A Systems View of Circular Economy

Abstract

In many developing countries, economic growth is often prioritized, sidelining critical issues such as social inequality, pollution, climate change, ocean degradation, and pressing needs for health, education, food, and water management. Traditional linear models in organizations, based on product innovation and hierarchical governance, have been successful in certain contexts but are no longer viable in the face of finite natural resources and environmental degradation. This paper proposes a Systems Approach to Circular Economy as a practical framework for achieving “circular business-driven sustainability”, a concept proposed by major global organizations such as COP-25. This approach redefines sustainability, aiming to generate “sustainable wealth increasing returns” that benefit all key stakeholders, including the environment, society, and the economy. The primary objective of this paper is to introduce a new paradigm that facilitates the transition to more conscious, long-term growth. The proposed circular iterative thinking framework shifts from linear, reductionist thinking to a more holistic, systemic vision, underpinned by disruptive sustainable innovation. This novel paradigm creates positive impacts across the economy, environment, and global geopolitics. The paper demonstrates the application of this framework in two case studies, providing concrete evidence of its utility in real-world scenarios, including Heineken’s sustainable practices at its Meoqui brewery, which recovered methane for energy use, reduced water consumption, and contributed to local irrigation. The results underscore the effectiveness of the Systems Approach to Circular Economy in achieving economic decoupling and enhancing sustainability.

1. Introduction

We have modified our environment so drastically that we must now modify ourselves to co-exist in this changing environment.

(N. Wiener in “The Human Use of Human Beings: Cybernetics and Society” 1950)

1.1. Why Must a New Redesign Model of Growth Emerge?

Several economic trends of the last few decades such as the globalization of the markets, the great influence of digital technologies, the large demand for natural resources from the extraction economies of developing countries, the increment of national debts, world pandemics, etc., have notably stressed the use of linear models of growth, mainly for emerging countries.

South Korea, Taiwan, India, Mexico, Brazil, and China are examples of this paradox. Excessive industrialization, uncontrolled extraction of natural resources, high use of fossil fuels, and excessive consumerism have produced unprecedented economic growth in recent years. However, this growth has generated an extreme wealth concentration for few individuals and, at the same time, the resulting environmental damage has been devastating. More than ever, the social gap has reached one of the highest levels of inequality worldwide as 71% of the world’s population lives in countries where inequality has grown [1]. Coupled with migrations, this has caused increasing geopolitical disagreements among some countries as well as an important impact on the resilience of the planet [2].

For most developing countries, the priority today is focused on economic growth. This has left problems such as pollution, social gaps, ocean degradation, and climate change, as well as an urgent need for health, food, education, and water management, with a low or null priority. Unfortunately, this situation aggravates because in the last international meeting on climate change, some politicians expressed, unjustified: “grow now and clean up later” [3].

Focusing on economic growth-centered success, without considering important social and environmental stakeholders, has not been successful. On the contrary, rather than creating regional prosperity, this approach has created unbalanced social development, destroyed the natural environment, and compromised the survival mainly of the population of developing countries.

This short-sighted and mechanistic thinking has prevailed in all organizations for decades, “think to grow, but think linearly”, with fixed goals based on the efficiency of all business and government activities. Growth has been promoted in organizations with the replacement of human labor with machine operations as in the case of Industry 4.0, generative artificial intelligence (AI), virtual reality (VR), ChatGPT, 5G, and the Internet of Things (IoT) [4,5,6,7,8].

Although it has achieved some efficient results in certain industries and countries, the conventional model of linear operations in organizations, product of classical innovation based on generating new products and markets, and highly hierarchical governance, it is a model that will not survive the demands of a stressed planet whose nature behaves in cycles. This linear growth model will further constrain natural resources by 2030, creating a gap of around eight billion tons between supply and demand [9]. These natural resources are being notably ravaged, which creates an unequal society that demands diversity and a significant reduction of the current social gap that affects millions of people around the globe.

On top of that, if we add that the sustainability concept is expensive to implement, difficult to promote, needs the consensus of several stakeholders and institutions with different interests, and is continuously competing with the linear market–oriented models, then a paradigm shift must be built. A new paradigm where everybody must be included and “sustainable wealth” must be created, with a new vision of holistic reality, [10,11,12], focused on human well-being and its interrelation with a healthy planet [13,14,15].

1.2. Research Objectives and Contribution

The purpose of this paper is to explore the potential of a more systemic approach to the circular economy concept. More specifically, it examines how systems thinking is able to address gaps in existing linear frameworks and, at the same time, fosters a more sustainable, inclusive growth. In sum, the paper addresses the following research questions: (1) How can a systems thinking perspective improve the effectiveness of circular economy practices? (2) What limitations do current linear models have in addressing global sustainability challenges, and how can a circular, systemic approach overcome these limitations?

By addressing these questions, this paper provides a contribution by introducing an innovative “circular iterative thinking” framework. This framework seeks to integrate a systems view of sustainability aiming at filling critical gaps in traditional circular economy models. To do so, it focuses on the interconnectedness of environmental, economic, and social systems. Finally, the proposed framework aims to bridge the gap between theory and practice by offering actionable insights for organizations, policymakers, and scholars. The paper also illustrates the application of this framework through two case studies addressing pressing sustainability challenges.

Based on a “disruptive sustainable innovation” approach, this innovative paradigm positively impacts the economy, the environment, and the world’s social geopolitics [16]. This new paradigm for creating “sustainable consciousness growth” is focused on regenerating the environment; reducing the social gap; improving quality of life to the base of the pyramid (BoP), including human equality and biodiversity; and improving the resilience of the planet, while being simultaneously financially viable and competitive. Two cases are presented where this innovative paradigm has been applied to solve pressing sustainability challenges.

It is a “disruptive redesign” of the world, as Sam Pitroda puts it:

“…world was last designed during the 1940s when WWII came to a close.

