Circular business models in Ukraine

2020;
: pp. 107 - 121
1
Lviv Polytechnic National University
2
Lviv Polytechnic National University, Ukraine

The paper presents the results of a circular economy study and the benefit of implementing this concept in Ukraine, based on the experience of the European Union, and provides recommendations from the Ellen MacArthur Foundation and the European Commission, which should be taken into account by governments in view of the critical environmental situation in the world. Possibilities of formation and development of circular business models in Ukraine on the example of the best European practices in the field of waste management are substantiated.

The authors argue the following: if we go beyond the traditional (linear) industrial “Take-Make- Waste” model, the introduction of circular business models will help reduce waste, and thus minimize costs and redefine sustainable growth, focusing on positive benefits for society.

It has been identified that the circular economy is a new economic model that focuses on the reuse of materials (including waste), as well as on value creation through services and intelligent solutions.

The global challenges of improving waste management efficiency provide significant business opportunities. As a result, the circular system makes it possible to move materials, energy, labor and information efficiently to restore natural and social capital. This is why the circular economy is part of an effort to boost economic development, overcome wasteful consumption, and reduce undemocratic power structures in the global economy.

The conducted researches have allowed establishing, that innovative business models of circular economy arise and develop first of all in the urbanized and environmentally responsible environment and are directed on reduction of dependence on material resources, increase of efficiency and increase of profit.

A study of European experience in the circular economy through practical examples of five business models (circular deliveries, resource recovery, sharing platforms, product lifecycle extension, product as a service) demonstrates that: from implementation circular economies benefit both companies and consumers, as well as the community (society); in addition to short-term financial benefits, companies have long-term strategic advantages, including optimization of material flows, entry into new markets; expanding customer service or after sales service, and generating additional revenue in the provision of closed-loop services.

Scaling up the circular economy is impossible without a systematic integrated restructuring, ranging from legislative regulation, technology implementation, financing and forms of doing business, to shaping society as a whole to change its habits toward the widespread use of circular products and creating new platforms and schemes for the interaction between producers and consumers of circular goods.

  1. The Circularity Gap Reform 2020. Retrieved from: https://circulareconomy.europa.eu/platform/en/news- and-events/all-news/2019-circularity-gap-report-reveals-world-only-9-circular-and-trend-negative (accessed: 01.18.2020).
  2. 2017   National   Baseline   Report   “Sustainable   Development   Goals:   Ukraine”.   Retrieved   from: http://www.un.org.ua/en/publications-and-reports/un-in-ukraine-publications/4205-2017-national-baseline-report- sustainable-development-goals-ukraine (date accessed: 01.28.2020). 
  3. Growth Within: A Circular Economy Vision for a Competitive Europe – McKinsey Center for Business and Development & Ellen MacArthur Foundation. Retrieved from: https://www.mckinsey.com/~/media/McKinsey/Business%20Functions/Sustainability/Our%20Insights/ Growth%20within%20A%20circular%20economy%20vision %20for%20a%20competitive%20Europe/Growth_Within .ashx (accessed: 02.15.2020).
  4. What is the circular economy? Retrieved from: https://www.ellenmacarthurfoundation.org/circular- economy/what-is-the-circular-economy (accessed: 02.21.2020).
  5. The new model for consumer goods. Retrieved from: https://www.mckinsey.com/industries/consumer- packaged-goods/our-insights/the-new-model-for-consumer-goods   (accessed    16.03.2020).
  6. The circular economy in detail. Retrieved from: https://www.ellenmacarthurfoundation.org/explore/the- circular-economy-in-detail (accessed 11.03.2020).
  7. Implementation of the circular economy action plan. Retrieved from: https://ec.europa.eu/ environment/circular-economy/ (accessed: 01.22.2020).
  8. Europe’s circular  economy opportunity. Retrieved from: https://www.mckinsey.com/business- functions/sustainability/our-insights/europes-circular-economy-opportunity    (accessed    12.02.2020).
  9. Law of Ukraine “On Waste” No. 187 / 98-BP dated 05.03.1998. Retrieved from: https://zakon.rada. gov.ua/laws/show/187/98-%D0%B2%D1%80 (accessed: 01.24.2020).
  10. Best European waste management practices. Retrieved from: http://epl.org.ua/wp- content/uploads/2019/07/Krashchi_ES_praktuku_NET.pdf   (accessed:   01.25.2020).
  11. Sergienko L. V. (2017). Interaction between the state and business in ensuring the implementation of the state policy of circular economy. The manager. No. 1 (74). P. 78–84.
  12. Circular economy. Organizational and legal aspects. Retrieved from: https://www.businesslaw. org.ua/circle-economic-t/ (accessed: 03.02.2020).
  13. On approval of the National  Waste Management  Plan by 2030. Retrieved from: https://zakon.rada. gov.ua/laws/show/117-2019-p (accessed: 01.26.2020).
  14. Accenture Strategy: Circular Advantage - Innovative Business Models and Technologies to Create Value in  a  World  Without  Limits  to  Grow.  Retrieved  from:  https://www.accenture.com/t20150523t053139w/us-en/_acnmedia/accenture/conversion-assets/dotcom/documents/global/pdf/strategy_6/accenture-circular-advantage- innovative-business-models-technologies -value-growth.pdf (accessed: 01.29.2020).
  15. Circular Economics in Action: Forms of Organization and Best Practices. Retrieved from: http://www.beroc.by/webroot/delivery/files/PP_5_eng.pdf (accessed 25.03.2020).
  16. Zvarych I. Ya. Global circular economy as means of building a new environmentally sustainable society. Retrieved from: http://dspace.tneu.edu.ua/bitstream/316497/22489/1/Zvarich%20I..pdf (accessed: 02.22.2020).
  17. Circular economy update. Overview of circular economy in Europe 2019. Final report. Ecopreneur.eu. Retrieved from: https://circulareconomy.europa.eu/platform/sites/default/files/ecopreneu... report-2019.pdf. (access date: 03.12.2020).