6-15. Failure in Circular Economy Implementation: A Lack of Stakeholder Coordination

The circular economy is gaining significant attention as a key concept for achieving sustainable growth through the cyclical use of resources. However, many companies fail in their implementation, often due to insufficient stakeholder coordination. This article explores why a lack of coordination leads to serious problems, drawing from failed case studies, and suggests directions for future improvement.

1. Significance and Background

The circular economy aims to move away from the traditional "take-make-dispose" linear model to one that maximizes waste reduction and resource efficiency. Companies are adopting this model to meet environmental regulations, improve ESG ratings, and enhance brand value. However, a hasty implementation that disregards on-the-ground realities and relationships with business partners can lead to significant disruption.

2. A Typical Failure Case

One manufacturing company decided to incorporate recycled materials into its products but failed to secure sufficient agreement with its procurement department and suppliers. This led to increased costs and unstable supply, ultimately causing the business model to collapse. Additionally, a lack of consumer education and sales strategy meant the product's value proposition was not effectively communicated, failing to gain market support.

3. Causes of Insufficient Stakeholder Coordination

Failures are often rooted in top-down, unilateral decision-making and a focus on short-term results. The circular economy model requires cooperation across the entire supply chain, making it essential to gain consensus from raw material manufacturers, logistics providers, retailers, and even consumers. Friction and conflict are inevitable if implementation proceeds without clearly defining the distribution of cost burdens and quality assurance responsibilities.

4. Impact on Businesses

Failure due to poor coordination is not limited to the discontinuation of a project; it also damages trust with investors and regulatory authorities. It can lead to a decline in ESG ratings and supplier attrition, significantly eroding a company's competitiveness. Since the circular economy is a topic with high societal expectations, a single failure can lead to extremely high reputational risk.

5. Strategies for Success

To ensure successful implementation, it is crucial to involve all stakeholders from the initial stages and clarify their roles and responsibilities. Strengthening partnerships with suppliers, thoroughly educating consumers, and cooperating with governments and municipalities are also essential. Companies must prioritize long-term social and economic value creation over short-term profits. Furthermore, transparent information disclosure can help gain understanding and support from stakeholders.

Conclusion

The biggest reason for failure in implementing a circular economy is a lack of stakeholder coordination. Instead of driving the initiative alone, companies must design their strategies around collaboration with the entire supply chain and society to achieve sustainable results.