Today hyperconnectivity has provided the most incredible opportunity ever to humanity to put in place a new paradigm. One that will strengthen democracies, democratize knowledge, empower individuals, demonetize education and health, decentralize execution, and bring a generation change, a new economy, a more empowered society, and a more sustainable planet…”

(S. Pitroda. Redesign the World. 2021)

2. Literature Review

From linear to circular.

From technology-driven innovation to innovation inspired by nature.

From analytic segmentation to systems clustering.

From machine autocracy to human-driven processes.

From an economic linear business strategy to a Circular Business-Driven Sustainability strategy.

2.1. From Linear to Circular

The current linear economy enables efficient production and effective connections from suppliers to customers, allowing efficient economies of scale [17]. This economy depends on the current enabling conditions that are permitted by established norms and policies of the global stakeholders.

However, these linear growth models provide, produce, sell, throw, and create an accumulation of waste, plastic, electronic materials, organic waste, construction materials, contaminated water, etc., which has shown that the classic model of extraction–production–distribution must be modified [11].

Most of these linear structures require fossil fuels for their production, tax benefits for capital investment (technologies and others), subsidized transport infrastructure, demand of high costs for managing waste, subsidized ecological footprint, etc. It cannot persist much longer because it strongly affects the sustainability of the regions, mainly under the current government structures of developing countries with a weak rule of law.

This model generates inequality and debt, the largest that humanity has created, as well as a gap not only between the very rich and the very poor but also a polarized environmental inequality, between regions extremely abundant in resources and others with a total lack of them. All this increases the base of the pyramid of poverty, where the wealth of the 1% of the population grows, and the poverty of the rest increases at the lower base [18].

In general, the linear growth model must be transformed into one that closes the cycles and produces feedback flows of increasing value for all three systems [19]. First, for the natural ecosystem, regenerating natural resources and transforming and revalorizing waste and residues of the linear producing lines [9]. Second, one that is focused on the reduction of the social gap, as well as on the reduction of toxic emissions [20], in benefit of the resilience of the planet. And third, a model that creates inclusive economic wealth able to eliminate the ever-increasing gap between the rich and the poor.

Following this approach, the linear or conventional economic growth of a region is “circularized”. Thus creating a decoupling between the economic wealth creation from both the environmental impact and the social gap that the linear chain may produce [20]. This circular network of new interconnected elements creates a new dynamics of self-determined economy based on its own resources, and on a self-financed sustainable structure, conducing to an economic model of “sustainable increasing returns” [21].

2.2. From Man-Driven to Nature-Driven

“God does not play dice with the universe” A. Einstein. The universe is a great deterministic and planned phenomenon. However, for S. Hawking: “Not only does God play dice but…he sometimes throws them where they cannot be seen”.

Nature is a well-structured model, deterministic in its planetary characteristics, and highly efficient, at least until now. With the advent of the Anthropocene era [3,22], man has been able to alter natural behaviors, and the whole biosphere ecosystem has been significantly modified. It is perhaps the moment in which we should adopt an innovative model that may improve the current economic and social systems as well [13].

Nature evolves through the interweaving of simple connections of basic but complete “information” (e.g., of basic elements C, H, O, N) that, with time and external conditions, generate more complex relationships. This evolution goes step by step from cells, evolving to assembling colonies of cells that are increasingly characterized (e.g., to more complex protein chains). These chains, with the same basic elements, but more intertwined, form swarms with a more complex organization until they become specialized tissues, nervous, circulatory, and digestive systems, and eventually organisms [6].

In other words, it is not an aggregation of new elements like a puzzle of more and more different two-dimensional pieces, but rather the same basic pieces (i.e., DNA structure) that are related in more complex chains, of multiple dimensions, forming clusters with a clear and precise purpose, create increasingly valuable organisms.

We are living in a transition stage. A transition from a worn-out socialist model, a highly criticized extraction capitalist and colonialism structure—not only from a politically dominant structure but also, from an artificial intelligence colonialism [23]—to a growth model limited and driven by natural resources and global sociopolitical forces. A disruptive proposal must emerge that is capable of learning from its surrounding natural phenomena, under a circular dynamics mechanism engaged in a balanced (homeostatic) common purpose, therefore creating a more prosperous and equitable society that can achieve harmony alongside a more resilient planet [12].

Therefore, economic and social systems may operate under a biomimicry model. This is a model inspired by nature [13] that is very effective with an “ecosystemic logic” approach [24]. In this way, we would be talking about a model for solving complex problems such as the climate crisis or the global pandemic, with a mechanism that works optimally in nature, but at the same time is supported by robust economic and social drivers and human management.

2.3. From Man-Driven to Machine-Driven

“Let us remember that the automatic machine is the precise economic equivalent of slave labor. Any labor which competes with slave labor must accept the economic consequences of slave labor”.

Norbert Weiner in Cybernetics: Or control and communication in the animal and the machine (1948)

One can say that Weiner’s assertion underscores the profound impact that a transition toward a machine-driven world has on society, the environment, and the economy. This machine-driven change has been recently fueled by advancements in technology, automation, and generative artificial intelligence. This trend is strengthened by the ideas of companies or entrepreneurs such as Elon Musk and prominent tech companies like Google. However, with new technology, new questions and implications for global sustainability arise both as opportunities but also as challenges.

On the one hand, the quick adoption and proliferation of machine-driven technologies such as Artificial Intelligence or robotics, have created unprecedented increases in efficiency and productivity, which are now streamlined in the manufacturing, service, and logistics industries. The achievement of such high levels of efficiency aligns perfectly with capitalist principles as it maximizes profits and minimizes costs. However, this pursuit of mere economic gains has also unintended or overlooked consequences beyond productivity metrics. This is the case of job displacement and unemployment, which not only affects the social fabric of societies but also disrupts livelihoods and potentially exacerbates inequalities. In other words, this machine-driven approach could amplify the “race to the bottom” phenomenon where countries compete to be the lowest cost supplier with human considerations sacrificed in order to ensure that economic benefits are met [25,26].

