Business models of a circular economy

Abstract

Background: The concept of a circular economy is attracting more and more attention from the scientific and business community. It represents an alternative way of management for the currently dominant linear system. The traditional “take-use-discard” consumption model cannot be sustainable in the long run. Companies need to adapt their business models to CE-compatible ways of creating, delivering, and capturing values. To achieve positive economic, environmental, and social benefits, companies need to create new business models that separate economic growth from raw material inputs using a circular approach. In a circular economy, products and resources are used for as long as possible, for example by reusing or repairing products – in a linear economy they would be discarded.

Research purpose: This paper presents the concept of a circular economy and its business potential. It also presents examples of how companies around the world sell products and services based on developed circular business models. These best practice examples aim to demonstrate the diversity of business models implemented by companies and the business opportunities in a circular economy that are already being used today.

Methods: This article is the result of a review and analysis of literature and reports on CE objec­tives and circular business models.

Conclusions: The presented typology of a circular business model gives an opportunity to imple­ment the idea of a closed circuit on a practical level. It should be noted that the types described in the article, together with examples, do not necessarily present full innovations in the business model, but rather key elements of a strategy that contribute to closed-circuit activities. They have separate features, but there are no clear-cut boundaries between them. In order to support com­panies in achieving the highest possible productivity of natural resources, these strategies can be used individually or jointly.