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Consumers believe profits drive the adoption of circular economy practices

Published on 20/09/2022 Written by David Jani.

The use of circular economy practices by UK companies could prove an essential way to control waste management and energy usage at a time of environmental crisis. However, many doubt the adoption of circular principles is driven by sincere environmental beliefs. In our latest survey, participants expressed cynicism about why businesses adopt circular economy practices.

Consumers check products for evidence of circular economy practices

Sustainability is a major issue for governments, businesses, and the public. According to the most recently collected data from the Department for Environment, Food and Rural Affairs (Defra), Britain generates approximately 222.2 million tonnes of waste each year, with 43.9 million tonnes generated by commercial and industrial sources. This represents 20% of all waste currently generated in the country. 

Circular economy practices are gradually being adopted by UK industry and commercial entities, and many businesses are keen to publicise their dedication to environmental methods. However, what is the public perception of these efforts and are they seen as authentically driven by environmental goals?   

In GetApp’s latest study, we surveyed 1,027 UK consumers to find precisely how motivated consumers are to engage with the circular economy and if people believe company claims about sustainable practices via these processes. Our full methodology can be found at the end of this article.

What is the circular economy?

The European Parliament defines a circular economy as ‘a model of production and consumption, which involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products as long as possible’. 

In other words, a business focused on the circular economy aims to optimise the processes of manufacturing and distribution, whilst making it easier to reuse, repair, and recycle its generated products. The overall aim is to help companies avoid waste and reduce overall input in terms of energy and raw materials.

Infographic showing cycle and benefits of circular economy

Does the UK public understand the circular economy?

One of the first things we wanted to learn about circular economy processes was how well the public understands the concept. After all, companies will be eager to talk more about their efficiency practices related to this concept if it is well known amongst UK consumers.

As a result, we showed our UK participants the European Parliament’s definition of a circular economy seen in the section above. We then asked them several questions about how familiar they were with it as an idea. 

We found that circular economy processes are still little known by the British public. Whilst there are numerous positive benefits of a circular economy, most members of the UK public don’t have any recognition of the term. 

graphic showing consumer familiarity with circular economy models

In our survey, when shown the definition of this process, 39% of the respondents had not heard the name or the concept of a circular economy. Another 15% knew the name and not the concept.

This means over half the people surveyed didn’t understand ‘circular economy’ as a term. This suggests that the expression ‘circular economy’ has low market recognition, despite its positive sustainability credentials.

Tips for SMEs

These findings show that an opportunity exists to educate the public on the values of circular processes to differentiate themselves from competitors. Whilst many members of our sample aren’t yet aware of the expression ‘circular economy’, many are receptive to it when they know what it means.

Companies could educate consumers about the circular economy by communicating with their end users through many means such as:

Do British consumers believe company claims about circular economy practices?

It has become increasingly common for businesses to publicise their green credentials and resource efficiency when advertising their products. Historically, however, ‘ greenwashing’, when companies purposely mislead about their environmental impact, has been a common practice. 

This prevalence has been noted by the UK government, which recently tasked the Competition and Markets Authority (CMA) to investigate the validity of deals branded as ‘green’ or ‘environmentally friendly’. The organisation had previously found that around 40% of online green claims were false or misleading.

Whilst steps are being taken to address this issue at a government level, previous and more recent cases of greenwashing may still remain in the public consciousness. This could affect how people perceive efforts by businesses to apply circular economy practices.

In our findings, we broadly observed this cynicism towards companies’ motives to use the circular economy.  

graphic showing consumer perceived company motivations for using circular economy practices]

Overall, our participants believed that money was the overriding factor that influenced the use of the circular economy, whether it be through cost savings in manufacturing, improved brand image, or to gain an edge over competitors.

Whilst 42% did express the opinion that companies have sincere convictions in using circular principles, this was only the third most popular choice for our sample.

Additionally, 41% believed companies were using circular economy processes to take advantage of government initiatives. A further 36% felt that it was just a greenwashing practice. 

Graphic showing consumer opinions on whether governments should monitor circular economy process compliance

There is also an overriding opinion amongst British consumers that the government could do much more to ensure compliance with the circular economy. We found that 89% of our sample agreed that the authorities should do more to foster compliance with these principals.

Graphic displaying survey participant opinions about company investment in anti-waste measures

We also observed more doubts about how well companies manage anti-waste measures. 72% of our sample disagreed with the statement that companies are investing enough in cutting waste. 

Overall, this paints quite a negative picture of how seriously claims of action on the circular economy are taken. These results suggest that businesses in the UK can still do more to show that they sincerely adopt sustainable practices that cut waste.

How can businesses avoid greenwashing?

The CMA published the Green Claims Code in September 2021 to help businesses avoid making incorrect claims about environmental practices. This can be done by making clearer factual statements about their green credentials.

The code highlights six points businesses should follow when making green environmental claims:

  1. Make only factual claims
  2. Avoid vague terms and phrases 
  3. Give enough information to make informed choices easy
  4. Only compare products with the same purposes or uses
  5. Provide credible evidence of the claims being made
  6. Take into account the entire life cycle of a product

Are the UK public more motivated to purchase products from circular economy manufacturers?

Companies may wish to adopt a circular economy business model to engage with an environmentally focused section of the public. However, does the use of these sustainable practices have an impact on the purchasing decisions of UK consumers?

We asked our respondents this question to determine whether people were more or less likely to buy a product due to the mention or use of circular economy processes. 

