Digitalisation as an Enabler of Circular Economy

TLDR

Digitalisation can accelerate the circular economy by providing accurate information on product availability, location, and condition, enabling efficient processes, waste minimisation, longer product life, and lower transaction costs, yet significant challenges remain to realise these benefits. This exploratory qualitative study aims to clarify the limited literature on the opportunities and challenges of digitalisation for circular economy business models. The authors conduct a qualitative exploration of existing literature and stakeholder perspectives to identify gaps and solutions for digital technology‑aided circular business models. They find challenges in adopting novel business models, data collection and management, collaboration, and competence requirements, while highlighting opportunities such as product and process virtualization, stakeholder collaboration, and digitalisation.

Abstract

Digitalisation can boost the transformation towards a more sustainable circular economy. It can help closing the material loops by providing accurate information on the availability, location and condition of products. Digitalisation also enables more efficient processes in companies, helps minimise waste, promotes longer life for products and minimises the transaction costs. Thus, digitalisation boosts the circular economy business models by helping to close the loop, slow the material loop and narrow the loop with increased resource efficiency. However, there are still many challenges to be solved in order to gain the desired benefits and gaps hindering digital technology-aided circular business models implementation. The existing literature that discusses the opportunities and challenges of digitalisation is still very limited, and therefore, our exploratory and qualitative study seeks to clarify these perspectives. There is a significant research gap in understanding those challenges and finding solutions to them. In our study, we identified challenges related to adopting novel business models, data collection and management, collaboration and competence requirements. The virtualization of products and processes, collaboration with stakeholders and utilising digitalization were highlighted to be major opportunities in adopting CE-based business models.