While the ambitious plans for a techno-utopian world inspired by industry leaders can inspire innovation, the overreliance on machines overlooks the intricate social, environmental, and economic implications of its rapid adoption. For example, data monetization has raised concerns about data security, privacy, and even the potential for algorithmic biases that perpetuate existing inequalities. In other words “technology will exacerbate inequalities while risks from cybersecurity will remain a constant concern” [2] (p. 8).

Therefore, this man-driven to machine-driven transition bestows multiple implications for global sustainability by boosting productivity and economic growth at the expense of risks of unemployment, social equity, and eventually human well-being.

2.4. From Analytic Segmentation to Systemic Synthesis

The universe is messy. It is nonlinear, turbulent, and chaotic. It is dynamic… It self-organizes and evolves. It creates diversity, not uniformity, … that is what makes it work.

Meadows, D. (2008)

As in nature, in the economy, and in social development, the “integral holistic” approach persists, although it is not always visible or accepted. Microeconomic activities occur in time through simple relationships. By applying established economic, statistics and mathematical rules, reasonable connections between institutions, regulations, policies, industrial indicators, international treaties, etc. emerge, in such a way that political–social–business decisions are appropriated and performed to solve specific complex problems.

However, the current economic system was analytically designed by segments under political, social, environmental, and technological sets of rules and principles, quite different from the current natural ecosystem behavior.

Current economic growth has created, mostly in regions of developing countries, large amounts of waste and residues, ineffective productivity levels, short obsolete periods that cause immense environmental impacts, and substantial socioeconomic gaps [21]. Among these are indiscriminate consumer markets, programmed obsolescence, large ecological footprints, toxic waste and residue impacts, extended greenhouse emissions, natural disasters, and social imbalances, among others. These bring extremely complex macroeconomic systems that become uncontrollable, compromising growth, poor security, social instability, etc., which is what usually happens in certain regions of the planet.

If a new approach is proposed, based on a “design with a systemic vision” of growth, the economic environment will be more than monetary or financial, and growth will be measured in holistic terms. Such as improving the environment, and social welfare, all under an economic structure aligned to these goals. This will translate into generating more and new jobs, more recreational spaces, better pollution indicators, more R&D of new clean technologies, and more security, until achieving a balanced prosperity for all, transformed into wide coverage of public health, better living standards, effective transportation, and excellent education systems.

Growth has passed from the industrial era to the knowledge era, and this last to an era inspired by nature and by the bioeconomy of the regions, totally against the current worldwide colonization and domination by digital technologies.

In summary, a necessary transformation must be redefined, adapted, and enforced. An era in which a model of growth is inspired by nature and the bioeconomy of the regions. A new “systemic” framework would help decision-makers foster the necessary collaboration between nature, society, and economic stakeholders, as a complete indivisible entity (more valuable than global), a win-win for all the stakeholders of the ecosystem of the biosphere [27,28].

3. Methods and Analysis

3.1. The Alternatives for a Transitional Paradigm, a Regenerative Economy

The capitalist system is linear; therefore, any attempt to build a new economic approach must come from a different economic-social system.

The conventional linear economy needs alternative models of growth. Models that incorporate systems theory [29,30] and systems thinking [12,31] may be analyzed and incorporated into the linear thinking approach. The recently developed growth model of “Doughnut Economics” [3] may be a viable alternative to solve the dilemma of economic growth under the limits of an ecological ceiling.

Although the economy has been always cyclical, since the basic models [32] that close the cycle between production and consumption, its metric has been linear. The GDP, the balance between supply and demand under the concept of diminishing returns, are examples of linear metrics that are insufficient to measure the impacts that economic growth creates on environmental damage and on unbalanced social development.

In the Doughnut Economics model [3], the outer ring is fixed and represents natural resources that are currently limited to the finite resources of the planet. The inner ring, in contrast, represents economic-social development. It is in this inner ring where products and services are produced by industries, which transforms natural and manufactured resources into new goods that are acquired by consumers. This generates simultaneously excessive waste and residues (which acidifies the oceans, pollutes the atmosphere, erosions soils, etc.) and at the same time consumes nonrenewable resources (water, land, minerals, etc.). These dynamics gradually decrease the viable living band, which is limited by the outer ring that currently cannot be expanded more.

This approach originates a significant challenge for theories and methodologies that have been considered to replace the linear model with a regenerative economic design, which offers an extraordinary possibility of creating sustainable wealth to satisfy human well-being under natural limitations. However, its implementation has a series of disadvantages that will be analyzed together with the following circular economy proposal.

3.2. The Circular Economy Approach

The term “regenerative and distributive economics” concept of regenerative economy [33] has been designed to recover capital assets and produce well-being for the population. It is the fundamental of the circular economy concept [34,35,36] that has been widely shared by the Ellen MacArthur Foundation (EMF) [37]. In fact, a way to make the regenerative approach viable is the systemic diagram proposal of the EMF, also called the “butterfly” diagram. In this diagram, the technological loop and the biological loop are interconnected by a linear production chain, where all materials are fed back to the corresponding processes to be transformed into something with a larger value following a hierarchical order where the inner circles are preferred over the outer ones.

Circular economy (CE) has proven to have great value in the regeneration of the environment through the application of models such as the ReSOLVE framework of R’s, (reduce, reuse, recycle, remanufacturer, etc.) activities [37,38,39]. However, the concept has two main limitations. The first one is its effective implementation under strong linear patterns of operation. The second is regarding the inclusion of social benefits, mainly for regions where conditions are not appropriate for supporting circularity, which is the case in most developing countries. Therefore, the concept of CE requires further exploration from a systemic viewpoint to facilitate the cohesive integration of diverse actors and perspectives, serving as a mean to bridge essential disparities between theory and practice [40].

