Balancing Economic Viability and Environmental Impact in Circular Business Transitions

Abstract

Abstract: Companies are under growing pressure to reduce their environmental foot print while still maintaining profitability and business success. Circular Business Models (CBMs) offer potential benefits like lower costs, reduced risks, and additional income sources, but companies often struggle to implement them due to expensive initial investments, unclear timelines for returns, and difficulty accessing specialised financing options. This paper synthesises evidence from a systematic literature review (2010–2025; 68 studies) to clarify the financial drivers, barriers, and performance implications of CBM transitions across firm sizes, sectors, and regions. We introduce two complementary frameworks: the CIRCLE (Consider, Identify, Redesign, Calculate, Launch, Evaluate) Framework for established firms, and the CIRCUA (Create, Innovate, Rethink, Close, Utilize, Adopt) Framework for startups, both six-phase iterative roadmaps. Both integrate financial feasibility, organisational capabilities, and policy context. After that, the frameworks were preliminarily validated through a pilot survey among stakeholders related to finances in CBMs and circular startups. This work makes two key contributions: first, it provides a comprehensive overview of the financial considerations and key success factors for CBMs; and second, it offers a practical toolkit that adapts to different situations to help managers, investors, and policymakers develop financially sound circular economy strategies.