax relief, grants and low-interest loans for research and development in sustainable technologies and practices (Kemp & Pontoglio, 2011). Governments can also create an environment conducive to lasting organisational innovation by establishing standards, promoting best practices and facilitating knowledge exchange between stakeholders. Moreover, policymakers can level the playing field for sustainable organisations by penalising unsustainable practices, such as polluting or excessive consumption of resources. 4.2 Methodology In order to identify scientific literature on sustainable business models, the desk research method was used to search databases such as Web of Science and Scopus, together with international and national strategies, think-tank reports, company materials and online resources. The search was carried out using keywords such as ‘sustainable business models’, ‘green business models’ and ‘circular business models’. The case study method was also used, which allowed understanding of implementation of sustainable business models in practice. The selected cases came from Poland, Germany and Spain. Thanks to an analysis of these cases, it was possible to identify factors leading to the success of sustainable business models. 4.3 Radical change and transformational leadership as implications of sustainable business model design The significance of radical changes in business processes is well established in management and organisation studies (Christensen et al., 1997). The rapid pace of technological advances, globalisation and increasing competition have

60  Sustainable business models caused many traditional business models to cease providing entrepreneurs with added value. In order to meet a complex reality and competition, companies must continually remodel their performance. Changing business models requires support in the form of modern leadership playing a key role in directing and managing radical changes in organisations (Higgs & Rowland, 2005). Transformational leaders are particularly effective in supporting a culture of innovation and inspiring employees to question the status quo and adopt new ways of thinking. Such leadership also facilitates open communication, encourages risk-taking and provides the necessary resources and support in implementing change initiatives. Although radical change often brings organisations benefits in the form of greater competitiveness, innovation and improved resource ­management, and so better financial results, it is not without risks. Fear and resistance to change, routines, organisational inertia and the complexity associated with large-scale changes can hinder this process (Oreg, 2003). To overcome these obstacles, companies must establish a strategic vision, ­ engage with ­stakeholders and create an environment conducive to change. Markides’s (2008) research confirms the importance of radical changes. Companies ­implementing radical innovations in their business models achieve better results than their industry counterparts in terms of revenue growth and profitability. Digital transformation is sculpting a future in which the demarcation lines between the physical, digital and biological domains will become increasingly indistinct. AI is playing a significant role in this revolutionary shift, serving as a primary driver of this fusion of realities. This transformation is not just a simple technological change; instead it is a metamorphosis in crucial aspects of business management. It compels organisations to reevaluate and redesign their operational strategies and give birth to innovative business models that were previously unimaginable. As the digital transformation progresses, there is escalating recognition of the vital role of technological innovation. This disruptive force does not merely supplement existing processes but it also challenges and dismantles traditional ways of operating. It propels businesses out of their comfort zones and urges them to replace antiquated methodologies with more efficient technology-based solutions. Therefore, the essence of digital transformation goes beyond merely adopting new technologies. It is about harnessing these advances to create a more interconnected and efficient world. This profound shift is driving a new age of innovation, fundamentally reshaping businesses and society as a whole. In this era of continual change organisations must be agile and open to reinvention and recognise that the future belongs to those who can best adapt and align with these evolving digital landscapes (Batko, 2021). The COVID-19 pandemic had a significant impact on the transformation of business models and it affected aspects of the environment, particularly regarding remote work and the reduction of business travel, which was replaced with online meetings. Where possible, remote work has become the norm. It

Sustainable business models  61 generates new tasks at many levels. The transition to a virtual work model brings tangible economic benefits but it leads to social and psychological complications resulting from the isolation of employees. 4.4 Designing sustainable business models Sustainable business models (SBMs) represent a strategic shift in how companies create, deliver and capture value by integrating social, environmental and economic dimensions in their operations (Boons & Lüdeke-Freund, 2013; Ringvold et al., 2022). The process of designing them may involve creating completely new models or modifying existing ones. Creating new SBMs requires rethinking values, supply chains, customer relationships and revenue mechanisms (Bocken et al., 2017). Several components of SBMs have been identified in the literature, such as efficient resource management minimising waste and environmental impacts all along value chains; eco-design incorporating environmental factors in product design leading to reduced resource consumption, reduced emissions and increased recycling opportunities; and implementation of pollution control and cleaner production processes to help companies minimise emissions and protect ecosystems. On the other hand, modifying existing business models in favour of sustainable development involves implementing eco-efficiency measures and promoting social innovations (Bocken et al., 2014). This is particularly evident today in the use of renewable energy. Companies invest in renewable energy sources, such as solar, wind or water power, to reduce their dependence on fossil fuels and promote clean energy production. Not only can the compromise between – sometimes conflicting – economic, social and environmental aims to balance stakeholder demands and achieve long-term business benefits, and systemic conditions – existing organisational structures, cultures and processes – hinder the adoption of SBMs (Whiteman et al., 2013), but also external barriers – market dynamics, regulatory frameworks, and stakeholder expectations – influence companies’ ability to implement sustainable business models. Generating green added value through a positive impact on the environment requires going beyond minimising harm and actively improving environmental conditions. One of the key elements in strategies related to green added value is stakeholder engagement, which influences business processes and company outcomes. Collaborating with suppliers, customers, and government bodies allows companies to better understand the needs and expectations of these entities. No less important is life cycle assessment. This allows companies to identify environmental impacts along the whole value chain. Analysing the life cycles of products and services can lead to the development of very specific actions aimed at reducing negative environmental impacts (Rebitzer et al., 2004). As a result, companies are able to develop effective methods to reduce emissions, energy and resource consumption, and generate green added value (Elkington, 1998).

62  Sustainable business models According to Weick and Westley (1996), achieving sustainable development of companies requires not only stakeholder engagement and the use of life cycle assessments but also the shaping of a culture of continual innovation and learning. This is a process in which companies constantly seek new ways to improve their operations and adapt to changing environmental conditions (Senge, 1990). A culture of innovation and learning contributes to increasing a company’s competitiveness, improving its adaptation to a changing market and sustainable growth. In practice, shaping a culture of continual innovation and learning involves a wide range of activities that companies can implement. Investing in employee skill development and supporting initiatives related to searching for new solutions are key in developing creativity and the adaptive capacities of organisations. Collaboration with other entities, such as universities, research institutes and other companies, is also important as it allows exchanges of knowledge and experience and leads to the creation of synergies and innovation (Chesbrough, 2010). Additionally, monitoring and analysing achievements are essential to evaluate the effectiveness of actions taken and allow ongoing adjustments of sustainable management strategies (Kaplan & Norton, 1992). Designing sustainable business models can be done in organisations of any size and legal form. Scientific research in this area has gone beyond large international corporations to explore the application of SBMs in small and medium-sized enterprises (SMEs) (Dentchev et al., 2018), start-ups, non-profit organisations and public institutions. It is clear that not only large corporations but also smaller companies are beginning to include features such as circular economies, digitisation to green organisations through efficient resource use and waste reduction, or elements of social entrepreneurship (Santos et al., 2015) in their strategies. Implementing big data analysis in the context of developing SBMs allows key elements supporting a sustainable approach to be identified and internal business processes to be improved. In particular, management style and government policy have been identified as the two most important predictors of big data analysis and sustainable practices (Raut et al., 2019). 4.5 Types of sustainable business models Circular business models (CBMs) are responses to contemporary challenges related to the increasing consumption of natural resources and waste generation. The aim of these models is to decouple economic growth from resource consumption by promoting efficient resource management, waste minimisation and product longevity. These models involve various strategies such as product as a service (PaaS), shared platforms and regeneration (Korhonen et al., 2018). In the product as a service model, businesses focus on offering customers services related to product use rather than selling the product as a property (Tukker, 2004). This allows companies to maintain greater control over the product and its

Sustainable business models  63 useful life, resulting in better resource management and waste minimisation (Bocken et al., 2014). The shared platforms model assumes sharing resources, such as infrastructure, machines or knowledge, by various entities, thus better utilising them and reducing resource consumption (Botsman & Rogers, 2010). In practice, these platforms can take the form of shared production spaces, logistics centres or information systems (Korhonen et al., 2018). The regeneration model, on the other hand, involves businesses striving to recover, repair and reintroduce products and materials in circulation, enabling longer use of them and limiting waste generation (Stahel, 2016). An example of regeneration is remanufacturing, the process of recovering used products and their components for reuse (Guide & Van Wassenhove, 2009). Social business models are associated with striving to promote human welfare by delivering products and services that meet the needs and aspirations of various users and communities (Moingeon et al., 2010). These models emphasise integration, accessibility and affordability, thus ensuring the fair distribution of benefits arising from sustainable products and services in society (Seelos & Mair, 2007). A key element in social business models is the integration of diverse social groups, both as recipients of products and services and as participants in production processes. This integration includes considering the needs of people with disabilities, the elderly, local communities and ethnic minorities (Moingeon et al., 2010). In such models, businesses also strive to ensure broad accessibility of their products and services by different social groups (Seelos & Mair, 2007). Accessibility may be related to the geographical reach of deliveries, distribution in lower-income areas or technologies enabling use of services by people with various limitations. Additionally, social business models aim to ensure their products and services are affordable, making them available to the widest possible group of recipients regardless of their income level (Moingeon et al., 2010). Such affordability can be achieved through innovations in production, distribution or marketing, which allow costs to be reduced and increase the accessibility of products (Karnani, 2007). Business models oriented towards the common good aim to promote social wellbeing and environmental protection by introducing ethical principles and sustainable business practices. In such models, the company seeks to achieve economic, social and environmental benefits for society as a whole. Examples of such business models include cooperation with non-profit organisations, promoting green technologies and introducing systems to assess companies’ impacts on the common good (Eisenhardt et al., 2016). Eco-innovation business models are based on several elements aimed at minimising the environmental impact of products and services. Eco-design considers environmental factors already at the design stage of products

64  Sustainable business models and services, which allows their negative impacts on the environment to be reduced. These may include the choice of materials, technologies and production processes that are more environmentally friendly. Green supply chain management is another model. This involves integrating environmental factors with supply chain management practices. These include the selection of suppliers, logistics and waste management. This type of management can lead to a reduction in resource consumption, limitation of pollution emissions and minimisation of waste. Life cycle assessment is a tool used to systematically analyse the environmental impact of products and services throughout their life cycle, from resource extraction to production, to distribution, to use, to end-oflife disposal. Life cycle assessment allows areas where eco-innovations can be introduced to be identified and progress in their implementation to be monitored. Business models based on sharing are ones that use resources, such as products, services and space, in a more efficient way by sharing them among users (Belk, 2014). Examples of such business models include car sharing, office sharing and home rental platforms like Airbnb. Sharing can lead to reduced resource consumption, less waste and lower costs for both companies and consumers (Hamari et al., 2016). Challenges associated with these business models include risk management, user privacy protection and ensuring appropriate quality standards (Cohen & Kietzmann, 2014). 4.6 Measuring results Performance management and indicators in this field are important tools for a company to assess the effectiveness of its strategies and processes, monitor impacts and ensure efficient resource allocation (Kaplan & Norton, 1992). Applying appropriate measures can help organisations identify areas requiring improvement, streamline decision-making and ultimately achieve their goals. Several types of performance indicators can be distinguished, primarily financial, operational and strategic, each tailored to different organisational contexts and aims (Bourne et al., 2000). Financial indicators focus on an organisation’s financial outcomes, such as revenue, profitability and returns on investment. Operational indicators measure the efficiency and effectiveness of an organisation’s processes, including production, quality and customer service, while strategic indicators pertain to achieving an organisation’s strategic objectives and may include measures related to market share, innovation and sustainable development (Bourne et al., 2000). The triple bottom line (TBL) approach proposed by Elkington (1998) advocates for organisations to concurrently consider the economic, social and environmental dimensions of their activities. Social indicators include gender equality, working conditions, local community support and the inclusion of people with disabilities. Gender equality refers to the ratio of women to men in

Sustainable business models  65 leadership and managerial positions. Working conditions include an employee satisfaction index, benefits and motivational systems. Local community ­support involves the contribution of SMEs to community development, for example by supporting local initiatives, while the inclusion of disabled people refers to the availability of job opportunities and support for people with disabilities. Environmental indicators include energy efficiency – energy consumption per unit of production – waste, recycling and greenhouse gas emissions. Implementing sustainable development metrics for SMEs involves identifying sustainable development goals, conducting a baseline assessment, monitoring and evaluation, and reporting and communication. Businesses need to define their sustainable development goals taking into account their specific nature and the expectations of stakeholders. After conducting a baseline assessment, businesses identify areas where they can improve their sustainable development results and then regularly monitor and evaluate their sustainable development activities using the metrics identified. It is a challenge to measure the social sustainability of circular economies (CEs), which would involve assessing sociocultural changes required by the transformation. A study conducted in Finland highlights the complexity of both creating indicators and systematically monitoring and analysing. This is due to linear thinking and the logic behind monitoring current social processes in conventional data sources (Pitkänen et al., 2023). Nowadays, new technologies such as artificial intelligence, big data and the Internet of Things are changing the ways companies collect, analyse and use efficiency data, including social data. 4.7 Sustainable leadership, sustainable organisational culture and collaboration within the value network In the context of creating and effectively implementing sustainable business models, exploring the relationship between sustainable business models, sustainable leadership and culture, cooperation within the value network and their collective impact on organisational outcomes and sustainability of results is of cognitive interest (Dyllick & Muff, 2016). Sustainable leadership involves the ability to inspire, motivate and direct individuals and organisations towards achieving sustainability aims (Waddock, 2013). Key characteristics of sustainable leaders include a long-term perspective, systems thinking, stakeholder engagement, ethical decision-making and adaptability. According to Avery and Bergsteiner (2011), continual development of organisations depends on leaders’ ability to simultaneously pursue economic, social and environmental goals. Leaders can apply strategies such as training and education, building organisational culture, supporting sustainable initiatives, stakeholder communications, monitoring and evaluation. A sustainable organisational culture refers to shared values, beliefs and practices that enable organisations to incorporate sustainable development in

66  Sustainable business models their daily operations and decision-making processes. A strong, sustainable culture promotes employee engagement, fosters innovation and increases the organisation’s ability to adapt to changing conditions. Key elements in a sustainable culture include shared sustainable development values, open ­ ­communication, collaborative problem-solving and continual learning and ­improvement. Unquestionably, open communication allows the exchange of information, opinions and ideas between employees at all levels of the organisation, thus facilitating adaptation to change. Collaborative ­ ­problem-solving creates a cooperative culture in which all members of the organisation are involved in decision-making processes and have the opportunity to influence the direction of the company’s actions, and continual learning and improvement means that organisations are constantly looking for ways to ­improve their processes, products and services in order to achieve sustainable goals. To promote a sustainable organisational culture, leaders need to be ­responsible for setting and promoting values associated with sustainable development, creating an environment conducive to cooperation, communication and innovation, and for involving employees in decision-making processes concerning the company’s strategies and actions. One of the key questions in SBM research is scaling up SBMs beyond the single company that has decided to implement them. Cooperation with other entities is one scaling strategy. The two main dimensions of SBM scaling are deep scaling, aimed at achieving greater impact among a given number of beneficiaries, and quantitative scaling, associated with increasing the number of beneficiaries (Ciulli et al., 2022). It should be stressed that the initiators of such a business model – large corporations or new market players – have different resources at their disposal, which affects their ability to scale up their model. Large companies have significantly more financial resources, marketing and infrastructure, which facilitates the development of new business models, but at the same time they may have difficulties in implementing changes in their existing business models and gaining credibility in the field of sustainable development. On the other hand, new companies often bring innovative business models to the market but they have fewer financial resources and little market power, which limits their ability to scale up their business models. Cooperation can take various forms from more complex and formal, such as joint ventures, to looser and narrower, e.g. joint experiments or cooperation on specific activities. Cooperation in the context of SBMs can take various forms, such as cooperation between large firms and new market entities, and cooperation with non-governmental organisations. Added value is revealed in cooperation with a network of partners, especially in the context of renewable energy sources, circular economies and platform business models in smart cities. Cross-sector cooperation is important as it is necessary to meet the complex challenges of sustainable development that go beyond the scope of individual organisations or sectors (Waddock, 2013). Cooperation-based initiatives can help organisations overcome barriers to innovation, gain access to new resources and knowledge and create shared value for all stakeholders

Sustainable business models  67 involved. Successful cooperation requires trust, transparency and effective communication between partners, and setting clear goals and performance indicators (Austin & Seitanidi, 2012). Value networks consisting of interrelated relationships between organisations play a key role in shaping the broader impact of business actions (Allee, 2000). Emphasis on interconnections and cooperation within the value network can help achieve greater sustainable development by promoting sharing of resources, innovation and adjustment of common aims (Prell et al., 2009). Cross-sector inter-organisational cooperation can strengthen interconnections and cooperation in the value network (Koschmann et al., 2012). By cooperating with partners in different sectors and organisational environments, entities in the value network can gain access to new resources, knowledge and opportunities, driving innovation and lasting results (Selsky & Parker, 2005). 4.8 Ethical implications in shaping sustainable business models Modern companies must not only aim to make profits but also take into account the impact of their actions on society and the environment (Mittelstadt & Floridi, 2016). Social and environmental responsibility is one example of incorporating ethical factors in the shaping of sustainable business models (Carroll & Shabana, 2010). Companies have a duty to pay attention to social welfare and environmental protection, and strive to minimise the negative effects of their activities and promote positive ones, such as employing fair trade practices, protecting employees’ rights, engaging with local communities, reducing pollutant emissions and minimising resource consumption. Respect for human rights is also an important ethical element in shaping SBMs (Donaldson & Dunfee, 2002). Companies must protect the rights of workers and customers, not exploit child labour, not tolerate discrimination, ensure decent working conditions and protect customer data privacy. Transparency and honesty are other ethical values that should be included in sustainable business models (Rawhouser et al., 2019). This means openness in communications with stakeholders, including employees, customers, investors and local communities, and clearly presenting the company’s aims, actions and results. Honesty is also part of fair business practices, such as fair advertising, fulfilling contracts and complying with regulations and market rules. Ethical shaping of SBMs requires engagement and cooperation with stakeholders (Freeman, 2010). Companies should actively engage in dialogue with stakeholders to better understand their needs and expectations, and adapt their strategies and actions to these needs. Cooperation with stakeholders can also lead to innovations that contribute to increasing sustainability and creating value for all parties involved (Vurro et al., 2009). Ethical shaping of SBMs requires a long-term approach to sustainable development which balances current needs with future impacts on society and the environment. Intergenerational fairness is also considered in SBMs, protecting future generations by preserving natural resources, reducing ­

68  Sustainable business models greenhouse gas emissions, promoting sustainable growth and ensuring equal access to the benefits of innovation, services and products, and combatting social and economic inequalities. As new technologies transform societies and economies, it is necessary to consider their ethical implications, such as privacy concerns, data security and potential inequalities in access and benefits (Mittelstadt & Floridi, 2016). New technologies, such as big data, the Internet of Things and artificial intelligence, have the potential to increase efficiency and innovation in sustainable business models. However, introducing these technologies may lead to increased threats to privacy and data security, which can raise concerns among customers, employees and other stakeholders (Batko, 2016; Mittelstadt & Floridi, 2016). Therefore, companies should apply appropriate data management practices such as anonymisation, access control and data encryption (Cavoukian et al., 2010). The introduction of SBMs can also lead to potential inequalities in access to benefits derived from innovation. Companies that implement SBMs should pay attention to not deepening social and economic inequalities but instead contribute to reducing them (Seelos & Mair, 2007). In this context, it is important to consider the needs of different social groups, such as those with low incomes, people with disabilities and ethnic minorities, when they are designing and implementing SBMs (Moingeon et al., 2010). For example, companies can create business models based on accessibility, affordability and integration of these groups in production processes (Seelos & Mair, 2007). 4.9 Examples of sustainable business models in Poland, Germany and Spain 4.9.1 Poland case study: the Polish circular hotspot and LPP’s sustainable fashion initiative

The Circularity Gap Report Poland (2022) examines the current state of circular transformation in Poland and identifies key issues and challenges. By calculating the degree of circularity in the Polish economy it establishes a reference point for further actions and helps identify existing obstacles and the most prospective development paths. Importantly, it also allows comparisons with global circularity indicators. With a 10.2% share of the circular economy, Poland presents a circularity gap of 89.8%. This is the amount of primary resource consumption in the country, with only a tenth of all materials present in the economy – from metallic and non-metallic mineral ores to biomass, to fossil fuels – coming from secondary sources. With a total annual consumption of 613.4 million tons of materials, Poland consumes 517.9 million tons of primary resources, which translates into 13.8 tons per person annually. Poland lags behind other European Union countries in terms of decarbonisation. It is the EU country which consumes the most hard coal, and it ranks second after

Sustainable business models  69 Germany in terms of lignite consumption. The report indicates measures that can reduce Poland’s excessive material consumption while increasing its circularity. The agri-food and construction sectors are key contributors to Poland’s material footprint, with about 82% of total biomass extraction being in crop production (food and feed) and animal farming, with a smaller share of forestry. The country’s construction sector consumes vast amounts of materials, energy and water, requiring 228.6 million tons of materials annually (37% of the total footprint), and a high number of largely inefficient older buildings means additional higher energy consumption. The Circularity Gap Report Poland (2022) proposes six strategies modelled on ‘what if’ scenarios. These strategies aim to increase circularity, reduce material consumption and emissions, and transform the Polish economy. They involve creating a circular building environment, supporting a circular food system, rethinking mobility, promoting circular industry, keeping goods in an undamaged state for a longer time and powering Poland with clean energy. The potential benefits are numerous: strengthened supply chain resilience against disruptions and instability; less polluted cleaner cities; and even improved health of residents. The transition to a circular economy has the potential to bring Poland significant ecological, social and economic benefits (The Circularity Gap Report Poland, 2022). An example of building a sustainability model is the Polish Circular Hotspot (Polish Circular Hotspot, 2023), which is a public–private platform connecting various entities, which, despite potential competition on a daily basis, cooperate with each other, thereby gaining access to common resources and increasing the efficiency of their activities in the field of implementing the circular economy. The mission of the Polish Circular Hotspot Hub is to support businesses, cities, governments and society in the process of transforming towards a circular economy with practical scalable solutions aimed at meeting the greatest challenges facing humanity, namely ensuring sustainable production and consumption which are neutral regarding the planet’s resources. The Polish Circular Hotspot is not the only initiative of this kind in Europe. Similar initiatives have been successful, e.g. in the Netherlands, Slovenia, Scotland and Norway. International cooperation can help to stop processes such as climate change, excessive exploitation of resources and degradation of the natural environment, and ensure a high level of socio-economic development (Polish Circular Hotspot, 2023). LPP is a Polish clothing manufacturer which was founded in 1991. In three decades, the company has grown into one of the fastest-growing clothing companies in the Central and Eastern Europe region. Although LPP operates on three continents, it maintains its Polish roots as its brands are created in Poland and strategic decisions are made there. Sustainable development is an important aspect of the company’s strategy. LPP strives to make its operations increasingly environmentally friendly and future-generation friendly. In response to global climate challenges, the company is gradually reducing its impact on the environment by implementing a sustainable development strategy entitled

70  Sustainable business models ‘For People For Our Planet’, which it adopted in 2019. By the end of 2023 all its jeans factories will be covered by the Eco Aware Production programme and a system for collecting used clothing will be operating in 100% of its stores. The Eco Aware Production standard defines requirements for production plants in terms of reducing the consumption of natural resources. A plant operating according to this standard must have independent certificates confirming its eco-friendly approach. By 2025, the company also aims to reduce its carbon footprint by 15% (LPP, 2023). An interesting example of LPP’s educational activities supporting SBMs is its ‘Take Care of Your Clothes’ (2023) campaign, which is an initiative promoting conscious use of clothing aimed at maintaining its original properties and aesthetics. It offers practical advice and evidence that changing habits brings both benefits for the household budget and long-term benefits for the environment. Research conducted by LPP in cooperation with the research company ARC Rynek i Opinia showed that proper care of clothing contributes to saving water and energy, and reducing CO2 emissions into the atmosphere. It also determined that consumers’ daily decisions and actions have measurable effects on the environment in which they live, and unawareness of bad habits can have long-term effects on the environment. The aim of this study was to determine how Poles approach care for clothing and whether they follow the guidelines on clothing labels. The conclusions of the study present a complex picture of respondents’ attitudes and behaviours in the context of clothing care and ecology. Although it found general knowledge about pro-ecological actions, awareness of sustainable fashion turned out to be low. Respondents expressed a desire to lead a more ecological lifestyle but were not willing to pay more for environmentally friendly clothes. The results showed that many respondents still throw unworn clothes out in the rubbish. Another important conclusion concerned the use of detergents. Despite declaring they were aware of the recommended quantities, most respondents used them in random, non-compliant doses. All this indicated a need for consumer education in the field of responsible clothing care taking into account ecological factors and sustainable fashion. An example of such teaching is a tool on the website of the ‘Take Care of Your Clothes’ campaign: an ‘Emissions Calculator’, which assesses the impact of care for clothing on the environment and allows calculation of the carbon footprint associated with one care cycle (washing, drying and ironing) based on the power consumption of washing machines, dryers and irons. The calculator’s methodology is based on the GHG Protocol, an international standard in the field of greenhouse gas emissions management, together with the emission factor for electricity for Poland according to data from the Association of Issuing Bodies. Deloitte Financial Advisory staff conducted an independent review of the calculator applying Higgs coefficients to the defined stages of clothing use and the methodology and assumptions adopted by LPP. This external validation further enhanced the credibility and accuracy of calculations performed by the calculator (Take Care of Your Clothes, 2023).

