What is the circular economy and how are Canadians participating in it?

Published on 2022-09-07 by Tessa Anaya

Due to global events such as supply shortages, inflation, and climate change, some businesses, as well as the Canadian government, are implementing circular economy measures to extend the value of their resources. But, what is the circular economy, and what are the best practices according to Canadian consumers?

what is circular economy depicted by usinga pc to investigate elements in a process

In 2021, a Capterra study found that Canadian consumers had become more interested in shopping sustainably since the beginning of the pandemic. In light of the growing enthusiasm to support sustainable businesses and with the availability of sustainability software, SMEs may be asking how they can participate in anti-waste measures and eco-friendly practices.

To delve further into this trend, we launched a study of over 1,000 Canadians over the age of 18 (scroll to the bottom for the full methodology). They answered questions about their understanding of the circular economy, their participation in it, and their expectations for companies who implement circular economy practices.

What is the circular economy?

According to the Government of Canada, the circular economy is a “different way of doing business,” aimed at retaining and recovering as much value as possible from resources used. Circular economy practices include reusing, repairing, remanufacturing, repurposing, or recycling existing products and materials. In this way, the life cycle of products is extended.

Some examples of circular economy programs currently available in Canada can be found in the retail sector. IKEA launched a buy-back program to help customers recycle IKEA-brand furniture in exchange for in-store credits. Additionally, H&M’s RE:WEAR program offers clothing shoppers a platform to buy and sell their used items from any brand online, with an option to receive a higher payout via in-store discounts.

circular economy definition

Despite the clear connection the circular economy has to sustainable business, the majority of surveyed Canadians (40%) were not familiar with the name nor the concept behind it before participating in this study. However, the “reduce, reuse, recycle” philosophy is far from unheard of, and 33% of survey-takers understood this concept without knowing it by name. Only 13% were completely familiar with the circular economy.

Are Canadians participating in the circular economy?

It may seem that Canadians aren’t aware of circular economy practices, but that may simply be due to a lack of familiarity with the term. In fact, 40% of respondents say they take a company’s circular economy actions into consideration before buying a product (with 6% always considering such practices and 34% considering them sometimes). 

A further 41% of survey respondents don’t consider circular economy practices but would like the option of supporting companies with such initiatives. This shows that investing in circular economy practices may help SMEs get an advantage over their competitors.

Tip for SMEs: For those choosing to take on circular economy objectives, make sure those efforts can be recognized by your audience. Once you’ve adopted sustainable practices, build awareness of them and engage customers on the topic, either via your website, social media channels, subscriber newsletters, packaging copy, or wherever your audience is most active.

Which Canadians are supporting the circular economy most?

Adopting practices that boost circular economy activity may appeal to Canadians, though some groups may be more inclined to consider these initiatives than others. Age proved to be an important factor amongst survey respondents who keep a company’s circular economy efforts in mind when making a purchase: younger generations are more likely to support such measures.

participation in the circular economy canada 

As seen in the graph above, 43% of respondents between the ages of 18 and 25 consider a company’s circular economy policies at least sometimes, while 46% of those 26 to 35 years old do so. In comparison, only 29% of surveyed Canadians of ages 65 and above consider these practices when making purchases.

Tip for SMEs: Not only are older consumers less likely to consider circular economy practices when shopping, but they’re also less likely to be familiar with such practices. Nearly half of respondents from the Baby Boomer generation (48%) weren’t familiar with the circular economy at all, a 14-point percentage difference from unaware respondents belonging to Generation Z.

To ensure news of your circular economy efforts reaches your target audience, engage your customers with content marketing efforts on the topic. Research the buyer personas of your clients to define the best medium to reach them. Content marketing tools can also make multi-channel publishing and engagement tracking easier.

Which circular economy practices are most important to consumers?