We found that most people do not currently consider the circular economy to be an important factor when choosing a product.

Graph showing whether consumers consider circular economy practices when selecting products

At the moment, using circular economy practices doesn’t have a significant impact on how likely consumers are to buy from a company. When asked whether they considered circular economy practices when making a purchase, a combined total of 68% answered no. 

However, it is worth noting that in the group that said no, 45% of answers indicated an interest in these sustainable concepts. This shows that giving the public more information about these practices may lead to more consumers considering circular economy methods as an essential purchasing decision. 

When looking at how these results varied by age, it was clear that younger people were more likely to consider the circular economy in their purchasing decision. Nearly half (49%) of those aged 18 to 25 say they always or sometimes take these factors into account, compared with only 16% of those aged over 65.

Graphic showing how different age groups consider circular economic practices when buying products

Yet, there is also a trend to show that the older the consumer, the less likely they are to highlight the circular economy as an important purchasing decision. However, even amongst the youngest groups, consideration of these practices never exceeded 50%.

What is the public perception of the UK circular economy?

As we’ve already seen, there is no strong recognition of the term circular economy amongst the public. Nevertheless, people are much more aware of its practices, such as energy efficiency, recycling, zero waste, and reusability.

Therefore, to find out more about how the UK circular economy is perceived and how it could be better marketed, we’ve examined how British consumers value its practices. 

We looked at the features that most impressed the public about the circular economy. We also examined whether this influenced how much money they were willing to spend on products manufactured using its sustainable practices.

What elements of the circular economy model attract UK consumers the most?

Many circular economy principles may prove attractive to the UK population. The UK recorded its hottest temperature in 2022 due to pollution-driven climate change, and there are also worries about energy consumption in the face of the Ukraine invasion. 

This may make the public pay closer attention to how individual businesses maximise efficiency, use clean energy, and champion the reuse of their products.

Did you know?

Some examples of circular economy practices have been written into law. One such case is the right-to-repair that fosters eco-design processes and encourages the repair of products to increase their overall lifespan. 

When we asked our participants what would be the most admirable efforts companies could make for stimulating the circular economy, we found that three factors stood out the most.

Graphic showing the three most admirable efforts the British public thinks companies can take to stimulate the circular economy

Our sample was most impressed by factors such as recycling waste, material reuse in production, and renewable energy. However, 63% were also in favour of producing products with longer lifespans, and 60% were eager to see waste reduction during product production. 

Tips for SMEs

Companies can use one of the many types of sustainability software to help themselves become greener. These can assist businesses in the following ways to reach net zero:

  • Collecting and analysing sustainability data
  • Digitising and automating data processes
  • Producing environmental, social, and governance (ESG) and environmental impact reports

Would UK consumers pay more for circular economy products?

A big question about circular economy-derived products is whether consumers would pay more for the perceived sustainability benefits. 

However, we discovered a split in opinion. There was an equal balance between those who would and would not spend more on circular economy practices in our findings.

Graphic asking whether the public would pay more for products produced through circular economy practices

To dive deeper into this finding, we also asked those who had said they would pay more for circular economy processes how much extra they would be comfortable spending.

Graphic showing how much the UK public would pay extra for products produced in circular economy processes

What can be learned from these results is that many people will happily spend up to 20% more on circular economy-made products. There are even some who would spend much more than this, but they are in the minority.

Despite no clear trend between those that would and wouldn’t spend more on circular economy products, it is at least clear to see how much more those motivated to pay extra would be happy to expend.

Tips for SMEs

Investing in new circular economy manufacturing processes could be expensive upfront, even when they equal bigger savings further down the line. Having a clear view of how your pricing strategy will change whilst undergoing a green or net zero transition is therefore essential.

Using price optimisation software, companies can plan ahead and test out scenarios that will allow them to figure out potential unit costs under a new paradigm. This can also ensure that production changes won’t drive prices beyond what consumers expect to pay for the added value of sustainability. 

Is the public playing its part in helping circular economy practices?

We’ve now seen how the public perceives businesses’ involvement in the circular economy and what companies do to facilitate it. Overall, industry and commerce in the UK didn’t inspire much public confidence in the handling of sustainability issues.

Our sample felt that companies use practices such as the circular economy to become more profitable and don’t invest enough in cutting waste. It is therefore important for businesses to ensure that they are transparent with their practices and work to educate their customers about the benefits of the circular economy and their place in it.

Whilst there is clear evidence that businesses must do a lot more to show they sincerely support the circular economy, it also requires the participation of all sections of society, including consumers. This is especially true with the repair, waste-avoidance, and recycling of products.

This is something we’ll examine in more detail in our second report, which details consumer behaviour and interactions with second-hand products and food waste apps. 

Looking for waste management software? Check out our catalogue. 


Methodology

Data for GetApp’s Circular Economy 2022 survey was collected in July 2022. Results comprise responses from 1,027 UK participants. The criteria to be selected for this study are as follows:

  • UK resident
  • Aged 18 or older
  • Understands the definition of the circular economy

This article may refer to products, programs or services that are not available in your country, or that may be restricted under the laws or regulations of your country. We suggest that you consult the software provider directly for information regarding product availability and compliance with local laws.

About the author

David is a Content Analyst for the UK, providing key insights into tech, software and business trends for SMEs. Cardiff University graduate. He loves traveling, cooking and F1.

David is a Content Analyst for the UK, providing key insights into tech, software and business trends for SMEs. Cardiff University graduate. He loves traveling, cooking and F1.