Abstract
In Circular Economy Management, various stakeholders play different roles that contribute to the value chain within the circular economy. These stakeholders need to be tracked and motivated to contribute to a circular economy. In addition, real estate developers as well as facility managers have a growing interest in both, the expansion of the value chain within the building as well as associated with facility services within the optimized building operation. The research approach is drawing upon real estate development projects as case studies. It maps the different stakeholders and analyses their role in the value creation. A range of new value creation stakeholders were identified and analysed to which extend their role is defined in traditional business models. The key benefits for owners and real estate investors comes from the adaptability to changing market demands, re-use and repurpose, low impact on urban ecology and biodiversity, innovative new real estate products among others. This study shows the benefits of encouraging stakeholders to actively participate in the co-creation and co-innovation of circular solutions. This involves identifying different stakeholders in the design and development of strategies, policies, and projects related to the circular economy. By defining their new role, diverse business models, as well as innovative and effective solutions can be developed.
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1 Introduction
1.1 Circular Economy in Real Estate and Facility Management
The traditional linear economic model, characterized by “take, make, and dispose” approach, has been a key driver of industrial nations’ wealth. However, its significant limitations have recently become evident. In response, the Circular Economy (CE) emerges as a sustainable alternative, emphasizing a regenerative system that minimizes waste.
The World Economic Forum [1] has specified that CE principles are essential for preserving our current way of life by decreasing natural resource utilization and allowing the earth sufficient time to replenish its resources. Key principles of the CE include [2,3,4,5,6,7,8]:
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Extending Product Life Cycles: CE encourages practices that maximize the lifespan of products, ensuring they remain in use for as long as possible.
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Resource Efficiency: CE seeks to optimize resource utilization, minimize waste, and reduce the extraction of virgin materials.
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Promoting Reuse, Repair, and Recycling: Circular practices emphasize reusing products, repairing them when necessary, and recycling materials to create new products [26].
However, different stages in the lifecycle of buildings requires different stakeholders.
1.2 Stakeholder Theory
In the context of stakeholder theory, understand the type and role of stakeholders is critical. A stakeholder is defined as any group or individual who can impact or be impacted by the objectives of an organisation [9] or a focal issue [10], such as the transition to a CE. Particularly, when targeting stakeholder engagement activities and impacts of stakeholder relations, it often implies a specific approach, which may be moral, strategic, and/or pragmatic [11, 12].
1.3 Stakeholder Analysis
Previous research has presented various findings on stakeholder roles and interests in a CE. For example, Govindan and Hasanagic (2018) highlighted that, when establishing circularity in supply chains, governments play an important part by promoting circularity through laws and policies sympathetic to the goal [13].
Marjamaa et al. (2021) examined stakeholders’ joint sustainability interests while Geissdoerfer et al. (2017) stated that in a CE, governments, companies and Non-Governmental Organisations (NGOs) play key roles as agents driving systemic change [14, 15]. It is widely accepted that the support of all stakeholders is needed when implementing a CE on a large scale [16].
Stakeholder analysis is a crucial process in business that helps organizations understand and manage their relationships with various stakeholders. A stakeholder is any individual, group, or organization that has an interest in, is affected by, or can influence a company’s activities and decisions. Stakeholders can be internal (such as employees and shareholders) or external (including local communities, regulators, and environmental groups). Their concerns and interests range from financial returns and employment opportunities to regulatory compliance and environmental protection. Stakeholder analysis is the process used to identify and assess the importance, influence, interests, or impact of various stakeholders in relation to a project or business decision. The primary objective is to ensure that the needs and opinions of stakeholders are considered, allowing for better decision-making and effective management of potential conflicts or issues. The typical steps in Stakeholder Analysis include [17, 18]:
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Identify Your Stakeholders:
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Create a comprehensive list of all individuals and groups who may impact or be impacted by your project.
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Ensure all affected parties are recognized and duly considered.
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Understand Your Stakeholders:
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Identify the issues that matter to them, along with their expectations and needs.
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Group Your Stakeholders:
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Classify stakeholders according to their levels of interest and influence.
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Strategically target your engagements based on this classification.
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Evaluate Key Stakeholders:
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Identify stakeholders with the most interest and influence in your project.
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Stakeholder analysis ensures that stakeholder needs and opinions are considered, leading to better decision-making. Effective stakeholder management helps prevent conflicts and improves project outcomes.
2 Purpose of This Study
Various stakeholders assume specific roles in Circular Economy Management in real estate, shaping the sector's value chain. They include suppliers and raw material providers, manufacturers and producers, distributors and retailers, consumers, waste management and recycling industry, and reverse logistics and circular service providers [15]. Significantly, real estate developers and facility managers are focusing on expanding the building's value chain and optimizing facility services for better operational efficiency. From the above argument, we hypothesize that:
Hypothesis 1 (H1): The adoption of CE principles is positively and significantly correlated with influences from organizational (a), regulatory (b) and community (c) stakeholders.
