Dipartimento di Economia e Statistica "Cognetti de Martiis"

Vera Palea, Cristina Santhià, Aline Miazza, "Are circular economy strategies economically successful? Evidence from a longitudinal panel" Journal of Environmental Management, Volume 337, 2023, 117726, ISSN 0301-4797,  https://doi.org/10.1016/j.jenvman.2023.117726
(https://www.sciencedirect.com/science/article/pii/S0301479723005145)

Abstract: While the Circular Economy (CE) is considered a critical tool for addressing environmental degradation, its economic consequences have not received much attention yet. This study fills this gap by investigating the effect of CE strategies on key corporate profitability indicators, debt financing and stock market valuation. Our analysis focuses on a global sample of listed companies over the 2010–2019 period, which allows us to document how CE strategies have evolved over time and regions. To assess the impact of CE strategies on corporate financial measures, we construct multivariate regression models which incorporate a CE score to capture the overall corporate CE performance. We also analyze single CE strategies. Results suggest that implementing CE strategies improves economic returns and is rewarded by the stock market. Creditors, instead, started penalizing firms with worse CE performance only after 2015, the year of the Paris Agreement. Eco-design, take-back and recycling systems, and waste reduction strategies play a major role in increasing operational efficiency. These findings encourage companies and capital providers to direct investments toward CE implementation, with beneficial effects on the environment. From a policymaking perspective, they show that the CE can benefit not only the environment but also the economy.

Keywords: Circular economy; Economic performance; Cost of debt; Tobin's Q; Circular economy metric; Circular strategies