The Role of Research and Innovation for the Transition to a Circular Economy in Europe. Evidence from the Community Innovation Survey 2014

The signature of international commitments such as the Sustainable Development Goals (SDGs) and the COP21 Paris Agreement in 2015 demonstrates a current favourable policy context to address environmental issues. These engagements have been endorsed by the European Union (EU) which also launched complementary strategies such as the one on Circular Economy. Doing so, the EU promotes a transition towards a sustainable, low carbon and circular economy where innovation plays a key role. To monitor progress towards such models, the paper proposes an analysis of the 2014 edition of Eurostat’s Community Innovation Survey (CIS) and more precisely its module on “innovations with environmental benefits”. The dataset allows to understand the performance of companies in eco-innovation and to identify the factors leading to innovation with environmental benefits. The CIS data shows that environmental concerns are becoming a significant component of innovation at large in enterprises’ strategies. It also demonstrates that a significant number of European firms (almost 25%) have introduced new products, processes, marketing or organisational innovations with environmental benefits between 2012 and 2014.The main factors leading to such eco-innovations include enterprise's reputation, reducing costs of inputs, and environmental regulation, while surprisingly a factor like market demand is not statistically significant. The paper defends that circular models generate an environmental, economic and social value for companies and the entire society. But it also suggests that enterprises are followers in the transition towards a sustainable economy, the process being led by other actors like public authorities and an active part of the civil society. Despite some caveats, the CIS’ microeconomic data allow identifying the most efficient policy instruments to promote the transition towards a sustainable, circular and low-carbon economy and society.