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ESG and Circular Economy: a Comparative Analysis
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2022-08-26
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en
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Abstract
In recent years, investing in ESG and Circular Economy (CE) has become highly popular among academics and investors. This is due to the fact that both concepts can provide potential solutions for current worldwide challenges, e.g. global warming, scarcity of raw materials and overpopulation. Furthermore, there are studies which show that ESG and CE investing are certainly accompanied by financial benefits. This research elaborates on the ESG and circular economy topic by examining existing literature on these topics. Both ESG and circular economy frameworks will be compared to each other to determine if the use of these frameworks lead to higher financial performance. Hence it is key to define and understand how both frameworks work. The main conclusion of this research is that both frameworks aim to foster environmental sustainability development. ESG investing is a broader framework than Circular Economy as it covers more dimensions of sustainability. Additionally, the ESG criteria have been practiced for a longer time compared to circular economy activities, which also explains why ESG is more developed in terms of laws and regulations. Therefore, ESG investing is currently more likely to ensure higher financial performance for companies in the long-run compared to circular economy activities.
Keywords: ESG; Circular Economy; Sustainable Development; CSR; financial performance; measurement
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Faculteit der Managementwetenschappen