How to Build a Net Positive Company? Circular Business Model Frameworks for Sustainable Success

A practical framework for sustainable business models. Transform Your Business with Circular Economy Strategies: Practical Guide to Sustainable Business Models for 2025

Unlock the secrets to sustainable business growth with actionable circular economy strategies. Discover how to transition from a linear to a circular business model, create net positive impact, and future-proof your company with expert insights from “The Circular Business Revolution” by Manuel Braun and Julia Binder. Learn practical frameworks, real-world examples, and proven steps to drive environmental and financial success in 2025 and beyond.

Ready to future-proof your business and lead the sustainability revolution? Dive deeper into the actionable steps, proven frameworks, and inspiring case studies that will help you transform your company into a net positive force for both profit and the planet-continue reading to unlock your path to circular business success!

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With the need for action on the environment becoming more urgent, businesses are seeking guidance on how to move forward. Sustainability experts Julia Binder and Manuel Braun offer an inspiring, engaging guide to making the transition from a linear, “take-make-waste” model of business to a sustainable, circular, “net positive” model that aims at both business success and environmental and social good. Binder and Braun bring deep insight and extensive business experience to their manual for business transformation, emphasizing the imperative of change and the potential for everyone to win.

Take-Aways

• The shift from a linear economy to a circular one is both possible and necessary.
• In a circular economy, companies pursue both business success and the good of the planet and society.
• Devising a circular business model means rethinking the way your company creates value.
• Circular business models focus on resource use, ecosystems, uses of waste, product life, or servitization.
• For insights into your business’s future, look at your value chain and your operating environment.
• Start with a clear, bold vision for how your company could create a net positive impact.
• Your strategy should address both business and environmental aims and align with your organization’s vision.
• The execution of a circular business model is complex and focuses on integrating sustainability.

Summary

The shift from a linear economy to a circular one is both possible and necessary.

Today, the world economy operates on a linear model: Value creation begins with the extraction of natural resources, and ends when people discard products as waste. However, this model is inefficient and has immense negative effects on the environment. The need to shift to a circular model is becoming clear. In a circular economy, value creation occurs much as it does in nature: Materials circulate continuously through use and reuse, and waste becomes practically nonexistent.

“Many of the challenges we face today stem from the inherent limitations of prevailing linear value-creation systems.”

Such a shift might seem impossible — and it does have its challenges. But this transformation is not only possible; it’s inevitable. Think of it in terms of three time horizons: the near horizon, where operations proceed according to business as usual; the far horizon, where you’ll find your circular, regenerative future; and the mid-term, where a revolution in business models will bridge the present and future.

To move through this transformation process, begin by assessing “signals for change”: the shifts and disruptions in various conditions within your business context that signal and drive the need for change. Then, create a vision for a circular, regenerative version of your organization. This vision becomes the “North Star” for your business’s transformation. Next, investigate the business models that could allow you to achieve good business outcomes and a low environmental impact. Finally, assess and strengthen your organization’s readiness for change in terms of strategy, execution, and people.

In a circular economy, companies pursue both business success and the good of the planet and society.

The circular economy is a vision of a future where business success and environmental restoration go hand in hand. In this future, instead of net profit, businesses seek “net positive”: giving more than they take, enhancing the well-being of all those they touch, and joining in partnerships to meet the global challenges humanity faces. Principles of the circular economy include the elimination of waste and pollution, the maintenance of products and material in circulation continuously throughout their lifespan, and regeneration inspired by natural systems.

“Circular innovation is one of the most powerful forms of innovation, as it aligns with the principles of nature, which operate in cycles and balances.” (eco-strategist Andrew Winston)

Going beyond eco-efficiency, which merely seeks to mitigate harm, the circular economy aims at “eco-effectiveness.” Circular models seek to create net positives through “cradle to cradle” designs, wherein products circulate infinitely in closed loops. The circular economy aims to break the link between the use of natural resources on the one hand and economic activity and the well-being of people on the other. It transfers the focus from the sale and ownership of products to the performance of products and services in terms of meeting actual human needs.

