There are several roadblocks in the way of successfully implementing circular economy practices, which can be clustered into cultural, technological, regulatory, and market barriers. Overcoming these requires a fundamental paradigm shift, which can be initiated by awareness campaigns and political incentives and regulations.
What are challenges that might hinder a transformation towards circularity?
Possible obstacles to a move towards more circularity may include: lack of support by top management/owner, financial barriers, lack of government support and effective legislation, lack of information (i.e., lack of knowledge about the general circular economy concept and its benefits), administrative burdens, lack of technical skills, and lack of support from the supply and demand network are arising challenges (Rizos et al., 2015; Rizos et al., 2016; Kirchherr et al., 2018) . The three main challenges are the lack of support supply and demand network, lack of capital, and lack of government support (Rizos et al., 2016). Additionally the most proactive companies (in-going firms) in implementing circular economy measures come across common barriers such as administrative processes, regulations, and a lack of human resources to perform these practices, while firms that have not implemented circular economy measures (no-going firms) view financing, investment and cost–benefit barriers as the most significant (Garcés-Ayerbe et al., 2019).
How can these barriers be overcome?
In general, knowledge about the topic and green business model opportunities needs to be increased, which needs to be facilitated by European and national policies. This could help to impact consumer preferences, market value chains and company cultures. More specifically, this can be achieved through the creation of dedicated marketplaces and communities of practice (Rizos et al., 2015; 2016).
On a more fundamental level, company environmental culture (i.e., company culture, mindset of manager or CEO), networking (i.e., joining like-minded SMEs and engaging in memberships), and support from the demand network in going for or supporting green products are highlighted as enablers (Rizos et al., 2016). A paradigm shift is required which provokes the appetite from SMEs to think about and implement circular economy benefits and measures (Thorley et al., 2019). On a political level, circular economy regulations should be improved to make it easier for companies to implement strategies that will make them more sustainable (Garcés-Ayerbe et al., 2019; Thorley et al., 2019). Firms that have not implemented CE measures view financing, investment and cost–benefit barriers as the most significant. In other words, companies seem to believe that economic factors have hindered them to have a closer look at the topic. This could be addressed through funding mechanisms, as initiating circular economy activities are related to research and development (R&D) investment. These funding mechanisms could be aligned to the following three stages, that most SMEs follow as gradual advancement: (1) starting by implementing material recycling and reuse measures, (2) implementing measures to minimize power consumption and to redesign products, (3) rethinking their water use and turn to renewable energy (Garcés-Ayerbe et al., 2019). However, there is no one size fits all approach, so policies need to consider different sectors and firm sizes (Trianni & Cagno, 2012).