Management accountants are a cornerstone for management control, stewardship, performance measurement, and decision-making within circular economy business models (CEBM). Examining the adoption of circular economy business models within five local manufacturing firms, the Advancing the Circular Economy in Sri Lanka’s Manufacturing Sector: The role of management accounting study underscores the need for innovative accounting tools to support CEBM implementation. The research reveals a broad view of how circular economy principles are being operationalised in Sri Lanka's manufacturing landscape.
An innovative study lead by a researcher from the University of Sri Jayewardenepura in Sri Lanka explores the evolution of the Circular Economy (CE) from a niche concept to a mainstream strategy, as noted by the World Economic Forum (2022). This research closely examines the implementation of Circular Economy Business Models (CEBM) in five local manufacturing firms across the tea, newspaper, and food and beverage sectors, representing a significant advancement toward sustainable business practices.
A circular economy is a system in which products and materials are kept in circulation through processes like maintenance, reuse, refurbishment, remanufacture, recycling, and composting.
According to the World Economic Forum (2022), the Circular Economy (CE) is predicted to transition from a niche to mainstream approach.
Implementing CE principles in business operations and supply chains poses a challenge for companies as it directly affects the creation and delivery of value through their business models. Consequently, Circular Economy Business Models (CEBM) are rapidly emerging.
This study, led by a scholar from the University of Sri Jayewardenepura, Sri Lanka investigates the implementation of circular economy practices and circular economy business models in five local manufacturing firms within the tea, newspaper and food and beverage sectors. The research focused on the following CEBM strategies- ‘circular inputs,’ ‘sharing economy,’ ‘product as a service,’ ‘product use extension,’ and ‘resource recovery,’ across various activities within the companies' value chains.
The research found that for CEBM’s, management accounting serves as an important tool for management control and support, stewardship, performance measurement and decision-making. It also showed that of the CEBM strategies, 'circular inputs,' 'resource recovery,' and 'product use extension' demonstrate the highest degree of integration with management accounting. There is also a need to develop additional accounting tools to support CEBM implementation.
The report also sets out the implications for various stakeholder groups, including practitioners, policymakers and regulators, and recommendations for each group to consider and implement.