The question of what the circular economy is can be a complex one to answer, as there are many activities that fall under its umbrella. When Canadian consumers were asked about the circular economy practices they felt were most effective, the following preferences were revealed:

  • Recycling waste (by 73% of respondents)
  • Reusing materials in the production process (67%)
  • Reducing waste caused by production methods (64%)
  • Producing products with longer lifetimes (64%)

Consumers’ top answers for admirable circular economy efforts illustrate clear expectations for SMEs who want to contribute. The most preferred actions are all aimed at making companies’ products and production processes less harmful to the environment. For organizations who are curious to launch such objectives, sustainability software can help with oversight and management of their impact on the environment.

examples of circular economy activities for SMEs

Finding ways to remanufacture/refurbish existing products as well as implementing a product buy-back/recycling program were two more solutions cited by over 50% of survey-takers. Both remanufacturing and buy-back programs require customer participation, as do other circular economy activities such as purchasing second-hand and refurbished products. 

These value-retention processes are key activities of the circular economy in Canada, which can also offer significant benefits to the companies who carry them out. Some positive effects of such value-retention processes include:

  • Creating new employment opportunities
  • Reducing overall production costs and quotas
  • Offering cheaper products to customers
Tip for SMEs: When implementing business-wide changes in the way your company carries out certain processes, teams and departments may need help adapting. Change management tools can help align people behind new workflows and keep businesses agile during process shifts. 

Would Canadian consumers pay higher prices to support a circular economy?

Before changing business models and budgetary allocations to incorporate circular economy measures, some SME owners may wonder about consumers’ interest levels in such actions.

When asked if they would be willing to pay more for products that were made via circular economy practices, Canadian respondents were split. 50% would be willing to pay more, and 50% felt they would not be willing to go beyond their current budget to support these measures.

For those who would be willing to pay extra to promote a circular economy, the majority (45%) would pay between 10% and 20% more for such a product. 

graphic of 4 takeaways of the % of people who would pay more for products Alt text: circular economy prices

Tip for SMEs: When adopting processes that stimulate a circular economy, pricing models must also be reconfigured. After all, circular economy activities such as repurposing manufacturing waste, switching to renewable energy, and launching product recycling programs require investments of time, labour, and money. When recalculating prices based on newly launched operations, pricing software can help SMEs monitor market conditions, competitors’ prices, and past data using one platform.

Considerations for SMEs

For business owners who are unsure if consumers will care about any circular economy initiatives they implement, there’s good news. When we asked survey-takers to identify the reasons they think companies invest in these practices, more than half (54%) felt that companies implement such models because they sincerely believe in them. 

Not only that, but consumers also showed a strong interest in participating in sustainable consumerism —which we will also explore in part two of this survey series. This represents an opportunity for companies to adopt circular economy practices that create new business models, save resources, and show customers the true values of their brand. 

Some takeaway ideas for SMEs to get started implementing circular economy practices:

  • Consider the effects your waste management solutions have on the environment and whether they could be more sustainable.
  • Audit your company’s energy consumption to see if renewable energy or energy-saving plans could reduce the amount of energy used or wasted.
  • Re-examine production processes like design, supply, manufacturing, and packaging to see if they can be optimized, or if remanufacturing procedures could be included.
  • Research whether remanufacturing procedures could be implemented, potentially extending the life cycle of products and offering new ways for consumers to participate in circular economy activities.

Starting to contribute to the circular economy does not have to be daunting. Simply taking a look at existing business processes will likely show SMEs the areas where they can make a difference.

Looking for sustainability software? Check out our catalogue!

Survey methodology:

Capterra’s Circular Economy Survey was launched online in July 2022. The survey was completed by 1,006 consumers who fit our criteria. The sample of participants is representative of the population of Canada regarding aspects of age and gender, and the criteria for selecting participants are as follows:

  • Canadian resident 
  • At least 18 years old
  • Must have submitted their generation identity
  • Understands the concept of a circular economy (after being shown a definition, respondents were able to select the correct description of a circular economy from a choice of three)

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

Content Analyst at Capterra, dedicated to helping SMBs access the insights that elevate their organizations. B.A. in English, University of Michigan. Based in Barcelona.

Content Analyst at Capterra, dedicated to helping SMBs access the insights that elevate their organizations. B.A. in English, University of Michigan. Based in Barcelona.