Cleaner Environmental Systems 2 (2021) 100006

Contents lists available at ScienceDirect

Cleaner Environmental Systems

journal homepage: www.journals.elsevier.com/cleaner-environmental-systems

Circular economy as a driver to sustainable businesses

Murillo Vetroni Barros *, Rodrigo Salvador, Guilherme Francisco do Prado,
Antonio Carlos de Francisco, Cassiano Moro Piekarski
Sustainable Production Systems Laboratory (LESP), Graduate Program in Industrial Engineering (PPGEP), Universidade Tecnol
ogica Federal do Paran

a (UTFPR), Ponta
Grossa, Paran
a, Brazil

A R T I C L E I N F O A B S T R A C T

Keywords: Circular economy can play an important role towards sustainable business management and it can be seen all
Circular economy throughout an organization. Although the current literature regards the circular economy as a guide for more
Sustainable business sustainable business models, it is not clear the main implications to key business areas. Therefore this study aimed
Business management
to present the key impacts of circular economy practices within different business areas that help guide a sus-
Circular business model
Sustainable practices
tainable management of businesses. To that end, it was identified, by means of a systematic review of the existing
literature, the business areas impacted by circular economy practices within an organization. The business areas
identified were strategic planning, cost management, supply chain management, quality management, environ-
mental management, process management, logistics and reverse logistics, service management, and research and
development, allowing a discussion on the main contributions of the circular economy to each area. A key-impact
map was provided summarizing the most influential changes in each area that assist in the management of
businesses towards greater sustainability. It is important that organizations understand and accurately internalize
circularity principles within their strategic plan. On that note, adopting a circular thinking might enable an or-
ganization to obtain more sustainable (economic) results while reducing impacts.

1. Introduction
Organizational concern regarding environmental management has
been growing worldwide. Environmental improvements in businesses
have been encouraging companies to think and act towards reducing the
negative effects from ill environmental performance, from both produc-
tion and consumption ends. In that regard, as companies have a re-
sponsibility to defend the environmental and sustainable values of
society and need to show it to their stakeholders (Lahti et al., 2018), the
circular economy has been increasingly seen as a possible solution to
pursue a more sustainable development (Geissdoerfer et al., 2018).
The new economic system called circular, aims to include practices
such as reducing, reusing, recycling, and recovering (Kristensen and
Mosgaard, 2020) to traditional systems. However, the circular economy
is an approach that seems to have been brought up only more recently in
the organizational and research environments, but its theoretical foun-
dation derives from older schools of thought, such as Industrial Ecology
(Graedel, 1994; Lifset and Graedel, 2002), Biomimicry (Benyus, 1997),
Natural Capitalism (Lovins et al., 1999), Cradle-to-Cradle (McDonough
and Braungart, 2002), Performance Economy (Stahel, 2010), and others.
Ultimately, circular economy refers to the idea of extending the useful
life of products, materials or resources (Gregson et al., 2015). A central
topic in the concept of circular economy is the use of resources within
closed-loop systems, reducing pollution or avoiding resource leakage
while sustaining economic growth (Winans et al., 2017). In addition, this
approach represents the latest attempt to conceptualize the integration of
the well-being of the environment with economic activities (Murray
et al., 2017).
The definition of circular economy considers both the environmental
and economic advantages simultaneously under the notion of a regen-
erative performance requiring circulation of technical nutrients while
ensuring safe entry and exit of nutrients in and out of the biological
sphere (Lieder and Rashid, 2016; Noya et al., 2017). The circular econ-
omy also demands a shared conscience, responsibility, and performance
involving the entire life cycle and all the stakeholders of both the orga-
nization and the product.
Circular economy has advanced a great deal in the last decade, and
the investigation of alternatives in support of the circular economy in the
industrial sector has been observed to bring consistent benefits not only
to the literature, but also to the business sector. On those grounds, the

* Corresponding author.
E-mail addresses: murillo.vetroni@gmail.com (M.V. Barros), salvador.rodrigors@gmail.com (R. Salvador), guilhermefprado92@gmail.com (G.F. do Prado),
acfrancisco@utfpr.edu.br (A.C. de Francisco), piekarski@utfpr.edu.br (C.M. Piekarski).

https://doi.org/10.1016/j.cesys.2020.100006
Received 30 October 2020; Received in revised form 16 December 2020; Accepted 19 December 2020
2666-7894/© 2020 The Author(s). Published by Elsevier Ltd. This is an open access article under the CC BY-NC-ND license (http://creativecommons.org/licenses/by-
nc-nd/4.0/).
M.V. Barros et al.
organization that appears to be most proactive in accelerating the tran-
sition to a more circular economy around the world is the Ellen Mac-
Arthur Foundation (llen MacArthur Foun, 2013), standing out by helping
pave the way to the adoption of circular initiatives by both the public and
private sectors.
Many companies seem to still struggle to view the circular economy as
a revenue-making paradigm, rather than risky and costly (Cristoni and
Tonelli, 2018). Therefore, more sustainable business models have been
discussed in the last few years (Bocken et al., 2014), especially embracing
the concept of circular economy towards circular business models (e.g.
(Urbinati et al., 2017; Nuβholz, 2017; Leipold and Petit-Boix, 2018;
Salvador et al., 2021a)).
Nonetheless, little is known about what impacts circular economy
practices have across different business areas, and what effects of
implementing more circular practices leads those businesses to being
more sustainable. Therefore, based on the existing literature, this study
departs from the following research question: how can circular economy
guide a sustainable management of businesses from within organiza-
tional areas? This research question shaped the aim of this study. Based
on that, this paper aims to present the key impacts of circular economy
practices within different business areas that help guide sustainable
business management.
In response to the aim of the present study, a theoretical discussion is
presented. Circular economy-based studies were analyzed, seeking to
summarize the main contributions of the circular economy to sustainable
business management. A key-impact map with insights to sustainable
business management practices was built, as presented in Fig. 2.
