Sustainability accounting and the introduction of the circular economy principles in businesses

Abstract

The introduction of the circular economy by firms entails, among other issues, an evolution in accounting and reporting since firms must implement specific activities to close the loops, are involved in collaborative solutions in the value chain of sharing economy and industrial symbiosis, and make decisions in a decoupling scenario. The adoption of a circular business model implies the need to properly account for the financial implications of the environmental investments, as well as to report exhaustively the environmental impacts avoided. In addition, to change from a linear economy to a circular one raises the need to measure and analyse activities and impacts other than those environmental and social ones that have yet to be included in sustainability accounting and disclosure. In this scenario, an outlined framework is provided in this paper to offer a better understanding of how the circular economy-related principles can be integrated into sustainability accounting given a strong approach to sustainability. An integrated analysis of the implications that the circular business model has for sustainability accounting is carried out to overlap the circular economy introduction at the micro level and to offer a new vision of the implication of the circular economy in businesses and society that remains underexplored in the literature.

Keywords

• Sustainability accounting
• Circular economy
• Environmental management
• Circular business model
• Stakeholders