Managerial perspectives on Circular Economy business ecosystems

Introduction

Over the last 150 years, the traditional linear economic model has been the dominant model, but times are changing and the need for a renewed economic model arises (MacArthur, 2015). The rising impacts of humankind’s actions on the environment are trespassing planetary boundaries (Roy & Baxter, 2009; World Economic Forum, 2019). In the widely applied linear model resources are extracted, turned into products, utilized and thrown away afterwards (Blomsma & Brennan, 2017). From extraction to final disposal, the traditional paradigm known as “cradle-to-grave” (Goyal, Esposito & Kapoor, 2018) addresses impacts at every phase of the product life cycle in a linear business model (Galvão, Homrich, Geissdoerfer, Evans, Ferrer & Carvalho, 2020). In this linear model, more than 61% of non-renewable materials are currently used in the production process of products with a lifecycle of less than a year (De Wit, Hoogzaad, Ramkumar, Friedl & Douma, 2018; Jonker, Kothman, Faber & Montenegro, 2018). As a result, resource depletion and worldwide volatility upsurges such as growing inequality occur (Piketty & Saez, 2014). Thus, the traditional linear model is proven to be unsustainable (Ellen MacArthur Foundation, 2013).

Circularity is receiving increasing attention - both from academics and practitioners - as it could be a feasible pathway to replace the linear model. Merely, the circular economy is perceived as a solution to various sustainability concerns and a means of integrating monetary benefits (Lieder & Rashid, 2016; Nerurkar, 2017; Witjes & Lozano, 2016). On one hand, the implementation of circular economy strategies could foster economic benefits by optimizing materials and energy efficiency (Mhatre, Panchal, Singh & Bibyan, 2021). On the other hand, these strategies could provide social as well as environmental benefits through potential new job markets and resource allocation (Mhatre et al., 2021). By 2030, through the implementation of the circular economy, 700 new jobs will be created while also increasing the GDP by 0.5% (European Commission, 2020). These will include direct circular job opportunities as well as indirect circular employment opportunities that support the circular economy (Lakatos et al., 2021).

In Europe, certain circularity aspects had been developing over the years but it lasted until 2015 for the European Commission to signal the transition towards a circular economy with the approval of the “Circular Economy Action Plan” (Mhatre et al., 2021). Nowadays, national governments and business organizations are promoting the circular economy (Korhonen, Honkasalo & Seppälä, 2018). Merely, to reach sustainability targets (Geng, Sarkis & Bleischwitzet, 2019). These sustainability targets are for instance the G7 Alliance for Resource Efficiency, the Sustainable Development Goals and the below 2°C of the Paris Agreement (Lakatos et al., 2021).

In general, the implementation of circularity principles has progressed slowly (Babbit, Gaustad, Fisher, Chne & Liu, 2018). This is caused by many practical challenges such as regulatory, cultural, technical, etc. problems (Kirchherr et al.,2018). Moreover, Lieder and Rashid (2016) state, “innovating towards circularity requires fundamental changes in wide-spread economic structures”. Also, Yuan, Bi and Moriguichi (2006) mention that “CE is emerging as an economic strategy rather than a purely environmental strategy” which requires a reform of structures and policies (Tu, Zhang, Zhou, Liu & Fu, 2011). In other words, the change towards the circular economy necessitates on one hand circular supply chains that support circular business models (Bocken, Short, Rana & Evans, 2014). On the other hand, policies and legislation need to be taken into account as they “can be driven by a different perspective of value and alignment with the goals of a circular economy agenda” (Machacek, Richter, Habib, & Klossek, 2015). Moreover, the implementation of CE strategies necessitates higher degrees of collaboration as well as integration within the system - meaning the integration across the value chain - an ecosystem perspective is called for (Brown, Bocken & Balkenende, 2020). So, organizations need to alter economic structures such as their supply chain, business model or even ecosystem. To implement a circular economy, radical changes are asked for in combination with new ways of doing business while taking other perspectives into account (Bocken, de Pauw, Bakker & van der Grinten, 2016). For this reason, this dissertation will dive deeper into the economic as well as legal perspective on the circular economy.

More specifically, the implementation in the building sector has progressed even slower (Többen & Opdenakker, 2022). While this sector is accountable for 40% of all materials worldwide which causes 35% of waste globally little initiative is taken to integrate circularity (Eberhardt, Birgisdottir & Birkved). Few research studies have developed frameworks for the integration of the circular economy in the construction sector (Eberhardt et al., 2019). Also, knowledge of how to integrate circularity in the initial phase of a construction project is currently very limited (Többen & Opdenakker, 2022). Previous research mentions that most of the time the project manager does not possess the knowledge to execute construction projects that satisfy circular economy needs (Adams, Osmani, Thorpe, & Hobbs, 2017). This dissertation attempted to design and present a checklist to integrate circularity in the initial phase of building projects.

— Introduction, taken from the master dissertation.