This study can be seen as a driver for the industrial and academic
sectors. It can assist in organizational decision-making towards a more
sustainable planet, providing knowledge and practice-based insights on
the identified areas impacted by circular economy practices. On top of it,
to the best of the authors’ knowledge, this piece of research is unprece-
dented, especially by identifying the different areas with a closer rela-
tionship with the circular economy and by revealing the impacts circular
economy practices have on them towards more sustainable businesses.
Considering circular economy applied to sustainable businesses, there
is a constant need to discuss and present means of application, and thus
facilitate sustainable development in organizations. Therefore, this
article brings some important contributions: (i - theory) it provides aca-
demicians with a coherent view of the relationship between circular
economy and business models, particularly by identifying the impacts of
circular economy across different business areas; (ii - method) it provides
practitioners and organizations with insights on where the adoption of
circular economy might affect businesses the most, thus helping antici-
pate decision-making struggles; and (iii - policy implications and prac-
tices) it provides practitioners and scholars with a discussion of the
business areas within an organization with a closer relationship with
circular economy practices and policy implications in terms of identi-
fying organizations that are working with practices based on circularity
actions. In addition, the study is in line with the sustainable development
goals (SDG) developed by the United Nations with the aim of integrating
and balancing the environmental, social, and economic perspectives
within 17 Goals (UN - United Nations, 2015).
This study proceeds to demonstrate the above in the following way.
This section addressed the initial considerations, and the aim of the
present piece of research. Section 2 describes the research design used to
conduct the study. The next section presents key insights on how circular
economy may influence sustainable business management within
different business areas. Section 4, in turn, addresses a set of managerial
implications. Finally, section 5 provides the final remarks and key dis-
cussions on the findings, as well as topics for further research.
2. Research design
The methods used to conduct this research comprised two phases. In
Phase 1, a systematic literature review was conducted in order to gather
2
Cleaner Environmental Systems 2 (2021) 100006
representative research to reach the aim of this paper; and Phase 2
comprised identifying the main organizational areas and the influence of
the circular economy within them collaborating to make businesses more
sustainable.
2.1. Phase 1 - systematic literature review
A systematic literature review was conducted following the steps
presented in Fig. 1 and detailed thereafter.
All remaining articles composed the final portfolio and had their full-
texts analyzed (see Phase 2). The final portfolio served as a basis for the
insights and discussion presented in this paper.
2.2. Phase 2 - identifying organizational areas and the influence of circular
economy
The 38 documents in the final portfolio were used as the basis for
identifying the organizational areas as well as for supporting the dis-
cussions of the impacts of circular economy in each of those areas. In
addition to that, the authors used cross referencing, thus consulted the
references in those 38 studies, in order to reach out to publications that
were not in the portfolio, seeking to enrich the discussions presented in
this article.
During the reading of the full-texts, in order to fulfill the objective of
this piece of research, the authors identified the main business areas
influenced by circular economy practices. Those areas were: strategic
planning, cost management, circular supply chain management, quality
management, environmental management, process management, logis-
tics and reverse logistics, service management, and research and devel-
opment. This identification was done by qualitatively observing the
business areas that were affected by circular economy initiatives across
the different frameworks, discussions, and case studies observed in the
literature analyzed.
Table 1 presents the business areas, the number of documents in the
final portfolio that contributed to identifying the business area, and the
respective references for those studies.
After identifying the business areas, the main roles played by the
circular economy in each of the business areas were discussed and are
presented throughout section 3.
3. Circular economy as a driver of sustainability in business
management
The influence of the circular economy towards more sustainable
businesses can be seen across a range of business areas. Studies on sus-
tainable businesses is a prolific theme (Dentchev et al., 2018). In some
areas this influence is more evident, seen as an underlying issue, in others
there is some blur on the real implications of circular economy practices to
businesses. Nevertheless, many actions/practices towards circularity (or
greater circularity) might not have been identified as such, thus having
received other names, even though many have been in practice since long.
Strategic planning, cost management, circular supply chain manage-
ment, quality management, environmental management, process man-
agement, logistics and reverse logistics, service management, and
research and development are a few areas of a business/organization
where circular economy can act as a driver towards more sustainable
practices. These practices can comprise mutual, multi-directional
changes among the areas previously mentioned and others, as well as
one might exert direct unidirectional influence over another. Or even yet,
they can cause a chain of events where area A influences area B, which
influences area C, which goes back to influencing area A. Moreover, this
circle may even take more than three agents in one iteration.
Seeking to summarize the main implications of the circular economy
on each identified area, Fig. 2 provides a key-impact map with insights to
major implications of circular economy towards a more sustainable
business management.
M.V. Barros et al.
Having identified the key impacts from a circular economy to a more
sustainable conduct, the insights highlighted in Fig. 2 are discussed
hereafter.
3.1. Strategic planning (SP)
Circular economy contributes to greater resource efficiency and a
more sustainable economic development by means of using its main
principles to gain strategic advantage, where companies seek to lower the
environmental burdens and improve the economic aspects of their op-
erations (Haas et al., 2015; Yang and Feng, 2008). In the current envi-
ronment, circular economy is considered a strategic and relevant issue for
the profitability of companies and for creating value (Fonseca et al.,
2018). Thereupon, managers might want to subsidize better environ-
mental alternatives in terms of strategic planning.
Several researchers have adopted the premise that studies of circular
economy contribute to strategic planning, contributing to a more sus-
tainable organization (see e.g. (Mavendra et al., 2018; Sharib and Halog,
2017)). As for environmental aspects, the adoption of circular economy
principles enables companies to close resource loops, providing ways to
align the company's strategic planning with more circular principles.
Circular economy functions, thus, as a motivator for companies that wish
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Cleaner Environmental Systems 2 (2021) 100006
Fig. 1. Steps for the systematic literature
review.
1 - Definition of keywords and searches in
databases. Three searches were conducted
on October 18, 2020, on the Science Direct,
Scopus and Web of Science databases, using
the following keywords: (“circular economy”
OR CE) AND (“sustainable business*”). The
searches yielded 182 documents (including
all sorts of documents such as original
research and review articles, books and book
chapters, and conference proceedings).