In most cases, the CE approach has been applied to specific versions of “Re-activities” to many industries, companies, and municipal governments; e.g., converting organic waste into energy, reusing textile materials, remanufacturing cement, recovering metals from electronic parts, recovering valuable resources [41], recycling plastics of one single use, etc. Despite that CE can effectively achieve its sustainability goals and maintain its credibility as a viable approach to sustainable development [40], most of the time, these activities rely on applying government subsidies, which turns the CE concept into a financial engineering approach for the optimization or extension of linear value chains. This, in consequence, makes this approach vulnerable to not being financially viable, diminishing the environmental and social impacts that circularity may deliver.

The same happens with the circularity of suppliers’ materials, which must insert their products into large cycles of recycling and remediation, which cost significant amounts of money and energy, making programs like EPR (Extended Producer Responsibility) financially unfeasible.

Another critic of the effectiveness of the CE is the low priority that the original approach has with social activities [42]. It is also accepted that CE secondary activities (i.e., recycling, reusing, etc.) can displace a region’s primary production, therefore reducing the region’s attractiveness. In line with this, recent studies (e.g., [43]) have supported the fact that the ability of the circular economy to offer a more robust foundation for sustainable management theory depends on its capability to present a socio-ecosystemic framework. Likewise, a systems view on organizations and circular economy from a socio-ecological systems perspective has been addressed [44]. All these have been highly explored topics of debate among economists, politicians, and production engineers for several years.

Therefore, the Doughnut Economics and the circular economy approach, although efficient and invaluable frameworks, in most cases, are difficult or inefficient to implement. Also, they may even create an inbreeding loop constraining regional growth, if they do not have the proper supporting conditions (i.e., culture, technologies, political alignment, rule of law, etc.) offered by institutions and the cities or communities, mainly for developing countries.

These paradigms must be complemented and extended with a holistic vision of the whole ecosystem. This means adopting a systems approach that considers the entire life cycle of materials in the analysis and integrating a holistic systems perspective while considering the synergies among the contexts of the three subsystems (economic, social, and environment) of the biosphere simultaneously, and generating an extended and increasing value for all, to overpass all the above limitations for their implementation [45].

3.3. The Circular Value Extended System (CVES) Framework

To create an effective and resilient circular economy systems model, it is necessary to assemble a cluster of strongly connected members of the social, economic, and environmental subsystems of a given region. Embracing circular economy from a systemic perspective should involve comprehensive assessments of organizations, considering environmental, social, and economic aspects equally [40]. It is about connecting systems flows, not just bilateral relations among parts.

Following the stages of the system dynamics approach [12], the Circular Value Extended System (CVES) cluster, represents the structural network of “industrial ecology synergies flows and systems” among multiple stakeholders [16].

Figure 1 shows how the SWIT (Sustainable Wealth Creation Through Innovation and Enabling Technologies) framework works as multiple decarbonization linear ZRIES (zero-emissions/residues industrial ecology systems) chains are created to transform residues, wastes, and obsolete products (RWOs), produced from the principal linear production core chain. If properly assembled, the CVES cluster articulates multiple ZRIES, creating a highly valuable network of new spinouts, jobs, business opportunities, and emerging economies [16,21], among citizens of a community or region.

Finally, this CVES cluster, composed of multiple zero-emissions chains, deploys the structure that may transform linear value chains into a nest of multiple ZRIES and later into a new “business process unit” (BPU), articulated by supporting institutions (ABIIGS: Academy, Banks, Infrastructure, Industry, Government, and citizens of the local Society) of a region. Furthermore, for this dynamic transformation of a linear value chain into a circular value system to occur, several processes and activities must be added to the supply chain management [46,47]. Skilled workforce for the circular economy practice [48], and clean energy managements, as well as the processes that transform materials, residues, and wastes in a circular process must be considered. On this latter point, recent studies point out the role of circular economy in propelling the transition toward renewable energy [49], as well as implementing a coupled circular economy and energy transition model [50]. Therefore, the energy used in these processes ideally would be zero-emission, renewable, and sustainable [51].

The CVES has been developed through several research papers over the years. With the basic foundations of the model focusing on transforming industrial wastes into increasing returns [16], the model was refined to decouple economic development from resource extraction [52] and then to transform linear production chains into Circular Value Extended Systems (CVESs) [21]. The CVES model has first been applied in the community of Higueras in northern Mexico [53] and then further validated as it was deployed by Heineken at their newest and greenest brewery in the world [54].

The Systems Approach Applied to Circular Structures

The nature of the eco-system preserves a circular behavior, as Stahel defined:

A “circular or regenerative economy” is a complex adaptive phenomenon that is represented by an interconnected group of elements among different stakeholders, with collective characteristics that have a structure and a dynamic of operation through multiple iterations around a set of simple rules of connectivity (cause-effect relations).

This definition gives us a starting point to deeply engage with the systemic approach. The term “systems”, has two stages. First, the concept of a system as a holistic interconnection of multiple parts with its boundaries, providing the framework to perform a dynamics behavior created by the flows among its parts, with a specific purpose beneficial to all [17].

The system focuses on holistic properties that can only be understood as the product of the interaction among parts, with rules about the way these parts may be connected, and through interconnected flows of feedback that generate the dynamics of the system, all with a well-defined common purpose.

The system is a physical “interlinked network of stakeholders” with an “iterative flow” among the three loops of the main subsystems (economic, environmental, social) of the biosphere. By means of this “iterative circular mechanism”, is possible to solve the complexity of the interactions of the multiple stakeholders with a holistic vision of growth for a community, an industry, or a region. For instance, is quite difficult and expensive to arrive at a zero-residues production chain if we take a linear one-shot approach; instead, if it is used a “iterative and spiral dynamics” to achieve zero-residues, by incremental steps on each iteration, the residue/waste is reduced, until most residues are transformed, and new valuable items are produced following a trend of zero-emissions for all [27].