Sustainable business models  71 4.9.2 Community renewable energy – examples from Germany and Spain

Community renewable energy refers to initiatives related to the production and distribution of energy led by local communities (Soeiro & Ferreira Dias, 2020; Walker et al., 2010). These can be activities such as group investments in renewable energy sources and owning an energy company or even a distribution network. The legal form of these activities depends on the specificities of the initiative and the regulations applicable, and can include energy cooperatives, foundations, non-profit organisations and others. In Germany, where the term ‘Energiewende’ refers to the energy transition, communities play a key role in promoting renewable energy sources. Nearly 43% of the electrical energy produced in Germany in the third quarter of 2019 came from renewable sources, with a significant portion resulting from projects carried out by citizens or with significant participation by them. It is predicted that by 2050 half the citizens in the European Union will be able to produce their own electrical energy, which will cover 45% of the EU’s energy demand. This change, in line with the trend to move away from fossil fuels, contributes to a significant reduction in carbon dioxide emissions, with citizen engagement in the transformation being key. A cooperative is a possible legal form for energy projects. This is a group of citizens cooperating in implementing initiatives that benefit the entire community. Important characteristics of cooperatives are that they strive to improve the living conditions of the local community, they do not generate profits, and they are democratic and open with a transparent organisational structure. The profits are either directly consumed by the members or are reinvested in projects concerning the natural, social or economic environment. An example of a community-led energy project is a wind park in Neuenkirchen, Germany. It was set up by local farmers and landowners who wanted to diversify their income. Despite an initial lack of support from the local authority, the project was ultimately realised after a change of mayor and with community engagement. In 2013, an operating company called ‘Citizens’ Wind Farm Neuenkirchen’ was established, and in 2015 the farm went into operation. Of about 1000 inhabitants, 145 decided to buy shares in the limited partnership. The local government also decided to invest in the wind farm, wanting to show its commitment to the project. In addition to benefits for the municipality in the form of business tax revenue, a citizen’s non-profit association was also created, which receives a portion of the annual gross income generated by the wind farm. The ‘Bürgerverein’ association supports various local initiatives benefiting the entire community. Without the involvement of the local government the project would probably never have been realised (Community Energy Guide PL 2021, 2021). ‘Som Energia’, which means ‘We are Energy’, is a pioneering energy cooperative in Spain. It was established in 2010 by a group of 150 residents of Catalonia. Its activities were inspired by the actions of the ‘Ecopower’ cooperative in Belgium and ‘Enercoop’ in France, with which it shares a similar approach

72  Sustainable business models to cooperating on local initiatives producing energy from renewable sources. In its original form as a non-profit organisation, Som Energia bought energy produced locally from renewable sources in order to then distribute it among its members. Over time, Som Energia invested in the construction of its own photovoltaic installations, while also carrying out new projects using local resources. The cooperative’s aim is to generate enough electricity to fully satisfy the demands of its members. The cooperative has already gathered over 80,000 members and generates 63 GWh of electricity a year (Som Energia, 2023). After an unexpected cessation of financial support by the Spanish government, Som Energia developed an innovative financing system called ‘Generation kWh’, which aims to initiate new projects on market terms. The members of the cooperative are not just consumers of energy but also co-owners, actively participating in the decision-making process. They also have the opportunity to directly invest in the development of renewable energy. Som Energia is an inspiring model of cooperative operation. It engages participants and promotes the production of renewable energy. Joining the cooperative offers the possibility to achieve independence from large energy corporations and enjoy better services and a personal approach. Its business model is designed in such a way as to minimise costs associated with advertising, management salaries and offices, and communication and management are carried out via the internet. The membership of the cooperative supports a social movement that promotes renewable energy and public participation. By joining Som Energia, citizens can engage in responsible consumption and direct investment in generating ‘good energy’ (Community Energy Guide PL 2021, 2021; Som Energia, 2023). 4.10 Conclusions The narratives of modernism, which were once dominated by progress and change, are gradually evolving to reflect environmental and social issues, encompassing environmental degradation, oppressive social engineering and deepening social inequalities. This growing awareness necessitates the establishment and development of sustainable business models to address global environmental challenges such as climate change, resource depletion and biodiversity loss. Efficient resource management and circular economy principles contribute to waste reduction, diminishing environmental impacts, minimisation of resource extraction and lowering emissions. From a management perspective, adopting SBMs yields numerous benefits for companies, including competitive advantages, regulatory compliance, cost savings and improved stakeholder relationships, allowing organisations to differentiate themselves in the marketplace, attract environmentally conscious consumers and build stronger relationships with stakeholders. Furthermore, by implementing SBMs and CSR initiatives, organisations can contribute to addressing complex socio-ecological problems such as poverty, inequality and environmental degradation. Various approaches can be

Sustainable business models  73 used, including programmes supporting local communities, employee volunteering, philanthropy, sustainable supply chain management and inclusive business models. Investment in research and developing eco-innovations can lead to the creation of new more sustainable products and services that positively contribute to the environment and human wellbeing. Engaging in such initiatives can also attract and retain talented employees who value company sustainable development efforts and positive impacts on social issues. The number of partnerships and collaborations with other organisations, such as non-governmental organisations, governments and academic institutions, is also increasing, leading to the development of social innovations and advances in research and development. The key challenge lies in transforming the awareness of small and medium-sized enterprises to incorporate sustainable development in their business strategies, decision-making processes and organisational culture. This requires pro-environmental government policies that support eco-investments and sustainable business models. Government policies can stimulate innovation in sustainable development by offering incentives such as tax relief, grants and low-interest loans for research and development in sustainable technologies and practices. By establishing standards, promoting best practices and facilitating knowledge exchange, governments can create an environment conducive to enduring organisational innovation. Despite the numerous benefits associated with radical change, including increased competitiveness, innovation, improved resource management and better financial outcomes, radical change is not without risks. Fear and resistance to change, organisational inertia and the complexity of large-scale changes can hinder the process. To overcome these obstacles, companies need to establish a strategic vision, engage with stakeholders and create an environment conducive to change. The digital transformation is reshaping our future and blurring the boundaries between the physical, digital and biological domains. Artificial intelligence is leading this revolutionary shift, driving a fusion of realities that necessitates re-evaluation and re-design of operational strategies. This ­transformation gives rise to innovative business models that challenge and ­dismantle traditional ways of operating, urging businesses to replace outdated methodologies with more efficient technology-based solutions. References Allee, V. (2000). Reconfiguring the value network. Journal of Business Strategy, 21(4), 36–39. Austin, J. E., & Seitanidi, M. M. (2012). Collaborative value creation: A review of partnering between nonprofits and businesses: Part I. Value creation spectrum and collaboration stages. Nonprofit and Voluntary Sector Quarterly, 41(5), 726–758. Avery, G. C., & Bergsteiner, H. (2011). Sustainable leadership practices for enhancing business resilience and performance. Strategy & Leadership, 39(3), 5–15.

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5

The eco-digital factory transformation model in small and medium-sized enterprises

5.1 Introduction The aim of this chapter is to present the results of research on the eco-digital transformation model in small and medium-sized enterprises (SMEs) and to identify best practices and strategies that can facilitate the transition to more sustainable production processes. For this purpose, the ADMA (ADvanced MAnufacturing) methodology was chosen. The aim is achieved by analysing existing literature on eco-production, digital transformations and circular economy principles, focusing on their significance and application in the context of SMEs. The ADMA methodology is employed, with particular emphasis on the third ‘eco-factory’ transformation, and there is also a case study on Polipack, the winner of this transformation in the ‘Factory of the Future’ competition held in 2022 (Advanced Manufacturing Support Centre, 2023; European Innovation Council and SMEs Executive Agency, 2021). Transformation of enterprises driven by the need for environmental sustainability in response to climate change and resource depletion results in the implementation of eco-production and the adoption of environmentally friendly practices in various sectors (Bocken et al., 2014). Small and medium-sized enterprises play a very important role in this transformation as they constitute a significant part of the world economy and their impact on the environment is considerable (Aragon-Correa et al., 2015). Eco-production primarily involves incorporating environmental factors in such company processes as design, production and disposal of goods and services (Nidumolu et al., 2013). In practice, this means implementing innovative technologies and practices that minimise the ecological footprint, reduce waste and promote efficient resource use (Seuring & Müller, 2008). In this context, digital transformation plays a crucial role enabling organisations to use the latest technologies such as the Internet of Things (IoT), artificial intelligence (AI) and big data analysis, to optimise their operations, improve environmental outcomes and reduce costs and risk (Bughin & van Zeebroeck, 2017). The idea of a circular economy promoting reuse and recycling of materials to minimise waste and resource consumption is closely associated with eco-production (Geissdoerfer et al., 2017). Through the adoption of circular economy principles, SMEs can not only DOI: 10.4324/9781003411239-6

The eco-digital factory transformation model  79 reduce their impact on the environment but also discover new business opportunities, improve their competitiveness and create long-term value for their stakeholders (Lieder & Rashid, 2016). Despite the potential benefits of eco-production and digital transformation, SMEs also face challenges in implementing such an approach, primarily limited resources and a lack of technical specialist knowledge or transformational leadership. This research niche primarily involves a deeper understanding of the conditions for the use of eco-digital transformation models in SMEs, and the identification of best practices and strategies that can facilitate the transition to more sustainable production processes (Rese & Baier, 2011). 5.2 Eco-production in small and medium-sized enterprises The circular economy (CE) is a model that aims to minimise resource depletion, waste generation and environmental impacts by promoting efficient use of materials, energy and resources across their entire life cycle (Geissdoerfer et al., 2017). Unlike the traditional linear ‘take–make–dispose’ model, for a circular economy there is a need for a systemic change to closed-loop production and consumption, which include recovery, reuse and recycling of materials and products (Bocken et al., 2017). Sustainable production models prioritise efficient resource use, minimise environmental impacts and support long-term resilience in ecosystems and economies. Moreover, a circular economy can stimulate innovation and business growth by creating new market opportunities for remanufactured, refurbished and recycled products, and develop innovative business models and services that support resource recovery and closed systems (Geissdoerfer et al., 2017). Regulatory pressure in the form of environmental policies and standards forces companies to comply with environmental requirements, often necessitating the implementation of eco-production strategies (Zobel, 2015). A significant factor in such a transformation is the growing market demand for environmentally friendly products and services, as consumers increasingly prioritise sustainability in their purchasing decisions (Lubin & Esty, 2010). This trend has led SMEs to adopt eco-production practices as a way to meet customer expectations and gain a competitive edge in the market. Another factor influencing eco-production by SMEs is recognition of potential cost savings and operational efficiency that can be achieved by implementing sustainable practices (Aragon-Correa et al., 2015). By minimising waste, reducing energy consumption and optimising resource use, SMEs can lower their operating costs and improve their overall performance (Bocken et al., 2014). SMEs face a number of challenges in implementing eco-production practices. Limited financial resources, lack of specialist knowledge and insufficient awareness of opportunities and risks associated with eco-production are common barriers for SMEs. Additionally, they may struggle with the complexity of integrating eco-production practices in their existing operations, especially if they lack the necessary management support and organisational culture to facilitate such a transition (Sarkis et al., 2010). Employee engagement is a key factor in the success of any organisational change initiative,

80  The eco-digital factory transformation model including eco-digital transformation. Engaged employees are more likely to adopt new technologies, apply sustainable practices and introduce innovative ideas to improve environmental performance (Afsar et al., 2015). A strong organisational culture that values sustainability and supports eco-digital ­ ­transformation is necessary to engage employees in these efforts. Management commitment, transformational leadership, clear communication of s­ ustainability goals and the integration of sustainability principles with organisational policies and procedures can help shape a sustainability culture that encourages employee engagement and lead to a successful eco-digital transformation (Avery & ­Bergsteiner, 2011). Key performance indicators are a significant tool to assist organisations in monitoring progress and making data-driven decisions which contribute to a continual improvement of environmental outcomes. They enable evaluation of the effectiveness of energy management strategies by measuring indicators such as total energy consumption, energy intensity and the energy efficiency index (Schmidt et al., 2016). To reduce their greenhouse gas emissions, a crucial element in climate change mitigation efforts, small and medium-sized enterprises have the capacity to monitor their carbon footprints by measuring emissions per unit of production or per employee (Bai et al., 2015). Similarly, waste management, an integral component of sustainable production, benefits from monitoring waste generation, recycling rates and waste intensity, allowing SMEs to assess the effectiveness of their waste reduction and recycling strategies, and to identify areas for further improvement (Zhu et al., 2007). These strategies also involve tracking indicators such as the amount of material per unit of production and the index of material circularity, enabling SMEs to assess the efficiency of eco-design initiatives and other strategies aimed at enhancing resource utilisation efficiency (Lieder & Rashid, 2016). In executing actions related to ecological digital transformations, employee engagement is crucial. In this context, KPIs related to employee engagement and awareness, such as the percentage of employees participating in sustainability training programmes and the number of sustainability initiatives conducted by employees, prove particularly important in assessing the effectiveness of actions intended to build a sustainability culture (Aarikka-Stenroos & Ritala, 2017). The application of KPIs also allows evaluation of progress in shaping a sustainable innovation culture, which is realised through tracking indicators related to eco-innovations, such as the number of filed patents for environmentally friendly technologies or the percentage of revenue derived from eco-innovative products (Carrillo-Hermosilla et al., 2010). This is closely linked with sustainable supply chain management, in which KPIs such as the percentage of suppliers meeting specified environmental criteria and the number of initiatives related to sustainable sourcing of raw materials are essential in assessing the effectiveness of actions promoting responsible resource procurement and minimising the impact of supply chains on the environment (Seuring & Müller, 2008). Adherence to environmental regulations and standards is another area where KPIs have a vital role. They allow SMEs to demonstrate commitment to

The eco-digital factory transformation model  81 sustainability and avoid legal consequences. In this context, monitoring indicators related to regulatory compliance, such as the number of environmental permits and certificates obtained and the frequency of environmental audits, enables SMEs to ensure that their actions comply with best practices and meet the requirements of relevant legal regulations (Lee & Kim, 2011). 5.3 The digital transformation and its role in eco-production A digital transformation involving integrating digital technologies in various aspects of an organisation’s operations leads to fundamental changes in business practices and value creation (Batko, 2021; Bharadwaj et al., 2013). In the context of eco-production, a digital transformation may play a pivotal role in enabling SMEs to achieve their environmental objectives and enhance their overall sustainability performance (Khan & Vorley, 2016). By adopting advanced data analytics, Internet of Things devices and automation technologies, organisations can improve their resource efficiency, reduce waste and optimise their production processes (Waller & Fawcett, 2013). For instance, advanced sensor technology enables real-time monitoring and control of energy and material consumption, allowing SMEs to identify inefficiencies and implement targeted improvements (Schneider Electric, 2023). Moreover, digital technologies can facilitate the implementation of circular economy principles, enabling tracking and management of resources throughout their entire life cycle, from raw material extraction to end-of-life disposal (Lieder & Rashid, 2016). Another key benefit of a digital transformation for eco-production is the potential to enhance decision-making processes and strategic planning. Utilising big data analytics and artificial intelligence, SMEs can gain valuable insights into their environmental performance and identify opportunities to improve. Furthermore, digital technologies can enable more effective communication and collaboration among stakeholders, facilitating sharing of best practices and development of joint eco-production initiatives. This might involve participation in knowledge exchange networks, attendance at industry events or engagement in collaborative research and development initiatives aimed at advancing eco-production practices through digital technologies (Khan & Vorley, 2016). Energy efficiency and locally sourced technologies also play crucial roles in promoting eco-production and sustainable development in SMEs. By adopting such technologies, SMEs can not only reduce their energy consumption and associated greenhouse gas emissions, but also strengthen local economies, shorten supply chains and minimise the overall carbon footprint of their operations (Geissdoerfer et al., 2017). Renewable energy systems such as photovoltaic panels, wind turbines, and biomass generators can enable SMEs to generate clean and sustainable energy, thus reducing their ­reliance on fossil fuels and mitigating their environmental impacts (Hossain et al., 2016). Integration of renewable energy systems in SMEs’ production ­processes can not only enhance their energy efficiency but also contribute to the global transition to a low-carbon economy in line with the United Nations’ Sustainable Development Goals (SDGs) (IRENA and ILO, 2022). Energy-efficient

82  The eco-digital factory transformation model technologies, such as high-efficiency motors, variable speed drives and advanced process control systems, can significantly reduce energy consumption in SMEs’ production processes. By implementing digital energy management and monitoring systems SMEs can optimise their production processes, enhance their environmental performance and demonstrate their commitment to sustainability and corporate social responsibility (CSR) (Parida et al., 2015). Additionally, incorporating sustainable materials, such as recyclable or biodegradable materials, in their products and packaging can help SMEs minimise their environmental impacts and align with circular economy principles (Ghisellini et al., 2016). Implementing waste reduction and recycling strategies is a critical aspect of green digital transformations in small and medium-sized enterprises. By minimising waste generation and promoting recycling, SMEs can improve the efficiency of their resource use, reduce their environmental impact and align with circular economy principles. Such actions are supported by management tools such as lean manufacturing, a production philosophy aimed at minimising waste and optimising resource utilisation in the production process (Womack et al., 1991). By adopting lean principles and practices, SMEs can identify and eliminate non-value-adding activities, reduce material and energy consumption, and enhance overall production efficiency (Gupta et al., 2021). Industrial symbiosis is a cooperative approach that involves sharing resources such as materials, energy and infrastructure among various businesses to minimise waste and create mutual benefits (Chertow, 2000). By participating in industrial symbiosis networks, SMEs can identify opportunities for waste reduction and recycling, and promote a synergistic use of by-products, in which the waste or by-products of one company become valuable resources for another (Mirata, 2004). Digital platforms and tools can facilitate information and resource exchanges among network participants, and increase the efficiency and effectiveness of industrial symbiosis (Lombardi & Laybourn, 2012). Extended producer responsibility (EPR) is an approach that makes manufacturers accountable for the environmental impact of their products throughout their life cycles, including disposal at the end of their use. By implementing EPR and product return schemes, SMEs can encourage the return of used products and packaging materials for recycling, refurbishment or remanufacturing, which in turn reduces waste and promotes a closed-loop production system. Digital technologies, such as product tracking systems and transparency assurance, can support the implementation of EPR and product return schemes, and provide real-time information about product flows and enable efficient reverse logistics (Akenji et al., 2011). Digital tools and technologies such as geographical information systems (GISs), artificial intelligence and blockchain can enhance waste management and recycling processes in SMEs, and provide data-driven analytics and decision support. For instance, GISs can help companies visualise and analyse waste generation patterns and identify optimal locations for recycling facilities, while AI can optimise waste sorting and processing operations, and blockchain can enable secure and transparent tracking of recycled materials along the supply chain (Yadav et al., 2023).

The eco-digital factory transformation model  83 Innovative strategies aimed at reducing the environmental impact of small and medium-sized enterprises serve as vital pathways to achieve an eco-friendly digital transformation. One such approach is eco-design, which entails integrating environmental considerations in product and process design with the aim of minimising environmental impacts across the entire product life cycle (Pigosso et al., 2010). In parallel with this, life cycle assessment (LCA) emerges as a systematic tool to evaluate the ecological performance of a product or a process, considering all life cycle stages from raw material extraction to disposal (ISO 14040, 2006/2022). SMEs can identify opportunities to reduce resource consumption, mitigate emissions and reduce waste generation, thereby enhancing their ecological efficiency (Baumann & Tillman, 2004), particularly by using eco-design principles and conducting LCAs. Adding to these strategies, digital technologies such as computer-aided design (CAD) software and environmental management information systems (EMISs) provide an essential scaffold. They can facilitate eco-design and LCA, and provide data-based analytics and decision-making support (Jeswani et al., 2015). Furthermore, these digital technologies, including the Internet of Things, smart sensors and advanced analytics, extend their utility to enhance the efficacy of renewable energy systems and environmental management systems (EMSs), providing real-time data and enabling predictive maintenance and demand response. Following this line of thought, another strategy that comes into focus is green supply chain management (GSCM). GSCM entails integrating environmental issues in supply chain operations, from raw material procurement and production to distribution and end-of-life product management (Srivastava, 2007). By adopting GSCM practices, SMEs can notably improve the ecological efficiency of their suppliers, reduce the environmental impacts of logistics and transportation, and promote sustainable waste management and recycling. In facilitating GSCM, digital technologies such as blockchain, artificial intelligence and digital twins play critical roles by enhancing tracking, transparency and decision-making along the supply chain (Seuring et al., 2022). Shifting the focus slightly, co-consumption surfaces as an alternative approach. Co-consumption refers to shared use, rental or borrowing of goods and services among users, in contrast with individual ownership (Botsman & Rogers, 2010). In a similar vein, product-service systems (PSSs) are business models that combine product provision and services with the aim of satisfying customer needs while minimising resource consumption and environmental impacts (Tukker, 2004). In the final analysis, by promoting co-consumption and implementing PSSs, SMEs can extend product lifetimes, optimise resource utilisation and reduce waste generation (Negrete-Cardoso et al., 2022). Deploying digital platforms and technologies such as mobile apps, the Internet of Things and cloud computing can enable co-consumption and PSSs, thus facilitating resource sharing, real-time monitoring and remote service delivery (Aarikka-Stenroos & Ritala, 2017). These combined efforts provide a comprehensive approach for SMEs to move towards sustainable and efficient operations.

84  The eco-digital factory transformation model 5.4 ADvanced MAnufacturing (ADMA) support centres – transforming SMEs into modern and sustainable factories of the future 5.4.1 The basic assumption behind ADMA

In an era of rapid technological progress, industrial processes evolve towards the model termed the factory of the future. This model, integrated with advanced technologies such as artificial intelligence, robotics, the Internet of Things and big data, aims to enhance the efficiency, quality and adaptability of manufacturing processes. Small and medium-sized enterprises, which constitute the majority of the economy worldwide including Europe, are integral components of this future manufacturing landscape. However, due to limited resources and a lack of experience in technological deployment, SMEs encounter challenges in transitioning towards the ‘factory of the future’ model. To address these enterprises, in 2018 the European Commission initiated a project establishing a European Advanced Manufacturing Support Centre. The purpose of this initiative was to assist SMEs in implementing advanced manufacturing technologies and social innovation strategies. These actions were expected to transform SMEs into modern sustainable factories of the future capable of competing in the market. The project, which was funded by the European Executive Agency for Small and Medium-sized Enterprises, involves areas such as manufacturing, energy and the environment, and focuses on developing and implementing innovative solutions. The pilot activities carried out by the ADMA Consortium engaged over 100 SMEs in 12 European countries, with nearly 70 firms receiving direct support. ADMA developed a focused multi-stage methodology tailored for SMEs. In the Vision and Ambition, Registration and Scanning, Transformation Plan and Implementation Plan stages, SMEs have opportunities to assess the potential for the application of advanced manufacturing solutions and social innovation strategies. This structured process enables transformation of these organisations into modern competitive sustainable factories of the future. The ADMA methodology plays a key role in this process. It enables a holistic approach and openness to various solutions. As a result of implementing this methodology, the Advanced Manufacturing Support Centre has become a key tool for SMEs. It facilitates their assessments of the possibility of implementing advanced manufacturing solutions and social innovation strategies. Consequently, this enables them to transform seven areas of their organisations into factories which are more competitive, modern and sustainable. As the technological expertise and innovative capacities of SMEs are often limited, ADMA’s support is valuable in accurately defining the needs and expectations of these enterprises for technology, services and equipment. ADMA’s approach involves conducting transformations in seven areas. These are: • Advanced Manufacturing Technologies (T1) • Digital Factory (T2)

The eco-digital factory transformation model  85

• Eco-Factory (T3) • End-to-End Customer-focused Engineering (T4) • Human-centric Organisation (T5) • Smart Manufacturing (T6) • Value Chain-oriented Open Factory (T7) (Advanced Manufacturing Support Centre, 2023; European Innovation Council and SMEs Executive Agency, 2021)

These areas reflect key factors that influence the future operation of enterprises in advanced manufacturing. The solutions offered by ADMA provide a comprehensive response to the challenges faced by SMEs as they transform into factories of the future. The scope of enterprise transformation in the modern technological context encompasses many factors that form a coherent and effective whole, which ADMA specifies as follows: • Implementing advanced manufacturing technologies involves integrating innovative technologies such as robotics, artificial intelligence and the Internet of Things in production processes. These technologies have potential to increase efficiency, reduce costs and raise productivity. However, introducing them requires significant investment and the engagement of a skilled workforce capable of operating and maintaining modern equipment. • Sustainable development is crucial in the transformation process into environmentally friendly factories, where waste reduction practices, energy savings and the use of renewable resources play key roles. Realising these assumptions contributes to reducing the impact of production on the environment, compliance with regulatory requirements and building a positive reputation and image of the company. • Digital transformation is another aspect of transformation. It involves incorporating digital technologies in all stages of the production process, from design to production, to distribution. Increased efficiency, reduced costs and increased productivity are the main benefits of this transformation, but it requires significant investment and a skilled workforce. • A customer-oriented and value-creation strategy involves putting customers at the centre of the production process and creating products and services in line with their expectations. This transformation requires understanding of customer needs and an ability to quickly adapt to dynamic changes in the market. • Concurrently, it is important to implement a culture of continual improvement to encourage employees to identify problems and optimise processes. Achieving this aim requires a commitment to constant training and development, and openness to change and innovation.

