Circular Economy Outlook

One of RISE's missions, as mandated by the Swedish government, is to contribute to the competitiveness of industry. To fulfill this mission, we work to understand the situation of companies, the barriers and drivers they experience, and how they assess the future development of their competitors in this area. In this project, we examined these questions within the context of the competitive dimension called the circular economy. The results for Sweden were presented in the report Circular Economy Outlook 2024 Sweden in June 2024. The Nordic report is launched on December 4, 2024.

In Sweden, the conclusions are based on 28 interviews and approximately 200 survey responses. We are extremely pleased with the high response rate for both. Half of the companies we approached agreed to be interviewed, and as many as 38% of the companies on the three main lists of the Stockholm Stock Exchange responded to the survey, along with approximately 50 small companies (10–49 employees).

The project is structured in two phases. First, a Swedish phase, followed by a Nordic phase that includes Denmark, Norway, and Finland in addition to Sweden. The survey on companies' views on the circular economy is based on a combination of interviews and survey responses.

In the Nordic countries, where the focus was entirely on publicly traded companies, we received data from 34% of the companies listed on the four stock exchanges: Nasdaq OMX (Sweden), Euronext Oslo Børs (Norway), Nasdaq Copenhagen (Denmark), and Nasdaq Helsinki (Finland). Both the Swedish and Nordic response rates are high for this type of study and constitute an initial indicative result in themselves: the engagement with the circular economy among publicly traded companies is significant.

What did we learn from the study? 

In a single sentence, the conclusion is that the circular economy has evolved to become a competitive dimension for many companies. Here are three indicative findings from the report:

1. 90% of respondents state that the circular economy impacts their business strategy to some extent (on average, for about half of their operations).
2. 70% expect their competitors to develop significant circular capabilities within the next five years.
3. Two of the most common drivers for adopting circular strategies are viewing them as business opportunities and experiencing pressure/expectations from customers in this area.

This indicates that the business sector has begun cautiously pressing the accelerator pedal for the circular transition of the economy (our estimate in the report is that the average publicly traded company is investing at about 20% of the survey’s potential scale). However, it is clear that we are still in an early innovation phase where many solutions remain to be identified:

• Less than half of the companies have successfully translated their circular strategies into revenue or cost savings at this point.
• Many report being constrained by lock-ins in their current business models and experiencing uncertainties in investment calculations.
• Interestingly, despite customer expectations being a driver, many companies cite a lack of concrete customer demand as the largest barrier.

Recycling Stands Out

Among the eight circular strategies, recycling stands out. In this area, the most common barriers are lack of infrastructure and technology rather than customer demand. Some companies even express frustration over a lack of Swedish competitiveness in this area.

Common and Uncommon Strategies

The most commonly adopted circular strategies are Reduce (e.g., reducing production waste and using lightweight materials) and Recycle (e.g., purchasing recycled materials or sending materials for recycling). The least widespread strategies are Rethink (e.g., sharing economy), Remake (e.g., remanufacturing), and Regenerate (e.g., organic farming). Circular strategies that appear to be most often financially benefitial are Repair (e.g., spare parts and repairs) and Remake (e.g., remanufacturing). Reduce and Recycle are the strategies most strongly correlated with all other strategies, suggesting that many companies often start here before exploring more specialized circular strategies that best suit their operations.

What Does This Mean for RISE?

For RISE and its mission to support the competitiveness of businesses, this means:

1. Circular economy is a critical business issue for Swedish companies, so RISE should continue to support them in this area.
2. Different companies choose very different combinations of circular strategies, each with its own challenges. The breadth of RISE’s expertise is essential for providing integrated solutions tailored to each company.
3. Business opportunities, customer demand, and climate impact are the main drivers of circular strategies, making business development support like the Circular Business Lab at RISE more crucial than ever.

About the Project

The Circular Economy Outlook project is coordinated by the non-profit organization Cradlenet and carried out jointly by RISE and Cradlenet. In the Swedish study, the strategic innovation program Re:source contributed. In the Nordic study, contributions came from the Danish Technological Institute (DTI), the Norwegian Research Centre (NORCE), and the Technical Research Centre of Finland (VTT). The project has been funded by donations and time from organizations such as Sirk Norge (Avfall Norge), Avfall Sweden (Swedish Waste Management), Foxway, Helsinki Circular Valley, Håll Sverige Rent, Industriens Fond, Nordic Circular Hotspot, Nordic Innovation, Ragn-Sells, RE:Source, Skanska Sweden, Södra Skogsägarna, Teknikföretagen (Technology Industries of Sweden), Återvinningsindustrierna (Recycling Industries of Sweden), as well as Cradlenet’s and RISE’s own time.