Tallinn University of Technology

Authors: Tarvo Niine, Merle Küttim, Wolfgang Dieter Gerstlberger, Tarmo Kalvet, Tarmo Tuisk, Ulrika Hurt; TalTech Department of Business Administration

The survey of circular economic practices in Estonian companies highlighted three main recommendations for policy making.


In order to support the further development of these practices, it is important to compile an overview of the activities carried out in different industries and to share it with companies, for example in trade associations. Secondly, companies need for more tailored financing schemes with advisory services to carry out costly circular economy activities (such as investments in technology and digitalisation, certification and eco-labelling). Thirdly, it is important to increase people's awareness of the nature of circular economy, as well as of the activities related to the circular economy of companies, as well as their customers, suppliers, NGOs, research institutions, local governments, etc., and the possibilities of expanding cooperation with each other. Today, there is often a lack of critical mass for collaboration, and this hampers the development of the corresponding business ecosystem.

At the end of 2021, Tallinn University of Technology conducted a study commissioned by the Ministry of Economic Affairs and Communications to identify the circular business models suitable for Estonian small and medium-sized enterprises (SMEs), to identify their enablers and barriers, and to clarify the expectations of enterprises regarding state support. The survey covered four industries: computers, electronics and optical equipment; chemicals; electrical equipment; and metals, where a survey of companies and focus group interviews were carried out.

Circular economy aims to create a circular system of production and consumption with minimal losses. This means making better use of resources (e.g. materials, energy, water, heating, packaging, transport), creating more value and less waste. At the same time, circular economy requires changes in the attitudes and behaviour of businesses, consumers and society, as well as in the decisions and support provided by the state.

The survey found that there are a number of circular economy practices that companies are already doing. In addition, there are also practices that are highly regarded for future initiation. At the same time, investments in technologies supporting circular economy (e.g. waste sorting, recycling, digital solutions) are, however, mostly sporadic and an increase in investments in the future was considered unlikely. Practices such as voluntary eco-labelling, quality labels on recycled products, participation in green public procurement and the use of financial mechanisms for circular economy activities were considered more likely. The lack of relevance of circular business models and the lack of know-how were seen as the main problems in their implementation. As a general pattern, it was also considered necessary to expand various social activities – including closer cooperation with customers, green NGOs, universities and local governments. In these circumstances, too, the low importance of activities, the lack of knowledge and the scarcity of cooperation partners were seen as obstacles.

The circular economy activities of the industries were partly similar, but there were also differences:

In the computer, electronic and optical equipment industry, the importance of circular economy practices was growing, both due to changes in the external environment (technological development and more regulations) and through changes in norms and values within the company, where the life cycle of a product or service was seen more as a whole.

The following circular economy business models were more common in the industry: considering the durability of products and ensuring product safety (e.g. with regard to flammability) in order to extend product life; manufacturing products and adapting packaging to the customer's order; enabling product repairs and providing information on repair services.

However, there was only a modest take-back of second-hand products and the use of leftovers from other companies as inputs. Offering the product as a service was also only used by a small number of SMEs.

The electrical equipment industry was optimistic about the future, as the components and equipment of this industry are an input to the finished products of other industries, and their importance increases, as well as the pressure to apply circular economy practices to companies due to the digital and green revolutions.

The industry was concerned with the durability of the products, the possibility and availability of repair, and its notification. It was also common to adapt the size and shape of packaging to the customer's needs, and to sort and process it according to type. Many companies considered it important to reduce input materials and waste.

At the same time, the results of the survey showed that some practices were common to only a small number of companies: repairing products (in-house or at a partner's premises); offering their own production leftovers as inputs to other companies; directing customers to return used products to the company; technological innovation in waste recycling; offering products on sharing platforms.

In the chemical industry, tighter regulations, the need for more investment and the harmonisation of products, which will make it harder to differentiate from competitors, were seen as future challenges.

In the industry, the business principles that sustainability is part of a company's responsibility to society, and that the business model considers not only maximum efficiency and profitability, but also the lowest possible use of harmful substances were quite common. Reuse and recycling of packaging, safe product design and the use of local suppliers and input materials were important.

However, recycling (both in-house and with partners), smart waste management solutions, digital innovations in terms of user experience, and regulating the take-back of products at the level of the sales-purchase contract were relatively rare.

 A wider problem in the metal industry was the lack of possibility of melting and large-scale reprocessing of metal in the immediate area. 

It was found that the industry widely implemented sustainable technologies to reduce material consumption and waste. The companies' main input material (metal) comes from nearby regions. A number of companies mentioned support for product remanufacturing, offering component recovery and replacement. In the metal industry, too, the overarching principle was to see corporate social responsibility as part of the sustainability of the business model.

Data also indicated that the following were not important for the majority of companies: encouraging the return of used products; cooperation with independent repairers; offering products in reuse shops, on sharing platforms and as donations; technological innovation in waste recycling; and smart logistics solutions.