Participants in a circular economy use nine strategies, called the “R-strategies,” to attain circularity and reduce pressure on resources: “refuse,” meaning eliminating unnecessary products; “rethink” and “regenerate,” meaning improving a product’s performance; “reduce” waste; “reuse,” “repair,” and “refurbish” products to continue their usefulness; “remanufacture” and “repurpose” product parts to create new products; “recycle” and “recover” salvageable materials or their “embodied energy” via incineration or composting.

Devising a circular business model means rethinking the way your company creates value.

Business models define how organizations create value, deliver it to the consumer, capture that value via revenue models, and retain value through cost optimization. The business model includes the company’s value proposition. Compared to linear business models, circular models have more complexity and uncertainty due to the feedback loops, system dynamics, and numerous parties involved. Although R-strategies can form part of a circular business model, they aren’t enough on their own. A full-fledged circular business model requires a deep rethink of the organization’s strategies for creating and capturing value. Circular models address not only production but also marketing and the ways consumers use and value products.

“Business models are the key to practically activating the R-strategies and unlocking their full impact potential.”

As you explore the varieties of circular business models, think of the possibilities for implementation as existing on a spectrum, from minor adjustments to your existing business model — perhaps making the status quo more sustainable — to transformative innovation. Start by identifying the circular business models most relevant to your organization, and then drill down to specific potential patterns to discover ways they could enable your business to create value and achieve environmental benefits.

Circular business models focus on resource use, ecosystems, uses of waste, product life, or servitization.

Circular business models fall into five categories based on their overall strategy for value creation. They will aim to do one or more of the following:

• Optimize the use of resources — These business models aim at making existing operations more environmentally sustainable — such as by reducing waste or pollution via product redesign or process innovation — or by switching to the use of bio-based, secondary, or decarbonized materials. These business models can enhance the organization’s resilience, reputation, and product positioning, and can result in cost savings.
• Regenerate or restore ecosystems — In these business models, organizations implement agricultural strategies to revitalize ecosystems, enabling opportunities for economic value creation. For example, on the island of Borneo, where logging has decimated forests, cultivation of the illipe nut combats deforestation and supports local communities. The illipe nut is valuable in the cosmetics industry, providing an alternative to shea or cocoa butter.
• Capture the value of waste — These business models recognize the economic value of materials currently considered waste, including the by-products of production processes, and create value by recovering these materials. This category of business model includes companies that convert waste into energy and those that provide platforms for markets in secondary materials. These markets have the advantage of boosting the resilience of industrial ecosystems and can spur product innovation.
• Extend product life — Children are still playing with Swedish BRIO wooden train sets that their great-grandparents used when they were young — an example of the category of business models focusing on producing long-lived products. In these models, opportunities for additional revenue stem from repairs, replacements, and upgrades. Companies focused on recommerce recover, refurbish, and resell “pre-loved” products. In another version of this business model type, companies implement “reverse logistics” to enable customers to return used products, components, or materials for reuse.
• Bundle services and products — In servitization, companies shift their focus from selling products to providing integrated solutions tailored to meet specific needs. This type of business model, based on access rather than ownership, helps to de-link value creation from resource extraction. Models take pay-per-use or pay-per-outcome approaches. Sharing and pooling platforms enable “co-access” and co-ownership, often via third-party providers.

For insights into your business’s future, look at your value chain and your operating environment.

To see what the future might hold for your business, look at it from two perspectives: from the inside out and from the outside in. The inside-out view will help you understand how your business creates value. In today’s linear system, companies create value by extracting natural resources and then processing those resources to create a product that usually is destroyed at the end of its lifespan. The inefficiencies that riddle this system and make it so damaging to the environment fall into five categories: the overuse of resources; negative externalities, such as pollution; the generation of waste; underutilized capacities in the transport and use stages; and losses of value at products’ end of life. To discover circular opportunities for your business, study your value chain to reveal its specific inefficiencies.

“The challenge with sustainability lies in its systemic nature. Everything seems to be interconnected — like the cycles in nature. This forces us into a continuous encounter with difficult decisions and intricate trade-offs.”