2 - Removing duplicates and documents
not written in English. In this step, all
duplicate documents, as well as documents
written in languages other than English were
excluded from the raw portfolio. Therefore,
accounting for the overlaps in the databases,
when different databases returned identical
documents, only one of them was kept.
3 - Screening by title and keywords. All
remaining documents had their titles and
keywords screened and the following ques-
tion guided the decision of keeping the
document in the portfolio or not: does this
research contribute to identifying how cir-
cular economy can guide sustainable business
management from within organizational
areas?
4 - Screening by abstract. In this step, the
abstracts of remaining documents were
screened and the following question guided
the decision of keeping the document in the
portfolio or not: does this research contribute
to identifying how circular economy can
guide sustainable business management from
within organizational areas?
5 - Reading full-texts. After the abstract
filter, the full-texts of all documents were
retrieved and read, and once again the
following question guided the decision of
keeping the document in the portfolio or not:
does this research contribute to identifying
how circular economy can guide sustainable
business management from within organiza-
tional areas?.
to adopt more sustainable business models. A company may, for instance,
outline its supply chain management practices to maximize resource ef-
ficiency through the reduction, reuse, and recycling of waste and attain
environmental goals (Heyes et al., 2018).
Furthermore, the adoption of circular economy principles as main
philosophies for strategic planning provides companies with means to
identify and tackle different sources of revenue. Companies that follow
this path are able to create means to reduce operational costs through
resource recycling and reuse (Park et al., 2010) and also reach different
audiences.
Organizations may strategically develop their business models to
attain greater circularity within their supply chains, by leading their
suppliers into adopting practices such as the recycling of products and
reuse of materials/resources, in order to make circular business models
fully viable (Geissdoerfer et al., 2018).
3.2. Cost management (CM)
When it comes to cost management, the adoption of circular economy
principles and practices plays a significant role, as it allows companies to
turn products which are at the end of one of their life cycles into re-
sources for the conception of other/new products. This allows for the
M.V. Barros et al.
Fig. 2. Key-impact map: contributions of circular economy to sustainable business management.
minimization of waste (Stahel, 2016) and simultaneously decreases the
need for inputs of virgin material (Haas et al., 2015). On top of that,
resource scarcity causes prices to go up and become more volatile,
negatively impacting a company's value creation and capture (Fonseca
et al., 2018). Undoubtedly, changing from linear to circular business
models, both efficiently and sustainably, may require investments (of
many sorts) from all parties involved in the company's network (Lahti
et al., 2018).
Recently, the European Union recognized the circular economy as a
high-impact strategy to help make society aware of the limits of eco-
nomic growth (Leipold and Petit-Boix, 2018). Although barriers for
adopting such practices are to be considered, such as potentially high
upfront investment costs for circular economy projects and low prices of
virgin material caused mainly by greater offer (Kirchherr et al., 2018),
there are several cases in which the results of its implementation turn out
to be favourable in more than one expected way.
A practical example of applying circular economy precepts into cost
management can be seen in Alcatel's adoption of monitoring and treat-
ment of the electronic-waste it generates. As Alcatel tackles the Chinese
market, it identifies clear economic advantages provided by this practice,
such as the cost reduction provided by the reuse of components and,
simultaneously, the reduction of possible intangible costs that are to be
expected from poor environmental performers (Park et al., 2010).
In Alcatel's case, not only did the company create a clear economic
advantage by recycling and reusing the waste it generates, it also avoided
an intangible cost of reputation damage, which might be expected from
companies that are not perceived as environmentally-friendly (Park
et al., 2010).
Other examples of cost-affecting strategies are shown by Bocken, Mo-
rales and Lehner (Bocken et al., 2020), where the authors present Ikea's
and Waitrose's (a British supermarket) practices. Ikea offers consumers the
inconvenience of having to assemble their furniture themselves, but it
comes at a lower price compared to traditional furniture purchases. Wai-
trose, in turn, offers the possibility of buying products (such as pasta and
wine) in the quantities the consumer wants, using their own containers or
“borrowing” a container from the store until their next purchase, which
reduces food waste at the end of its life cycle. Both strategies are subtly
attached to traditional business approaches, but contribute to more cir-
cular systems. In those cases, and others, slight changes are seen in the
revenue patterns, thus affecting the companies' cost management
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Cleaner Environmental Systems 2 (2021) 100006
strategies. It should be noted that traditional cost management strategies
might even hinder company development (Wang and Zhang, 2018), where
the financial value of recovery is merely one condition for the creation of a
circular flow in supply chains (Vlajic et al., 2018).
3.3. Circular supply chain management (CSCM)
Circular economy is often regarded as a provider of opportunities for
companies to stretch the economic life of goods (Gregson et al., 2015),
joining efforts along the chain of supply and also engaging consumers,
seeking to recover the value of such products all throughout its life cycle.
Thus, the potential for value recovery offers good opportunities for the
creation of circular supply chains (Hankammer et al., 2019; Vlajic et al.,
2018; Hofmann, 2019; Hofmann and Jaeger-Erben, 2020).
When it comes to supply chain management, circular economy pro-
vides means for integrating its main concepts within the existing man-
agement principles. Circular supply chain management encompasses the
configuration and coordination of organizational functions within and
across business units in order to close, slow, or narrow energy and ma-
terial flows. This results in the minimization of resource input into the
system and also prevents waste and emissions from leaking out of the
system, thus improving operational effectiveness and increasing
competitiveness (Geissdoerfer et al., 2018).
In order to adopt a more circular supply chain management, com-
panies are required to align their strategies in order to successfully attain
specific goals, where economic, environmental, and social bottom lines
must be considered, and proactive action from multiple stakeholders is
required (Geissdoerfer et al., 2018). In fact, Kazancoglu, Kazancoglu and
Sagnak (Kazancoglu et al., 2018) claim that in order to integrate circular
economy to supply chain management, it is necessary that the company
achieve a balance on the environmental, economic, logistics, organiza-
tional, and marketing performances. On that note, Tura et al. (2019)
argue that more circular supply chains have the potential to be more
independent and also to avoid volatile and high prices.