Figure 2 portrays the iterative circular path and shows how to start from initial linear conditions to the creation of circular value advantages [from (1) to (2)]. The circular path is affected by external forces and supporting institutions, until a determined goal is achieved.

This iterative mechanism applies the systems dynamics modeling [55], widely used to solve the dynamic flow of complex phenomena. In the same vein, Peter Senge in one of his more remarkable works presents the “systems thinking iceberg” model, where multiple layers explain the real functioning of a complex adaptive phenomenon, which is similar to the behavior of circular structures [12].

Therefore, the system dynamics approach is applied to the cluster array of CVES interactions, producing a dynamic “systemic structure” with one purpose, to transform RWOs into valuable assets. This is the fundamental principle that moves the “flow” of materials, energy, and information among all connecting living organisms, organizations, and institutions of the natural ecosystem. These systemic structures are the result of the design of “mental models” that describe the dynamics of the relations and transformations of all the elements that participate in the evolution of the phenomenon [12,55,56].

Based on the structure of the CVES, a new economic approach emerges as a “circular value incremental system” framework, capable of transforming the linear chains of production and manufacturing and replacing them with a new “flow of systems and eco-cycles”. These new dynamics open the opportunity to redesign the conventional linear economic models, integrating the inclusion of social needs and the regeneration of the environmental ecosystems of the planet [21].

Finally, to provide a clear and structured comparison,

Table 1. Comparison of the proposed concept with linear and traditional circular economy models.

Model	Linear Model	Traditional Circular Economy Approach	Systems Approach of Circular Economy
Value Generation	Linear value	Close loop circular value	Circular Value Extended System (CVES)
RWOs Management	Not included	Included as a process (i.e., recycling, reusing, etc.)	Included as a cluster of industrial ecology processes (zero-residues industrial ecology systems)
Subsystems Inclusion (SEE)	Only the economic dimension	Optimizing resources and minimizing RWOs (ReSOLVE)	Includes social development, environmental regeneration, and an economically viable approach
Increasing Returns	Traditional economic returns	Economic and environmental returns	Sustainable increasing returns (monetizing the RWOs value, including a flow of integrated SEE increasing returns)
New Business Entrepreneurship	Not necessary, conventional entrepreneur	Not included in the basic model	Incubation of multiple non-usual sustainable businesses, through circular value entrepreneurs
Economic Viability	Sustainable strategies are very expensive to implement when must be aligned to a pure linear business model	Most times circular models need some kind of external financial support to be effective	The CVES approach has been designed to create a self-financed model of operation.
Sustainable Wealth creation	Designed to generate economic profits	It is a combination of economic optimization with biological processes	The Circular Systems Business Driven Sustainability (CSBDS) approach has been designed to create sustainable wealth for the three dimensions of the biosphere (SEE) simultaneously

summarizes how the proposed concept differs from the linear model and the traditional circular economy approach. This comparison aims to highlight the unique contributions and applicability of the proposed concept, fostering a broader discussion within the scientific community.

4. Results

The “Pretzel Flow of Systems”. All inputs that enter the CVES stay within the CVES as… all are transformed into something more valuable.

The circular value extended system (CVES) is the fundamental framework used as the base to deploy the interlinked flows of materials and energy among all members of the main linear value chain and the RWOs produced by it. It represents the nested connections of all members of the triple value systems (i.e., in the refreshment industry: suppliers, liquid producers, bottlers, plastic bottles, consumers, plastic collectors, transporters, distributors, policymakers, etc.). The next step is to replicate the dynamics of the flows and create extended value represented on new products and services. Therefore, everything that enters the industrial clustering system is transformed into new and more valuable materials and/or products, inert waste, and finally the impossible-to-transform materials are converted into energy. At this moment, it is possible to speak of an upcycling of the resources that enter the circular system of extended value, and of the energy that is produced at the end of an iterative loop [35].

Based on the systems framework and its effective dynamics, a “holarchy” nest of systems is created. It is in this holarchy where the whole and the parts have greater mutual relationships [38]. Holarchy is a mechanism that translates the parts, the connections, the rules, and the flows into a final purpose, creating a balanced, efficient (cost–benefit), and resilient (recovering natural resources) value to achieve “sustainable increasing returns“ for all [57].

Inspired by this, we have created a metaphor of the “pretzel flow of value systems”. This “pretzel” represents a structure that determines the dynamics of such CVES. Figure 3 presents the “pretzel flow of systems” representing the continuous flow of materials, information, and energy, produced by the original linear chain of production, and transformed into value among the three (social, environmental, and economic) systems of the biosphere.

Through this industrial ecology cluster (CVES), it is possible to establish a continuous flow between the elements of the three large subsystems. It is the only effective way to create a true circular synergic economy by allowing the flow of materials, energy, and information along the “pretzel flow”. It is within this pretzel flow that the upcycling is produced through the continuous flow of economic assets transformed into social and individual benefits, therefore reducing the social gap, as well as recovering natural resources and reducing the impact of waste and residues in the environment. It is a holistic approach, not an independent or isolated flow among disconnected parts.

This “pretzel dynamics” creates an effective “sustainable increasing returns flow of extended value” among all stakeholders of a region (where the RWOs are produced).

The synergy of the flows through the interconnected elements of the CVES cluster is highly effective. It impacts sustainable development, ameliorates the welfare and prosperity of the regions, recovering and revaluating the damaged of natural resources mainly for developing countries, and creates new growth opportunities for the regions where it is applied.

5. Discussion

5.1. The Regeneration Economy for the Creation of Sustainable Wealth

From linear business strategies to circular sustainable-driven business strategies.

The world is moving drastically in multiple dimensions. In human history, we have never been exposed to such drastic changes. In less than a generation, we have jumped from the growth of an economy based on oil, the increasing countries with national debts, the extreme globalization with developing countries, the economies of extraction from less developed territories, the growth of ruthless consumerism, to an economy that must focus on growth with a sustainable systemic vision, based on the regeneration of nature and the prosperity of human beings [12,13,15,16,58].