86  The eco-digital factory transformation model • An agile supply chain and solid partnerships are important elements in transformation. They create a flexible supply network capable of quickly responding to changing market conditions and customer needs. This requires establishing and nurturing strong partnerships with suppliers and other stakeholders, which in turn depends on an ability to quickly adapt to dynamic market changes. • A commitment to measuring and reducing the impact of production processes on the environment is key to environmental sustainability. Such a transformation includes monitoring key environmental indicators such as energy consumption, greenhouse gas emissions and waste generation, and implementing actions aimed at reducing these impacts. These may include using renewable energy sources, waste reduction and improving energy efficiency. This transformation is closely related to the needs to meet regulatory requirements, reduce costs and enhance the company’s reputation. Moreover, it reflects a growing awareness of the need to address environmental issues and promote sustainability in all aspects of business operations. (Advanced Manufacturing Support Centre, 2023; European Innovation Council and SMEs Executive Agency, 2021) 5.4.2 The ADMA methodology

ADMA is a tool designed for companies employing at least ten workers. Companies can choose between two forms of evaluation available in the ADMA methodology. The first involves conducting either a quick scan consisting of 30 questions or a full scan composed of 58 questions. These scans allow a comparative assessment of the company’s level of advancement in each transformation area. The second option is a detailed ADMA assessment executed with the guidance of a Future Factory Advisor, which results in creating a transformation plan that clearly identifies priority areas and required actions. The ADMA evaluation process begins with an interview conducted by an advisor with the company’s owner or management. The interview lasts approximately 90 minutes and covers the seven main areas of transformation and related subtopics. Subsequently, the advisor undertakes a visit to the production hall, which lasts an additional 60 minutes. On concluding, the advisor completes an ADMA assessment, which results in a ‘shadow scan’. The next stage involves the SME managers filling out the scan. It is also recommended that the HR manager, the R&D department and others complete additional scans to comprehensively cover the seven transformation areas. At a second meeting, the advisor discusses the results with the management to obtain a consolidated assessment. At this stage, potential solutions are not yet presented, with the outcome being an ‘as is’ assessment of the company. Subsequently, there is a phase involving the delivery of a so-called ‘transformation plan’ to the company. This allows SMEs to transform their organisations in the seven transformation areas, aiming to create next-generation factories characterised by more

The eco-digital factory transformation model  87 competitive, modern and sustainable production. The ADMA Support Centre centralises SME requests and offers personal contacts with Future Factory Advisors as part of a 36-month study which began in June 2018. The consortium included both technological and non-technological partners. The study involved 50 SMEs in various industry sectors, such as machinery manufacturing, electronics, chemicals and the food industry. The study involved three phases: a survey, interviews and analysis of the results (Advanced Manufacturing Support Centre, 2023; European Innovation Council and SMEs Executive Agency, 2021). 5.4.3 Research results

The findings of the research suggest several key factors influencing the evolution of small and medium-sized enterprises towards being smart factories. Development of employee competencies and qualifications is one such factor. In order to achieve the level of a smart factory, SMEs need to invest in developing the education and skills of their workers so they are capable of effectively leveraging new technologies. To do this, SMEs can use various tools such as training, coaching and mentoring. Shaping an appropriate organisational culture is another crucial aspect of the process. SMEs should foster an organisational culture that promotes innovation and continual improvement. In this context, promoting open communication, flexibility and adaptability, and granting employees decision-making autonomy are important. Moreover, developing technological infrastructure is key. SMEs should invest in modern technologies such as the Internet of Things, artificial intelligence and robotics to enhance the efficiency of production and improve product quality. In particular, developing management systems is of great importance. SMEs should implement management systems that allow real-time monitoring and control of production processes. In this context, tools such as enterprise resource planning (ERP) systems and manufacturing execution systems (MESs) can prove indispensable (European Innovation Council and SMEs Executive Agency, 2021). 5.4.4 Requirements for SMEs in transformation 3: eco-factories according to the ADMA standard

Sustainable production plays a pivotal role in the eco-factory transformation. This involves production systems based on the availability of resources and auxiliary materials designed to close the material cycle and optimise raw material use, thereby significantly reducing energy consumption and leveraging renewable energy sources. The eco-factory transformation aims to assist ­ ­businesses in shrinking their environmental footprints and enhancing their sustainability. Based on circular economy principles, this transformation aims to minimise waste and maximise resource utilisation. It involves implementing advanced production technologies to enable businesses to lessen their environmental impacts. These technologies include using renewable energy sources,

88  The eco-digital factory transformation model optimising raw material use and reducing energy consumption. Furthermore, they involve developing a resilient and robust organisation that can effectively withstand the impacts of climate change and resource depletion. To achieve the eco-factory transformation, a holistic approach is necessary encompassing all aspects of business, from product design to production processes, to supply chain management. Significant investments in research and development and a commitment to continually improve and innovate are crucial. Energy consumption is a key focus area, with SMEs striving to reduce energy, fuel and water use in their products and production processes. To achieve this, SMEs should implement energy consumption improvements targeting their most critical products and production processes. Specific energy consumption aims need to be established and a methodical approach needs to be implemented to transform energy consumption at the machine, process and factory level. SMEs should leverage the best technologies available to reduce machine, process, product and method energy consumption. They should invest in strategic and stable partnerships with key experts in leading energy consumption methodologies and technologies. Companies should also reduce waste flows and use renewable energy sources to minimise their environmental impacts. By reducing energy consumption, SMEs can not only minimise their environmental impacts but also decrease energy-related costs. This approach helps companies remain competitive in the market while contributing to a more sustainable future. Waste flow management is another key focus area in which SMEs need to strive to reduce their environmental impacts. Companies should take steps to reduce waste flows and emissions from their products and processes, thus enabling maximum material and energy recovery. To achieve this, SMEs need to implement several stepwise actions aimed at improving their waste flow management. Waste management improvement projects should be deployed for the most crucial products and production processes. Companies can also reduce material use by optimising products and production processes. Stepwise actions have to be implemented to enhance material usage. Implementing technologies that enable closure of the material cycle is aimed at optimising the efficiency of raw material use. This aim is achieved through strategic stable partnerships with customers, suppliers and other key stakeholders. Compliance with regulations and innovation are two key focus areas for SMEs to ensure resilience and robustness, and minimise both the negative impact and the risk associated with climate change and resource depletion. SMEs implementing green digital transformations need to set specific aims and implement a methodical approach that includes waste flows, energy and material consumption in their supply chains. Measuring the success of actions minimising environmental impacts in business processes can be done using KPIs. Innovative green techniques and methods need to be applied to product design, industrial processes and logistics, and key stakeholders should be engaged in co-creating and implementing projects aimed at reducing companies’ environmental impacts. In line with ADMA audit standards, SMEs are required to demonstrate

The eco-digital factory transformation model  89 their commitment to complying with current and upcoming regulations, standards and norms. Applying effective timely strategies to incorporate new regulations in products, processes and supply chains is key. In their value chains, SMEs should be perceived as significant stakeholders in the process of creating new regulations and norms. It is recommended that they establish specific goals and implement a methodical approach, which includes waste management, energy and material consumption in the supply chain, in line with current regulations. As part of their structure, SMEs need to demonstrate that they have a robust control, benchmarking and management system the indicators in which surpass the requirements of existing regulations. It is vital to utilise dedicated management systems and business processes to minimise environmental impacts. Business processes focusing on specific environmental issues should be clearly defined. Activation of specific actions aimed at addressing fundamental environmental problems should be anticipated in business processes. It is necessary to adopt a customer-oriented integrated approach to managing environmental risk. SMEs should implement modern eco-production business models that close the material cycle and reduce environmental impacts, taking into account customer and societal expectations. SMEs are obliged to establish precisely defined KPIs for new products, processes and services which are actively used and documented Internal and external feedback are both transformed into KPIs that cover all products and processes, whether new or existing. Intelligent KPIs, improvement procedures and corrective actions need to be applied daily on the production floor to monitor and improve production processes. KPIs are calculated and displayed in real time to enhance and steer production, quality, lead time and efficiency on the production floor and improve production processes. By systematically addressing environmental impact measurements and adopting KPIs and targets, an organisation can monitor and improve its environmental performance. This approach aids the company in reducing its environmental impact along the value chain, significantly considering customer and societal expectations (Advanced Manufacturing Support Centre, 2023; European Innovation Council and SMEs Executive Agency, 2021). 5.4.5 The ‘factory of the future’ competition

The ‘Factory of the Future’ competition, an initiative by the Future Industry Platform Foundation, was announced in 2021 (currently applications for the 3rd edition are ongoing) with the purpose of identifying innovative solutions and best practices applicable in the technological, ecological and organisational transformation of manufacturing enterprises in Poland. The competition is open to companies carrying out manufacturing activities in Poland, and it serves to promote Industry 4.0 solutions. The contest offers an opportunity to identify factories that have effectively implemented modern technologies and innovative solutions that have brought benefits to companies. Moreover, the competition allows organisations to share their experiences in digital

90  The eco-digital factory transformation model transformation and in implementing innovative projects, thus creating a Future Factory ecosystem. The term ‘Factory of the Future’ is a key element in Industry 4.0. It symbolises synergy of the physical and virtual world, which allows intelligent production of products responding to dynamically changing market needs. In Factories of the Future, modern digital solutions are used that enable flexible automation of production, allowing product personalisation at costs comparable to mass production while simultaneously paying attention to the welfare of workers and natural environment resources. Therefore, Factories of the Future are characterised by greater competitiveness, innovation, openness and more sustainable processes thanks to the application of advanced technological solutions, and social and environmental innovations. The aim of the competition is to identify and promote good practices in digital transformations and the implementation of innovative solutions in Polish manufacturing enterprises. The competition also aims to inspire Polish factories to follow the path of Industry 4.0 and support the digital transformation of Polish companies. Applications are accepted in seven competition categories, which correspond to the seven transformations in the ADMA method. These categories are Advanced Manufacturing Technologies, Digital Factory, Eco-Factory, Customer-oriented Complex Engineering, Human-centred Organisation, Smart Manufacturing and Open Factory Focused on the Value Chain. The competition process consists of six stages. In the first stage, participants submit their application forms. Next, in the second stage the organiser does a formal assessment of the compliance of the applications submitted with formal guidelines. In the third stage, the merit of the applications is evaluated by a merit assessment panel, which then creates a shortlist of candidates for the next stage. The fourth stage involves evaluation visits conducted by a foundation team and external experts. In the fifth stage, the merit assessment panel re-evaluates the applications and passes its recommendations to the programme board of the competition. In the final sixth stage, the programme board assesses the applications and selects the competition winners. In the 2022 competition, the award in the eco-factory category was received by Polipack, a Polish manufacturer of plastic packaging operating in the market since 1992 (Platforma Przemysłu Przyszłos ́ci, 2023). 5.4.6 Case study – the eco-factory award 2022 – the Polipack company

The eco-factory concept advocates for sustainable eco-production that involves a flexible production system reliant on the availability of raw materials and ancillary supplies. Such systems have the capacity to close the material cycle with the aim of optimising resource efficiency. The primary objective of the production system is to reduce energy consumption and use renewable energy sources. Companies advanced in eco-production demonstrate a profound understanding of the implications of their actions and their impact on the environment, continually seeking ways to mitigate the adverse environmental impact of their processes, products and services. The competition category

The eco-digital factory transformation model  91 includes topics such as resource management – companies systematically decreasing their dependency on non-renewable energy sources, raw materials, ancillary supplies and water – compliance and innovation – in which a flexible and robust organisation successfully withstands the impact of climate change and the effects of natural resource depletion (Platforma Przemysłu Przyszłos ́ci, 2023). In the 2022 competition, the eco-factory award was granted to the Polipack company, a Polish plastic packaging manufacturer operating in the market since 1992. The company’s mission is to create packaging that is not just an add-on to a product but acts as a co-creator and enhancer of its value. It operates in line with the conviction that good packaging is a crucial element in brand communication and can significantly influence consumer purchasing decisions. Equipped with a state-of-the-art machinery park, the company is capable of executing projects with high-quality requirements. It specialises in processing plastics such as polypropylene, PET and polyethylene using injection (IM), stretch and blow injection (ISBM) and blow extrusion (EBM) technologies. Polipack manufactures packaging for numerous industries, including cosmetics, pharmaceuticals, food and tobacco. The company also offers packaging decoration services using various methods, and labelling, allowing packaging personalisation according to the individual needs of the client. Polipack has implemented and certified the ISO 9001:2015 Quality Management System, ISO 14001:2015 Environmental Management and ISO 15378:2017 for direct packaging materials for medicinal products. This standard specifies particular requirements for the application of ISO 9001:2015 with consideration of good manufacturing practice (GMP). Additionally, Polipack holds the BRC Global Standard for Packaging and Packaging Materials Certificate and Certificates from the National Institute of Medicines. As a packaging manufacturer, Polipack declares adherence to sustainable development values, meaning simultaneous consideration of economic, environmental and social issues in the company’s operation. Its vision emphasises the company’s responsibility for its products and their impact on the community and natural environment. Its highlighting of a holistic approach to products, namely the packaging, suggests a comprehensive understanding of its role. Polipack sees packaging not only as a product cover but also as a functional element ensuring safety, complying with stringent legal requirements, optimised in terms of materials and designed with the environment and ecology in mind. This perspective portrays packaging as a critical element affecting user experience, product value and even perceptions of it in an ecological context (Polipack, 2023). The objectives and strategy that have been articulated focus on promoting ecological practices in various aspects of the company’s operations. Polipack engages in investing in renewable energy sources with the aim of minimising the impact of its activities on the environment. These investments contribute to reducing greenhouse gas emissions, and may additionally bring economic benefits in the long term by reducing energy costs. Eco-design is a process in which ecological issues are considered in all stages of product design. For Polipack, eco-design of packaging includes four key strategies, known as the 4R principles:

92  The eco-digital factory transformation model 1) Reduce. This involves the company endeavouring to reduce the mass of materials used in the packaging production process. This may include minimising the thickness of packaging walls, using lightweight materials and eliminating unnecessary packaging elements. This approach not only reduces the amount of resources consumed but can also contribute to energy saving during production and transportation. 2) Reuse. Polipack promotes the possibility of reusing packaging instead of single use. This involves designing multi-use packaging or ensuring that the packaging is easy to clean and refill. 3) Recycle. The company strives to design packaging that can be easily recycled after use. This may involve the use of a single type of material that is easy to identify and segregate, and avoiding materials that are difficult to recycle. 4) Rethink. This principle encourages designers to rethink the entire life cycle of packaging. This means analysing the impact of packaging on the environment from the moment of resource extraction, through production and use, until the end of its life. It may also involve the use of alternative more environmentally friendly materials, such as recycled resources. Implementing this approach aligns with the concept of a European circular economy, which aims to increase resource efficiency and minimise waste by closing the life cycle of products by reusing and recycling them. Polipack’s introduction of an eco-design plan aimed to: • increase the share of recycled and bio-based packaging. This strategy involves promoting the use of recycled and bio-based packaging, which is more environmentally friendly than traditional packaging materials. Implementation of this strategy may contribute to reducing the amount of waste that ends up in landfills and increase the share of renewable materials in the company’s supply chain. • implement a sustainable supply chain architecture: The company ensures sustainability of the entire supply chain from the selection of raw materials, through the production process, to the distribution of finished products. This integrated supply chain contributes to reducing negative environmental impacts in every stage. • carry out social and educational actions increasing ecological awareness. These actions aim to raise social awareness about the importance of sustainable development and ecology, and include various initiatives such as workshops, lectures, training programmes, media campaigns and community events (Polipack, 2023). An example of specific actions in the field of sustainable packaging is the introduction of an eco-friendly cosmetic jar with an interchangeable thermos. This innovative product allows end customers to purchase only the thermos and retain the jar and lid for reuse. This solution saves up to 80% of the weight of the packaging. In collaboration with an independent research entity, Polipack

The eco-digital factory transformation model  93 conducted a comparative analysis for a line of cosmetic jars with interchangeable thermoses made from different materials, such as standard plastic, bioplastics and recycled plastics. The results of the analysis showed a superiority of bioplastics and recycled materials in terms of a smaller environmental footprint by as much as 80% compared to standard solutions. This solution fits the concept of a circular economy, in which packages are designed in such a way that after their primary use they can be reused or processed into secondary raw materials. This reduces the consumption of raw materials, waste generation and emissions associated with the production of new packaging. Similarly innovative are packages made of bioplastics which have similar functional properties to traditional packaging. They are fully recyclable in the existing collection system and are also characterised by lightness and ease of use. However, an important difference is that they are made from plant-derived materials and are not traditional plastics derived from petroleum. Using bioplastics instead of conventional polymers has a positive impact on the environment and contributes to reducing the environmental footprint. It reduces emissions of carbon dioxide into the atmosphere and limits the consumption of fossil fuels which are necessary in the production of traditional plastics. Polipack actively engages in recycling plastic packaging, both through reprocessing post-production waste and by using post-consumer recyclates. Post-production waste, such as packaging with minor quality defects that do not affect functionality, undergoes an internal recycling process. These packages are properly sorted, ground and processed into new packaging. Thanks to this, the company achieved a very high level (95%) of recycling of post-production waste from polypropylene and polyethylene in 2020. Life cycle assessment is a scientific method to assess the environmental impact of a product over its entire life cycle. For companies like Polipack, LCA analysis is conducted in collaboration with customers to assess the impact of their packaging on the environment. The LCA analysis takes into account different stages in the product’s life cycle, including resource extraction, the production process, packaging, use and final disposal or recycling. The purpose of LCA analysis is to provide a comprehensive assessment of the impact of a product on the environment, and identify areas where improvements can be made and negative environmental impacts can be reduced. The ‘Polipack Sustainable Supplier Conduct Code’ provides guidelines for Polipack’s suppliers. The code requires suppliers to have short- and long-term plans or policies that include measurable aims to reduce negative impacts on the environment. It also requires suppliers to respect workers’ rights to collective bargaining and to comply with all national regulations regarding environmental protection, both in the workplace and concerning products and production methods. The code aims to ensure that Polipack’s suppliers operate in accordance with the principles of sustainable development and contribute to minimising negative impacts on the environment. All suppliers in the supply chain adopting uniform standards allows consistency and compliance in terms of ecological actions (Polipack, 2023).

94  The eco-digital factory transformation model 5.5 Conclusion Small and medium-sized enterprises can serve as significant change agents in their industries and communities by promoting sustainable practices among suppliers, customers and other stakeholders. However, several obstacles are often encountered along the path to realising this transformative potential. A key challenge that SMEs frequently face concerns financial constraints and limited resources, which make it difficult for them to invest in initiatives related to green digital transformations (Ching et al., 2021). The high initial costs of implementing new technologies and systems can pose a particular challenge for these organisations. In addition, a lack of awareness and competencies can impede SMEs. They may not be aware of the potential benefits of green digital transformations, and they may also lack the technical know-how necessary to implement and manage these initiatives. This can hinder the adoption of sustainable practices and digital technologies. Organisational resistance to change can be a significant barrier to the effective implementation of green digital transformation strategies in SMEs. Employees may be reluctant to adapt to new processes and technologies, especially if they perceive potential job losses or changes in their roles. Limited access to external support is another challenge for SMEs. They may have limited access to external support, such as government incentives or consulting services, which can facilitate the adoption of initiatives related to green digital transformations (Guandalini, 2022). Transformations into eco-digital factories, as proposed by ADMA, are an inspiration and guide for SMEs on how to carry out sustainable development transformation. A holistic approach, which includes all aspects of business, including product design, production processes and supply chain management, is crucial in achieving this transformation (European Innovation Council and SMEs Executive Agency, 2021). Energy and waste management are two main areas that SMEs should pay particular attention to and in which they should set specific goals and implement systematic strategies that relate to their most important products and production processes. Effective environmental impact management facilitates the use of key performance indicators and adoption of modern eco-production business models. Such coordinated efforts will help SMEs maintain their competitiveness, comply with regulatory expectations and contribute to a more sustainable future. References Aarikka-Stenroos, L., & Ritala, P. (2017). Network management in the era of ecosystems: Systematic review and management framework. Industrial Marketing Management, 67, 23–36. Advanced Manufacturing Support Centre. (2023). Retrieved from https://single-­marketeconomy.ec.europa.eu/tools-databases/adma_en Afsar, B., Badir, Y., & Safdar, U. (2015). Linking spiritual leadership and employee pro-environmental behavior: The influence of workplace spirituality, intrinsic motivation, and environmental passion. Journal of Environmental Psychology, 45, 79–88.

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6

Organisational support for employee green behaviour

6.1 Introduction Protecting the natural world and its resources for the next generations has emerged as an urgent priority for society, policymakers and managers. Therefore, both individuals and organisations must adopt more environmentally friendly operating styles. This requires a change in organisations’ business models and a change in the behaviour of their employees, together with the use of the latest technologies. In view of the increasing impacts of organisations on the environment, it is to be expected that organisations around the world will assume responsibility for preserving and improving the environment. It should be noted that in spite of the fact that organisations contribute significantly to degrading the natural environment they also have considerable potential when it comes to protecting it (Ones and Dilchert, 2012). This raises common expectations of green initiatives on the part of organisations (Renwick et al., 2013). So far, the majority of organisations have been focusing more on their external surroundings in this respect and on supporting green initiatives at the strategic level, including promoting circular economies, improving the ecological quality of products (Kryk, 2014) and minimising negative impacts of their activity on the environment. However, it seems that reality requires more complex actions i.e. at both the strategic and unit/individual levels. Success of any organisational initiative, including ones related to the environment and circular business models, depends not only on appropriate management systems and technological ­ ­innovations but also on the willingness of individual employees to engage in pro-environmental behaviour. Therefore, employee behaviour contributing to a circular economy (employee green behaviour, EGB) is gaining popularity among a growing number of researchers (e.g. Amjad et al., 2021; Chaudhary, 2019). In addition to the need to operationalise the various types of employee green behaviour, an important challenge is to study their antecedents in order to fully understand the mechanisms that stimulate employees to engage in them. EGB directly contributes to green performance (Shen et al., 2018) by increasing the willingness of employees to perform extra duties beyond their DOI: 10.4324/9781003411239-7

Organisational support for employee green behaviour  99 main work responsibilities. Implementing green human resource practices may lead to operational efficiency, cost-saving, prevention of pollution and saving scarce resources to achieve a better environment. A study by Mishra (2017) finds that green policies not only improve sustainable development but also benefit organisations with improved sales, brand image and employer marketing. Green organisational performance refers to the final output or observable employee behaviour. Green performance might be perceived as the amount of resources used by organisations (energy, water, land) and the by-products of their activities (waste, emissions, chemical residues) but also in manifested EGB. Green leadership is therefore perceived as a pool of practices deployed by an organisation aimed at promoting EGB and at intensifying holistic green performance. A review of the literature indicates that relatively little research on circular economies (CEs) has been conducted in the fields of management and social sciences. Therefore, we believe that there should be more research on how organisations can contribute to environmental objectives by using the potential of their employees. Previous studies have focused on the effects of green practices and financial performance (e.g. Miroshnychenko et al., 2017), corporate strategies (Berchicci et al., 2012), environmental innovation (Rezai et al., 2016), customer perceptions (Yi and Li, 2018) and customer choices (Androulidakis et al., 2016). ­Although more and more research has focused on EGB, there is a lack of comprehensiveness (Okumus et al., 2019). The main aim of this chapter is to identify the organisational antecedents of employee green behaviour contributing to a circular economy. In order to present the state of the art in research on EGB, the chapter reviews the literature and tests a model of the impact of selected antecedents of EGBs. This research adopts a behavioural perspective. By following some predefined practices and procedures, organisations affect employee attitudes, behaviours and performance through reinforcing certain behaviours and eliminating others. The literature suggests that organisational stimuli support changes towards greener behaviour (Norton et al., 2018). This is explained by the AMO (ability, motivation and opportunity) model, which shows that employee performance is a function of three components: skills, motivation and the ability to participate (Demortier et al., 2014). The model emphasises the significance of organisational incentives and stimuli aimed at triggering initial changes and the importance of engaging employees in green campaigns such as encouraging them to present their ideas and engage in team problem-solving (Kroon and Freese, 2013). In addition, the essence of the relations presented in the model is also explained by social exchange theory. This is based on the assumption that intra-organisational relations are based on a mutual exchange, and positive assessments of efforts made by the organisation stimulate employees’ willingness to reciprocate. In such cases, employees should make behavioural responses such as EGB (Van Knippenberg et al., 2007). The theory of planned behaviour (TPB) and the