Companies may attain social goals, for instance, by orienting their
business models to create local jobs, while others may declare commit-
ment to customers and communities as a social-oriented action. Overall,
Leigh and Li (2015) highlight that circular economy offers companies a
systematic thinking and allows them to integrate it to a more sustainable
development of their supply chain.
M.V. Barros et al.
Table 1
Business areas, number of documents, and the references of the supporting
literature.
Business Area Number of Supporting Literature
Documents from the
Final Portfolio
Strategic planning 3 Fonseca et al. (Fonseca et al.,
2018); Heyes et al. (Heyes et al.,
2018); Geissdoerfer et al.
(Geissdoerfer et al., 2018)
Cost management 4 Fonseca et al. (Fonseca et al.,
2018); Lahti et al. (Lahti et al.,
2018); Leipold and Petit-Boix
(Leipold and Petit-Boix, 2018);
Bocken et al. (Bocken et al., 2020)
Circular supply 8 Hankammer et al. (Hankammer
chain et al., 2019); Vlajic et al. (Vlajic
management et al., 2018); Hofmann (Hofmann,
2019); Hofmann and Jaeger-Erben
(Hofmann and Jaeger-Erben,
2020); Geissdoerfer et al.
(Geissdoerfer et al., 2018); Tura
et al. (Tura et al., 2019); Abuabara
et al. (Abuabara et al., 2019);
Vegter et al. (Vegter et al., 2020)
Quality management 1 Fonseca et al. (Fonseca et al., 2018)
Environmental 13 Dentchev et al. (Chiappetta
management Jabbour et al., 2020); Cristoni and
Tonelli (Cristoni and Tonelli,
2018); Chiappetta Jabbour et al.
(Chiappetta Jabbour et al., 2020);
Tura et al. (Tura et al., 2019);
Pieroni et al. (Pieroni et al., 2018);
Fehrer et al. (Fehrer and Wieland,
2020); Scheepens et al. (Scheepens
et al., 2016); Dijkstra et al. (Dijkstra
et al., 2020); Reinhardt et al.
(Reinhardt et al., 2019); Kopnina
(Kopnina, 2019); Zufall et al.
(Zufall et al., 2020); de Sousa
Jabbour (de Sousa Jabbour, 2019);
Bocken et al. (Bocken et al., 2018a)
Process management 4 Witjes and Lozano (Witjes and
Lozano, 2016); Geissdoerfer et al.
(Geissdoerfer et al., 2018); De los
Rios and Charnley, 2017;
Lewandowski, 2016
Logistics and reverse 5 Geissdoerfer et al. (Geissdoerfer
logistics et al., 2018); Reinhardt et al.
(Reinhardt et al., 2019); Stål and
Jansson (Stål and Jansson, 2017);
Copani and Behnam (Copani and
Behnam, 2018); Khan et al. (Khan
et al., 2018)
Service management 8 Hsieh et al. (Hsieh et al., 2017);
Copani and Behnam (Copani and
Behnam, 2018); Heyes et al. (Heyes
et al., 2018); Bocken et al. (Bocken
et al., 2018a); Fernandes et al.
(Fernandes et al., 2018); Khan et al.
(Khan et al., 2018); Todeschini
et al. (Todeschini et al., 2017);
Maffei et al. (Maffei et al., 2019)
Research and 5 Cristoni and Tonelli (Cristoni and
development Tonelli, 2018); Baldassarre et al.
(Baldassarre et al., 2020);
Todeschini et al. (Todeschini et al.,
2017); Zamfir et al. (Zamfir et al.,
2017); Heyes et al. (Heyes et al.,
2018)
Similarly, an organization is able to proactively manage its stake-
holders either by engaging their partners into making their business
models viable, or pushing their partners towards the adoption of input
materials that are made mostly by recovered materials/resources, thus
enabling the market of such materials to grow (Geissdoerfer et al., 2018).
5
Cleaner Environmental Systems 2 (2021) 100006
Examples of actions that can be taken to increase the circularity of a
supply chain are presented by Abuabara et al. (2019) in a study of con-
sumer behaviour in the Brazilian coffee-in-capsules market. Those ac-
tions included: expanding urban collection points; including incentive
programs to encourage customers to return the capsules or taking them to
a pick-up point; cultivating a culture of civic responsibility and awareness
around waste reduction; and association with specialized recycling
companies to explore each waste separately.
A long-term perspective with short-term actions can be observed from
building economically viable businesses in order to disseminate circular
economy principles, or to use certain materials in order to show that they
may not need to end up in landfills (Geissdoerfer et al., 2018); none-
theless, a more circular conduct might rearrange a supply chain alto-
gether if compared to a traditional chain (Vegter et al., 2020). Circular
economy, therefore, presents itself as a philosophy that is adaptable and
has the capacity to be integrated to supply chain management.
3.4. Quality management (QM)
When going circular, there is still an inherent need for quality in
products and processes. Companies need a shift in policy that enables
protecting the environment while promoting business models that assure
manufacturing/production quality and also allowing to maintain the
competitiveness of a business (Stahel, 2016), maintaining
customer-oriented and differentiation strategies (Fonseca et al., 2018).
However, the shift from a linear to a circular economy leads to issues
previously inexistent or unperceived in terms of product and process
quality (see (Tukker, 2015)). Organizations should address the issue that
its customers might perceive the products that have been made with the
use of recovered input materials as lower quality products. This conse-
quently drives organizations onto developing quality management
practices in order to keep their reputation out of harm.
Therefore, it is important to point out the main material flows in
quality management and the need to have a quality management system
that is both more integrated with the circular economy and more mature.
Hence, a circular economy can foster quality improvement in processes.
For the performance of closed-loop systems to be considered of quality,
nutrients, water, soil, wastes, and other materials must be selected and
approved based on certain quality standards.
3.5. Environmental management (EM)
There has been a growing concern regarding the environmental
aspect of sustainable and circular business models (Salvador et al., 2020)
(Dentchev et al., 2018). Rather than proposing that organizations should
manage the environment, which inherently implies ownership of the
natural resources it has access to, the studies have proposed that orga-
nizations should adopt environmental stewardship (Cristoni and Tonelli,
2018); (Park et al., 2010). It has also been reported that the principles of
circular economy have a close relationship with a company's environ-
mental management and performance (Chiappetta Jabbour et al., 2020),
and, on the one hand, it is argued that more circular systems are able to
help prevent negative impacts to the environment (Tura et al., 2019).