For this situation, the circular value extended systems approach implies breaking with the linear paradigm of growth, and emerges with the collaboration of “systems, flows and cycles”. It is an opportunity to redesign conventional economies, current business models, and linear mindsets by the engagement of social and environmental “conscious resilience”, into a more extended model of sustainable wealth creation [14,15,21].

Following the CVES clustering and the dynamics of the “pretzel flow of systems”, it is possible to articulate a “circular business-driven sustainability (CBDS)” strategy for the generating of sustainable increasing returns, for all participants of the natural ecosystem.

In the following section, we describe two relevant cases using this innovative approach based on the CVES (cluster)–Pretzel (dynamics) framework.

5.2. Cases of Application of the Circular Business-Driven Sustainability Approach

Two cases are deployed as an application of the CVES–Pretzel framework.

On the one hand, this framework can be applied to achieve true decoupling. We argue that by following this approach, it is possible to decouple the economic growth of a region from its environmental damage. This includes the decoupling of social inequalities from economic growth as well.

On the other hand, this framework may provide an answer to how to reduce the green premium of certain products, as it is discussed in the following sections.

5.2.1. How the CVES–Pretzel Flow of Systems “Decouples Economic Growth” from Environmental Damage in a Region

Poor countries are too poor to be green. What’s more, they don’t need to be, because economic growth will eventually clean up the very pollution that they create and replace the resources that it runs down.

Discussed in Raworth (2017)

Despite how convincing this quote may sound, it has been researched that traditional economic growth under a linear paradigm is not having a positive impact on cleaning pollution, therefore making it more of a myth than a reality, as Raworth later asserts by saying:

“Rather than wait for growth to clean it up—because it won’t—it is far better to create economies which are regenerative by design, restoring and renewing the local-to-global cycles of life on which human well-being depends”.

[3]

In the following paragraphs, we describe how to decouple economic growth from environmental damage.

The decoupling of economic growth from environmental damages and social inequality is a key driver for the current sustainable growth of regions. All communities, companies, and individuals want to grow economically to transform their income into social welfare for society or create a benefit growth for the regions. However, very few want or have the means to recover the environmental damage caused by their own growth, and/or to reduce the social gap that industrialization creates.

This is given that being sustainable is expensive, difficult to implement, requires the consensus of multiple players (institutions, government, supporting industries, etc.), and needs win-win outcomes between economic and social players, and nature. Transforming linear business strategies into something effective and sustainable is complicated and currently unrealistic. This is given the inappropriate conditions of the regions and their political association with their long-term plans [59]. The challenge is how to perform this decoupling with a viable financing model that is a win-win for all three main stakeholders. Some of the highlights of how this can be possible are discussed in the following paragraphs.

The United Nations Environment Programme [60] has deployed the associated impact of economic growth over the social and the environment ecosystems. We have aggregated other indicators of this impact [52] and have created a model for the decoupling following the systems approach of the CVES framework and the “pretzel” dynamics of flow of systems.

Figure 4 shows the dependence of economic growth versus the impact of natural resources and social well-being, with the main metrics for each factor, including residues, waste, and obsolete products (RWOs).

Figure 5 represents the dynamics among the three subsystems and the linear production chain catalyst of all interactions [52]. Interconnecting flows and systems generate synergies that benefit all three subsystems of the circular structure.

This diagram shows how the three subsystems of the biosphere are interconnected and produce multiple loops with several purposes. The linear chain has been decomposed and reconnected to assemble a series of zero-emissions industrial ecology synergies, producers of an iterative flow of extended higher value for all.

From this roadmap (Figure 5) among the three subsystems, we can observe multiple activities [52] that can be obtained from the application of the CVES–Pretzel framework:

• Substitute natural resources, reducing the extraction of virgin resources.
• Regenerate natural resources with recycled and reprocessed materials, which results in the transformation of residues and waste of the linear production chain.
• Reduce the impact of the industrialization and urbanization of towns, on their own natural environments.
• Create multiple new businesses (startups) and new jobs, a product of new opportunities produced by the circular iterations.
• Create self-supported economies for the region based on the dynamics of the flow of the extended triad value, among several stakeholders.

Based on the CVES cluster and Pretzel dynamics, we contend that it is possible to create a viable circular value extended network capable of decoupling economic growth from natural resource extraction. This can be achieved through the optimization of the resources, transforming RWOs into valuable assets, while simultaneously creating increasing economic returns, reducing the social gap, and regenerating the natural capital for regions in developing countries.

An example of a successful implementation of the CVES for decoupling economic growth from resource extraction is the case of Heineken’s greenest and most sustainable brewery at Meoqui, Mexico. With the implementation of the CVES as the backbone of its sustainable strategy, the brewery was able to recover and use around 70,000 cubic meters of methane gas from a wastewater treatment plant [61], save thermal energy of up to 50% thanks to the recovery and usage of excess heat from a neighboring glass bottle factory furnace, and even donate 60% of the water used at the brewery after it is treated to irrigate locally cultivated areas that grow alfalfa or walnut [54].

This success was underpinned by an Insider Action Research (IAR) methodology, which guided a cyclical process of research and action to address practical concerns while generating actionable outcomes [62,63]. The IAR approach facilitated the systematic collection of primary data from internal documents, employee-authored reports, meeting memos, and field observations, as well as secondary data from public reports and regulatory documents. One of the authors, who worked for the company as part of its sustainability department, played a central role in designing and implementing the CVES vision. The insider researcher also actively participated in strategic discussions with senior executives, local stakeholders, and government representatives, providing a unique perspective and direct access to sensitive internal operations. This methodology enabled continuous reflection, adaptation, and alignment with the circular economy framework, ensuring a holistic perspective on the brewery’s sustainability initiatives. For more details of the case and methodology, see [64] and [54] accordingly.

