SMEs and the circular economy: Experiences and challenges

Laura Galloway, Laura Jackman, Laerke Salhauge-Rasmussen

The project investigates the experiences and challenges encountered by small and medium sized enterprises (SMEs) in Scotland as they navigate the adoption of circular economy (CE) practices. The research explores the extent of engagement with CE principles and the impact on business operations, emphasising the pivotal role of SMEs in promoting sustainability.

Key findings

  • Good Levels of Engagement – The research reveals a commendable level of engagement among SMEs with the principles of sustainability and CE. SMEs demonstrate a proactive approach towards embracing these practices.
  • Strategic Importance of SMEs – SME owner-managers recognise their unique position in fostering knowledge dissemination about CE and sustainability. Their close customer relationships enable them to play a pivotal role in educating consumers and the wider society on these principles.
  • Positive Customer Reception – CE practices implemented by SMEs are well-received by customers, indicating a growing awareness and appreciation for sustainable business practices.
  • Business Benefits – SMEs acknowledge the positive impact of CE practices on their business operations. The efficient use and reuse of resources are seen as advantageous, promoting sustainability while enhancing operational efficiency.


  • Implementation Costs – A notable challenge faced by SMEs is the initial costs associated with the adoption of CE practices. Overcoming such financial barriers emerged as a crucial aspect for widespread adoption.
  • Knowledge and Skills Gap – SMEs lack knowledge and skills concerning CE technologies and practices. Bridging this gap becomes essential for integration.


  • Financial Support for Adoption – To facilitate the adoption of CE practices, targeted financial support is recommended. Initiatives aimed at subsidising the costs associated with adoption will encourage wider participation.
  • Knowledge Dissemination – Addressing the knowledge and skills gap requires a comprehensive approach. Dissemination of information on CE practices should be facilitated through training programmes or industry-specific consultants.

This project explicates the efforts of Scottish SMEs towards embracing CE principles. While acknowledging the positive reception and benefits, this study underscores the importance of addressing financial barriers and knowledge gaps to promote more widespread and sustainable adoption.

For further insights, please refer to the report “Circular Economy Decision Making in a Time of Economic Crisis” available through Zero Waste Scotland and the Smart Poster for the HWU Research Showcase at COP28.