However, on the other hand, one must not neglect the consequences of
rebound effects, which if not accounted for might offset the impacts
prevented by the intended strategy and ravage the sustainable efficacy of
more circular systems (Pieroni et al., 2018).
On the one hand, much research on this theme is based on a Porterian
value chain logic that overemphasizes economic goals at the detriment of
social and environmental goals (Fehrer and Wieland, 2020). On the other
hand, currently, circular economy studies have been using more inten-
sive environmental management tools. The development of product-
s/processes with greater environmental awareness charges companies
with the adoption of more sustainable measures. Thus, it raises the need
to use tools that can evaluate processes from an environmental stand-
point, in order to quantify potential environmental impacts. Potential
M.V. Barros et al.
reductions in primary energy use and environmental and toxicological
impacts can also generate satisfactory results in terms of adopting a cir-
cular economy approach, as shown in the study of Ferreira et al. (2019).
One of the environmental assessment tools that can support the circular
economy is the Life Cycle Assessment (Scheepens et al., 2016). The ISO
International Organization for Standardization (2006a); International Or-
ganization for Standardization (2006b) refers to Life Cycle Assessment as a
tool aimed at raising environmental awareness of potential impacts asso-
ciated with products, aiming to evaluate the environmental aspects and
potential impacts of the life cycle of a whole process, product, or service. It
can be characterized as the most important tool for assessing potential
environmental impacts in modern environmental management (Salvador
et al., 2021b; L€ofgren et al., 2011). The tool may guide improvements on
the environmental performance of products, by assisting in decision
making, selection of environmental performance indicators, marketing
strategies International Organization for Standardization (2006a), selec-
tion, classification, and management decision support (Chang et al., 2014),
and it can be used to encourage environmentally-friendly practices and
assist in sustainable decision-making (Barros et al., 2020). The evaluation
is performed by a compilation of inputs and outputs, assisting environ-
mental management in identifying opportunities for improvements in
production systems. Therefore, the use of Life Cycle Assessment allows
evaluating the system as a whole in order to quantify the potential envi-
ronmental impacts (existing and avoided).
On those grounds, it has been observed that existing studies have
already addressed the joint implications of environmental management
and circular economy (see, e.g. (Geng et al., 2009; Zhu et al., 2010; Zhu
et al., 2011)). These studies, all from China, point out that the rapid
development of China's economy and industries has caused increasingly
high rates of pollution and resource depletion. Therefore, such studies
propose an integrated management approach to try to solve the existing
conflicts between industrial development and environmental protection
by adopting circular economy concepts. Still in China, the strategic
transition from end-of-pipe control to pollution prevention sets an
example of improved environmental management. The notion of circular
economy marked the change in the Chinese model of pollution treatment,
from end-of-pipe to a structural change towards a more circular economy
(He et al., 2012).
Moreover, it has been highlighted that sustainable business models
have been focusing on recovering products and resources and creating
value from waste (Dijkstra et al., 2020), which is in line with Reinhardt
et al. (2019)'s view that the concept of circular economy provides po-
litical guidance for a more sustainable transition and presents a positive
vision for the future in terms of climate change, ecosystem degradation,
and increasing risks of scarcity of raw materials.
Not much alike industrial approaches, circular economy approaches
have not been the subject of education for sustainability, which has been
slow to adopt circular systems in the curriculum (Kopnina, 2019). Given
the need for further assessment and adoption of circular systems, which
might not always have an ideal performance throughout the entire life
cycle of products (Zufall et al., 2020), it has been suggested that busi-
nesses build business cases (de Sousa Jabbour, 2019) for a more circular
conduct, and experiment with such approaches (Bocken et al., 2018a).
3.6. Process management (PM)
Within the circular economy, processes might be reengineered so as
to extend product life (Lofthouse and Prendeville, 2018), reduce envi-
ronmental impacts, or increase financial results. On those grounds, much
thought is put onto strategies for product and resource recovery (Witjes
and Lozano, 2016), thus many waste management processes/strategies,
for instance, are founded on the circularity concept (Allesch and Brunner,
2014; Liguori and Faraco, 2016).
To internalize circularity, many processes have been going through
redesign to facilitate aspects of (e.g.) reusing, recycling, and transporting,
as for logistics and reverse logistics (Geissdoerfer et al., 2018).
6
Cleaner Environmental Systems 2 (2021) 100006
Management of processes might be affected with regards to reengineer-
ing production processes in order to make them more circular (e.g.,
restructuring facilities), or even switching from one set of operations to
another (production based on virgin inputs versus production based on
non-virgin inputs) (see e.g. (De los Rios and Charnley, 2017)).
In general, existing business models for the circular economy have
limited application and there is no comprehensive framework supporting
every kind of company/process in designing a circular business model
(Lewandowski, 2016). In this sense, the processing or manufacturing
phase of a product is one that locks a fair share of the resources consumed
and the environmental impacts caused by a product, therefore, it is
rendered a key spot for managing and promoting or fomenting circu-
larity. One of the central changes in process conception and redesign is
elimination or reduction of waste and, even if/when waste is produced, it
should be planned to have its value recovered (Lovins, 2008).
Circular economy principles have driven strategies and changes in
processes in a range of fields, such as in the area of chemical (Zuin, 2016),
or biological processes (Liguori and Faraco, 2016), and a myriad of in-
dustrial processes (Li et al., 2010; Ridaura et al., 2018). Besides waste
management strategies (including reduction, reuse, recycling, final
disposal) and even partnership deals to either provide or receive waste,
changes towards greater circularity may affect factors such as energy
consumption rates and types of raw materials.
Finally, Walmsley et al. (2018) suggest that all of these interactions
among processes might lead to industrial symbiosis. That might happen
among processes within the same industrial facility (internal recovery),
as well as it may happen among related or non-related companies
(external recovery). One process' outputs might be another one's inputs
and this interaction/relationship may happen philanthropically or be
based on financial or economic incentives. Such interactions, whether
designed environmental wise or not, influence the environmental profiles
of processes, leading organizations through a more sustainable path.