100  Organisational support for employee green behaviour norm activation model (NAM) also have potential to explain EGB. The TPD explains green behaviours as maximising self-interest determined by expected benefits, perceived behavioural control and the pressure of social norms. The NAM refers to individuals’ pro-social motivation and also emphasises the support of social and organisational norms (Wiernik et al., 2016). 6.2 Employee green behaviour and its consequences In the process of adapting to a rapidly changing environment, organisations are continually on the lookout for new concepts and methods to build and maintain competitive advantages and emphasise their exceptional nature. It has been claimed that green organisational practices allow companies to gain sustainable competitive advantages, as they play a critical role in establishing a positive brand image and meeting customers’ demands and expectations (Lozano, 2015; Yong et al., 2020). Equally important in this process is ­individual employee behaviour that coincides with environmental ­sustainability. This is often referred to as EGB. EGB is defined as behaviour consciously chosen by individuals to reduce the negative impact of their actions on the environment and to protect and preserve it (Kollmuss and Agyeman, 2002). According to De Roeck and Farooq (2017), EGB includes performing work in an environmentally friendly way (e.g. recycling, using resources rationally, participating in environmental initiatives and setting sustainable policies). Accordingly, EGB includes specific actions related to energy and water consumption, and waste reduction. Common approaches to categorising EGBs are to divide them by (a) type, (b) their degree of inclusion in work tasks (in-role vs. extra-role) or (c) their level of influence (direct vs. indirect). The first category includes (1) working sustainably, (2) conserving resources, (3) influencing others, (4) taking the initiative and (5) avoiding harm. While this taxonomy implicitly accepts the presence of both required and voluntary behaviour, the categories are not mutually exclusive and so allow a behaviour to belong to more than one group (Ones and Dilchert, 2012). The second category distinguishes task-related EGB, which is involved in the performance of work-related tasks and includes such behaviour as conserving water, energy and other resources (e.g. changing work methods in responsible ways, printing double-sided). On the other hand, voluntary green behaviour involves personal initiative, is voluntary and goes beyond the call of duty (Norton et al., 2014). The third classification distinguishes behaviours that have a direct impact on the environment and those that modify the green behaviours of close ­colleagues by example. It includes behaviours in the categories of working ­sustainably, conserving resources, avoiding harm and also extending the scope of activities to other members of the organisation with whom the number of interactions is smaller, i.e. influencing others and taking initiatives (Smith and O’Sullivan, 2012). Behaviours in the latter category may also include

Organisational support for employee green behaviour  101 instrumental action in the form of lobbying and activism, which serve as impetuses for co-workers to show greater environmental responsibility. Another interesting category of green behaviour is counterproductive behaviour at work (Ciocirlan, 2016). This includes both behaviours that have a positive impact on the environment, e.g. not using an air conditioner on hot days, and that have a negative impact on the natural environment, such as not segregating rubbish, leaving the light on after work and making excessive use of paper. Such behaviours, when they are widespread on a large scale among members of an organisation, can have harmful effects because they generate both environmental and economic costs. EGB may also bring benefits in the form of green behaviour, both in private lives in the form of consumer behaviour and at the organisational level in the form of environmental effectiveness and building greener management. Behavioural transfer between the home and the organisational setting has started to attract scholarly attention (Verfuerth and Gregory-Smith, 2018). Spillover effects in the environmental sense can be understood as the extent to which engaging in one behaviour influences the probability of conducting a subsequent behaviour. Behavioural spillovers (spillovers across behaviour) in which behaviour A leads to (influences the probability of engaging in) a different second behaviour B, or the same behaviour at a different time or in a different context resulting in a positive spillover effect, and behaviour A decreasing the probability of behaviour B (resulting in a negative spillover effect) seem to be the types of spillover most attended to in past research (Thøgersen et al., 2012). In practice, the aims of spillover effects may be to affect another behaviour, the same behaviour in the future or the same behaviour in another context. However, processes driving the spillover effect are still not fully understood, and have not been studied in a green context in the organisational arena. In addition, there are no known antecedents of EGB, variables moderating spillovers of EGB. It should be noted that, apart from its undoubted impact on environmental protection, EGB initiates subsequent positive and socially desirable changes, e.g. it disciplines enterprises in terms of their environmental approach. It is therefore worth mentioning the positive effects of EGB manifested in green organisational performance. We define green organisational performance as ‘a firm’s effectiveness in meeting and exceeding society’s expectations with respect to concerns for the natural environment’ (Kim et al., 2019, p. 245). This can be identified using environmental activity ratios of management, with a particular emphasis on these generated owing to efforts, including voluntary ones, of employees. These can be measured as financial impacts (actions/measures reducing operational costs e.g. reduced consumption of water, energy, waste, etc.), initiatives aimed at introducing eco-innovation, employees initiating environmental protection-related events, outcomes such as an improved perceived reputation of an organisation and practices and procedures oriented directly towards improving green effectiveness e.g. towards green training (Shultze, Trommer 2011).

102  Organisational support for employee green behaviour 6.3 Antecedents of EGBs Transformation towards a circular economy raises a need for research on the antecedents of EGBs. In order to identify them, it is necessary to answer the question of what determinants make employees committed and capable of initiating and implementing innovative sustainable circular solutions. Most studies analyse these at the individual and organisational level. Blankenberg and Alhusen (2019) emphasise that understanding the factors driving behaviour is key to changing human behaviour that effectively contributes to environmental problems. However, EGB is complex in its diversity and in its causal influences. The literature suggests various factors as predictors of EGB, among which it is worth mentioning: - socio-demographic factors, e.g. age, education, income, gender, household structure; - environmental knowledge, environmental awareness, ecological lifestyle; - psychological factors, e.g. environmental engagement, general awareness about nature, individual, social, institutional environmental and contextual knowledge (e.g. Foster et al., 2022; Kollmuss and Agyeman, 2002); - social norms perceived as informal primarily unwritten rules defining acceptable and appropriate actions within a given group or community guiding human behaviour acting on the basis of perceived social pressure leading to specific behaviour (Ajzen, 1991); - perceived behavioural control, as introduced by Ajzen (1991) in his theory of planned behaviour, which can be defined as individuals’ belief in their own ability to influence internal states and behaviours and the external environment; - pro-environmental motivation, which many researchers have also identified as an important variable influencing EGB (e.g. Fadzil et al., 2021). Autonomy is a factor linking individual and organisational EGB stimulators. It is accepted in the literature that a sense of autonomy at work should provide employees with more time, energy and flexibility to engage in specific activities. This results in increased enthusiasm, good work attitudes, initiative, willingness to engage and increased productivity (Humphrey et al., 2007). Autonomy at work enables aims to be selected and a choice of activities and collaborators. This can be seen as an individual factor due to the fact that individuals are characterised by a greater or lesser need for autonomy at work. Also relevant here is the question of the fit between the employee, the workplace and the organisation, which enables this need to be met. Autonomy at work is mainly dependent on organisational factors such as leadership style, organisational culture, the role and rank of human resource management (HRM), the innovation climate, the green supporting climate etc. (e.g. Kim and Yoon, 2015; Nielsen and Marrone, 2018). Analogous to other constructs related to green

Organisational support for employee green behaviour  103 organisations, one can also assume the existence of green autonomy, which orients the motivating role of autonomy in the workplace towards creating original pro-environmental solutions. When considering the organisational factors supporting EGB, green human resource management, green organisation support and green supervisor support should be mentioned in particular. GHRM adapts typical HRM elements such as strategy, practice policies, processes, principles and the HRM climate generated by them to support organisations and their stakeholders in a circular economy and social responsibility. It has also been emphasised that GHRM should develop a system of metrics to indicate the extent to which the organisation contributes to preserving and sustaining the green environment (Gholami et al., 2016). It should be noted that research has shown that GHRM practices directly influence organisation performance by enhancing efficiency, cost control and value creation (Kim et al., 2019). Jiang et al. (2012) prove that HRM practices have both direct and indirect positive impacts on financial results through operational results. GHRM helps organisations to create a workforce that understands and promotes EGB to enhance green organisational performance and the sustainable development of firms (Zarębska, 2019). GHRM has potential to stimulate EGB such as by emphasising reduction of use of resources, energy saving, recycling, carpooling (in the case of commuters) and awarding green initiatives or running educational projects focusing on environmental protection (Ari et al., 2020; Jabbour et al., 2008). GHRM is instrumental in environmental management since the HR function plays an important role in accomplishing environment-friendly corporate goals (Paillé et al., 2014). It has been proposed that GHRM should be integrated in CE and green business models. There must be synergy between them because it is impossible for organisations to implement a green policy without GHRM being embedded in a green business model. Both GHRM and green business models have substantially developed over the past decade (Renwick et al. 2013), but they have not developed together. Kim et al. (2019) propose a green HRM model in four steps: (1) provide a green vision as a guide; (2) train employees to share their green vision and aims; (3) evaluate employee green performance; and (4) recognise employee green activities using reward programmes. Training can help employees understand new green practices, and empowered employees tend to engage in green activities. Therefore, rewards can stimulate employees to be environmentally responsible (Kim et al., 2019). In addition, Renwick et al. (2013) categorise the elements in the HR perspective on environmental management. First, GHRM involves developing green abilities in recruiting, selecting, training and ­developing green leadership. Second, GHRM motivates green employees by evaluating and rewarding their green performance. Third, GHRM stimulates the involvement of employees by empowering them and generating an environmentally friendly organisational culture (Kim et al., 2019). It should be noted that research has shown that GHRM practices directly influence

104  Organisational support for employee green behaviour organisational performance by enhancing efficiency, cost control and value creation (Kim et al., 2019). Jiang et al., (2012) show that HRM practices have both direct and indirect positive impacts on financial results through operational results. Therefore, the impact of GHRM on EGB indirectly contributes to organisational performance. EGB is dependent on organisational support, and in particular support from management (Andersson et al., 2005; Ramus and Killmer, 2007). Research shows that in order for them to contribute to circular economy aims in the workplace, employees need to be motivated by their managers (Kim et al., 2019; Raineri and Paillé, 2016). This is also confirmed by Gkorezis (2015), who clearly emphasises the role of managerial support in developing EGB. However, such a lack of ambiguity is not established in other studies. A study by Paille et al. (2013) indicates that organisational support is necessary for employees to reorient their behaviour towards caring for the environment. It turns out that without support from their organisation (consisting in resources which make EGB possible) and in spite of positive perceptions of pro-environmental actions by managers, employees do not assimilate green behaviour in the workplace. It is also worth emphasising that top m ­ anagement has the decision-making power to initiate any change in the organisation, and it must be oriented towards circular economy aims for it to support GHRM practices. With effective leadership, top management initiates changes in the organisational culture by adopting GHRM practices such as green recruitment and selection, green job descriptions, green training and development, green performance, a green appraisal system, green safety and health provision, green employee and labour relations and green grievance handling systems (Ahmad, 2015; Rana and Sharma, 2019; Renwick et al., 2013; Srivastava et al., 2020). The little research devoted to the relation between trust and EGB confirms the existence of such dependence in dealings both with representatives of top management (Andersson et al. 2005) and with line managers (Raineri and Paillé 2016). It can be assumed that trust in the organisation should influence EGB, especially if circular economy aims are embedded in the organisation’s strategy and publicised and supported by GHRM. Increased customer interest in and awareness of the seriousness of environmental problems and the importance of environmental protection results in companies increasingly introducing green practices to increase customer satisfaction and loyalty (Horbach et al., 2012). Such a trend was also observed at the Kärcher company (see below). Therefore, the influence of customers can also be included in the set of variables explaining environmental concerns. To summarise, studies conducted so far point to an influence of GHRM practices and perceived supervisor support on EGB (Daily et al., 2009) and suggest correlations between perceived organisational support, trust and EGB

Organisational support for employee green behaviour  105 (Raineri and Paillé, 2016; Shen and Benson, 2016). At present, the potential for artificial intelligence to support GHRM activities is beginning to be recognised. However, research on the use of AI in GHRM is only in a preliminary stage (Sabale and Gopmath, 2022). This literature review has enabled us to identify research gaps, which we intend to fill by conducting research, and which boil down to insufficient recognition of the organisational drivers directly stimulating EGB, and the factors mediating these relationships. Therefore, in our research model we will test the relationships between the following variables and their impacts on EGB. - GHRM-introducing practices including hiring, training, appraisal, incentivisation and supporting EGB (Ahmad, 2015); - Perceived green organisational support (PGOS) built on employees’ belief that the organisation values their contributions to the environment (Gkorezis, 2015; Paillé et al., 2013); - Perceived green supervisor support (PGSS) – direct encouragement by managers to demonstrate environmentally responsible behaviour, including the provision of necessary resources (Cantor et al., 2012; Cantor et al., 2015; Ramus and Killmer, 2007); - institutional trust (of the organisation), building also on relations with top management (Andersson et al., 2005) due to the fact that – as is evidenced in numerous research studies – it facilitates positive organisational behaviour including EGB (Nienaber et al., 2015); - autonomy, i.e. a belief in being able to make decisions independently on the job and being responsible for the results obtained (Hunter et al., 2007); - pressure from clients who are concerned about the environment and expect companies to implement pro-environmental practices. The relationships studied are shown in Figure 6.1. However, the figure also shows a wider range of interactions among various individual and organisational factors that should be taken into account in designing organisational solutions oriented towards supporting EGB. Some of these were not tested in the empirical study presented here due to the scope of the study. In the figure the first circle indicates factors carrying specific pro-environmental messages intentionally influencing EGB, i.e. GHRM, PGOS, PGSS and client pressure. Autonomy and trust are shown as contextual factors providing the background for EGB in the organisation. The next circle contains factors on which the organisation has little (or no) influence as they are related to the characteristics of individuals. These factors shape EGB in the working environment. Also shown is the spillover effect of transferring green behaviour from the work setting to the private setting and vice versa. The end result of the process is green organisational performance. This model is only illustrative and requires further in-depth research.

106  Organisational support for employee green behaviour

Figure 6.1 Factors shaping EGB.

6.4 Methodology We conducted a quantitative survey to identify the relationships between the variables indicated above. A positive effect of organisational factors such as GHRM, institutional trust, PGOS, PGSS and autonomy on EGB was assumed. The research was conducted on a sample of 100 employees at Kärcher (https://www.kaercher.com). It was assumed that the survey would be conducted with a full sample so each employee had the chance to participate, but the response rate was only 36%. The average respondent was 38 years old and had worked for the company for slightly more than six years. 55% of the respondents were men. 15 of them had secondary education and 85 had higher education. Regarding their positions in the company, 6 were managers, 64 were specialists and the remaining 30 were production workers. 59 worked in marketing and sales, 27 in services

Organisational support for employee green behaviour  107 Table 6.1  Description of the variables of the testing model Construct

No. of items

Literature sources

EGB

15

GHRM

15

Perceived green organisational support Institutional trust

10

Client pressure

4

Perceived green supervisor support

5

Autonomy

5

Ones et al. (2018); I propose new practices Francoeur et al. (2021); that improve our Glinska Newes ́ and environmental Dantas (2023) performance Chaudhary (2019); My company uses green Renwick et al. (2013); performance indicators Jabbour (2011); Yong in employee evaluations and Mohd-Yusoff (2016) Lynch, Eisenberger and My company recognises Armeli (1999) my environmental goals and values Krot and Lewicka, (2016) As a company, we are heading in a clearly defined direction. Rui and Lu (2020) Most customers are very concerned about environmental practices Susskind et al. (2003) My supervisor talks about the importance of protecting the environment. Hackman and Oldham I make decisions about (1980); Breaugh (1985) how to do the job.

3

Example

and 8 in administration. The respondents completed an online version of a questionnaire prepared using Google forms, which included 57 items and metrics. The study was anonymised to ensure full confidentiality of the respondents and approved by the Research Ethics Committee. A review of the GHRM literature identified the current state of research and available scales to test the variables identified in the study (Table 6.1). The principal components factor method was used to analyse and explore the underlying structure. Only for the PGOS construct did the method indicate that there are more than one principal factors. Three factors were identified in this case. Unfortunately, the number of questions included in the potential factors was insufficient. It was therefore decided to leave all items in the PGOS group within a single construct. The accuracy of the choice of items for the constructs was confirmed by using confirmatory analysis techniques. In particular, factor analysis methods were used. Cronbach’s alpha coefficient, KMO (the Kaiser–Meyer–Olkin measure of sampling adequacy), Bartlett’s sphericity test, AVE (Average-Variance-Extracted) and CR (Composite-factor-Reliability) were adopted as measures of validity and reliability (Table 6.2).

108  Organisational support for employee green behaviour Table 6.2  Statistical evaluation of constructs Construct

Cronbach’s alpha

KMO

Bartlett test (p-value)

AVE

CR

EGB PGSS PGOS Clients Trust Autonomy GHRM

0.984 0.974 0.855 0.931 0.898 0.958 0.983

0.904 0.792 0.721 0.828 0.687 0.871 0.905

0.000 0.000 0.000 0.000 0.000 0.000 0.000

0.813 0.891 0.470 0.782 0.768 0.830 0.795

0.985 0.976 0.874 0.934 0.907 0.960 0.984

Cronbach’s alpha (Cronbach, 1951) was used to evaluate the reliability of the individual scales. Values above 0.7 are considered acceptable (Taber, 2018). The KMO test measures common variances between components. KMO values between 0.8 and 1.0 indicate that the sample is adequate. KMO values between 0.7 and 0.79 are average and between 0.6 and 0.69 are medium (Shrestha, 2021). Bartlett’s sphericity test (Bartlett, 1950) checks whether the variables are interdependent. When analysing test results, p values lower than the assumed level of significance are considered appropriate. AVE compares the level of variability captured by a construction against the level due to measurement errors. Values over 0.7 are considered very good, while 0.5 is acceptable. To ensure the reliability of a construct, a CR value of 0.7 is required (Tentama and Anindita, 2020). Therefore, the components obtained within the distinct groups can be treated as correct. In each case, the statistics obtained are satisfactory. 6.5 Findings The structural equation modelling SEM was used in the analysis. Due to the relatively small number of respondents (100), it was decided not to use latent variables in the model. The result was a multivariate model taking into account the parallel relationships between the model variables. Confirmatory factor analysis (CFA) was carried out to verify hypotheses regarding the impact of organisational support on environmental behaviour. The model was constructed in such a way that EGB depended directly on PGOS, GHRM, client pressure and organisational trust and via two mediators: autonomy and PGSS. Calculations were performed using MLE estimators and the results obtained were standardised. The accuracy of the model was assessed using model fit statistics (Table 6.3). All the values obtained are exceptionally good. The likelihood ratio allows us to conclude that the model described is not worse than the saturated model (Table 6.4). Therefore, the model is properly matched to the data and a proper interpretation of the parameters obtained is possible. The results of the estimation are presented in Table 6.4.

Organisational support for employee green behaviour  109 Table 6.3  Model fit statistics Fit statistic Likelihood ratio χ2 (p − value) χ2 (p − value) Absolute measures RMSEA

Value

Description

5.861 (0.320) 346.008 (0.000)

model vs. saturated baseline vs. saturated

0.042

Pclose GFI Incremental-fit measures CFI TLI Size of residuals SRMR

0.459 0.983

Root mean squared error of approximation Probability RMSEA ≤ 0.05 Goodness of fit index

0.997 0.992

Comparative fit index Tucker–Lewis index

0.017

CD

0.922

Standardised root mean squared residual Coefficient of determination

Table 6.4  SEM model estimates Standardised EGB EGB EGB EGB EGB EGB PGSS PGSS PGSS PGSS Autonomy Autonomy Autonomy

Coef. ← ← ← ← ← ← ← ← ← ← ← ← ←

PGSS 0.356 Autonomy 0.165 GHRM 0.491 Clients 0.154 Trust −0.595 const 1.510 GHRM 0.758 PGOS 0.277 Trust −0.129 const −0.502 PGOS 0.507 Trust 0.205 const 1.205

Std. Err.

z

P > |z|

0.121 0.070 0.120 0.077 0.069 0.304 0.049 0.079 0.067 0.169 0.104 0.111 0.350

2.95 2.35 4.09 2.00 −8.47 4.97 15.55 3.49 −1.92 −2.98 4.87 1.85 3.44

0.003 0.019 0.000 0.045 0.000 0.000 0.000 0.000 0.055 0.003 0.000 0.065 0.000

Autonomy and perceived supervisor support act as mediators in the model. Both mediators have a statistically significant positive impact on EGB. EGB is also directly influenced in a statistically significant and positive way by GHRM practices and client pressure. Trust in the organisation also directly and statistically significantly influences EGB. This time, however, the relationship is negative. Excessive trust in the organisation leads to a decrease in EGB. Perceived supervisor support mediates the effects of perceived organisation support and GHRM on EGB. That is, perceived supervisor support enhances

110  Organisational support for employee green behaviour Table 6.5  Total effects Standardised EGB EGB EGB EGB EGB EGB PGSS PGSS PGSS Autonomy Autonomy

← ← ← ← ← ← ← ← ← ← ←

PGSS Autonomy GHRM PGOS Clients Trust GHRM PGOS Trust PGOS Trust

Coef.

Std. Err.

z

P > |z|

0.334 0.218 0.875 0.286 0.228 −0.653 0.930 0.463 −0.148 0.603 0.167

0.115 0.093 0.086 0.096 0.115 0.086 0.074 0.135 0.077 0.133 0.091

2.91 2.33 10.24 2.99 1.99 −7.61 12.63 3.44 −1.91 4.52 1.83

0.004 0.020 0.000 0.003 0.046 0.000 0.000 0.001 0.056 0.000 0.068

their positive impacts on EGB. Being a mediator of the effect of trust on EGB due to the negative sign of the relationship reduces the effect of supervisor support on EGB. The relationships mentioned are statistically significant. Only in the case of the trust variable is the p-value of the significance test slightly above the threshold of 0.05, so this relationship can be considered a trend identified in the sample. Perceived organisational support positively influences EGB, and also through autonomy. Autonomy is also a mediator of organisational trust. The relationship is positive this time, meaning that trust in the organisation with the mediating influence of autonomy results in increased EGB. However, the relationship is on the borderline of statistical significance. The total effects of the impact of the organisation’s activities on EGB is presented in Table 6.5. Observing the total effects of the organisation’s activities on EGB, GHRM has the greatest positive impact. In the cases of PGSS, autonomy, PGOS and client impact, the relationships are at a similar significant and positive level. Trust in the organisation, on the other hand, has a significant negative impact on EGB. 6.6 Conclusions The aim of this study was to identify factors influencing EGB. The study was conducted at the Polish branch of the German company Kärcher. In a literature review, organisational and individual antecedents of EGB were identified. The results obtained confirmed the positive influence of GHRM, PGOS, autonomy, PGSS and customer pressure on EGB, which is in line with previous studies (Ahmad, 2015; Gkorezis, 2015; Cantor et al., 2015). Moreover, the mediating effect of autonomy and PGSS increases the impact of these constructs on EGB. An impact of client requirements on EGB was also confirmed (Rui and Lu, 2020). A trend was observed that stakeholders report increasing demands on

Organisational support for employee green behaviour  111 the environmental performance of the company and expect a flexible response to environmental challenges (Horbach et al., 2012). This impact requires further in-depth research due to the fact that clients, especially business clients, will be forced to become more and more involved in environmental issues due to increasing demands on the environmental performance of the company and stakeholder requirements. It is surprising to note that there is a negative impact of organisational trust on EGB. However, it turns out that autonomy changes the negative sign of trust into a positive one. This may suggest that high trust in the organisation may weaken willingness to take environmental initiatives due to the fact that the company emphasises its environmental commitment in a very strong way. Consequently, employees may feel that simply working for the organisation is a guarantee of fulfilling environmental responsibilities. High trust in the company may put environmental vigilance ‘to sleep’. This result relates to the dark side of trust identified in studies, which is related to excessive pathological levels of trust that negatively affect choices and actions (Krot and Lewicka, 2016). Therefore, an optimal level of trust in individual relationships is sought. This level is dependent on the situational context and allows for a proper placement of valuable intangible resources. In the case of the mediating effect of autonomy, trust positively affects the relationship. It can therefore be concluded that for trust to increase EGB, it must go hand in hand with a belief in one’s own autonomous decision-making on the job and responsibility for the results obtained. In the case of the mediating effect of PGSS on the relationship between trust and EGB, it can be seen that PGSS reduces the negative effect of trust. This can be assumed to be based on a similar mechanism to the one previously mentioned. This mechanism transfers responsibility for pro-environmental activity from the employee to the company. This tendency may apply equally to employees and their superiors, who may also believe that the company does so much for the environment that initiatives by individual employees are not necessary. The results provide a basis to guide further research. A better understanding of the determinants of EGB and the mediating relationships between them is needed to guide the design of a GHRM system that can achieve the intended longer-term outcomes. Better understanding of the impact of particular GHRM practices on stimulating EGB is needed. More research is also needed on the proposed set of variables in size- and sector-diverse entities. There is also a need for better clarification of the spillover mechanism between the work and home settings in order to propose organisational interactions that link the diffuse effects of activity in the two areas. This study has a series of managerial implications. Harmonisation of ­actions taken by individuals and enterprises at the strategic and GHRM level seems the right direction to introduce the concept of sustainable development of the environment. HR managers should therefore develop GHRM policies and practices aimed at encouraging sustainable use of corporate resources and

