Assessing and evaluating CBMs through challenging LCC approaches

The transition to Circular Economy involves rethinking of products, services, changes throughout the value

chain, and implementation of circular business models. Potential economic gains and cost savings from

circular business models have been mentioned as drivers to implement circular thinking within

organisations. However, companies still struggle in understanding the economic benefits and implications

associated with such a transition. To overcome this, metrics that provide economic information associated

with circular products and business models are needed. Life cycle costing (LCC) has been identified as a

potential economic quantitative assessment method. Through a systematic literature review, this paper

presents the strengths and limitations associated to LCC in assessing the economic implications of circular

business models.

The review recognised that LCC can provide a life cycle and multiple stakeholder perspectives, which are

relevant to overcome some challenges associated with the implementation and design of circular business

models. Furthermore, environmental and social LCC can include externality costs, which is an important

factor for Circular Economy. Nonetheless, there is a lack of empirical studies implementing multiple

stakeholder perspective and accounting for externalities. Several challenges were also identified: lack of

understanding of the cost implications of products/materials with multiple life cycles; difficulties in

allocating costs among multiple stakeholders; lack of data availability and low quality. These are relevant

issues for costing associated to circular business models and should be addressed in future research.