3.7. Logistics and reverse logistics (L&RL)
Reverse Logistics has been stretching out around the world, involving
all layers of supply chains in various companies and sectors, and this area
of research has become a key competence in modern supply chains (Brito
and Dekker, 2004), and also a profit generating function (Rogers and
Tibben-Lembke, 2001).
Applying the concepts of circular economy to the field of logistics
incurs in a few implications. Some of the highlighting issues are sharing
transport means, so as to increase load factor (and thus reduce idleness)
and avoid unnecessary transport, and strengthening and stimulating in-
dustrial clustering, thus industries are able to share services (Buren et al.,
2016). It all contributes to lowering transportation costs, besides
lowering environmental impacts and connecting with one underlying key
aspect of a circular economy - sharing.
In the context of the circular economy, logistics (and reverse logistics)
management assists in closing, slowing, and narrowing supply chain
loops (Geissdoerfer et al., 2018). Therefore, it is also highlighted the
importance of building partnerships to promote reverse logistics prac-
tices (Reinhardt et al., 2019), in order to enable recovery strategies such
as recycling (Stål and Jansson, 2017), and remanufacturing (Copani and
Behnam, 2018; Khan et al., 2018).
Furthermore, Eposito, Tse and Soufani (Eposito et al., 2018) claim
reverse logistics to be a major component of the functioning of a circular
economy. That lies on the concern that post-use wastes must be trans-
ferred back upstream so that they can be re-processed, thus recovering
their value (see (Geisendorf and Pietrulla, 2017)), which builds on the
concept of take-back systems (TBS) (Stål and Jansson, 2017). In this re-
gard, whether wanted or not, the final consumer is the agent who con-
trols the flows of end-of-life processes. They are the agents who can make
or break such reverse systems, thus the importance of sensitizing cus-
tomers and encouraging a change in culture in order to embrace a cir-
cular behaviour.
M.V. Barros et al.
In addition, last mile (delivery), service, and first mile (reverse) lo-
gistics can be integrated so as to increase circularity (Buren et al., 2016).
Deliveries, pickups, and intermediary logistic services have a potential to
increase transport efficiency and circularity if merged or shared. Once
again, such interactions lead to both environmental and financial bene-
fits, leading to positive impacts on business sustainability.
3.8. Service management (SM)
Circular economy research has gradually expanded from government
policy to the management of the value chain and material flows, but now
has a more business-oriented perspective (Hsieh et al., 2017). In this
sense, service companies are in a strategic place, between manufacturers
and end-users, therefore, they play an important role in the transition to a
circular economy (Heyes et al., 2018); (Copani and Behnam, 2018).
Many times, efforts are devoted to major changes in the processing of
products in order to attenuate some sort of negative impact, while par-
allel potential in services is often neglected. The circular economy is
considered holistic and adaptive; in this sense, the use of Product Service
Systems (PSS), a model that uses eco-efficient services with the potential
to replicate and compete with the ‘fast-fashion’ industry, has been
increasingly observed (see e.g. (Bocken et al., 2018b) (Fernandes et al.,
2018)) and these systems have been pointed as great enablers of a cir-
cular economy (Khan et al., 2018). Moreover, PSS have been signaled as a
path for greater sustainability (Tukker, 2004).
Indeed, it is easily found and agreed in the literature that offering
services rather than products is one of the most effective ways of walking
towards a circular economy (Stahel, 2006), decoupling profits from
massive resource consumption (Heyes et al., 2018), since in the standard
pattern of consumption products have been prematurely aged (Crocker
and Chapman, 2017). Moreover, the offer of PSS has implications to the
development of effective take-back systems and the design of more du-
rable products that also facilitate recovering value at the end of their use
cycle (e.g. for recycling, remanufacturing, etc.) (Todeschini et al., 2017).
Two highlighting companies that offer PSS are Mud Jeans and RePack.
One good example is posed by the company Mud Jeans (2018), which
instead of selling jeans, rents them. One can rent a pair of jeans for a year
and have free repairs (if it be the case). This kind of practice makes pro-
ducers seek to make long-lasting products, instead of speeding its obso-
lescence to produce new ones and increase sales. When the provider holds
ownership, more of the company's interests are invested in it (Wastling
et al., 2018). Another practitioner is RePack (2018), a company that
provides packaging service for e-commerce. The company promises to
remove package waste and designs packages to last at least 20 cycles.
Notwithstanding, much thought is usually put onto medium and large
organizations, however, Heyes et al. (2018) suggest that micro and small
companies also have the potential to contribute to such circularity model
involving both upstream and downstream partners; even though,
doubtlessly, there are barriers, majorly economically, to be dealt with,
once micro and small companies might struggle with changes in the
short-term.
Furthermore, many authors corroborate the idea that offering ser-
vices and sharing are major steps towards a circular economy (see
(Todeschini et al., 2017; Maffei et al., 2019) (Lofthouse and Prendeville,
2018)). Yang et al. (2018) defend the idea that PSSs contribute to
increasing circularity, regardless of whether product-oriented, use-or-
iented, or result-oriented. Such practices may provide consumers with
the products/services they want and would otherwise not be able to
afford, economically, or even time or space-wise, for example. It does,
nonetheless, slow the pace of consumption that, at times, ravages
resources.
3.9. Research and development (R&D)
Research and development has been addressed as an attempt to
explore competitive advantages and innovation in order to compete in an
7
Cleaner Environmental Systems 2 (2021) 100006
increasingly globalized environment (Cristoni and Tonelli, 2018); (Von
Zedtwitz and Gassmann, 2002). With that regard, ecodesign- and life
cycle assessment-based research and development (Baldassarre et al.,
2020); (Sauv
e et al., 2016) allows selecting alternative materials, seeking
better economic and environmental performance throughout the whole
life cycle of products (Ribeiro et al., 2013).
