NEWSLETTER by Alessia Falsarone. The author acknowledges the team at The University of Chicago Circular Economy and Sustainable Business Management Program and all participants of the innovation knowledge hub for their insights and collaboration.

As we begin a brand new year, we can’t help but feel energized about the opportunities and possibilities that lie ahead. Before diving into new ideas and plans, it’s important to take a step back and reset our strategies.

In 2023, circularity professionals have learned that the concept of a business model is often used loosely in the field, and that simply reframing operational priorities, procurement decisions or product design features isn’t enough. To make effective changes towards more circular businesses, we must understand how key value-chain stakeholders are affected and ensure that the added value of a circular upgrade outweighs the cost.

Speaking of corporate investments in circularity, it’s important to remember that these should include more than just conventional financial needs. Natural and social capital should also be included in our calculations. This simple reality calls for learning to communicate beyond material flows and resource scarcity and to consistently rethink the business case for circularity.

Involving CFOs early on in the process is a great way to get started.


| The Science of Impact

Patrick Moloney and the circularity team at Ramboll Management Consulting have said it quite clearly in a recent article:

‘While the business model guides operational changes, the business case ensures a robust foundation by articulating the economic rationale and value proposition. Unifying these two elements is essential for private industries navigating the circular economy landscape’.

As such, if we consider the language of a business model as internally driven, the business case underpinning it all is the engine that takes the external view, beyond a company’s own operations, and adjusts its compass to sustain the necessary changes.


| Circularity Roadmaps Explained

Where to start to consistently align a business model with its evolving business case? A Circular Economy Matrix offers us a tool to address both the case for circularity and the blueprint to benchmark its operational development against. In their 2021 HBR article, INSEAD professors Atalay Atasu and Luk Van Wassenhove, along with Celine Dumas from Accenture France, take the example of manufacturing companies and how a combination of three basic strategies can help them round up a circular business model with a supportive business case.


>>click to zoom in | Legend: DFR = Design for Recycling; PLE = Product Life Extension ; RPO = Retain Product Ownership


Retain Product Ownership (RPO). This approach allows producers to maintain ownership of their products by offering them for rent or lease to customers, rather than selling them outright. In this way, the producers not only provide the products but also take responsibility for their maintenance even after the use phase.

Product Life Extension (PLE). Businesses that focus their efforts on extending the current life cycle of a product by repairing, upgrading, refurbishing, and remanufacturing, they retain as much of the value as possible, can demand premium pricing by avoiding obsolescence while also opening secondary market opportunities for their products to potentially leapfrog lower cost brands.

Design for Recycling (DFR). This approach prioritizes the intended functionalities of a product, the compatibility of its different components for disassembly and, the use of the recovered materials. Ultimately, design for recyclability of components allows for easier separation, recovery, and their re-deployment in new products.

No doubt, the effectiveness of reasoning through a circularity matrix is dependent on the ability of a company to experiment – whether on its own or as part of a network of technical partners. Yet, success or failure remains an organizational matter as the ability to adapt, acquire and grow new talent, and the pace of regulations will all continue to play a non-trivial role.


| Investing in the Circular Economy

To propel the adoption of circularity in businesses, it is crucial to approach the subject from a CFO perspective. Preparing for a cashflow dialogue that encompasses operating, investing, and financing activities will be pivotal in driving circularity into the strategic planning realm of any organization.

For instance, transitioning from a transaction-based, volume-driven business model to a service-oriented one will necessitate alterations in cash flow scheduling, cash flow scale, asset and liability allocation (including associated depreciation costs), inventory management, and more. Thoroughly identifying and quantifying these impacts enables a company to construct a more comprehensive business case by utilizing them as levers to optimize the business model itself.

The WBCSD – World Business Council for Sustainable Development offers a concise framework for developing a business case for circularity that speaks the language of a CFO, whether it relates to a product, service, or project.


>>click to zoom in


When seeking to convey the value proposition of a circular solution to a CFO, it is essential to be well-equipped to address the following inquiries:

How will this impact cash flows? Be prepared to provide insights into how both the frequency and magnitude of cash flows will be influenced. It may prove beneficial to commence by considering the effects on Accounts Payable and Accounts Receivable.

How will this impact the balance sheet? Understand the ramifications of your circular business model on your company’s assets and liabilities, particularly when contemplating a shift towards product-as-a-service models.

How will this impact cost of capital? Share how your circular business model may affect your company’s weighted average cost of capital, including potential preferential interest rates from banks or alterations in tax liability due to federal incentives.

Additionally, let us not overlook the fact that as the issuance of green bonds and investor interest in the circular economy continue to grow, companies will find increased support in securing debt or equity for further investments in circularity


| As you prepare for the year ahead

From Salzburg (Austria) to Turin (Italy), the first few weeks of the year bring a handful of R&D focused opportunities for circular economy builders and investors to connect and stir our world towards a more sustainable economic transition.

Discover, grow and leave your mark!


January 11th 2024: CircularPSP: Circular Economy Transition in Cities | Tender Launch (webinar). This info session introduces the tender for an AI/ change solutions platform enabling Circular Economy solutions for cities. Eight leading CE-cities (including CircularBerlin and ReLondon) have developed this tender jointly reflecting the challenges they share and consider to be on the critical path towards a wide-scale and systemic uptake of circular economy principles. Add-on tender application training events will include a technical webinar on January 18th, and an Administrative and Financial session on January 25th. Credit to CircularPSPGeorg Vogt and team for designing the tender and for providing all relevant training to navigate the application process.

January 17th – 19th: IERC 2024 – Promoting Circular Economy Action (Salzburg, Austria). Recognized as the most important annual event concerning circular economy in electrical engineering and electronics, the International Electronics Recycling Congress will bring together up 500 international professionals from the entire electronics recycling value chain, from materials suppliers, collection, OEMs, competent authorities to recyclers and re-use and repair organizations. Notable sessions include the future of e-plastics and the Circular Economy; emerging trends in low carbon content materials; a policy discussion on the right to repair and market considerations for industrial players; and circularity in smartphones. Jean Cox-Kearns from Lenovo’s Global ESG team, is serving as the 2024 Chair of IERC’s Steering Committee.

February 21st- 23rd: IRTC24 – Raw Materials in a Changing World (Turin, Italy). In a single-day introductory program covering the fundamentals of criticality and the evaluation of critical raw materials, the IRTC | International Round Table on Materials Criticality brings industry experts, policy makers and researchers together to address the most pressing issues with respect to the relevance of critical raw materials for decarbonization and the much needed cutting-edge technologies. A team of researchers from the University of Exeter will address the role of circularity to reduce criticality from a primary supply perspective. To follow, Anders Sand (Boliden), Brian Baldassarre (European Commission JRC), and Patrick Wäger (Empa) will chair a deep dive session into unconventional forms of value creation from extraction and production related to critical raw materials, including material by-production, valorization from wastes, and substitution. Get in touch to participate.


Off to an impactful start to the new year!


| brief bio

Alessia Falsarone is executive in residence, practitioner faculty at the University of Chicago, where she leads the Circular Economy and Sustainable Business program. The article is based on the author’s newsletter A Week of Circularity from the innovation knowledge hub.


All opinions expressed are those of the author and/or quoted sources. is an independent and neutral platform dedicated to generating debate around ESG investing topics.