The outside-in view includes the business’s operating environment. For most businesses, this operating context will face disruption soon, due to increasing scarcity of resources, changes in power dynamics, and other drivers that require companies to innovate and adapt. By considering how your business’s operating context will change in coming years, you can maintain your “license to operate”: the ability to meet the imperatives of doing business in your environment. You will be able to hold onto your “license to innovate,” too: your ability to leverage opportunities to gain competitive advantage.

Start with a clear, bold vision for how your company could create a net positive impact.

The transformation of your business from linear to circular should begin with a vision — an idea of the destination you seek, where your company achieves both business success and environmental goals. Craft this vision carefully, make it clear, and be ambitious. Develop your vision from both an environmental perspective and a business perspective, building on the vision, mission, and values the organization already holds. Use this future vision to work backward and determine what you need to do to make the vision into reality — a process called backcasting.

“Your role in the future is not merely about minimizing harm but actively contributing positively to the environment and society.”

Bag and accessories maker FREITAG uses the concept of “intelligent design for a circular future” as its guiding purpose — and in the words of former CEO Oliver Brunschwiler, “Purpose is boss.” FREITAG produces bags from previously used truck tarpaulins and encourages consumers to repair instead of replace damaged bags or participate in the company’s bag exchange program. FREITAG makes employee development a priority and also engages customers, partners, and other stakeholders by offering inspiration and encouragement to practice circularity.

Your strategy should address both business and environmental aims and align with your organization’s vision.

Strategy has two components: a pathway to implementing a chosen business model, and a direction and vision for the organization, indicating “where to play.” The implementation component should have a foundation in a strong business case as well as a clear environmental impact case specific to the organization’s industry, product, and region. Organizations engaging in servitization often encounter the so-called “balance sheet dilemma” as they transition to the servitization model, resulting from the shift from customers’ up-front payments for asset purchases to subscription payments. Solving the balance sheet dilemma requires careful cash-flow management.

“It is crucial to both ‘walk the talk’ and ‘talk the walk’ and actively involve your stakeholders by taking them on board your sustainability journey.”

The business model pathway should align with the organization’s future vision, just as the transition to circular should align with the company’s overall priorities and goals. Tools to achieve this alignment include vision backcasting and a system that specifies objectives and the results necessary to progress toward them. Finally, leaders must communicate actively and authentically in order to maintain transparency and demonstrate their commitment to the transformation. Communicators should be careful to avoid greenwashing — by ensuring communications reflect real activities and achievements — and “greenhushing”: reluctance to discuss sustainability efforts.

The execution of a circular business model is complex and focuses on integrating sustainability.

The implementation of a circular business model has six major dimensions, each of which helps enable the integration of sustainability into the organization:

1. “Customer-centricity” — For circular business models, customer-centricity has particular relevance because consumers play a pivotal role in their success.
2. “Design” — The design of both the operating model and the product itself will determine the impact of a circular initiative. Designers must design for a product’s complete life cycle, considering all of its phases.
3. “Ecosystem” — The success of circular business models, as well as circular ecosystem innovation, relies on partnerships and collaborations within ecosystems.
4. “Data and technology” — Technological and digital innovation enables many aspects of circular business models. Examples include digital product passports, advanced material processing technology, and smart reverse logistics systems.
5. “Organizational structures and processes” — Like any strategic initiative, the implementation of circular business models requires the clear delineation of roles and responsibilities, allocation of financial resources, and the design of efficient, integrated processes.
6. “Tools, systems, and KPIs” — The management of a circular business model requires the use of tools and systems to monitor performance and ensure results align with goals and objectives.

About the Authors

Julia Binder is a renowned thought leader recognized for her work at the intersection of sustainability and innovation. She’s professor of Sustainable Innovation and Business Transformation at IMD Lausanne and director of the school’s Center for Sustainable and Inclusive Business. Manuel Braun is an expert in sustainability and resource productivity. He’s director at Systemiq, a global think tank focused on sustainable systems change, where he leads the circular business program. Previously, he spent eight years at McKinsey & Company, leading sustainable product development and design projects across industries.