On those grounds, the design stage of a product can foment a more
circular performance (Todeschini et al., 2017). By means of designing
long-life goods and extending the life of products (by, e.g., offering ser-
vices to extend product life, such as repairing and remanufacturing), the
use phase of those products are extended, thus slowing the flow of re-
sources (Bocken et al., 2016).
Furthermore the role product design plays in a circular business to
some extent differs from that of businesses based on a linear economy
(based on throw-away products) (Den Hollander et al., 2017), and it is
argued that a thoughtful design of products can provide competitive
advantages for organizations (Bocken et al., 2016), therefore, one could
observe the importance of investing in R&D activities as it influences
economic performance (Zamfir et al., 2017).
It is important to notice that ecodesign does not apply exclusively to
product development or even to product-oriented organizations. Service
oriented companies can employ ecodesign to their business models in
order to implement circular economy into their daily practices (Heyes
et al., 2018). According to the Ellen Macarthur Foundation (Ellen Mac-
arthur Foundatio, 2017) product design implications reach a range of
fields, contributing to greater economic sustainability in production
chains by improving product life cycles, making them more manageable,
and bringing innovation.
4. Managerial implications
Circular businesses are a branch of sustainable businesses. Although
not necessarily sustainable on their own, circular business models help
achieve greater sustainability. Nevertheless, designing a sustainable
business or turning an existing business more sustainable by imple-
menting circular practices might incur in a range of managerial impli-
cations. By managerial implications, this article means the management
issues and changes to a business model and operations that managers
need to cope with and communicate throughout the entire organization
and also the chain of supply when going circular. This may also imply
changes in the company's organizational culture.
Changes in the way products are consumed, disposed of, and
managed, demand a change in culture (Cooper and Chapman, 2017). The
concern with behaviour towards circularity has been observed since the
1990s (Naveh, 1998), even if not under that name at times. Although
only a few studies of organizational culture associated to the circular
economy have been developed over the years, this is increasingly being
considered as a promising research topic (see e.g. (Wang et al., 2017;
Taddeo et al., 2017) (Wastling et al., 2018)).
Buren et al. (2016) claim that “pursuing a circular economy implies a
fundamental transition of society”. One of the challenges is to shift the
company's as well as the customer's views, sensitizing them to stand from
a cleaner viewpoint, thus detaching benefits and experiences from purely
economic aspects. To that end, companies might have to adapt existing
capacities or build new ones (see (Wang et al., 2017)). All of it leads to a
change in behaviour, both the company's and customer's. The company
might want to or have to deploy actions to encourage circular behaviour
(Hofmann and Jaeger-Erben, 2020); (Wastling et al., 2018), as its own
culture can play a critical role in enabling the implementation of a cir-
cular economy (see (Rizos et al., 2016)). Additionally, it will also need
coherent changes in governmental policies (Buren et al., 2016) and, thus,
all the culture embedded in it.
Furthermore, besides the market culture, even more importantly, the
company's culture needs a shift from commonplace practices, to be able
to maintain its activities, facing constant challenge and adaptation within
a market dominated by linear strategies. Accordingly, circularity happens
M.V. Barros et al.
differently depending on the context (see (Taddeo et al., 2017)). Aspects
such as social, organizational, structural, and political have to be taken
into consideration, and they all involve cultural traits, thus, being
context-driven.
All of the nine areas presented in this paper that were found to be
affected by the implementation and management of circular initiatives
have challenges and barriers to be overcome. One highlighting reason for
the need of identifying the impacts in different areas is that, on the one
hand, across an organization, different stakeholders might have to deal
with the different impacts (or even the same impacts but in different
places) each one in a particular way. They can and should interact in
order to develop integrated visions and action plans, as they are all part
of the same overall strategy. Nonetheless, those actions need to be
deployed on a daily basis and will be ultimately broken down into
operational tasks. On the other hand, on a more hierarchical perspective,
directors (or any other agent with the role of integrating and harmo-
nizing the work of all those different areas) need to be aware of the bigger
picture and be knowledgeable of the more general implications that
increased circularity might have. Furthermore, a few areas might be
more impacted than others, which will also depend on the strategy for
circularity, thus the circular business model, and also the type of com-
pany and the segment.
In this context, barriers are amplified in developing countries, as the
fact that they are seeking to fit into the market quickly, results in a low
interest in adopting circular economy practices (Ngan et al., 2019), and
organizations still lack structure and information when aiming at circular
practices (Guldmann and Huulgaard, 2020). This is due to the fact that
the circular economy requires a structural change that reshapes the
manufacture and the organizational culture. Therefore, the imple-
mentation of circular initiatives need to be analyzed beforehand so that
barriers and expenses are foreseen.
Furthermore, as a further managerial implication, life cycle thinking
can support the environmental, economic and social aspects that may be
linked to circular economy actions. Understanding the circular economy
and being able to in fact apply it in different areas within companies may
be a key point for organizations to move forward with material and en-
ergy recirculation, recycling, reuse, remanufacturing, and other de-
ployments of a circular economy.
Also, research on circular business models has been increasing (Sal-
vador et al., 2020) and new interactions between resource consumption
and revenue models have been being established in order to increase
sustainability of businesses (Bocken et al., 2014). On those grounds, re-
searchers and practitioners have been finding ways to decouple the
consumption of resources from the revenues of businesses. How far on
this road businesses will go remains to be seen. However, it will very
likely impact production and consumption patterns, and companies need
to be up for those changes if they want to remain in business.
Moreover, currently there are standards that help guide companies
towards achieving a more circular and more environmentally-friendly
conduct. Examples of those are the first standard on circular economy,
the BS8001 British Standards Institution (2017), and the ISO 14000 se-
ries, where one can find in ISO 14001 International Organization for
Standardization (2015) the requirements with guidance for use of envi-
ronmental management systems.
Finally, this work is justified by the effects on the environment that
we want to achieve through sustainable practices offered by the circular
economy. In addition, the consequences of the study may be friendly to
different stakeholders, such as public and private organizations, the
public sector, the environment, society, and the scientific community.