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7

Support for enterprises in circular economy industries

7.1 Introduction Support for start-up enterprises in market economies has long been a subject of debate. It concerns, among other things, both theoretical and practical efficiency. These enterprises are responsible for the process of production. They have to take into consideration all costs but that should not be the only reason for decision-making. The enterprises also have to determine the life cycle of any produced goods. The attitude of the owners towards environmental issues is a crucial factor in this, and this is particularly important in the area of circular economies. Therefore, this field is a priority for scientific research. The COVID-19 pandemic, however, had a significant impact on economies. As a result, many scientific publications have focused, in particular, on monetary policy and the measures necessary to help enterprises survive (Bofinger et al., 2020; Dulin & Tenie, 2020; Gita, 2020; Wang et al., 2021; Pedauga et al., 2022). During this period, issues linked to the circular economies were not the main priority for governments. However, in order to achieve the UN Sustainable Development Goals it is necessary to support and shape the behaviour of people, including potential entrepreneurs. This is particularly important in the case of young adults, who are just forming their views and attitudes. This is explained more in Chapter 13. It also concerns students, who will become the best-educated people in ­society. It is assumed that they constitute a group whose views and behaviours predict the near future of the society in which they complete their education. This has not been subject to research in recent years. However, it is now time to address this question. Therefore, the aim of this chapter is to assess the support instruments to start a company in the circular economy industries preferred by young adults. The assessment is based on surveys conducted in Poland and Spain The selection of the sample was non-random and purposeful in order to reach appropriate respondents. Young adults (aged 18–25) who study economics in Poland and Spain were selected. The survey produced qualitative data. Therefore, the χ2 (chi-square) test and V Cramer coefficient were used for statistical analysis. Furthermore, tables were made and they are presented after a DOI: 10.4324/9781003411239-8

118  Support for enterprises in CE industries power test. The contingency coefficient was used to assess the strength of the relation. This chapter is organised as follows. First, the theoretical starting point is explained and there is a literature review. Then, the methodology is described. In the next section, the results of the statistical analysis are presented. Conclusions follow. 7.2 Theoretical starting point and literature review The justification for government intervention in a market economy is connected with the concept of market failures. These result from a lack or paucity of supply of goods. This concept was developed in the area of the welfare economy. Initially, it only included externalities and public goods (Gancarczyk, 2010). Both micro- and macro-level externalities were considered. In the first case this means that an individual’s decision may expose others and imposes a cost on other people which the decision-maker does not pay. At the macro level, the bankruptcy of a company impacts other firms. Another example of externalities is extensive foreign-denominated debt (Stiglitz, 2021). However, there are two different types of externalities. If the influence on a person or company causes costs, then the externality is termed negative. If it is beneficial, it is regarded as a positive externality. Nonetheless, the market failure means that the price mechanism does not reflect the true costs and benefits. As a result, market allocation could be too high or too low (Stiglitz & Rosengard, 2015). Another type of market failure is connected to public goods. These goods are made available to every person in society and no one can be prevented from using them. Markets, however, do not ensure, for example, defence from foreign aggression (Mankiv & Taylor, 2019). The concept of market failure was extended in new institutional economics, particularly as concerns the field of information asymmetry and transaction costs. Information asymmetry means that two parties have different levels of access to information, meaning that one party has an advantage over the other (Mankiv & Taylor, 2019). Information asymmetry may result in adverse selection and moral hazard (Gancarczyk, 2010). The result of adverse selection is a tendency of people in dangerous jobs or with high-risk lifestyles to buy insurance when there is a higher probability that they will make a claim. Moral hazard concerns a situation where a person lacks an incentive to guard against a financial risk due to being protected from any potential consequences (Mankiv & Taylor, 2019). Additional market failure is also connected to transaction costs. These are forces that resist decision-making by individuals interacting in markets. Therefore, transaction costs include the expenses incurred when buying or selling goods. They are connected to bringing goods to market and there are entire industries dedicated to facilitating exchanges (Mankiv & Taylor, 2019). In recent years, however, it has been suggested that there have been even more types of market failures. Stiglitz (2021) argues there are also

Support for enterprises in CE industries  119 macroeconomic market failures such as unemployment or economic ­slowdown. In order to alleviate market failures, he advocates government intervention. However, the role of the government in market economies has been changing in recent decades. According to Gancarczyk (2010), this process has gone through the following stages: - - - - -

production and supply, supply and subsidies/grants to private companies, regulations that enable/induce market contracts, deregulation, privatisation.

This theoretical approach has an influence on practice. The solution to market failures involves government intervention. When companies hire too few lowskilled employees, the government can create exceptions for less-skilled workers. Other options include taxes and grants. Grants can help encourage enterprises to behave in ways that will produce positive externalities. Taxes can reduce negative behaviour. There can be different kinds of government intervention. Wach (2013) shows that European Union (EU) policy regarding enterprises has also been changing, particularly at the end of the twentieth century. First, it focused on craft industries, and then it moved onto small and medium-sized enterprises. At the beginning of the third millennium, however, the EU decided to focus on entrepreneurship and innovation (Wach, 2013). In recent years, there has been a shift towards renewables and circular economies. However, support policy for enterprises, particularly small and medium-sized ones, is often combined with entrepreneurial policy. There are four main criteria that enable these policies to be differentiated: the growth stage, the beneficiaries, the aims and the level of management. Entrepreneurial support is for companies in the early phases of growth (up to approximately three years). The beneficiaries are entrepreneurs. The main aims are to increase both the quantity and the quality of new enterprises. The support is usually managed at the regional level. Support for SMEs is aimed at companies in further growth stages (that is, more than about three years). The beneficiaries are enterprises and the main aim is to increase their competitiveness. This policy is often managed at the state level (Gancarczyk, 2010). There are a variety of support instruments that governments use. The most common – and also controversial – are repayable grants. In the case of entrepreneurial policy, grants can even cover 100% of expenses. The aim is to tackle financial obstacles and encourage entrepreneurs to start a company. However, small and medium-sized enterprises can apply for grants which usually cover 60–80% of expenses. The remainder of the expenses should be covered by equity. Advocates of using grants as support instruments highlight their high effectiveness. However, some suggest that entrepreneurs and SMEs sometimes apply for grants only to gather funds, not to develop a company. This undermines the efficiency of this support instrument; it is suggested that loans should be offered

120  Support for enterprises in CE industries instead. In such circumstances, if a company needs to pay money back, it must make a solid evaluation of an investment. Moreover, after repayment the funds can be used again for other enterprises. On the other hand, this would mean that entrepreneurs would tend to avoid the more risky (‘high risk, high reward’) ventures. Furthermore, too many loans as support instruments may crowd out private capital, for instance from commercial banks. Therefore, there is still a debate in the academic literature on the exact nature of support instruments. Nonetheless, during the process of recovery after the COVID-19 crisis, the European Union decided to implement a new financial vehicle: the Recovery and Resilience Facility. This includes both non-repayable grants and loans for all member states. The main aim is to make European economies and societies more sustainable, resilient and better prepared for the challenges and opportunities involved in the green and digital transitions. The facility has a significant amount of funds to offer: €672 billion – €312.5 billion in grants and €360 billion in loans. These funds need to be spent before 31 December 2026 and every member state had to prepare a national plan (https://ec.europa.eu/info/­ business-economy-euro/recovery-coronavirus/recovery-and-resilience-facility_ en, accessed 10 February 2022). Under this facility, about €58 billion are available for Poland and €69.5 billion – only in the form of grants – for Spain. The European Commission has already accepted the national plans for both Poland and Spain. Poland intends to use all €23.9 billion of the subsidies available and €12.1 billion of the loan part. According to the national plan, the money will be allocated in a number of different areas: to improve the resilience and competitiveness of the economy; green energy; reducing energy intensity; the digital transformation; and green and intelligent mobility. 39.8% of all the funds will be spent on green energy and reducing energy intensity (Krajowy Plan Odbudowy i Zwiększenia Odpornos ́ci, Ministerstwo Funduszy i Polityki Regionalnej, Warszawa, czerwiec, 2022). In the case of the green transition, the aim of the plan is to develop renewable energy. Over €3.7 billion will be spent on building offshore wind plants and terminal infrastructure. Furthermore, regulatory changes will facilitate the construction of onshore wind plants. €3.5 billion euro are allocated for energy-efficient renovation of buildings. Development of green hydrogen technologies will be supported by €800 million. The plan also aims to invest more than €7.5 billion in green and smart mobility. The Polish government engaged in dialogue with the European Commission (EC) before the formal submission of the plan. The EC gave the plan a green light on 1 June 2022 and it was adopted by a decision of the Council on 17 June 2022, which enabled its implementation and financing (https://commission.europa.eu/business-­ economy-euro/economic-recovery/recovery-and-resilience-facility/­recoveryand-resilience-plan-poland_en, accessed 4 May 2023). Spain decided that 40% of the national plan would support climate ­objectives and 28% would foster the digital transition. The funds are intended to accelerate the transition to a more sustainable low-carbon climate-resilient economy. The Spanish government wants to maximise the benefits of the

Support for enterprises in CE industries  121 digital transformation and also to ensure social cohesion (https://ec.europa.eu/ info/business-economy-euro/recovery-coronavirus/recovery-and-resilience-­ facility_en, accessed 10 February 2022). The grant allocation was revised up to €77.2 billion in 2022. Moreover, the Spanish government plans to invest an additional €27 billion. This will be supplemented by €12.4 billion from REACT-EU funds. Spain has already received 45% of the Multiannual Financial Framework funds and the rest depends on the country’s progress in implementing the plan (Mileusnic, 2022). However, the effectiveness of support instruments, including those under the facility, depends on the attitudes of the beneficiaries to pro-ecological issues, including matters relating to circular economies. Even if the attitude is positive, this does not mean it will lead to appropriate behaviour. This is a matter of great importance but there is a shortage of relevant research in the academic literature. The next question is: which support instruments can and should be used? The academic literature suggests there are two main categories: financial and non-financial ones. According to the only previous study the most important instruments for Polish small and medium-sized companies are subsidies. This confirms the theoretical approach. The importance of instruments facilitating access to external sources of equity such as venture capital funds is quite similar but not high. The most important instruments facilitating access to foreign capital are loans and credit guarantees (Woźniak, 2012). The research covered all industries and then existing companies. However, it was conducted over ten years ago. Nowadays, young people seem to be more pro-ecological. However, it is not clear what will encourage them to start companies, particularly in circular economy industries. Therefore, the following research questions emerge. Q1: Which support instruments to start a company do young adults prefer, and are there any differences between Poland and Spain? Q2: Is there a relationship between preferred support instruments and the characteristics of young adults in Poland and Spain? 7.3 Data collection data and methodology The survey was conducted between 15 December 2021 and 30 January 2022. It consisted of an online questionnaire completed by young adults. The questionnaire was developed on the basis of the literature review and included the results of previous research. It consisted of 18 multiple choice questions. The selection of the sample was non-random and purposeful in order to reach appropriate respondents. Young adults (aged 18–25) who study economics in Poland and Spain were selected. The data collected were one dependent variable and the following seven demographic variables: - sex (women/men/other), - level of study (bachelor’s/master’s degree),

122  Support for enterprises in CE industries - date of birth, - city of residence (50,000 inhabitants), - type of study (full-time/part-time), - place of residence (student accommodation/with parents/rented apartment/ own apartment), - source of income (job/parents). There were 540 observations for Poland and 54 for Spain. The variables were nominal and qualitative. Therefore, it was decided to use cross-tabulation analysis. This method allows relations between the variables to be identified. The significance of these relations is tested with the Pearson chi-square (χ2) statistic. This is the most common significance or independence test for qualitative variables (https://www.tibco.com, accessed 12 February 2023). The chi-square test becomes significant when deviation from the expected pattern grows. The value of the chi-square statistic and its significance level depend on the total number of observations and the number of cells in a table. The formula is as follows:



2  

O  E  E

2

,

where: O is the observed size of a group; E is the expected size of a group. In the next stage, the number of degrees of freedom is determined using the following formula:

df   p  1  r  1 ,

where: r and p are the sizes of the categories for the first and second variables. Once χ2 and the degrees of freedom are calculated, the critical χ2 value for the adopted significance level p (assumed p = 0.05) is checked. When the calculated value of χ2 is lower than the critical value, there is no reason to reject the null hypothesis of independence of the variables. When the value of χ2 is higher than the critical value, one can reject the null hypothesis in favour of an alternative hypothesis of the existence of a relationship between the variables. In order to assess the strength of possible relations the contingency coefficient is used. This is a measure based on chi-square statistic values of the relation between two qualitative variables. Its value varies between 0 and 1, with 0 meaning the variables are independent. The maximum value depends on the size of the table. The contingency factor, however, can only reach 1 for an infinite

Support for enterprises in CE industries  123 number of categories (https://www.tibco.com, accessed 12.02.2023). The formula for the contingency coefficient (C) is: C

2 , N  2

where: N is the number of observations. Moreover, the Cramér V coefficient is calculated to define the level of dependence between two nominal variables when one of them has more than two values. The coefficient varies between 0 and +1 (inclusive). The closer the score is to 0, the weaker the relation between the features examined. However, the contingency and V Cramer coefficients can only be interpreted when chisquare indicates the existence of a significant relation between the variables. A power test based on a χ2-goodness of fit test for contingency tables is conducted to verify whether the sample size is sufficient to detect the relation investigated. A post hoc computed achieved power test is chosen. The level of significance assumed is α = 0.05. When the power of the test is (1 − β) > 0.95, a limited number of degrees of freedom is specified, which allows the above condition to be met. The number of degrees of freedom is different for each relationship analysed. The effect size is low if the value of r varies around 0.1, medium if r varies around 0.3, and large if it varies more than 0.5. 7.4 Results The main purpose of the research was to compare the preferences of Polish and Spanish young people. The different number of respondents in each case was, however, a challenge. The general characteristics of the respondents are presented in Table 7.1. Women constitute 54.4% of the Polish respondents and 68.5% of the Spanish. Most of the Polish respondents study for a bachelor’s degree while over 92% of those in Spain study at the master’s level. There are significant differences in their ages. Most of the Polish respondents were born between 2000 and 2004 and over 42% of the Spanish respondents were born between 1978 and 1999. Most of the people surveyed do not earn money and their parents are their source of income (70.9% in Poland, 72.2% in Spain). The others already have a job. Furthermore, more than half the respondents (52.2% in Poland, 59.3% in Spain) live in large cities (over 50,000 inhabitants). Most of the respondents in Poland study parttime, while among those in Spain over 94% study full-time. Most of the young adults in Poland surveyed live in rented apartments (45.2%) or with their parents (31.3%). Only 15.4% live in student accommodation or their own apartment (8.15%). In Spain, living with parents is the most popular (51.85%) and renting a room comes second (38.9%). Few respondents have their own apartment (8.1%) or rent student accommodation (15.4%).

124  Support for enterprises in CE industries Table 7.1  Characteristics of the respondents Characteristics

Sex Level of study Date of birth Source of income City of residence Type of study Place of residence

% of respondents

Women Men bachelor’s degree master’s degree 1978–1999 2000–2004 Parents Job 50,000 inhabitants Full-time Part-time Own apartment Rented apartment Student accommodation With parents

Poland

Spain

54.4 45.2 94.4 5.6 15.8 84.2 70.9 29.1 29.3 18.5 52.2 39.4 60.6 8.1 45.2 15.4 31.3

68.5 31.5 7.4 92.6 42.6 57.4 72.2 27.8 7.4 33.3 59.3 94.4 5.6 3.7 38.9 5.5 51.8

There are some similarities in the Polish and Spanish young adults’ preferred support instruments (Table 7.2). The similarities include grants (about 10–11%) and grants with tax relief (approximately 17–18%). However, more young people in Spain than in Poland prefer tax relief (15.5% > 9%) or a mix of financial instruments with coach/ mentor assistance (10% > 4.4%). Furthermore, more Spanish respondents do not need any incentive (about 19% > 15%) as they believe starting a company is necessary. On the other hand, a higher percentage of young people in Poland prefer a mix of grants, low-interest loans and tax relief (approximately 21.5% > 10%) or another set of financial instruments (about 21.5% > 16%). This leads

Table 7.2  Preferred support to start a company in Poland and Spain Support instrument

grant tax relief grant low interest loan tax relief grant nothing needed to encourage me –I believe that starting a company is necessary tax relief grant tax relief coach/mentor assistance other

Country (%) Poland

Spain

17.7 21.3 11.8 15.0

18.8 10.2 10.3 19.2

9.1 4.4 21.7

15.5 10 16

Support for enterprises in CE industries  125 Table 7.3  Relation between preferred support to start a company and source of income in Poland Support instrument

Summary two-way table. Observed frequencies. Cardinality of marked cells > 5 Source of income

grant, tax relief grant, low-interest loan, tax relief grant nothing needed to encourage me –I believe that starting a company is necessary tax relief grant, tax relief, coach/mentor assistance

Job

Parents

25 6 24 14

68 17 40 67

14 8

35 16

Notes: Results of statistical tests: χ2 = 20.3; coefficient of contingency = 0.52; V Cramer = 0.43; p = 0. 00002.

to the second research question about possible relations between the characteristics of the young adults and their preferred support instruments. The results of the statistical analysis reveal that there is such a relation between their preferred support and their source of income in Poland (Table 7.3). The values of the V Cramer and contingency coefficients suggest the relation is at a medium level. Nevertheless, most of the young adults prefer grants and tax relief. On the other hand, slightly fewer respondents believe they do not need any support, particularly if they do not work. They believe starting a company is necessary. Furthermore, there is also a considerable group of young adults who think only grants will encourage them to start an enterprise. Most of them do not have a job. However, some respondents only find tax relief to be an appropriate support instrument. The other options, such as a mix of various financial incentives connected with coaching or mentoring are the least important for the young people. In this case it does not matter whether the young people work or not. There is also a relation between the preferred support to start a company and place of residence in Poland (Table 7.4). The value of the V Cramer coefficient is not high so this relation is somewhat weak, as opposed to the consistency coefficient that suggests a mediumly strong relation. Most of the young adults prefer grants and tax relief. Many of them live in rented apartments or with their parents. However, slightly fewer respondents said they do not need any support. In this case most of them live in rented apartments. There is also a significant number of the young adults who prefer either grants or tax relief. Only a few young people would like to get a mix of financial support instruments, including loans or coaching/mentoring. There is also a relation between preferred support to start an enterprise and sex in Poland (Table 7.5). The V Cramer coefficient suggests this relation is

126  Support for enterprises in CE industries Table 7.4   Relation between preferred support to start a company and residence in Poland Support instruments

Summary two-way table. Observed frequencies. Cardinality of marked cells > 5 Residence

grant, tax relief grant, low-interest loan, tax relief grant nothing needed to encourage me – I believe that starting a company is necessary tax relief grant, tax relief, coach/mentor assistance

Own apartment Rented apartment

Student With parents accommodation

5 2

41 11

13 2

34 8

4 6

28 42

9 12

23 21

8 2

20 13

8 3

13 6

Notes: Results of statistical tests: χ2 = 19.36; coefficient of contingency = 0.51; V Cramer = 0.34; p = 0.04.

Table 7.5  Relation between preferred support to start a company and sex in Poland Support instrument

Summary two-way table. Observed frequencies. Cardinality of marked cells > 5 Sex

grant, tax relief grant, low interest loan, tax relief grant nothing needed to encourage me –I believe that starting a company is necessary tax relief grant, tax relief, coach/mentor assistance

Female

Male

46 10

47 13

32 61

32 20

24 18

25 6

Notes: Results of statistical tests: χ2 = 20.65; coefficient of contingency = 0.52; V Cramer = 0.35; p = 0.02.

Support for enterprises in CE industries  127 Table 7.6 Relation between preferred support to start a company and sex in Spain Support instrument

Summary two-way table. Observed frequencies. Cardinality of marked cells > 5 Sex

grant, low-interest loan, tax relief, coach/mentor assistance; grant, low-interest loan, credit guarantees nothing needed to encourage me – I believe that starting a company is necessary tax relief, coach/mentor assistance; business incubator, coach/mentor assistance

Female

Male

8

5

9

6

5

3

Notes: Results of statistical tests: χ2 = 41.25; coefficient of contingency = 0.65; V Cramer = 0.87; p = 0.03.

somewhat weak, although the consistency coefficient indicates it is at a medium level. Grants and tax relief are equally preferred by women and men. The same applies to tax relief on grants. However, many more women than men think they do not need any incentives because starting companies is necessary. The same applies to a mix of grants, tax relief and coaching/mentoring. The only relation which has the appropriate level of significance, but should be considered with cautions as the number of Spanish respondents was quite low, is that with sex (Table 7.6). The V Cramer and consistency coefficients for this relation are quite strong. Higher numbers of women than men prefer various support instruments to start an enterprise. Similarly, more female than male young adults do not need incentives as they think that starting a company is necessary. Power that exceeds 95% is achieved with a maximum of 67 degrees of freedom. Therefore, some cross-tabulation was rejected. In the case of Poland, taking into account the assumed significance level, α = 0.05, and the number of degrees of freedom, 3 tables with effect sizes = 0.3 were selected for further analysis. In the case of Spain, the sample only completed 54 questionnaires. Therefore, a similar power test allows only one table with effect size = 0.5 to be analysed. 7.5 Conclusions Nowadays, more and more people seem to be aware that a circular economy is a key issue and that the ‘business as usual’ model can no longer be maintained. This has to led to changes in the behaviour of existing companies and the creation of new enterprises. These enterprises are usually created by young people

128  Support for enterprises in CE industries who seek to create jobs for themselves or have innovative ideas. The aim of this chapter has been to assess the instruments to support starting a company in circular economy industries preferred by young adults. A literature review resulted in two research questions being established. Q1: Which support instruments to start a company do young adults prefer, and are there any differences between Poland and Spain? Young adults prefer grants with tax relief both in Poland and Spain. Grants as the only support instrument come second. However, there are some differences in preferences between Polish and Spanish respondents. More young adults in Spain would rather have only tax relief or a mix of financial support with coaching/mentoring than their Polish counterparts. The number of young people in Spain who believe they do not need any support is greater than in Poland, too. More Polish respondents prefer the combination of a grant, a loan with low interest and tax relief and also other mixes of financial support than Spanish young adults. This raises the question of why. One possible explanation could be that young adults in Spain are more aware of circular economy benefits. Another reason may be that they have a more entrepreneurial attitude than the Polish respondents. Q2: Is there a relationship between preferred support instruments and the characteristics of young adults in Poland and Spain? There are relations between the support instruments preferred by young adults in Poland and three characteristics. The first one is source of income. This relation is at a medium level. Young adults who work prefer grants or grants with tax relief. Others who get money from their parents more often believe that starting a company is necessary. The second characteristic is residence. The relation with support instruments is a little weaker than in the case of source of income. Most Polish respondents who live in rented apartments or with their parents prefer grants with tax relief. Some of them live in student accommodation. Only a few have their own apartments The last significant characteristic is the sex of respondents. This relation is somewhat medium or even low level. It is worth mentioning that many more women than men believe it is necessary to start companies in circular economy industries and nothing is needed to encourage them. The same applies to Spain. This chapter contributes to both theory and practice. The theoretical conclusions make a contribution to public policy, particularly in the field of entrepreneurship and SMEs. The results could be important for policymakers and guide them in adjusting support instruments for young adults. However, the limitations of the chapter ought to be mentioned. They are connected with the declarative nature of the answers, which may differ from actual preferences. The results may also be influenced by the selection of respondents and the structure of the questionnaire. Moreover, differences in

Support for enterprises in CE industries  129 demographic characteristics between the two countries could have an impact on the results. This should be controlled for in future research. Therefore, this research should be repeated in the future. Moreover, more advanced statistical methods, such as propensity score matching, could be used. References Bofinger, P., Dullien, S., Felbermayr, G., Fuerst, C., Huether, M., Sudekum, J, & Di Nauro, B. W. (2020). Economic implications of the COVID-19 crisis for Germany and economic policy measures. In R. Baldwin, & B. W. di Mauro (Eds.), Mitigating the COVID economic crisis: Act fast and do whatever it takes (pp. 167–178). CEPR Press. Bulin, D., & Tenie, I. P. (2020). Preliminary assessment of the COVID-19 pandemic impact on the tourism industry. Global Economic Observer, 8(1), 41–46. Gancarczyk, M. (2010). Wsparcie publiczne dla MSP. Podstawy teoretyczne a praktyka gospodarcza. Wydawnictwo C. H. Beck. Gita, G. (2020). Limiting the economic fallout of the coronavirus with large targeted policies. In R. Baldwin, & B. W. di Mauro (Eds.), Mitigating the COVID economic crisis: Act fast and do whatever it takes (pp. 41–48) CEPR Press. Krajowy Plan Odbudowy i Zwiększenia Odpornos ́ci, Ministerstwo Funduszy i Polityki Regionalnej, Warszawa, czerwiec 2022. Mankiv, N. G., & Taylor, M. P. (2019). Economics. South-Western Cengage Learning EMEA. Mileusnic, M. (2022). Spain’s National Recovery and Resilience Plan: Latest state of play, https://www.europarl.europa.eu/ Pedauga, L., Sáez, F., & Delgado-Márquez, B. L. (2022). Macroeconomic lockdown and SMEs: the impact of the COVID-19 pandemic in Spain. Small Business Economics 58(2). 665–688. DOI: 10.1007/s11187-021-00476-7. Stiglitz, J. E. (2021). The proper role of government in the market economy: The case of the post-COVID recovery. Journal of Government and Economics, 1, 100004. Stiglitz, J. E., & Rosengard, J. K. (2015). Economics of the public sector: Fourth international student edition. WW Norton & Company. Wach, K. (2012). Europeizacja małych i s ́rednich przedsiębiorstw. PWN. Wang, S. S., Goh, J. R., Sornette, D., Wang, H., & Yang, E. Y. (2021). Government support for SMEs in response to COVID-19: theoretical model using Wang transform. China Finance Review International, 11(3), 406–433. Woźniak, M. (2012). System wspierania małych i s ́rednich przedsiębiorstw w Polsce, Wydawnictwa AGH.