Although companies mostly adopt CE principles in the quest to enhancing competitiveness and sustainability performance [15], adopting them also robustly contribute to stakeholder satisfaction. According to Orlitzky (2011), responding to stakeholder demands or pressures creates a sense of trust and loyalty. The authors further explained that high satisfaction and reputation from stakeholders are strategically advantageous, in that, it has been shown to positively influence market and financial performance [19,20,21,22]. Adoption and implementation of CE principles influence stakeholder satisfaction from internal and external perspectives because orientation towards such eco-effective initiatives positively aligns with stakeholder desires and interest which is protection and preservation of natural resources as well as the Earth [19]. Integrating CE principles into business processes and practices will promote the recovery, reuse, recycling and repurposing of materials and energy to benefit the natural environment. Such company practices as indicated by Yang and Wu (2016) [23] lead corporations to achieve green legitimacy with stakeholders. It is worth noting that green legitimacy originates from high levels of external stakeholder satisfaction as exposed under institutional theory. According to Ünal et al. (2019) [24], the institutional theory indicates that companies attain legitimacy when external stakeholders are satisfied with or perceive that the practices and actions of the firm are appropriate and acceptable. Thus, this study seeks to contribute to understanding the interactions between CE principles, key partner and key customer stakeholders. From the discourse, we hypothesize that:
Hypothesis 2 (H2): Adoption of CE principles will positively and significantly influence key partner (a) and key customer (b) stakeholder as well as sustainable businesses (c).
Based on stakeholder and institutional theories, meeting stakeholder needs enhances a company's legitimacy [25]. Yang and Wu [23] note that satisfying stakeholders with sustainable practices leads to ‘environmental legitimacy.‘ In Circular Economy (CE) initiatives, this satisfaction builds trust and a positive reputation for the company [19, 26, 27]. Consequently, the company gains ‘green legitimacy,’ as per Yang and Wu [23], which brings market, social, and financial benefits, reduces risks, and improves performance. Hence, we suggest the following hypothesis:
Hypothesis 3 (H3): Sustainable legitimacy is positively and significantly influenced by key partners (a) and key customers (b) stakeholders.
Below is the research model of the study and the hypothesized relationships with regard to influence and interest (Fig. 1).
3 Methods
The research approach is drawing upon real estate development projects as case studies. These were characterized in their role and placed in the map the different stakeholders according to their role in the value creation along their interest and their influence as described by [9]. Then it places the stakeholder in the stakeholder analysis matrix shown in Fig. 1.
4 Results
A range of new value creation stakeholders were identified and analysed to which extend their role is defined in traditional business models. The key benefits for owners and real estate investors comes from the adaptability to changing market demands, re-use and repurpose, low impact on urban ecology and biodiversity, innovative new real estate products among others.
We analysed the whole building life cycle and identified various stakeholders through the value chain (Fig. 2).
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Suppliers and Raw Material Providers: These stakeholders play a crucial role in sourcing sustainable materials and minimizing waste. Their decisions directly impact the circular value chain.
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Manufacturers and Producers: Circular design principles guide their product development. By creating durable, repairable, and recyclable goods, they contribute to circularity.
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Distributors and Retailers: Educating consumers about circular choices and promoting circular products are essential roles for these stakeholders.
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Consumers: Their choices-whether to reuse, repair, or recycle-directly impact the circular system.
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Waste Management and Recycling Industry: These stakeholders ensure that materials are repurposed, reducing the need for virgin resources.
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Reverse Logistics and Circular Service Providers: They manage the return journey where materials and components are reused, recycled, and returned in a reverse process, addressing the needs of the construction industry.
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Real Estate Developers and Facility Managers: They focus on circular building designs, adaptability, and minimal ecological impact within the built environment.
4.1 Suppliers and Raw Material Providers: Architects of Sustainability
Suppliers and raw material providers are the foundation of circularity. Their sourcing decisions create a domino effect throughout the value chain. Choosing sustainable materials, minimizing waste, and adopting closed-loop practices, they trigger value creation. Consider the case of Patagonia, a renowned outdoor clothing brand, as an example. Patagonia’s commitment to using recycled materials in their products not only reduces waste but also serves as a model for other suppliers [28].
4.2 Manufacturers and Producers: Crafting Circular Narratives
Manufacturers and producers wield considerable power. Beyond production, they shape product design. Circular design principles-durability, repairability, and recyclability-become their guiding stars. Their innovations ripple across industries, influencing consumption patterns. One good example is Interface, a carpet tile manufacturer. Interface’s “Mission Zero” initiative aims to eliminate any negative impact on the environment by 2020. Their modular carpet tiles are designed for easy replacement and recycling, promoting circularity [29].
