Seven facts about the circular economy

The benefits of a Circular Economy are particularly great for Switzerland due to its limited supply of resources. However, the results of the present study show that the transformation process is not yet advanced at the corporate level. Moreover, there are indications that the transformation is a longer lasting process. The wait-and-see approach of many companies could therefore have a negative impact on their competitiveness as important natural resources become increasingly scarce. However, the conditions for accelerating the transformation are good in Switzerland. As one of the most innovative countries in the world, Switzerland has comparative advantages that it could use to efficiently implement circular activities and thus generate competitive advantages. Therefore, it would be important to target the obstacles that currently exist. The focus should be on raising companies' awareness of the Circular Economy, the diffusion of possible applications, and the removal of technical and financial barriers. In particular, activities to further strengthen private-sector innovation and certain aspects of digitization could benefit the transformation process.

Based on a specifically developed concept for mapping the Circular Economy at the company level, the approximately 8,000 companies of the KOF enterprise panel, which is representative for Switzerland were surveyed in 2020 by means of a written survey. For 27 specific activities in the field of Circular Economy, it was surveyed in which areas the companies have achieved measurable changes in the period 2017-2019. The collected data allow a comparison between industries, regions and company size classes and thus show, for the first time for Switzerland - and probably also on an international level - a representative and differentiated picture of the diffusion of circular activities in companies. The most important findings from this status report on the Swiss Circular Economy are presented here:

1. Status of transformation: around 10% of companies are substantially engaged in the Circular Economy
The Swiss private sector is still at the beginning of the transformation process: between 8% and 12% of companies are substantially engaged in the transformation towards a Circular Economy. 12% of the companies have substantially integrated circular business activities into their business model. 9% of companies invest more than 10% of their total investments in implementing circular business activities. 8% of the companies have implemented more than 10 activities in the field of Circular Economy. 12 % of companies generate more than 10% of their sales with circular products/services.

2. Activities to increase efficiency are the basis of the transformation process.
It is apparent that most companies enter the transformation process via activities to increase efficiency in the production area. These activities to increase efficiency are of central importance, since for most companies they are the basis for extending the activities to other production stages and dimensions of the Circular Economy, such as closing the loops by re-manufacturing and increasing the lifetime of the products..

The activities most frequently carried out to implement the Circular Economy at the company level are:

• 27% of companies reduced material consumption (incl. packaging, paper) in the production process. (Efficiency-increasing activities)
• 19% of the companies reduced the ecological footprint when purchasing new production inputs. (Efficiency-increasing activities)
• 19% of companies implemented activities to increase the lifetime of internally used production infrastructure through repair, maintenance. (Lifetime extension activities)
• 19% of the companies reduced the environmental impact in the production process (energy consumption, water, soil, air or noise pollution). (Efficiency-increasing activities)
• 17% of the companies reduced the environmental footprint of new purchases (production, transport) of production infrastructure. (Efficiency-increasing activities

3. Many industries lack "flagship companies".
Not all industries are equally advanced in their transformation. Accordingly, the challenges also differ. In some industries, such as Electronics & Optical Products, Vehicles and Pharmaceuticals, not only is the level of activities taken (degree of innovation) in the companies high, but their diffusion between companies is also remarkable compared to the Swiss average (Frontier Challenge). In the Retail Trade and Rubber/Plastics industries, there are some "flagship companies", but the gap between them and the rest of the companies in these industries are large, i.e. the Circular Economy is not very widespread here (Diffusion Challenge). In other industries, such as Textile/Clothing and Basic Metals, both the level of innovation and diffusion are rather modest (Beginner Challenge). In the Machinery & Equipment and Transportation industries, the challenge lies less in the diffusion of the activities and more in the innovative strength, i.e. the intensity of activities by leading companies is still relatively low in these industries. There is a lack of "flagship companies" (Innovation Challenge).

4. Espace Mittelland, Zurich and North-West Switzerland are the most advanced regions in the transformation process.
As with the industries, there are also differences in the transformation process at regional level. These are more apparent in terms of the degree of diffusion (proportion of companies with at least one implemented activity) and less so in terms of the degree of innovation (proportion of activities implemented). In general, it can be seen that with Espace Mittelland, Zurich and North-West Switzerland, some regions achieve comparatively high values for almost all indicators.

5. Innovative strength is essential for the transformation process.
Companies that are heavily active in the Circular Economy are generally characterized by four characteristics: They are characterized by a solid financial base and consequently have a high level of financial strength. They also invest heavily in the research and development of new products and services and succeed in generating high shares of sales with the resulting innovations; they have a high level of innovative strength. The degree of digitization and a high sensitivity to sustainability issues are further characteristics of companies that are already relatively far advanced in the transformation process.

6. Barriers: "My product/service is not suitable".
Entry into and expansion of the circular economy are primarily hampered by three factors: First, based on current technological possibilities, many companies state that their products and services are not suitable for the Circular Economy. The greatest challenge here is therefore to make companies aware of sustainable solutions and to support them in finding innovative solutions that increase their "suitability". Very often, there is a lack of know-how in technical implementation and, related to this, a lack of the necessary financial resources. It is therefore not surprising that high investment costs and difficulties in technical implementation are further significant barriers in the transformation process. Often, small companies in particular can hardly overcome these barriers on their own. This is why economic policy support is needed, not at least because companies are integrated into networks of suppliers and customers and therefore often need cross-company initiatives to make progress in the transformation process.

7. Policy challenges: Strengthening the knowledge base and raising awareness.
In order to stimulate the transformation to a Circular Economy in the future, the barriers should be removed or the characteristics of the companies towards a Circular Economy should be strengthened. Based on the results, the following three fields of action are in focus:

• Measures to raise awareness of the Circular Economy among companies.
• Reduction of financial barriers
• Building up know-how to reduce technical barriers