Online resources www.gov.pl/web/planodbudowy, accessed 10 February 2023. www.ec.europa.eu/info/business-economy-euro/recovery-coronavirus/recovery-and-­ resilience-facility_en, accessed 4 June 2023. www.tibco.com, accessed 12 February 2023.

8

Brand projects supporting the circular economy on the basis of the clothing sector A case study of 4F Change and other research results

8.1 Introduction The constantly growing numbers of garment sales around the world are causing an increasing negative impact of the clothing sector on the environment. Harmful substances are generated both in production processes and as a result of people getting rid of clothes when they no longer need them. Production of clothing is also energy- and resource-intensive. This chapter discusses the role of special clothing brand projects (Kerzner, 2022; McPhee and Dias, 2020) supporting a circular economy and sustainable management (Cohen, 2017; Robertson, 2021), and present the results of an empirical study. It includes a literature review, a meta-analysis of available online sources and original qualitative research using the following methods: a case study (how the 4F brand is running the 4F Change project, and how other brands in Poland, Germany and Spain in broader European and global markets do similar projects), participant observation and online content analysis. Sustainable management and circular economy principles are key factors in the brand strategies (Foroudi and Palazzo, 2021; Larsen, 2023) of market players, and they determine the direction of their good practices. Practically every well-known brand has a sustainable brand strategy which takes into account the guidelines of the 2030 Agenda (United Nations, 2023) and circular economy ideas. 8.2 Contemporary brands and their role in implementing a circular economy A brand is a complex construct, a symbol, a design or a combination of them, which generates value and is taken into consideration in decision-making processes by market players (Keller, 2013). In the current economic situation, brands act as management tools (Lubin, 2022; Zschiesche and Errichiello, 2021; Ind and Horlings, 2016) which have significant impacts on the final performance of objects labelled with them. Contemporary market entities, including brands, should strive for the longest possible use of products, raw materials and resources, so clothing brands DOI: 10.4324/9781003411239-9

The circular economy: clothing  131 are particularly relevant in this respect (Delchet-Cochet, 2020; Ghaffar et al., 2023; Larsen, 2023). Sustainable management and circular economy principles (Robertson, 2021) are key factors in the brand strategies of market players, and they determine the direction of their good practices. From a historical perspective, creating and defining a higher purpose for a brand has been relatively well-known. A sense of existence of brands has always been present in designing them, yet it used to have a slightly different nature and touched on a narrower spectrum of issues than it does now. In the past, marketers used to focus strongly on the brand promise, i.e. creating a unique, powerful and distinctive promise. This followed the product or service and could effectively build its position in the market, locally or globally. Activities focused on delivering the brand promise and making the brand stand out. However, this approach lacked direct emphasis on higher aspects of the business conducted such as consumer values and people’s expectations of companies and marketers. Ideas and messages related to brands used to be addressed directly to consumers and were supposed to meet their expectations (Bloomstein, 2021; Keller, 2013; Lubin, 2022). There was no communication at a higher level with the brand giving something not only to consumers but also more broadly to the entire society. This relationship, based only on the brand–consumer dependency, is no longer a distinctive characteristic. At a certain point brands decided to define themselves as enterprises delivering services and products with large impacts on society. They began to take well-thought-out action concerning their impacts on the environment and society which would not only compensate for any losses but also stop generating them at all wherever possible. Brand purpose (Goodson and Walker, 2021; Ind and Horlings, 2016) is currently strongly visible. For years, the largest brands have stimulated emotions, thus building added value. For instance, in the automotive industry this includes a sense of safety. In other industries it could be a sense of freedom, peace of mind, etc. Brands therefore communicate more than just the fact that their products are nice to drink, wear, look at or drive. Many brands provide a high level of added value (Hansen, 2021; Keller, 2013; Larsen, 2023; Lubin, 2022). This goes beyond the typical brand promise to consumers. Already in the early 1990s, major brands were starting to understand that being ‘green’ involves a conscious internal policy regarding social issues, such as regulatory protection of mothers returning to work after maternity leave. Many companies introduced internal educational programmes for the first time. These were the first examples of the then still not conscious yet very effective employer branding. It built a sense of higher purpose in working for a specific organisation. In the late 1990s there was an enhancement of brand images. Many companies started building entire programmes and campaigns which were no longer just individual corporate social responsibility (CSR) activities. They continued for months or even years and became permanent elements in brand strategies and communications. Building a brand purpose is a kind of evolution. It constitutes a higher step in thinking about the brand and it definitely goes beyond the sphere of marketing alone. Decisions that influence changes in the brand

132  The circular economy: clothing purpose are made at the business strategy level and often impact the functioning of the entire organisation, and in particular the manner of producing goods and services. Skilfully building a brand purpose primarily means answering the following questions (Marketingprzykawie.pl 1., 2022). How do companies acquire resources? How do they impact the environment? What is the full life cycle of the product and packaging they offer (also after being used by the consumer in the form of waste)? Can companies use their influence to impact consumers (e.g. with specialist brand projects) and responsibly shape their attitudes to sustainable behaviour, responsible consumption and circular economy practices? Currently, brands need to deliver new values to consumers (Wan et al., 2016; Zschiesche and Errichiello, 2021). This is why transferring the source of their contribution to the business level is an essential element in the transformation of their branding activities. It is about embedding the role and attitude of a brand in the economic and social context, from identifying what and how we produce, through improving what we could do better, to ensuring comfortable living and working conditions for employees and their families. This transformation is necessary for many brands. Otherwise, they will become producers of goods and services of decreasing consumer value. And, as research shows (Ghaffar et al., 2023; Hansen, 2021; Kerzner, 2022), consumers are increasingly conscious and feel that they have an influence on the actions of the largest brands and companies. Sustainable Brands Poland and Ipsos carried out an analysis of the level of consciousness of Polish consumers of sustainable development (Marketingprzykawie.pl 2., 2022). They put particular emphasis on consistency between declared intentions and real actions. A ‘Socio-Cultural Trend Tracker 2022’ (Marketingprzykawie.pl 2, 2022) study was carried out on a representative group of 2,001 Polish consumers aged 16–74. The main aim was to check the consumers’ readiness to take action in the area of ‘Sustainable Lifestyle Behaviours’ as defined by ‘Brands for Good’. Sustainable activities of 214 largest brands in 15 sectors of the economy (including clothing retail, energy and fuels, electronics, over-the-counter medicines, tobacco products, snacks) were also assessed. As a result (Marketingprzykawie.pl 1., 2022), one in five of the consumers stopped buying from a brand and using its products due to unethical or antisocial conduct by the brand owners. A vast majority of consumers (68%) believe that they have an impact on brands’ activities. More than 75% declare that they will remain loyal to brands that enable them to live in a better more sustainable way. According to the results of the present study, as many as 75% of Poles pay attention to sustainable and responsible development. They declare that they try to behave in a way aimed at protecting the planet, its inhabitants and resources, at least from time to time. Each of us can protect the environment and this is what we expect from companies and brands too. ­However, nearly a third of the respondents claim that this exceeds their capabilities. They believe that only businesses, the state and institutions have official causative power to introduce changes for the better. In Poland, women are the

The circular economy: clothing  133 leaders in sustainable development. They are the ones who usually take action related to sustainable and responsible development and who most often declare that they intend to implement such actions within the next 12 months. The two major barriers to living sustainably are ‘I don’t know how to start’ and ‘It’s not my priority’. As many as 61% of consumers declare that limiting the use of water and food waste are actions they intend to take within the next 12 months. 54% of respondents want to eat more fruit, vegetables and plant-based products (mainly because of the health benefits). At the same time, half of them intend to buy more durable products instead of disposable ones, and purchase recycled items. 8.3 Fast fashion and the need for a circular economy in the clothing sector The global media have published photographs of the world’s largest dump of discarded clothes (Wtórpol, 2021). Each year, 39,000 tonnes of used garments are deposited in Chile’s Atacama Desert. Clothes manufactured mainly in China and Bangladesh are sold in European, Asian and American markets. What stores do not manage to sell ends up in the desert in Chile. The amount of overproduction of clothing in the fast fashion sector is enormous. It is estimated that around 100 billion items of clothing are manufactured every year, and a truckload of textiles is dumped in a landfill or incinerated every second. The last few decades have been a time of huge changes in the textile market. In previous decades – and even centuries – much significance was attached to the quality and durability of garments. This was due to the fact that clothes were expensive and customers intended to use them for a long time. In the 19th century, a period of rapid growth in the textile industry, producers of ‘trashy’ clothes started to emerge. The present era is a time of fast fashion. Some companies now offer customers several, often over a dozen, collections annually, artificially driving demand. A consequence of this policy is manufacturing of immense amounts of clothes which are trendy and look good but are very low quality. After being washed just a few times, they lose their original appearance and properties. Today, it is common knowledge that this is intentional. Producers want people to replace their old garments with new ones as often as possible, as this generates profits. Unfortunately, it puts a huge burden on the environment (increased use of natural resources, including water, more land being used for cotton plantations, more production of chemicals and dyes, and a growing carbon footprint caused by transporting cheap clothing from China and developing countries). It is also a serious problem for people – getting rid of unnecessary or quickly deteriorating garments means additional costs, and so does succumbing to the latest trends and trying to adjust to the requirements of rapidly changing fashions, which involves constantly shopping for new items. Human rights is also an issue increasingly raised with reference to fast fashion (Sinha et al., 2022). Factories manufacturing for well-known global brands

134  The circular economy: clothing frequently use cheap labour from poor countries. What is worse, when newer collections replace previous ones, new unsold clothes are often destroyed instead of being made available for purchase at a lower price. The purpose of this strategy is to protect the image of the brand as ‘luxury’. According to the European Parliament, Europeans generate over 5.8 million tonnes of textile waste a year, only 25% of which is recycled (Cushman & Wakefield, 2022). Luckily, awareness of the problem is growing, along with openness to decisive steps. We observe that more and more Poles are giving up standard shopping for new items, which drives consumption in the clothing sector, and they increasingly tend to opt for alternative solutions, such as second-hand stores. A term which appears in the media and directly in company strategies increasingly frequently is ‘circular economy’. Previously, it was common practice to act based on a linear consumption model, i.e. ‘buy, wear, discard.’ Fortunately, growing social awareness is making people decide more often to maximise the full potential of products and raw materials, so as to extract less and limit the production of waste, plastic and CO2. According to a report entitled ‘Wiedza Polaków o recyklingu odzieży’ (Poles’ knowledge about recycling clothes) prepared by the Polish Zero Waste Association (Wtórpol, 2021), the clothing industry is the world’s second-largest consumer of water and the second-largest source of global pollution, behind the oil industry. Fast fashion is described as a cul-de-sac in the clothing sector (Papadoulou et al., 2021), yet in spite of growing awareness among customers departure from this model will take fashion companies much time. Before adequate regulations are issued, the answer is responsible shopping. The old saying ‘Only the rich can afford cheap things’ seems to be particularly apt here. When buying new clothes it is worth choosing more expensive ones, as their quality is incomparably better than similar-looking cheap equivalents. Different sports enthusiasts know this all too well. Good-quality trekking shoes and sailing jackets are a few times more expensive, yet they will serve their users for not one but ten seasons. The situation is similar for all types of clothing, in particular ‘classic’ models which resist fast fashion trends. It is worth remembering that the second-hand market is the fastest-growing one in the entire fashion industry. Shopping in such stores is definitely a manifestation of a circular economy. 100 billion clothing items (Stefanek, 2023) are produced annually for 8 billion people. How to make the fashion sector more eco-friendly has recently been discussed in Berlin by Polish and German textile companies. The essence of sustainable fashion can be summarised as ‘Reduce, Reuse, Rewear’. What sounds uncomplicated turns out to be much more difficult in practice, particularly when we lack tools supporting the process. This was pointed out by representatives of the Polish and German sustainable fashion sector who met in Berlin on 17 January 2023 during the Berlin Fashion Week. According to industry experts, already when purchasing a jacket the customer needs information not only about the material it is made from and where it was manufactured

The circular economy: clothing  135 but also about what is going to happen to it once they stop wearing it. However, there are still not enough technical solutions enabling implementation of all the circular economy ideas. There is a lack of legal regulations facilitating sustainable development. Often taking care to ensure that production is ecofriendly is the domain of smaller companies. Among large Polish clothing enterprises, only two have made significant achievements in this area: 4F and LPP. Large companies have much still to do. Currently, only 10% of clothes purchased in Europe are recycled. Moreover, a phenomenon called greenwashing has emerged in which an eco-friendly image of a company is falsely created. In the United States, increasing numbers of lawsuits are being filed against companies using greenwashing practices. Last year, some European brands were also accused of greenwashing, including clothing industry giants such as H&M and Decathlon. Both companies promoted their collections as ecofriendly but were unable to present clear evidence to prove it. The Dutch office for consumer protection accused the companies of making misleading advertising claims. Many industry experts believe that the key to sustainable development in the fashion industry is education. Research shows that for most people price is still the primary factor when purchasing apparel. More and more fashion brands are taking care to ensure they produce good-quality clothes and paying attention to the results of their production, use, and disposal. What Polish companies can learn from German brands is determination and consistency in pursuing their objectives, especially in terms of marketing and future planning. Many entrepreneurs in the textile industry in Europe are aware of the need to manufacture locally. Quality goods are already being produced in Poland, and many of them are exported to Germany. Germany is the world’s second-largest exporter of second-hand clothing (Używana odzież 2, 2023). A significant part of these goods are exported to Poland and the Netherlands. According to the Federal Statistical Office in Wiesbaden, last year Germany exported about 462,500 tonnes of old clothes and used textiles. This is about 5.5 kg per capita, 11% less than in 2021. Poland and the Netherlands received a third of these garments. Other major exporters of second-hand clothing are Belgium, the United Arab Emirates, and Turkey. The Federal Statistical Office published data regarding the global trade in textiles in 2021. According to the office, in 2021 Germany was the second most important global exporter of used clothes and textiles behind the USA. Germany was followed by China. German households throw out many clothing items. Some are collected in used clothes containers and waste collection points. In 2021, about 176,000 tonnes were collected – 5.8% less than in the record year, 2020, in which 187,000 tonnes were collected. In the last decade, the office recorded an over 70% increase in such waste. Although many clothes exported from Germany are reused, e.g. after being sold by second-hand stores, some are useless. As German news TV reported, some of the garments are pressed into bales and are transported to African countries, where they are immediately discarded. In Ghana, textile waste on beaches and in water basins

136  The circular economy: clothing poses a significant problem. Imports of used clothing to Germany in 2022 amounted to 63,000 tonnes – much less than it exported. Most of it – 41% – came from the United Kingdom. Austria, Switzerland and France also exported used textiles to Germany. Trade in used fashion is becoming popular in Germany. Last year, private households earned an average of €35 a month from selling used clothes. This is €8 more than in 2016, as was evidenced by the Federal Statistical Office in Wiesbaden (Używana odzież 1, 2023) on 14 March 2023. Most of these garments are sold online. Apart from online marketplaces such as eBay, there are also many portals strictly dedicated to the sale of used clothing, e.g. Vinted. Using a smartphone app, a favourite old jacket can be offered for sale to millions of users with just a few clicks. If this seems too much effort, a used clothes container can alternately be used. Old jeans and sweaters then begin a long journey. They are collected and partly also sorted by non-profit organisations, municipal waste management companies and commercial companies. Because this process is relatively time-consuming, the clothes are often exported. They are usually shipped to Poland and the Netherlands, and from there to Africa. The fashion cycle has been known for years. New apparel is manufactured mainly in Southeast Asia, sold in the global North and then exported as used clothing to countries in the Global South. A German umbrella organisation, FairWertung (non-profit old clothing collectors), has recently presented a report on how this controversial trade functions. Every now and then, accusations emerge that nearly half of the goods shipped are unusable and that the garments are even intentionally exported to Africa. The question arises of the extent that trade in used clothing is driving the problem of waste in countries such as Ghana. Every week, about 110 containers of used clothes reach the country. The items are then resold to other African countries or distributed in markets by individual sellers. ‘Second-hand textiles are ubiquitous in Ghana, they cover basic clothing needs and provide an income for numerous people’, explains cultural anthropologist Ann-Kristin Reinkenhoff from FairWertung. The trade in clothes is therefore an important employment sector. However, FairWertung was not able to ascertain whether damaged textiles are shipped from European collection points intentionally on a large scale. It is not a profitable business, as local traders do not pay for waste and the freight costs and duties for exporters are very high. The extent to which the quality of the goods can be verified before they are accepted is doubtful. For FairWertung, it is therefore all the more important to inspect the clothes before they are exported during so-called full sorting. This costly procedure includes a manual inspection. This is intended to prevent situations in which textile waste does not leave the EU at all, and in which items that do not match the climate are sent, such as ski jumpsuits sent to Ghana. The organisation rejects accusations that trade in used clothes is destroying the local textile industry. In Ghana, there is no clothing industry that could supply the local population with clothes. The country is undergoing a transformation into a ‘textile recycling centre’, FairWertung claims quoting Ghanaian politicians. This is

The circular economy: clothing  137 why, according to the organisation, more political regulations on trade in used goods are needed, including on better sorting of clothes and institutionalised tracking of the flows of used textiles. Forecasts indicate that within five years, as many as a quarter of clothing sales may take place in the ‘made to order’ format (Ciesielski, 2020). This matches the sustainability trend in the fashion industry, driven by young consumers. The pandemic definitely reinforced it. The latest research in the USA and Europe shows that ecological concerns motivate 15% of apparel buyers. The clothing industry, together with the oil and meat sectors, is among the largest polluters of the planet and is responsible for 10% of carbon dioxide emissions. This is primarily caused by the production of artificial fibres, which are petroleum derivatives. It also consumes a large amount of water, mainly in the process of cotton farming. Fashion brands need to take their consumers’ values into consideration in their products. This includes a commitment to recycling. Some brands, such as H&M, have already started collecting used garments. A method of designing clothes is also being planned that enables alterations and replenishment of unsold stocks. In this way they could be returned to stores the following season. This means more universal seasonless clothing. The pandemic has shown that seasonal collections need to be written off. This is a departure from the fast fashion trend, in which after one season clothes become useless. British studies have shown that a third of female consumers consider items of clothing to be old after wearing them two or three times. For producers, extending the life cycle of their goods means limiting or ceasing practices of incinerating millions of unsold garments annually instead of offering them at lower prices. Until recently, brands such as H&M and Burberry used to do just that. Ecological requirements and new consumer values have made many brands increase the transparency of their actions (Dew and Cyrus, 2018; Foroudi and Palazzo, 2021; Larsen, 2023). The Fashion Transparency Index monitors the entire clothing production and distribution chain. This is intended to build social responsibility (Wang and Korschun, 2015) in the fashion industry. More than 200 enterprises are part of the B-Corp initiative, which brings together companies which adhere to the principles of sustainable development. Among them is an outdoor clothing manufacturer, Patagonia, which is the first brand to use fleece lining made from recycled plastic bottles. This is increasingly important, as even before the pandemic more than 60% of consumers surveyed in the world were ready to change or boycott brands responsible for unethical practices. The pandemic also accelerated digitalisation of the fashion industry for both technical and efficiency reasons (Sinha et al., 2022). The isolation of economies made it impossible for designers, brands and clothing manufacturers to meet. The reaction was an introduction of virtual collections, catwalks and boutiques. The Paris Fashion Week (between February and March) was available to Chinese consumers in the form of an online live stream. It attracted twice as many customers as the offline event in 2019.

138  The circular economy: clothing Ultimately, however, there is movement towards full digitalisation of the entire supply chain. There are designers specialising in only digital design. A Dutch fashion house, The Fabricant, not only prepares 3D collection designs, which enable quicker orders, but also intends to make its digital collections available on social media. A dedicated app will make it possible to virtually try on its clothes, for instance on Instagram (Sarkar et al., 2023). This may also involve an ecological aspect, as one in every seven young women using this medium has considered wearing the same outfit twice to a social gathering to be a faux pas. Three-dimensional presentations of collection lookbooks may soon become standard in online stores. New possibilities of fashion presentation are also offered by holograms using virtual reality (VR). A Japanese brand, Asics, has recently promoted its new shoe collections in the media and among industry experts using this method. Supply chain management is supported by specialist digital cloud platforms, e.g. Unmade, which connect various industry players from designers, producers and transport operators to global brands. This makes it easier to make quicker decisions regarding designs and commissioning production with the support of artificial intelligence tools. The designs and digital samples are made available in 3D format, so production of even a small batch of clothing can be ordered by renting just one machine in a factory in Bangladesh or Vietnam. Additionally, it is possible to monitor the progress of execution in real time and almost immediately move production to another country if for some reason complete order execution is at risk. This type of management (Robertson, 2021) based on lean philosophy ultimately leads to distribution channels gaining even more bargaining power over manufacturers. In terms of fashion product promotions and sales, a quick growth in the importance of social media can be expected, at least in some markets (Sarkar et al., 2023). This is evidenced by the example of China. In the first two months of 2020 at the height of the pandemic, WeChat became a sales platform and recorded a 159% increase in transaction values. The (primarily financial) platform developed from a communication tool enables shop assistants to contact their customers, which raises the conversion rate (number of transactions relative to the number of openings of the application). Store chains offering luxury products sell them during live streams, which enable virtual visits to points of sale (the Yizhibo platform). This form of store visit is supported by influencers who offer virtual advice to both customers and distributors. Video chats have been very well received by leading Chinese brands, which have considerably expanded their use of this channel in their contacts with customers and business partners – in the case of the largest global e-commerce player, the Taobao portal owned by Alibaba, as much as sevenfold. Western consumers are also increasingly interested in buying clothes online. Research carried out by McKinsey shows that a quarter of customers in the USA and Europe intend to increase their online shopping, and 13% of customers have made their first online purchase. However, many retail chains are not prepared to sell digitally. From the economic point of view, the prospects for the

The circular economy: clothing  139 e-commerce sector are not optimistic as 44% of consumers report they intend to spend less on shopping in the coming months, also in this sales channel. Traditional brick-and-mortar shops will compete for the attention of customers too. At the same time, some companies, also in Poland (LPP, 4F), have announced a reduction in the number of their boutiques in shopping centres, where the rent is very high, in favour of high street shops. However, they still have to change, e.g. by taking into account the reality of the contactless economy. Some already existing technologies may be applicable, for instance ‘beacons’ (sensors), which identify customers inside or in front of the store and inform them through an app whether items they are interested in are available in their size and offer tempting discounts. This kind of solution may eliminate the need to try on clothes. A similar function is served by virtual mirrors, which allow customers to digitally try on items brought to the fitting room by displaying images of the customer in a number of outfits. This is safer and more convenient than traditional fitting rooms. There are many more useful technologies in the domain of the internet of things. The issues outlined above and the results quoted led to an empirical research project. 8.4 Methodology and data collection For this chapter, qualitative research was carried out using a triangulation of research methods: a case study of the 4F brand’s 4F Change project with participant observation in selected project activities between March 2022 and March 2023, four focus group interviews with young adults, online research of the content of the dedicated campaign website and communication via the brand’s social media profiles on Instagram and Facebook, and analysis of available documents related to the project, including clothes collection reports. The focus groups were students in the Faculty of Management at AGH University of Science and Technology in Kraków. The first group were full-time students (12 persons) of Management and Marketing; the second group (16 persons) studied Information Technology and Econometrics; the third group (17 persons) were full-time students of Management and Production Engineering; and the fourth group were part-time students of the same subjects as the third group. The aim of the research was to obtain information about the 4F Change project: the marketing undertaking and brand it was being carried out for; the people and institutions involved; the targets of the activities – employees, customers, media representatives, internet users; the aims; messages – content, formats, video materials; the scope of the activities; the budget; ways of measuring results and the effectiveness of individual activities; references to current conditions and determinants (war, pandemic, sustainability); practices with reference to legal conditions compared to other entities in the clothing sector). This included involvement in projects to stay up to date with different types of activities engaging stakeholders in order to determine their influence on

140  The circular economy: clothing participants’ behaviours and attitudes in line with the sustainable approach and implementation of the idea of a circular economy in the clothing sector, and study of the implementation of the guidelines of the 2030 Agenda (United Nations, 2023) by the brand under study. The entire research work, including study of the available sources of information and the qualitative empirical research, was oriented to assessing and analysing project activities conducted by clothing brands, in particular the 4F Change project, and to developing recommendations for marketers interested in transforming the clothing sector in the direction of a circular economy, a sustainable approach and skilful use of branded projects engaging stakeholders to change their behaviours and attitudes and those of their participants. 8.5 4F engagement in the implementation of the sustainable development goals The 4F brand has a sustainability strategy based on the 2030 Agenda (United Nations, 2023) and a significant manifestation of it is its 4F Change project. The strategy involves pro-sustainability activities in line with the four ‘think fair, act fair, create fair and live fair’ principles. The 4F Change project started in January 2022 as a grassroots initiative. It was the employees who felt that the time for change had come and appointed an EKO team. Over a dozen people led by their project manager regularly meet to take up new challenges in keeping with the slogan ‘Together we play for the planet. Let’s play it fair.’ The originators also created a movement of change-makers who want to influence what goes on within the company and also search for ideas for more sustainable activities in their private lives and inspire others, particularly the brand’s customers. Everyone visiting the 4F Change project’s website is encouraged to extend the life cycle of their clothes and they can choose the most convenient way to do this – have a courier pick them up, take them to one of the selected stores in Poland or use a machine to donate them. Such practices change behaviours and contribute to sustainable management of resources and the circular economy. The brand aims to develop better solutions and build environmental programmes, improve the quality of life in local communities, foster gender equality and prevent geographical exclusion in rural areas (Brand 4F, 2023). The action taken is primarily oriented to the goals of the 2030 Agenda (United Nations, 2023), and in particular goal no. 9 related to industry, innovation and infrastructure. It is executed, among other things, through: — gradual modernisation of infrastructure, processes and logistics. This is beneficial for the company’s sustainable development and the use of ecofriendly technologies; — waste sorting, the use of energy-efficient light bulbs and water filtering dispensers, and decreasing the amount of printed material; — opening a new Logistics Centre in Czeladź with a BREEAM certificate for the sustainable development goals (Project 4f Change, 2022).