Therefore, the right “clustering” of actors, linear chains, processes, institutions, public policies, appropriate technologies, and business models are the most important success factors for an effective decoupling capable of creating multiple businesses with sustainable increasing returns in benefit to all members of the communities.

5.2.2. How the CVES and Pretzel Dynamics Reduce the Green Premium

The “green premium”, which refers to the cost difference between a product that involves emitting carbon and an alternative that does not [65], is a frequently mentioned term in international meetings, but difficult to apply, mainly in developing countries. A series of valuable proposals, feasible solutions, and necessary breakthroughs, from the classic growth paradigms, to achieve effective climate change have been performed [66].

Among the different and most pressing industries, such as those depending on fossil fuels like steel and cement, one of the cases that urges an innovative approach is the plastics industry. Especially challenging is how to reduce the costs of greenwashing of the single-use plastic (SUP) industry.

For this challenge, the CVES cluster and its “pretzel flow of systems”, are focused on addressing the needs of three different clients (stakeholders) of the SUP industry: the industry (producers of virgin resins, transformers of recycled materials, bottlers, packaging, distribution, logistics, etc.), the environment (regions, oceans, rivers, soils, etc.), and the society (users of specific regions or municipalities, health care, etc.).

Consequently, it is important to address the barriers or limitations of the SUP industry, which are:

• The tremendous environmental impact it produces.
• The low profitability of the recycling businesses.
• The lack of sharing social responsibility mechanisms facing the plastic impact.
• The highly expensive and difficult-to-implement extended producer responsibility. (EPR) model of operation of the industry (i.e., the refreshment industry).
• The poor quality-of-life conditions of waste pickers (collectors) communities.
• Plastic’s low recycling rates.
• The prices of oil (variable) and derivatives competing against recycled materials. This is not the case today but is a variable difficult to predict.

Applying the CVES–Pretzel dynamics framework to the SUP industry, all stakeholders are intertwined, thus forming a “large cluster” of viable sharing and articulated flow of materials, energy, and information, among all participants of the packaging, food, plastics industries, logistics, recyclers, etc., providing triple value to the three stakeholders (Economy (E), Society (S), and Environment (N)).

The key issue of applying the CVES–Pretzel dynamics framework to the reduction of the green premium of the SUP is the internalization of the positive and negative externalities [58] through the “monetization” of the negative impact of the producing chains translated into a costs/benefit of the whole structure. This means including “all” players in the whole value chain and its extended value chains of RWOs portrayed in Figure 1.

When the “decarbonization” of the whole value chain is required, many intangible issues emerge. For instance, we must monetize the decarbonization of the production of virgin resins from the petrochemical industry, the generation of zero-emissions from the production of the bottle, zero-emissions of the ecological path of distribution, zero-emissions from packaging, and so on. All these processes have a cost as well as a benefit to the environment if transformation is then performed correctly. These are negative and positive externalities, respectively.

Using the CVES-Pretzel framework, we can assemble the whole map with all the players included in the three subsystems, and all their interactions. From this, we can generate different strategies for the creation of new businesses that can generate additional economic benefits. Benefits that can be shared to reduce the overall costs of the production of “green plastic”. This means that we do not design a new green product but a new “green system”, which includes the transformation of RWOs into economic value. It is only through the accurate internalization of the monetary benefits and impacts of transformed RWOs that the green premium gap can be effectively bridged.

In other words, this cluster of new processes, new businesses, and flows generate at the end of the iterations a positive value in favor of the environment, the society, and the economic production of the multiple businesses, one of them the production of the SUP industry.

Therefore, the original linear value chain of the production of the PET bottle may generate an extended value system with multiple alternatives, creating business opportunities for each case, for instance:

• A system designed to collect 100% of the bottles sold by the regional bottling producers. (N)
• A mechanism designed to improve the quality of life of waste-pickers (collectors), by building them homes and schools made from recycled plastic (e.g., plastic bricks/wood). (S)
• A system designed to substitute virgin resins, producing a competitive recycled business model for recycling companies. These business models will be able to compete against virgin resin prices while reducing raw natural material use (E).

All these new initiatives create value-added in terms of money, clean water, clean landscapes, better quality of life for collectors, better air, and a cascade of new startups (and new jobs) for the community, having a total sum of valuable benefits for all.

To further exemplify these benefits and the dynamics responsible for them, Figure 6 presents the Circular Extended Value System (CVES) cluster for the SUP industry. It focuses on four valuable subproducts, the core of four business models that are based on ecological bricks, pellets for energy, textile fibers, and plastic wood.

Figure 6 shows how the linear chain of plastic production and delivery is transformed into a cluster of circular initiatives that, through a dynamic iterative mechanism, can share the benefits of multiple businesses and social entrepreneurial initiatives (see [67]).

The cluster of the assembled CVES will provide the entrepreneurship of multiple non-usual businesses that, if well managed, will be able to produce economic benefits that can be used to reduce the green premium of plastic of a region. In this way, the CVES creates large increasing sustainable yields for all in the region, and in fact, a robust business-driven sustainable environment.

In this example of the SUP industry, we see how it is possible to reduce the costs of greenish (reducing the cost of green premium), as well as the social premium; that is, the cost of reducing the socioeconomic gap of the communities that usually have the generation of huge amounts of harmful waste and residues of this industry.

In general, through this circular iterative flow of systems, it is possible to (1) substitute natural raw materials (reducing the use of virgin raw material produced by fossil oil), (2) regenerate natural resources (recovery of the deteriorated environment), (3) create new and valuable economic resources (through new local startups, new jobs, and more tax collection), (4) create new sources of work for the community, (5) improve the quality of life of the members of the recycling services, and (6) improve industrial policies for the community, etc. However, all these societal, environmental, and economic benefits can be further enhanced by sound policies. Therefore, the proposed approach has implications to policymakers. Policymakers must align policies with a mores systemic approach to the economic environmental and social objectives. For example, aiming at internalizing environmental externalities [68] can drive systems-wide adoption of more circular practices. The latter to ensure that the transition to circular economy models is comprehensive and effective.

