Accounting for the Circular Economy

Dear Colleagues,

Circular economy (CE) is a relatively new concept, with a decade of scientific contributions and industry involvement. However, in the past few years, it has also gained regulatory traction, because governments and supranational institutions like the European Commissions have adopted strategies to reuse, recycle, and reduce (the 3Rs) materials in several key areas: batteries and vehicles, packaging, plastics, textiles, construction and buildings, food, water, and nutrients. The 3Rs have been expanded to include rentals, repurpose, repairs, recovery, upcycling, and other activities that protect scarce resources. The circular economy is applicable at multiple levels and in different contexts: at the national level (through government programs addressed at the population and organizations), at the municipal and regional levels, at the organizational level (in any stage of the value chain for the respective industries), or at the consumer level (through reuse, second-hand buying, rental, repairing, or selective recycling). Circular economy is a systemic approach that creates opportunities for sustainable business models focused on recycled inputs, cleaner production processes, reusable packaging, rentals and repairing, recycling, and traceability in the value chain.

Accounting and auditing are the backbone of the circular economy. Managerial accounting is the place to start for management to understand what can be optimized, what can be recycled, and what can be reused. Financial accounting is the instrument to assess the performance of operational solutions and long-term strategies with circularity implications. Sustainability accounting and reporting focuses on the progress of circularity programs, on several aspects such as resource flows, progress on the implementation of policies and actions, setting clear targets, and evaluating financial outcomes. Finally, internal control, financial audit, and external assurance are crucial for the verification of circularity claims and for preventing greenwashing. In this context, the European Union taxonomy is a crucial reporting instrument that establishes the credibility of company claims regarding the circularity of their business models. The taxonomy of sustainable activities is entirely based on financial accounting data and relies on a restrictive list of activities that can be classified as circular.

In this Special Issue, original research articles and reviews are welcome. Research areas may include (but not limited to) the following:

• Management accounting and internal control for the CE;
• Sustainable product design for material and waste reduction;
• European Union taxonomy reporting and implications for the CE;
• Sustainability reporting with a focus on the circular economy;
• Sustainable business models and strategies with CE components;
• The CE at the municipal level and governmental involvement;
• Monitoring and evaluation for the implementation of CE principles;
• Green transition and innovative solutions for the CE.

I look forward to receiving your contributions.

Dr. Voicu-Dan Dragomir
Guest Editor

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• circular economy
• recycling
• materials
• taxonomy
• sustainable
• strategy
• business models