Circular Economy: A Pathway to Integrated Value Creation for Business and Society

Abstract

[EN]Amid growing environmental pressures and the pressing demand to advance sustainable development, the circular economy(CE) has positioned itself as a transformative business approach capable of safeguarding favourable ecosystem conditionsthrough the application of key R-strategies. This research analyses the impact of corporative transition towards CE that respectsplanetary boundaries on the creation of tangible and intangible value for companies. To achieve our objectives and test our hy-potheses, we employed an unbalanced panel dataset comprising 44,756 observations over the period 2013–2022, involving 7010multinational and multisectoral companies. Our empirical findings show the significant and positive impact of CE transitionson firms' market value and growth opportunities, as well as on the probability of obtaining an award, intangible recognition forthe potential value that CE may offer to society and the environment. Furthermore, our complementary analysis highlights CEparadigms as a pathway in which, without importance of corporate advance—emerging, developing, mature or leading—value iscreated. Additionally, complementary estimations by subsamples of industries with high and low environmental sensitivity indi-cate stronger tangible value creation in environmentally sensitive industries, while the intangible value was more salient amongless environmentally exposed industries. These empirical results are robust across various methodological specifications; theseinclude GMM estimations to mitigate potential endogeneity concerns. Our findings provide empirical evidence to understand thepotential benefits of the transition to CE, especially in relation to the intangible recognition that it entails for companies to createvalue for society in accordance with the notion of safe operating space.