These actions generate a sustainable wealth flow of increasing returns for society. It is a new version of the economy, based on circular systems of extended value, generating sustainable wealth and prosperity for all stakeholders, based on a business-driven sustainability concept.

6. Conclusions

Sustainability is not viable, self-financeable nor self-organizing by itself. Sustainable decisions must be based on a holistic, circular, and a regenerative model of growth.

A new paradigm that innovates the way of thinking has been proposed. A paradigm capable of transforming linear, analytical thinking with a short-term span and a reductionist culture, into circular iterative thinking with a systemic vision, and a disruptive sustainable innovation of the relationships of the economy, the environment, and of the world’s social geopolitics in mind.

This Systems Approach is a useful path for the implementation of “circular business driven sustainability”, a new concept highly promoted by the main organizations at the COP-25. These organizations have seen the need to redesign the sustainability concept and transform it into a “sustainable wealth increasing returns” concept, beneficiary for all the key stakeholders of the natural ecosystem, increasing the wealth shared with the environment and the society, with economic benefits for all.

The final engagement is to create a circular iterative approach capable of generating “sustainable increasing returns” for all participant members of the ecosystem of a region.

The last cases—economic decoupling and the green premium costs reductions—are of extreme importance for the formulation of sustainable strategies and show that it is possible to obtain effective sustainable performances using the systems approach of a circular economy framework.

However, this flow of systems (pretzel approach) and the creation of viable sustainable increasing returns, is not possible if special regional conditions do not exist. Such conditions should be capable of providing interconnections, between proper physical, political, social, and technological structures, as well as the proper institutions and “educated” communities, and a robust rule of law for the strict application of local and international regulations and public policies, for the proper functioning of circular extended systems in a region.

Regional development requires a systemic vision of growth to be effectively addressed. Relying solely on conventional reductionist rules of cause and effect—such as economic metrics like GDP, social measures like employment rates, or environmental statistics reflecting incremental changes—is insufficient. Instead, sustainability must be understood as a holistic phenomenon centered on wealth creation.

Globally, there are numerous examples of the circular economy being applied to products, processes, and even entire companies. However, many businesses attempting to innovate with circular economy principles fail to deliver comprehensive systemic solutions (e.g., electric cars, waste recycling, green businesses). Transitioning from a linear value chain to a circular business model poses significant challenges, particularly without fostering cultural disruption.

By establishing a cluster of new businesses linked to emerging opportunities, it becomes possible to replace natural raw materials, regenerate ecosystems, create jobs, enhance life-cycle assessments (LCA), and increase GDP awareness. Simultaneously, such initiatives can incubate unconventional businesses reliant on RWOs materials, promote industrial and consumer consciousness, and reduce the green premium associated with manufacturing materials.

This systems approach does not aim to eliminate incumbent linear value chains. Rather, it emphasizes creating a “flow of systems that circulate among a cluster of interrelated triple value subsystems”, focusing on sustainable wealth generation through diverse business opportunities. Much like nature creates shared value from its residues to benefit entire ecosystems, this model seeks to replicate that dynamic in human economic systems [35].

Consequently, innovators, business designers, and economic strategists who want to apply this model should focus on the development of CVES clusters and pretzel dynamics with different stakeholders and leave single-product or process innovation in second place.

We contend that this is the best way to reduce the impact and reach zero-emissions while also recovering the environmental and social damage already produced by the dense industrialization of certain regions. It is by applying this model that we can create a sustainable increasing returns procedure that is viable and attractive for the business and political long-term plans of a region. This is the systemic view of sustainable competitiveness for a given industry.

The renaissance of a new kind of industrial, consumer, and government consciousness are required (i.e., fully producer–supplier extended responsibility), as well as a new democratic approach to growth. One that is directed more toward fundamental processes, perhaps inspired by nature [13], than to the conventional industrialism of product life chains [12].

Circular economy goes beyond one single company or institution. It is not about one manufacturer changing one product, but instead it is about all the interconnected actors that form infrastructures and economy coming together. It is about rethinking the operating system itself [37]. That is when we argue that a systems view of the circular economy is needed.

7. Future Research

While there has been ample research on decoupling [69], dematerialization [70], and the role of policy [71] to achieve it, scant research has actually provided a more detailed approach to materialize circular sustainable-driven business strategies able to provide a viable alternative to the current wasteful and flawed growth model.

Although the present research has provided valuable insights into the implications of a systems view of circular economy practices applied within the single-use plastic (SUP) industry, we consider that there are still several avenues for future research to further advance research and our understanding to inform practical interventions.

One of such avenues for future research could benefit from a more longitudinal study. This is, in order to assess the long-term impacts of this circular economy framework within not only the single-use plastic (SUP) industry but also from other industries such as cement, steel, or fertilizers [72]. This type of study would provide researchers the possibility to track changes in environmental, economic, and social indicators, therefore offering valuable insights into the scalability of circular economy practices and its sustainability impacts. Moreover, comparative research across different regions and industries could shed light on the transferability, scalability, and effectiveness of circular economy strategies. The richness of knowing the impact of case studies from different contexts could provide researchers with best practices, usual challenges, and contextual factors that could determine the success of circular economy implementation.

Finally, we encourage researchers to evaluate the impact of policy interventions aimed at promoting circular economy practices. These studies could assess the impact of more systemic regulatory frameworks that could encompass financial incentives, and capacity-building initiatives on different regions and industries.

By addressing the abovementioned future research avenues, we contend that more knowledge could be attained in discovering the most impactful ways to advance to a more sustainable and resilient circular economic approach.