The circular economy: clothing  141 With reference to goal 11, regarding sustainable cities and communities, the brand runs the 4F Pomaga Foundation, which offers modern sports spaces by building football pitches and sports fields where there is a shortage of them or the existing ones are of very low quality. As for goal no. 12, related to sustainable production and consumption, the following action is being taken: — increasing the share of more eco-friendly materials in the brand’s collections, while at the same time keeping the quality and durability high; — striving to introduce in the clothing collections at least 25% of products manufactured in compliance with the 4F Change project by 2026; — working to change the linear model into a circular one. For example, encouraging consumers to bring used clothes to 4F stores and giving their garments a second life; — reducing waste, rationally using clothes, education aimed at sharing clothes and reusing them, and recycling projects. Goal 13, which is related to climate action, is visible in 4F — implementing a move towards a circular model and increasing the share of collections connected with the 4F Change project. This is seen in the sale of second-hand items and through the 4F garment repair service; — commencing cooperation with the Carbon Footprint Foundation. This allows the brand to diagnose the most emission-intensive areas of its activity, which include gas consumption, electricity purchases and the production of materials used to manufacture clothes. 4F aims to achieve Goal 17, partnership for the goals, through: — a partnership with the Ubrania do Oddania (Clothing to donate) brand, which is a leader in returning clothes into circulation, the above-mentioned cooperation with the Carbon Footprint Foundation, and joining the Polish Plastics Pact; — commencing activities related to decarbonisation in cooperation with the Accenture brand, which has led to the development of as many as 300 ESG (Environmental, Social and Corporate Governance) indices; — local partnerships, as the 4F brand believes it should also help contribute to changes in our surroundings. These include cooperation with Volunteering for the Tatra National Park, Planeta 10, Operacja Czysta Rzeka (Operation Clean River) and Planet Heroes. The 4F brand is known both in Poland and abroad. It strives to not only ­increase its product range every year but also to develop a global distribution network. It operates in most European countries because it has an extensive wholesale network. Additionally, its products can be found in more than 600 multi-brand retail stores. In Poland, 4F currently has 369 shops, which

142  The circular economy: clothing indicates its well-established market position. It also has a significant impact on the natural environment. For several years now, the brand has been implementing projects supporting a circular economy. Activities in warehouses, offices and stores are carried out as part of the 4F Change project. The brand has started to make changes to clothing design, production and shipping. It has also taken action encouraging the sustainable use of clothes, which consists in striving to complete circulation by collecting clothes from customers who no longer need them and giving them a second life (Wear Fair, 2022). Therefore, it influences customers, who may also contribute to supporting activities related to ecology, sustainable production and consumption. 8.6 4F Change – good practices The introduction of circular fashion is one of the main principles behind 4F brand’s Change project. The initiative is carried out in partnership with Ubrania do Oddania (Clothing to donate), a company which collects used clothes from people who no longer need them and reintroduces them into the market for second-hand circulation. The undeniable impact of the fashion and textile industries on the natural environment made the OTCF company, owner of the 4F brand, launch the 4F Change initiative. The aim is to limit the brand’s negative impact on the environment by introducing fashion circularity and promoting the right attitudes among both consumers and businesses. The 4F Change strategy concentrates on four areas: philosophy – employee education; — — the workplace – changes in activities regarding work processes and the workspace, with emphasis on respect for both employees and the environment; — products – gradually increasing the share of collections manufactured in a sustainable manner, extending the life cycle of clothes already in use; — the environment – getting employees engaged in environmental projects, completing the circulation of clothes and establishing partnerships with organisations working for the planet. The first stage in the 4F Change project was the launch of a Wear Fair zone with second-hand clothes at the 4F store in the Arkadia shopping centre and at 4F stores in Bielsko-Biała (Sfera), Gdańsk (Forum Radunia), Katowice (Katowicka), Kraków (Bonarka and Serenada), Łódź (Łódzka), Rzeszów (Galeria Rzeszów) and Warsaw (Galeria Młociny, Galeria Północna). An education campaign is also being carried out as part of the project, during which special cardboard boxes are made available to the inhabitants of Warsaw for them to put their used clothes in. The boxes are located in six of the most popular places in Warsaw, such as Plac Konstytucji (Constitution Square), Rondo Daszyńskiego (Daszyński Roundabout) and the Wierzbno

The circular economy: clothing  143 metro station. This is a step aimed at showing Warsaw inhabitants how easy it is to take part in the campaign and start a new habit of managing the clothes they no longer use or need in a rational and systemic manner. 4F has also introduced machines for donating clothes in their stores (the first was in February 2022 at the Bonarka shopping centre in Kraków). The used clothes are immediately weighed and for each kilogram PLN 1 is donated to the 4F Foundation. After bringing their used garments, customers can have a discount on second-hand clothes sold in the stores. The machines also accept clothing of other brands, not just 4F. Moreover, used garments may be ­donated by ordering a courier on the brand’s website. Ski and snowboard clothing ­renting has also been launched as part of the project. After the winter season ends, the clothes will be put up for sale as part of the Wear Fair programme. 8.7 A review of selected projects carried out by Polish, German and Spanish clothing brands Online research conducted on brands’ special projects oriented at a circular economy in the clothing sector (with an emphasis on Poland, Germany and Spain) made it possible to identify – apart from the 4F Change project – a special platform called Zalando Pre-Owned, which allows customers to buy and sell second-hand clothes. According to research (Fashionbiznes.pl, 2020) commissioned by Zalando (in Poland, Germany, Spain, Belgium, France and the Netherlands), users are more willing to sell than buy used clothes. In Poland, as many as 62% of the respondents were both sellers and buyers of such goods. The most popular category of second-hand clothes purchased in Poland is women’s clothing, at 78% of the total (the average in the countries studied was 70%). Interestingly, Poles were respondents particularly happy to purchase second-hand children’s clothing – purchasing 61% (the European average was 40%). The question arises of whether this reflects a lower status of customers in Poland or rather them having a higher level of responsibility in their use of clothes. The main factor determining decisions to purchase preowned clothes in Europe is the will to take advantage of a good deal. The respondents also mentioned a desire to give clothes a second life and supporting sustainable trade as the main factors making them buy pre-owned items. Purchasing used clothing, although increasingly popular, still involves certain barriers for many customers. Among the inconveniences in purchasing second-hand garments, Europeans mentioned high shipping charges (31%), difficult or impossible returns (30%), bad-quality product photos (27%), too few details in product descriptions (26%), long searches for required items (25%) and individual sellers who do not seem trustworthy (24%). As for Poles, the main ­barriers to buying used clothes they mentioned included low-quality product photos (34%), poor product descriptions (40%) and inconsistency of the ­purchased products with their descriptions (26%). As a result of the research, Zalando Pre-Owned seems to be a long-awaited solution to the ­above-mentioned issues because in its new service the platform combines the possibility of

144  The circular economy: clothing buying and selling used clothes with the highest levels of customer service, secure shopping and convenience, which are well known from, and valued in, the company’s regular offer. When asked about Zalando’s new service, respondents instantly rated it very positively. It enjoyed a particularly warm welcome in Poland. As many as 91% of Poles (average 80%) declared that they will visit the new section of the online shop, and 82% claimed (average 68%) that they would shop for items from the new offer. 80% of Poles (average 70%) said that they would tell their friends about the new service, and 74% (average 63%) stated that the new category suits them perfectly. A vast majority of the respondents also said that the new offer harmonises with Zalando’s image (75% of the respondents). Another project is being carried out by the Re_store brand (Cushman & Wakefield, 2022). This involves an innovative store operation model which includes the possibility of reintroducing clothing into the store for resale, which is conducive to a circular economy. Customers bring their used clothes and at the store an employee prices them or puts them away for recycling. The employees of an international consulting company, Cushman & Wakefield, donated several dozen kilograms of clothes to Re_store. The ­profits were distributed among selected charities supporting eco-friendly ­activities. Caring about ecology and the environment and the wellbeing of other people constitutes the basis for the brand’s sustainable activities. More than 60% of clothes can be reused, but they end up in rubbish dumps and ­seriously pollute the planet. Re_store is a unique second-hand store concept which familiarises consumers with the idea of second-hand using and recycling of clothes. The store offers repurchases and further resales, giving clothing items a second life. Ubrania do Oddania (Clothing to donate) (UDO) (Stefanek, 2023) is a brand operating in Poland since 2018. It is currently entering the German market. It collects clothes and accessories and reintroduces them for sale. It runs a chain of circular boutiques at shopping centres and helps introduce large fashion brands in the second-hand market. In the German market, UDO intends to give people a chance to get rid of unnecessary clothes in a more transparent and eco-friendly manner. The main method of collecting used clothes in Germany is in containers. In spite of their broad availability, this solution has certain flaws, e.g. it is not transparent. It is not known whether the items will be donated to the needy or sold, and whether the money will go to charity and to what extent. UDO donates a specific amount for each kilogram of clothing to the donor’s charity of choice. Another drawback of used clothes containers relates to the conditions in which garments are stored. It often happens that before they are even collected, they deteriorate – usually due to excessive dampness and various kinds of dirt. Only 20–30% of clothes which end up in a container are fit for resale. The rest need to be disposed of. UDO protects the clothes collected, they are not exposed to unfavourable weather conditions and usually around 95% of the items can be reintroduced for sale.

The circular economy: clothing  145 The last project selected is Sorting for Circularity, which sorts clothes and brings them back into circulation (Ecoekonomia.pl, 2022). It was initiated by the Fashion for Good platform for sustainable fashion, innovation and change established in Amsterdam in the Netherlands. It addresses organisations in the textile industry and fashion brands. The project creates more efficient infrastructure for the treatment of textile waste in order to intensify the promotion of sorting clothes and put them back into circulation. All this is in line with circular economy principles. Due to their roles in textile waste processing in Europe, it was necessary to include Spain and Poland in the present project. The geographical scope of the activities conducted makes it possible to make detailed comparisons between the countries, reveals regional differences concerning textile waste management and contributes to innovation and investments in broader markets. Finally, the comparison enables changes in policies to accelerate the switch to the circular closed-loop model. Both countries are of key significance in discussions on the use of post-consumer textile waste. Spain was provisionally selected as a potential area for the EURATEX ReHubs project. This is a joint initiative aimed at textile waste treatment and fabric recycling in Europe. Poland is the third-largest exporter of used clothes in Europe. In Poland, the project was joined by Wtórpol, a company which collects textiles, puts them back in circulation and recycles used clothes. It brings more than 65,000 tonnes of textiles a year back into circulation. For many years Wtórpol has been taking part in various research and innovation initiatives. Joint projects help make efforts to implement the ‘zero waste’ approach more efficiently by educating apparel market participants and society about textile waste treatment and recycling. Only with the collaboration of the entire industry and investment in research and innovation will it be possible to transform the clothing sector into a circular industry. As long as the fashion industry separates economic growth from the use of natural resources, recycled materials will not be used optimally. We need to start treating used clothes and textiles that are thrown out as resources instead of waste, and implement the principles of sustainable production and consumption in a circular economy. 8.8 Conclusions Both the literature review and the research results confirmed the significance of branded projects in activities oriented towards a circular economy and sustainable transformation of the clothing sector in Poland, selected European ­countries and around the world. This study has primarily addressed the impact of the 4F Change project (activities carried out as part of it from January 2022 to March 2023) on responsible garment production and sustainable behaviours of its participants. The study has shown that project activities (including employee e­ ngagement, education, setting up special Wear Fair zones in stores, introducing machines

146  The circular economy: clothing for donating used clothes, contests, creating opportunities for spreading information e.g. on Healthy Day, promoting a second circulation of clothes, renting clothes etc.) increase users’ awareness of the impact of the clothing industry on the environment. They educate and change behaviours and attitudes. Young people in particular should be engaged in circular economy projects in order to implement the right solutions in their lives and in their surroundings, and shape the future of the planet. Environmentally educated people are likely to reflect and act more responsibly in line with sustainable development principles. The study has confirmed that project activities engaging employees and other stakeholders foster creativity and help develop better practices optimising the use of clothes and decreasing the impact of the clothing sector on the environment. Survey respondents emphasised that there were more and more projects supporting sustainable production and consumption and that people should get involved in these undertakings. Young people reported that they choose sustainable brands and products offered by these brands. What matters to them in the process of selecting clothes is the composition of the fabrics they are made of. Thanks to project activities, more conscious people search for better solutions in order to reduce their negative impacts on the environment. They increasingly donate their used clothes at collection points, choose clothes made of more eco-friendly materials and buy second-hand items. They do not want to degrade the environment without even thinking about it. Many ­respondents emphasised that they did not want to contribute to environmental pollution by purchasing clothes made of fabrics with a particularly bad composition. The 4F brand clearly stands out for its environmental action in the clothing sector. It carries out its activities in line with the goals of the 2030 Agenda (United Nations, 2023) and the ESG (Environmental, Social and Corporate Governance) directive in a consistent and creative manner, and engages its stakeholders. 4F definitely leans towards respecting circular economy principles. The brand wants to set an example for other clothing companies. By launching the project, it contributes to changes which transform consumer attitudes and positively impact the environment by completing circulation and introducing apparel made of eco-friendly materials. The brand stresses that changes in our way of thinking are essential for it to have positive effects on the environment and climate, in line with circular economy principles, sustainable resource management, the goals of the 2030 Agenda (United Nations, 2023), and the ESG directive of the Council of the European Union, in terms of sustainable activities, including occupational safety and health, and management and control processes. To sum up, projects supporting responsible production and sustainable use of clothes considerably contribute to a sustainable transformation towards more effective enterprise management. With the engagement of stakeholders (employees, project partners, customers, internet users, media representatives, people identifying with the brand in the real and virtual worlds, including

The circular economy: clothing  147 community members, through social media profiles on Instagram, YouTube, Facebook, etc., and other participants in the market), they inspire, educate, activate and encourage changes in attitudes and behaviours. Therefore, it is worth undertaking projects stimulating branded sustainable activities. In the coming months, the primary challenge for fashion market entities and brands will be to drive away the spectre of bankruptcy. A solution might be to join forces and consolidate in order to lower the cost of overheads. This can be achieved by connecting certain specialist and previously dispersed categories in the fashion market, such as outdoor, sportswear, footwear and wholesale suppliers. A greater scale will also bring greater economic benefits from technological innovations, provided that this does not jeopardise relations with nowadays even more valuable customers. Just like any other industry – in the face of the climate crisis and growing social inequalities – the clothing sector today has to confront assessment of its social and environmental impact and then deal with it in an appropriate, i.e. responsible, manner (Deloitte, 2021). In recent years, the clothing industry has indeed been among the industries most frequently accused of environmental degradation in public discourse. Paradoxically, this multidimensional ‘attack’ has contributed to a rapid growth of sustainability in the clothing sector and growing pressure exerted on brands. Changes need to be made in favour of the natural environment because the clothing industry is responsible for 8–10% of greenhouse gas emissions, water pollution, a lack of control over microplastics, devastation of biodiversity, toxic textile dumps, etc. Second, the well-being of employees along the entire value chain is of key significance, from farmers cultivating and harvesting cotton to people who work manufacturing, dyeing or sewing clothes, and also people employed in the fashion industry as models. There are a number of ethical problems in this area. Those usually mentioned include scandalously low pay for work, a lack of any occupational safety and health standards and even physical and mental abuse. And finally, the users of the clothes themselves are key to sustainability. It is worth considering what role we play in the clothing industry, how often we succumb to ever-changing trends, what type of body image is promoted in the messages of clothing brands, how often we buy things we do not really need (this applies to many sectors) and forget about our own style following the latest fads. We have accepted a new definition of quality as mediocrity, and moreover we have stopped challenging it. Contemporary customers are surely more and more educated, demanding and oriented towards sustainability, which is a considerable challenge for fashion brands. An ideal fashion world would not rush frantically, it would not overproduce or create new trends every few months, but would take advantage of our cultural heritage in the form of handicraft, care about product quality, respect people and it would not rely on social and environmental exploitation. It should be transparent, circular, creative and safe for everyone along the value chain. The long-term challenges facing the clothing industry certainly include

148  The circular economy: clothing combating overproduction, decarbonisation, circularity in production processes and consumption models, reducing plastic use, improving animal treatment standards (for instance when obtaining wool), transparency and ensuring fair treatment and pay for work. In short, the greatest challenge faced by the fashion industry today is comprehensive implementation of responsibility – along the value chain, in branded projects, in relationships with stakeholders and in the area of customer relations. To sum up, ecological requirements and new consumer values have made many brands increase the transparency of their actions. The pandemic also accelerated digitalisation of the fashion industry, for both technical and efficiency reasons. The isolation of economies made it impossible for designers, brands and clothing manufacturers to meet. The reaction was the introduction of virtual collections, catwalks and boutiques. A dedicated app will make it possible to virtually try on clothes, for instance on Instagram. This may also involve an ecological aspect, as every seventh young woman using this medium has considered wearing the same outfit twice to a social gathering a faux pas. Three-dimensional presentations of collection lookbooks may soon become standard in online stores. New possibilities of fashion presentation are also offered by holograms using virtual reality (VR). In fashion product promotions and sales, a quick growth in the significance of social media can be expected, at least in some markets. Designs and digital samples will be made available in 3D format so production of even a small batch of clothing can be ordered by renting even just one machine in a selected country. Video chats have been very well received by leading brands, which have considerably expanded their use in their contacts with customers and business partners. With ourselves and future generations in mind, we should strive for a circular economy, zero waste practices, a responsible use of clothes, sharing them and extending their life cycle, and reducing the carbon footprint in production and waste management processes in line with a sustainable transformation of both the clothing sector and the entire economy. References Bloomstein, M. (2021). Trustworthy: how the smartest brands beat cynicism and bridge the trust gap. Page Two Books, Incorporated. Brand 4F. (2023, 13 March). Blog 4F change. Retrieved from https://4f.com.pl/blog/ category/4f-change Ciesielski, M. (2020, 21 March). Moda – nowe szaty króla. Retrieved from https://www. obserwatorfinansowy.pl/tematyka/makroekonomia/trendy-gospodarcze/ moda-nowe-szaty-krola/ Cohen, M. J. (2017). The future of consumer society. Prospects for sustainability in the new economy. Oxford University Press. Cushman & Wakefield. (2022, 11 March). By giving fashion a second life, we help. ­Retrieved from https://www.cushmanwakefield.com/pl-pl/poland/news/2021/11/bygiving-fashion-a-second-life-we-help

The circular economy: clothing  149 Delchet-Cochet, K. (Ed.). (2020). Circular economy. From waste reduction to value creation. ISTE, Wiley. Deloitte. (2021, 7 March). Odpowiedzialnos ́ć w modzie. Retrieved from https://www2. deloitte.com/pl/pl/pages/zarzadzania-procesami-i-strategiczne/articles/­ odpowiedzialnosc-w-modzie.html Dew, R., & Cyrus, A. (2018). Customer experience innovation. How to get a lasting market edge, Emerald Group Publishing, United Kingdom. Ecoekonomia.pl, Sorting for Circularity. (2022, 15 February). Retrieved from https:// ecoekonomia.pl/2022/02/15/sorting-for-circularity-wtorpol-partnerem-europejskiegoprojektu/ Fashionbiznes.pl. (2020). Zalando podbije rynek odzieży używanej. Retrieved from https://fashionbiznes.pl/zalando-podbije-rynek-odziezy-uzywanej-platformawprowadza-do-polski-oferte-pre-owned/, 17 February 2023 Foroudi, P., & Palazzo, M. (2021). Sustainable branding: Ethical, social and environmental cases and perspectives. Routledge. Ghaffar, A., Zaidi, S.S.Z., & Islam, T. (2023). An investigation of sustainable consumption behavior: The influence of environmental concern and trust in sustainable producers on consumer xenocentrism. Management of Environmental Quality: An International Journal, 34(3), 1–23. https://doi.org/10.1108/MEQ-05-2022-0153 Goodson, S., & Walker, C. (2021). Activate brand purpose: How to harness the power of movements to transform your company. Kogan Page Publishers. Hansen, H. (2021). Brand management in a co-creation perspective: Communication as constitutive of brands. Routledge. Ind, N., & Horlings, S. (2016). Brands with a conscience: How to build a successful and responsible brand. Kogan Page Publishers. Keller, K. L. (2013). Strategic brand management. Building, measuring and managing brand equity (4th ed.). Pearson Education Limited. Kerzner, H. (2022). Innovation project management: Methods, case studies and tools for managing innovation projects. Wiley. Larsen, F. (2023). Sustainable energy branding: Helping to save the planet. Routledge. Lubin, L. (2022). How to build your brand: Implementing a proven and effective process. Wiley. Marketingprzykawie.pl 1. (2022). Brand purpose. Retrieved from https://­marketingprzykawie. pl/artykuly/brand-purpose-to-nowosc-czy-ewolucja/, 19 March 2023. Marketingprzykawie.pl 2. (2022). Sustainable brands. Retrieved from https://­ marketingprzykawie.pl/espresso/wiekszosc-konsumentow-wierzy-ze-ma-wplyw-­­nadzialania-marek-badanie-sustainable-brands-i-ipsos/, 13 March 2023. McPhee, W., & Dias, S.M. (2020). Integrating sustainability in major projects: Best practices and tools for project teams. Routledge. Papadoulou, M., Papasolomou, J., & Thrassou, A. (2021). Exploring the level of sustainability awareness among consumers within the fast-fashion clothing industry: A dual business and consumer perspective. Competitiveness Review: An International Business Journal, 32(3), 350–375. https://doi.org/10.1108/CR-04-2021-0061 Project 4F Change. (2022, 19 January). Retrieved from https://4f.com.pl/blog/ post/4f-change-malymi-krokami-w-kierunku-wielkiej-zmiany Robertson, M. (2021). Sustainability principles and practices. Routledge. Sarkar, J.G., Sarkar, A., & Sreejesh, S. (2023). Developing responsible consumption behaviours through social media platforms: Sustainable brand practices as message cues. International Technology & People, 36(2), 532–563. https://doi.org/10.1108/ ITP-01-2021-0044

150  The circular economy: clothing Sinha, P., Sharma, M., & Agrawal, R. (2022). A systematic review and future research agenda for sustainable fashion in the apparel industry. Benchmarking: An International Journal, 9, 1–26. https://doi.org/10.1108/BIJ-02-2022-0142 Stefanek, M. (2023, 18 January). Antidotum na ‘szybką mode’. Retrieved from https:// www.dw.com/pl/wsp%C3%B3%C5%82praca-polsko-niemiecka-potrzebneantidotum-na-szybk%C4%85-mod%C4%99/a-64438764 United Nations. (2023, 13 March). The 2030 agenda for sustainable development – The 17 goals. Retrieved from https://sdgs.un.org/goals Używana odzież 1. (2023, 14 March). Kwitnąca branża i kontrowersje. Retrieved from https://www.dw.com/pl/u%C5%BCywana-odzie%C5%BC-kwitn%C4%85ca-bran%C5%BCa-ikontrowersje/a-64985439 Używana odzież 2. (2023, 22 March). Z Niemiec trafia do Polski. Retrieved from https://www.dw.com/pl/u%C5%BCywana-odzie%C5%BC-z-niemiec-trafiado-polski/a-65085278 Wan, L. C., Poon, P. S., & Yu, C. (2016). Consumer reactions to corporate social responsibility brands: The role of face concern. Journal of Consumer Marketing, 33(1), 52–60. Wang, W., & Korschun, D. (2015). Spillover of social responsibility associations in a brand portfolio. Journal of Product & Brand Management, 24(6), 596–609. Wear Fair. (2022, 22 March). Campaign in the spirit of circular fashion. Retrieved from https://4f.com.pl/blog/post/4f-i-ubrania-do-oddania-posz erzaja-akcjewear_fair-w-duchu-mody-cyrkularnej Wtórpol (2021). Fast fashion, Retrieved from https://www.wtorpol.com.pl/aktualnosci/ fast-fashion-slepy-zaulek-przemyslu-modowego/, 12 March 2023 Zschiesche, A., & Errichiello, O. (2021). Reality in branding: The rules of European brand management in 50 answers. Books on Demand, Norderstedt.

