Circular products and business models and environmental impact reductions: Current knowledge and knowledge gaps.

The circular economy is billed as a solution to increase economic growth while reducing environmental impact. It is argued that retaining the value of products, components and materials by fostering the “inner loops”, such as reuse, refurbishment and remanufacturing, increases the resource-efficiency. However, published environmental assessments estimating the actual impact of these so-called circular outcomes are inconclusive. This paper presents the results of a systematic literature review of previous environmental assessments on circular products and circular business models, focusing on the tighter technical loops including reuse, refurbishment, and remanufacturing. Mapping reveals factors that influence the environmental impact of circular products and other aspects that should be incorporated in environmental assessments. Even though 239 papers were identified that discuss the environmental impact of circular products and/or circular business models, the far majority only considers a traditional product in a traditional sales model that is remanufactured and compares the impacts of remanufacturing with manufacturing new products. While it is important to quantify the impacts of remanufacturing, it is remarkable that product design strategies for circular economy (e.g. design for remanufacturing, upgradability, modularity) and product-service systems or other types of circular business models are usually not considered in the LCA studies. A lack of studies of products with so-called circular designs that are utilized within circular business models is apparent. In addition, many assessments are static analyses and limited consideration is given to future increases in the share of renewable energy. One can thus question how well the available environmental assessments quantify actual circular products/offerings and the environmental performance gains they could provide in a circular economy. The results show that there is an urgent need for more LCAs done in a way that better captures the potential benefits and deficiencies of circular products. Only then will it be possible to make robust claims about the environmental sustainability of circular products and circular business models and finally circular economy in total.

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Last updated: 2021-05-17

IVL Swedish Environmental Research Institute

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IVL Swedish Environmental Research Institute has a wide environmental profile. We combine applied research and development with close collaboration between industry and the public sphere. Our consultancy is evidence-based, and our research is characterized by interdisciplinary science and system thinking.

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