4.1. Synergies among the business areas and emerging business model
All those 9 areas might have different effects on one another, and
some might be more impacted by circular economy initiatives than
others. Considering an entire supply chain, there might be trade-offs
between areas relating to circular practices. An example would be
8
Cleaner Environmental Systems 2 (2021) 100006
seeking to reduce costs (cost management) and environmental impacts
related to logistics (logistics and reverse logistics) by using local bio-
resources to produce energy via anaerobic digestion, against using those
same bioresources to produce products with higher added-value (where
the resource could have at least one more cycle before being sent for
energy recovery) (thus addressing research and development), but
transporting it by a longer distance so that it could be processed. These
trade-offs will be specific to the resource/region/system under consid-
eration, but should be accounted for when deeming the sustainability of
the business.
Nevertheless, the synergies among those business areas could also
yield further business opportunities. The impacts of circular economy
practices on each of the areas presented here will also indirectly impact
the entire value chain of the business. Collaborations among different
actors along the supply/value chain are necessary for making better use
of the resources being dealt with, and they can help reveal and also boost
opportunities for new businesses. A few examples (selected at random) of
opportunities for new business deals are presented hereafter:
● By including a more circular thinking into their strategic planning,
companies might value the local economy and reduce environmental
impacts from logistics by working with suppliers that are located
nearby, which also saves time and money with transportation;
● Investing in more circular economy-driven research and development
for designing products and revenue streams, companies might reduce
environmental impacts and close, slow, or narrow resource flows
while reducing waste and improving their reputation both among
consumers and business partners;
● Another approach in terms of research and development is to think
about the entire production chain including the product's end-of-life
routes. Developing a product with a circular tendency can help
gauging benefits in the supply chain, logistics, and production/
manufacturing by reducing the inputs of virgin material, among other
measures;
● Closing the cycle in terms of material and energy can be an interesting
strategy for organizations working in cooperation networks. When
the use of resources/products are cascaded into a circular system, it
can be interesting for areas such as strategic planning, cost manage-
ment, and environmental management. Reducing costs, reducing the
extraction of raw materials from nature, and generating energy with
waste are key points that also help shape emerging business models.
Although it might seem that environmental management and circular
supply chain management stand out within the areas being influenced by
the circular economy, many other opportunities might arise from
bringing a circular thinking into the organization and internalizing flows
of resources. The opportunities presented here are generic examples, thus
further and more concrete opportunities can be spotted for specific
systems.
5. Concluding remarks, limitations, and opportunities for further
research
The current literature regards the circular economy as a guide for
more sustainable business models, presenting companies mainly with
possibilities for closing their material and energy flows. Based on that,
the aim of the present study was to present a theoretical discussion on
how circular economy may guide the management of sustainable busi-
nesses. This piece of research presented a graphical summary (see Fig. 2)
of the main implications to key business areas (strategic planning, cost
management, circular supply chain management, quality management,
environmental management, process management, logistics and reverse
logistics, service management, and research and development) that adopt
a more circular conduct.
It is important that organizations understand and accurately inter-
nalize circularity principles within their strategic plan, thus coupling
M.V. Barros et al.
their strategic goals with maximizing efficiency, reducing waste, and
most importantly, discovering novel sources of revenue that enable both
business success and the regeneration of the environment. On that note,
adopting a circular thinking might enable an organization to obtain more
sustainable (economic) results while reducing impacts. For instance,
making a supply chain more circular allows companies to lower the
environmental and social impacts not only for the company itself, but
throughout the entire chain of supply.
Companies with more circular practices are given the opportunity to
reduce tangible costs such as material usage and waste disposal, through
resource recovery initiatives, as well as intangible costs such as the po-
tential negative (or lower) reputation of companies that disregard sus-
tainable practices. Moreover, specifically with regards to environmental
management, the transition from the control and prevention of pollution
to a strategic era, where generating disposable waste is no longer an
option, is an essential point for the future of the planet.
Companies have been advancing the adoption of greater circularity
not only by internalizing more circular principles but also by requiring
stakeholders to become more circular too (e.g. selecting suppliers
through environmental criteria), contributing to making circular busi-
nesses viable and enabling market growth for (e.g.) products made from
reclaimed materials.
This paradigm shift also requires the industrial sector to promote
sourcing policies that prioritize sustainable businesses, and also need it to
incentivize consumption practices that award greater circularity, in order
to allow the development and success of such businesses.
A few limitations to this article should also be mentioned. The results
of this research were limited to the terms and databases used in our
search. Regarding the search terms, although CBMs have been subject to
much research recently and might be sustainable, they not necessarily
are, therefore it was decided to use “circular economy” and “sustainable
business” as umbrella terms, hence in case CBMs were identified in the
existing research as an option of sustainable businesses they would
appear in the documents retrieved (as it could, indeed, be observed in the
results of our study). Moreover, only documents of academic origin were
included in the final portfolio of this study, because of the greater scru-
tiny they have been subject to compared to other sources. Therefore,
other documents of non academic literature might add to the existing
knowledge on the influence of CE to sustainable businesses, however, the
analysis of these are left as suggestions for future research endeavors.
As to its contributions, this study contributes firstly by providing
academicians with a coherent view of the relationship between circular
economy and business models, particularly by identifying the impacts of
circular economy across different business areas. The practical contri-
butions of this study lie in providing practitioners and organizations with
insights on where the adoption of circular economy might affect busi-
nesses the most.
Further and future studies are expected to address separately the role
of each of the business areas highlighted here on the implementation and
management of circular business models and also identify the agents that
hold responsibility for managing the changes in each of those areas.
Conflict of interest
The authors declare that they have no known conflict of interest.
Funding sources
Authors Rodrigo Salvador and Murillo Vetroni Barros have received
research grants from the Coordenaç~ao de Aperfeiçoamento de Pessoal de
Nível Superior - Brasil (CAPES) - Finance Code 001. Authors Antonio
Carlos de Francisco and Cassiano Moro Piekarski have received research
grants from the Conselho Nacional de Desenvolvimento Científico e
Tecnol
ogico (CNPq) (Sponsored by CNPq 310686/2017-2 and 312285/
2019-1).
9
Cleaner Environmental Systems 2 (2021) 100006
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