9

Implementing a circular economy in the construction sector A case study of Porto Office B by Sol e Mar and SAO investments

9.1 Introduction The construction sector is one of the three most national resource-consuming industries. Therefore, integration of a circular economy in the industry has become a priority for national economic development, making study of the issue critically important, especially in developing countries undergoing intensive urbanisation (Suárez-Eiroa et al., 2019; Bilal et al., 2020; Schroeder et al., 2019; Iacovidou et al., 2021). The development process significantly increases real estate production, which still commonly uses the traditional 'take, produce, dispose' model (Castell-Rüdenhausen et al., 2021; Ghufran et al., 2022). The linear approach, however, does not account for the reuse of building materials resulting from demolition, thereby turning buildings into waste at the end of their lifespans (Benachio et al., 2020; Akanbi et al., 2019). The time has come to leave behind the old linear approach. We must recycle materials from building demolitions at a high rate, and ensure environmental respect and a substantial reduction in construction and demolition waste. An environmental performance assessment of implementing a circular economy in the construction industry requires a recurring structure (Sparrevik et al., 2021; Geissdoerfer et al., 2017). In the context of a circular economy, this recursive structure involves cyclical use and revitalisation of waste and resources in an economic system. It aims to minimise raw material and resource waste by recreating, recovering and reusing them in the construction and operation of buildings. This shift results in a paradigm change towards sustainability and a circular economy (Stewart and Niero, 2018; Menon and Suresh, 2020; Wijewansha et al., 2021; Ghufran et al., 2022). The construction industry primarily implements circular economy principles through building certification schemes. In recent years, many countries have developed certification procedures to assess the environmental sustainability of buildings, aiming to decrease energy consumption and environmental impacts during the construction, management and operation phases (Mattoni et al., 2018). Although these schemes vary, they all promote sustainability and circular economy principles. They are adapted to conditions in individual DOI: 10.4324/9781003411239-10

152  Implementing a circular economy: Construction regions through their differentiation and flexibility, and they assess the sustainability performance and/or potential environmental impact of buildings and projects (Suzer, 2019; Ferreira et al., 2023). These assessments also aid decision-making for sustainable development (Ali and Al Nsairat, 2009). The urgency to address climate change and reduce greenhouse gas emissions has significantly influenced the building sector, leading to the development of various building sustainability assessment methods to facilitate the achievement of these aims (Suzer, 2019; Ferreira et al., 2023). These assessment systems, which are closely linked with the notion of green buildings, serve as practical sustainability tools in the industry. Green buildings use energy and water efficiently, reduce waste generation and pollution, and minimise the consumption of all other resources to protect the planet without compromising stakeholders’ health, comfort, expenditure, safety and satisfaction. These buildings also aim to satisfy a significant portion of their energy needs by using renewable energy sources and to reduce water demand through water harvesting. The ‘reduce, reuse, recycle’ principle applies to green buildings (Varma and Palaniappan, 2019). The following section presents a practical case study of application of certification methodology and illustrates the stages in LEED certification on the example of Porto Office B by Sol e Mar (http://www.­ solemar.com.pl/) and a selected element in BREEAM certification using SAO Investments as an example (https://sao.com.pl/). The analysis focuses on the credit system for each certification aim in practice. The case study also discusses credit intentions, requirements and status, and outlines the steps taken and those remaining to meet each credit objective (Collectors 2020; Deloitte, 2017; European Environment Agency, 2021). 9.2 Recycling construction materials The recycling of construction materials is a key topic, and as early as 2016 the EU Protocol on Construction and Demolition Waste Management was developed. The main objective of this protocol was to boost trust in the process of managing construction and demolition waste and in the quality of recycled materials that originate from this waste. The protocol proposed several measures intended to help the EU meet its aim of improving the reliable management of construction waste. Improving waste identification, segregation at source and collection all are regarded as being of high importance. In practical terms, correctly defining waste to avoid circumvention is crucial. This can be further supplemented by updating material lists, segregating side streams and separating hazardous waste, also known as decontamination. Additionally, controlled and selective demolition and, where possible, on-site processing of demolition waste is also an essential consideration. Another important factor is the improvement of waste logistics. This involves ensuring compliance with waste registration regulations and also meeting transportation requirements. The identification of off-site sorting practices through mechanical and non-mechanical sorting is also important as is the achievement of. improvements in

Implementing a circular economy: Construction  153 waste processing. This involves disposing of hazardous waste through sorting, selecting waste for partial pit filling and cleaning and preparing it for reuse. The process of on-site approval or rejection of materials for recycling can also play a significant role. Moreover, energy recovery can bring additional economic and environmental benefits. Quality management is another issue that requires attention. This can be achieved through the use of unified international quality marks, certification and control systems to ensure regulatory compliance. Achieving a standardised quality system requires qualified employees operating the right equipment with a clear division of responsibilities in a high work safety environment. Transparency of operations and site management are essential to ensure this quality system. Establishing appropriate policy and framework conditions is another critical point. This involves creating incentive systems such as landfill fees, and, where justified, a landfill ban. Particular attention should be paid to ensuring suitable legal provisions for the delimitation of excavation fill and the use of raw materials. Regulations must be modified to supervise and reduce the incidence of hazardous construction and demolition waste, introduce integrated strategies for construction and demolition waste, establish a transparent permit system and significantly increase efficiency in the enforcement of construction waste management regulations. The wider benefits of the protocol include increasing demand for recycled materials from construction and demolition waste, promoting new economic activity and participants in the waste infrastructure sector and increasing cooperation in the construction and demolition waste value chain. Other benefits are progress in meeting construction and demolition waste targets, harmonised EU markets for recycled materials from construction and demolition waste where applicable, reliable statistics on construction and demolition waste across the EU, reducing environmental impacts and contributing to increased resource efficiency (EU Protocol for the Management of Construction and Demolition Waste, 2016; Suárez-Eiroa et al., 2019). The effectiveness of material recovery during the demolition process hinges on several factors. - Security concerns can add to the overall cost of project implementation. - Time is another factor. Selective demolition takes longer than traditional demolition, potentially leading to higher costs. Solutions optimising recyclability and reuse should be taken into account. - Economic feasibility and market recognition are critical. The cost of removing an item, such as roof tiles, must be justified by its resale value. Moreover, the reused item must be competitively priced and be recognised by prospective users. For certain materials, such as iron, metal and scrap, market prices can fluctuate significantly, often depending on seasonality. - Space can also be a limiting factor. When space is limited, segregation of collected materials should occur at a sorting facility. Particularly in space-limited situations, proper planning is essential.

154  Implementing a circular economy: Construction - Location matters too. The number of recycling facilities close to the project site or local waste management services might restrict the potential recovery of demolition materials. - Weather conditions can play a role. Some techniques might depend on certain weather conditions that may not prevail at the time of the project. (Joint Research Centre of the Directorate-General for the Environment, Best Environmental Management Practice in the Building and Construction Sector, 2015) In Poland, for instance, since 1 January 2023 there have been significant changes with regard to construction waste in the construction of a new building or the revitalisation of an old one. New rules have been introduced on the collection and removal of construction and demolition waste. These rules were already announced in 2021, thus providing the construction sector with ample time to adapt. From 2023, it becomes mandatory for the waste generator to segregate construction waste at construction sites. Construction and demolition waste must be selectively collected and categorised into six basic categories: wood, metals, glass, plastics, gypsum and mineral waste (including concrete, brick, tiles and ceramic materials, and stones). Key regulations regarding construction waste in Poland include the following. The provisions in the Waste Act do not apply to naturally occurring materials excavated during construction work that are used for construction purposes on the site. It is also prohibited to treat construction waste as municipal waste. Exemptions from waste record-keeping are only granted to individuals who are carrying out construction work on their own behalf. Separate rules exist for recognising an entity as a generator or possessor of waste resulting from construction services in Article 3(1, 32) of the Waste Law. There are unique waste record-keeping rules for construction waste generated while providing off-site construction services. Generators of certain small quantities of construction waste are exempted from waste record-keeping. And finally, from 1 January 2023, segregation of construction waste became mandatory, along with selective collection and disposal of construction waste (BDO Guidebook, 2023). Similar solutions are already being implemented, or are in the process of being implemented, in all European Community countries. This is a result of aligning the laws of Community countries with EU directives (COM (2012) 433, COM (2014) 445 final, CEAP (2020), and Directive 2008/98/EC). It is crucial to minimise the discrepancies that may arise among the solutions adopted in individual member countries. 9.3 Real estate certification and modern infrastructure solutions In the construction sector, a plethora of natural resources are exploited for diverse purposes. These range from constructing residential, commercial and

Implementing a circular economy: Construction  155 industrial edifices to developing transport infrastructure and public facilities. In response to increasing consumption and environmental impacts, various sustainable construction initiatives have been instituted to mitigate natural resource usage and diminish environmental footprints. Key practices include the utilisation of eco-friendly materials, energy efficiency measures, effective water management, recycling, building renovation and the incorporation of green technologies such as green roofs and vertical gardens. A number of globally recognised initiatives underscore the ethos of sustainable construction, each aiming to moderate natural resource consumption and mitigate environmental degradation. - LEED (Leadership in Energy and Environmental Design). This is an internationally recognised building certification system that emphasises sustainable practices in the design, construction and operation of buildings. - BREEAM (Building Research Establishment Environmental Assessment Method). This is a sustainable building rating and certification system from the United Kingdom that addresses both new and existing buildings. - DGNB (Deutsche Gesellschaft für Nachhaltiges Bauen). This is a German certification system for sustainable buildings that evaluates edifices from environmental, economic and social perspectives. - Passive House (Passivhaus). This is a standard originating in Germany that provides guidelines for designing buildings with minimal energy consumption. It has garnered global recognition. - Living Building Challenge. This is a holistic methodology for sustainable building that upholds the most stringent standards for green building design and construction. - Zero Energy Buildings (ZEBs). These are buildings that balance their energy consumption and production annually, typically through the integration of renewable energy technologies such as solar panels and wind turbines. - Green Materials. Utilisation of low-impact materials such as wood from certified forests, low volatile organic compound (VOC) content materials and recycled materials. - Water-Saving Technologies. These may be rainwater harvesting devices, efficient sanitation systems or grey water treatment and reuse systems. - Construction Site Waste Management. These are practices aimed at segregating, recycling and minimising waste generated during construction. - Integration with the ecosystem. Design and implementation of buildings that synergise with the local ecosystem, potentially through the integration of green roofs, vertical gardens or habitats for fauna. Multicriteria assessment-based certification systems are gaining traction in the real estate market, particularly in the office, retail and warehouse sectors, with growing adoption also in the residential market. The aim of building certification is to gauge the quality of solutions employed in a facility, and the level of alignment with a circular economy in the construction or revitalisation of

156  Implementing a circular economy: Construction buildings, independently of legislative requirements. Notably, certification associations operate independently and put varying emphasis on distinct aspects of sustainability. Nevertheless, all certification systems fundamentally rest on the same principles of sustainability. LEED, one of the two most prominent multicriteria certification systems, was established a quarter-century ago and has since seen significant evolution. Presently, LEED encompasses a variety of categories, such as Building Design and Construction (BD+C), Operations and Maintenance (O+M) and Interior Design and Construction (ID+C). Each of these categories is further divided into schemes. For instance, the BD+C primary scheme includes LEED New Construction for newly constructed buildings, LEED Core & Shell for common areas in new buildings, schools, retail and so forth. 9.4 The LEED certification strategy – the example of Porto Office B Application of the Leadership in Energy and Environmental Design (LEED) certification strategy can be exemplified by the Porto Office B project. This property, situated in Gen. Bohdana Zielińskiego Street, is in a verdant tranquil area of Krakow. The development was spearheaded by Sol e Mare, with an ambition to harmonise technology and nature in the complex to constitute the optimum work environment. Porto Office B has a meticulous design that blurs the barriers between technology and nature. The location, just a 10-minute ride from the city centre (Main Railway Station) and 3 minutes from the ICE Congress Centre, situates it favourably in a vast green area. The project incorporates advanced public transport in its development strategy. The premises are in close proximity to bus stops on Zielińskiego and Praska Street and tram and bus stops at the Kapelanka transit hub, making the complex easily accessible from anywhere in Krakow. The municipal bicycle-sharing system also promotes easy access via cycle paths. The office’s location is in close proximity to green leisure and recreational areas, offering panoramic views of the Twardowski Rocks and the Green Community Gardens. The LEED for Core & Shell Development Rating System was implemented for this project. This system is typically used for projects in which the developer has control over the design and construction of the entire core and shell base building (such as mechanical, electrical, plumbing and fire protection systems) but not the tenant fit-out. The LEED certification system enables achievement of up to 110 points, with the various certification levels shown in Table 9.1. The report aims to furnish Sol e Mar with a comprehensive analysis of the current status of Porto Office B in terms of credit requirements, projected Table 9.1  Certification levels Certified Silver Gold Platinum

40–49 Points 50–59 Points 60–79 Points 80–110 Points

Sources: US Green Building Council.

Implementing a circular economy: Construction  157 timeline, anticipated costs and role delineation. In forming the strategy, the certifying company examined all the credits in order to formulate the most apt approach for the LEED certification process. The LEED rating system is an internationally recognised standard in green building projects and offers thirdparty verification that a project has attained specified environmental standards and performance requirements. Green building projects that achieve LEED certification enjoy a number of advantages, such as: - - - - - -

Higher transaction prices (16% more than non-green buildings); Solid returns on investment, with an average of 6.6%; Higher occupancy rates (approximately 3.5% greater); Healthier and more productive building occupants; Lower heating and cooling costs (up to 40% less than conventional projects); Positive impacts on marketing, publicity and corporate image.

9.4.1 The LEED timeline

The LEED certification process unfolds along a specified timeline, and submission of LEED credits occurs in two distinct stages: the Design phase and the Construction phase. The phases encompass the following steps: - - - -

Strategy (already submitted) Precertification (optional) Design Construction 1 Precertification (Optional) In the event that this step is chosen, the certifying company will concurrently prepare the Precertification Submittals during the Design Implementation and Submittals Phase. Although precertification does not guarantee certification, it can offer insights into how a core and shell building might perform in a LEED review once completed. Preliminary Precertification Review Before significant project completion, the certifying company will submit a complete application for Precertification Review. This application must include payment of the Precertification Review fee by Sol e Mar and complete submittal documentation for all prerequisites and a sufficient number of credits to meet the minimum points required for certification. Final Precertification Review During this review, the project team’s responses and the submitted documentation are examined, and the review team determines whether the credits are anticipated, pending, or denied. 2 LEED Design Phase

158  Implementing a circular economy: Construction Preliminary Design Review The submitted application documentation is reviewed for completeness and compliance with the appropriate LEED rating system. The review team provides its preliminary design review, detailing which prerequisites and credits are anticipated, pending or denied, and whether the project information is approved or not. Project teams can choose to accept the results of the preliminary design review as final, or they can submit a response. Final Design Review (optional) In the final design review, the project team's responses and submitted documentation are examined, and the review team determines whether the credits are anticipated, pending or denied. 3 Construction Preliminary Construction Review The remaining credits are submitted and reviewed. The review team provides its preliminary construction review, detailing which prerequisites and credits are anticipated, pending or denied, and whether the project information is approved or not. Project teams can choose to accept the results of the preliminary construction review as final or they can submit a response. Final Construction Review (optional) Table 9.2  Preliminary timeline Item

Start Date

End Date

Project Registration Strategy LEED Design Phase Documentation – 3–6 Months Design phase review time Design Submittal Review Respond to GBCI Comments Design Final Review Design Appealsa Design Appeals Reviewa Construction Phase – in parallel with construction process Construction phase review time Construction Submittal Review by GBCI Respond to GBCI Comments Construction Final Review Construction Appealsa Construction Appeals Reviewa

14 Oct 21 14 Oct 21 14 Oct 21

14 Apr 22

14 Apr 22 28 Jul 22 25 business days 25 business days 15 business days 30 days 30 days Construction start date Construction commencement date +3 months TBD 25 business days 25 business days 15 business days 30 days 30 days

Source: Internal SoleMar material. Notes: a Optional – only in the case that credits are rejected.

Implementing a circular economy: Construction  159 In the final construction review, the project team’s responses and submitted documentation are examined, and the review team determines whether the credits are anticipated, pending or denied. The actual timeline may vary depending on the actual response times and the LEED documentation process (accepting the strategy in a shorter period, not requiring appeals), potentially reducing the overall time indicated above. 9.4.2 LEED prerequisites and credits – content organisation

The LEED certification system credits are organised based on their compliance status as in the categories detailed in the Executive Summary section and as follows: - ‘Yes’ if based on the information provided the criteria for achieving the point will be met. - ‘Targeted’ if the point could potentially be achieved, subject to further design and construction work to confirm implementation. - ‘Possible’ if the point might be achieved with an investment exceeding a 36-month payback period or depending on factors beyond our control. - ‘No’ if the building currently does not meet the requirements for the credit. The LEED for Core and Shell comprises 7 credit categories: - - - - - - -

Sustainable sites Water efficiency Energy & atmosphere Materials & resources Indoor environmental quality Innovation in design Regional priority

Each credit is outlined according to: Points possible: Number of points that can be achieved Status: Status of the credit Furthermore, each credit is detailed as follows: - Intent. This summarises the purpose of the credit. - Requirements. This section lists the requirements to achieve the credit. - Status. This segment summarises the credit’s current status, actions taken and actions still to be taken. - The Porto Office B Project Checklist encapsulates the project score for each category, and a detailed analysis of each LEED prerequisite and credit is conducted in later sections of the report.

160  Implementing a circular economy: Construction The certification process provides an up-to-date working project checklist, which is used for communication with the project team and the owner. This checklist includes a credit-by-credit review of all actions required for the ­completion of ‘Yes’, ‘Targeted’ and ‘Planned’ credits, and is kept updated throughout the project’s lifecycle. The detailed provisions in the checklist summarising the project scores for each category and providing an in-depth analysis of every LEED ­prerequisite and credit for Porto Office B are included in Appendix 1. This appendix contains information on the LEED certification requirements and the current status of the Porto Office B project. Tables summarise the credit requirements and status of each category, with some credits classified as ‘possible’ or ‘targeted’ according to their attainability. The text further highlights the prerequisites and credits requiring additional investigation to qualify. The certification company formulated a comprehensive strategy for the certification process, and certain measures have already been ­implemented to satisfy the requirements. However, some credits remain that require more design and construction work to verify implementation. Overall, the project has a potential score of 106 points, with 45 points ­targeted, 19 points possible and 42 points not yet achieved. The conclusion is that the project has made significant strides towards LEED certification but more work is required to secure all the credits and prerequisites (Sole e Mare Internal Material 2023; Porto Office n.d.). 9.5 The BREEAM multi-criteria certification system: the example of SAO Investments The BREEAM (Building Research Establishment Environmental Assessment Method) multi-criteria certification system is the second most widely adopted globally. Founded in the early 1990s, it was initially intended as a government system aimed at enhancing the quality of residential construction. Over time, it became an independent institution and expanded its certification to encompass all building types. BREEAM consists of several specific schemes. - New Construction (international, for countries outside the UK) aimed at newly constructed buildings and in use for buildings that have been in operation for at least two years; - Refurbishment & Fit-Out for renovation and interior fitting out; - Communities for urban development projects, and Infrastructure for infrastructure projects. The BREEAM assessment structure covers ten categories: Management, Health and well-being, Energy, Transport, Water, Materials, Waste, Land use and ecology, Pollution and Innovations. Each category encompasses a defined number of critical points (prerequisites) that must be fulfilled for eligibility for certification, minimum requirements and optional requirements (including an innovation

Implementing a circular economy: Construction  161 category) that provide additional points. An example of a critical requirement is the utilisation of legally sourced wood or asbestos-free materials. The sum of the points achieved is then multiplied by the percentage weight assigned for the country in question. Certification levels are assigned based on the final score: Pass for >30%, Good for >45%, Very Good for >55%, Excellent for >70%, and Outstanding for >85% (Polish Green Building Council, n.d.). An example of implementation of BREEM certification is an investment by SAO Investments ASI Sp. z o.o. The investment is still in the design phase. The project considered options for heating and cooling a building. The company based its solutions on Daikin systems. Daikin systems are the ideal partner for a green project aiming to achieve BREEAM goals. Daikin contributes to the overall sustainability level of the building and makes it possible to achieve an Excellent or Outstanding BREEAM rating. The Daikin VRV heat pumps used in the investment project can contribute to 6 of the 10 BREAM categories and earn up to 30 BREEAM points. The project has selected VRV systems with VRV heat recovery selected for both R410A and R32 refrigerants – which is new on the market, has a low greenhouse effect coefficient (GWP) and in which the systems themselves need less refrigerant. All the units have unique variable evaporation temperature technology (VRT). The refrigerant in Daikin VRV units is mostly recycled, which contributes to a low carbon footprint. In the first design phase, the following assumptions were made. - Air-reversible heat pumps with variable refrigerant flow i.e. VRV units. - The proposed systems are 3-pipe systems, allowing them to operate simultaneously in heating or cooling mode, depending on demand. - An air handling supply and exhaust unit was designed to ensure fresh air comfort for building users. - (Outdoors) VRV units with VRT technology are employed to adjust the evaporative temperature of the refrigerant according to cooling/heating demand. - A central controller with remote access was designed for all the systems to monitor the operating parameters of the equipment. It also allows scheduling of systems, which leads to real savings in electricity consumption. It can be concluded that the proposed Daikin solutions contribute to a passive or low-zero-emission design. The system solves the problem of people who do not turn the light off when they leave a room. The central controller will turn off the air conditioning when necessary. In addition, it will maintain the temperature in the building on working days, so that unnecessary systems do not work on days when no one is working. - The central controller allows visualisation of other elements in the installation using BACnet communication: ▪ Visualisation of the air handling unit

162  Implementing a circular economy: Construction ▪ Visualisation of light ▪ Visualisation of window blinds In a second stage, the project underwent an update, with the results given below. In the project, the equipment was divided by systems as follows: - Floors +1 to +3 are served by a 3-pipe VRV system operating with R410A refrigerant; - Floor –2 and –1 are served by a 3-pipe system running on the latest R32 refrigerant with state-of-the-art Daikin VRV 5 chillers. The benefits of using Freon systems using R32 refrigerant: 1 There is a lower environmental impact factor for R32, known as GWP (Global Warming Potential) 2 Fewer leak checks for R32 – saving operating costs 3 Additional scoring for BREEAM- and LEED-certified buildings Below are the most important design features of the new building heating and cooling system. - The design includes a 3-pipe system with heat recovery, allowing simultaneous heating and cooling. - The systems can defrost alternately, which gives a sense of thermal comfort when defrosting. - The system allows connection of a 15 kW DHW preparation module, i.e. the HXHD module. - In the investor’s design recommendations, the large duct units from the first floor (level –1) are placed on the floor below, i.e. FXMQ. Cooling medium with a low GWP measure Adopting R32 not only enables us to lower prices of the exploitation but also to lower CO2 emissions due to: - Remarkably lower GWP measure, - Lower required quantity of the cooling medium, factory fillingand filling in place.

GWP

Charge [kg]

CO2eq

Amount - 10% 2088

1/3 GWP

×

1

0,9

=

2088

675 R410A

R32

CO2

1/4 environment impact

605 R410A

R32

R410A

Figure 9.1 Cooling system impact on CO2 reduction. Sources: Internal SAO Investments material.

R32

Reduction up to

71 %

Implementing a circular economy: Construction  163 Lower requirements relating to the control of leakproofness according to The Regulation in the Matter of F-gases. According to The Regulation in the Matter of F-gases, devices containing fluoric greenhouse gases in the amount of 5 tons equivalent CO2 or higher, require conducting a leakproofness control.