The circular economic model gets based on the ideas of make, use, and return that redefine economic growth by focusing on long term societal benefits. Through this model, social and financial capital gets built through decoupling economic activities from the depletion of finite resources, and reduction of waste(Deresky, 2014). This approach is in line with the corporate social responsibility of being environmentally conscious.
Corporate social responsibility is a requirement for any company in production. Many companies today run on the linear economic model that operates on the get, make, and dispose of principle that considers resources as unlimited, which affects production in the long run (Deresky, 2014). This leads to more costly production that hinders efficiency and, ultimately, profitability. Companies running on the circular economic model, on the other hand, make use of renewable energy that leads to decreased levels of pollution. Additionally, due to re-use and dematerializing, fewer production processes and materials are required to make better and functional products that add value (Aboulamer et al., 2020). Recycling of materials further gets encouraged as the preferred choice of materials used to make products are non-toxic and energy-efficient. In this way, the overall operational costs get reduced, which boosts overall production.
Furthermore, it is possible to sell quality products at low prices since the model fosters an approach in which products get rented or leased to customers for different periods depending on the product type. Consequently, businesses get to learn about their customers’ usage patterns and preferences as they interact more frequently with them(Ghosh, 2020). Ultimately, customer satisfaction and loyalty get improved as products and services that suit the client better get produced.