4.3 Distributors and Retailers: The Circular Bridge Builders
Within real estate, distributors and retailers act as critical connectors to bridge the gaps between production and end-use. Educating both property owners and end-users about circular choices-whether through labeling, incentives, or storytelling—fuels value creation. Consider the efforts of Unilever, a global consumer goods company. Unilever’s “Love Beauty and Planet” brand focuses on sustainable beauty products. Their packaging clearly communicates recyclability, encouraging consumers to participate in the circular loop [30].
4.4 Consumers: The Silent Revolutionaries
Consumers, often underestimated, have a significant influence. Their choices echo through supply chains. Adopting circular practices—repairing, reusing, and recycling—they nudge the system towards sustainability. Education and awareness empower their decisions. The “Buy Nothing” movement, showcasing goods sharing and exchange in communities, is a prime example of consumer-led circularity [31].
4.5 Waste Management and Recycling Industry: Guardians of the Loop
Waste management and recycling professionals are unsung heroes. They recover materials, divert waste from landfills, and revitalize discarded resources. Their role extends beyond collection; it’s about closing loops and conserving finite resources. The Ellen MacArthur Foundation’s “Circular Economy 100” program brings together companies, including Veolia and SUEZ, to collaborate on circular waste management solutions [32].
4.6 Reverse Logistics and Circular Service Providers: The Return Journey
Reverse logistics—product returns, refurbishment, and remanufacturing—finds purpose in circular service providers. They orchestrate the return ballet, ensuring products re-enter the value chain. Their innovations—think circular leasing and sharing models—redefine consumption. For instance, the “Rent the Runway” platform allows users to rent high-end fashion items, extending their lifecycle and reducing overall waste [33].
4.7 Real Estate Developers and Facility Managers: Building Circular Foundations
Real estate developers and facility managers wield influence over the built environment. Circular buildings—designed for adaptability, longevity, and minimal ecological impact—become their canvas. From repurposing spaces to integrating circular services, they redefine value. The “CIRCL” building in Amsterdam, developed by ABN AMRO, exemplifies circular principles with its modular design, recycled materials, and energy-efficient features [34].
5 Conclusions
This study is a pioneering exploration of the stakeholders in value creation. It shows the benefits of encouraging stakeholders to actively engage in the co-creation and co-innovation of circular solutions. This involves identifying different stakeholders in the design and development of strategies, policies, and projects related to the CE. By defining their new role, a variety of business models, and innovative and effective solutions can be developed.
Stakeholder analysis is equally relevant in the context of CE projects, aimed at creating sustainable and regenerative systems. CE projects seek to minimize waste, promote resource efficiency, and establish closed-loop systems. Effective engagement of stakeholders is crucial for their success.
Thus, it became clear that understanding stakeholder interests is crucial. Another key aspect is the Life Cycle Approach and Material Flows, as CE projects require comprehensive accounting of material and energy flows from cradle to cradle. Multi-Stakeholder Collaboration is also vital, since CE solutions demand collaboration among various stakeholders. For example, Public-Private Partnerships (PPPs) enhance government spending capabilities by overcoming legal, regulatory, and institutional barriers. Lastly, transitioning toward a CE requires a corporate culture shift, aligning economic, social, and environmental dimensions.
In summary, stakeholder analysis in CE projects involves understanding diverse interests, fostering collaboration, and considering material flows throughout the lifecycle. Effective stakeholder engagement can drive positive change and foster more sustainable systems. We can state that the adoption of CE principles is positively and significantly correlated with influences from organizational (a), regulatory (b) and community (c) stakeholders (H1).
The significance of stakeholder engagement is increasingly recognized, particularly for its role in supporting the success of a CE model and in fostering the a culture of sustainability, which is broadly defined in this study. Indeed, positive stakeholder relationships are essential for long-term value creation; they enable a company to listen to and engage with relevant stakeholders as well as to disseminate values and principles aimed at safeguarding all dimensions (economic, social, and environmental). Consequently, the adoption of CE principles is expected to have a positive and significant influence on key partner (a) and key customer (b) stakeholders as well as on sustainable businesses (c). (H2).
Stakeholder engagement in transitioning to a CE fosters relationships based on consent, trust, and shared responsibilities, aligning with sustainability principles and positive behaviors. In this context, engaging key actors through proactive, inclusive, and integrated approaches is crucial for safeguarding ecosystems and shifting toward approaches emphasizing not only the economic outcomes, but also the environmental and social ones, adopting a long-term view. Thus, the commitment and willingness to improve all the dimensions impacted by a company’s activities depend on its cultural framework and the recognition that optimizing economic performance is closely linked to environmental and health protection. In conclusion, sustainable legitimacy is positively and significantly influenced by the involvement of key partners (a) and key customers (b) stakeholders. (H3).
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This research received support from the COST Action Implementation of Circular Economy in the Built Environment (CircularB) under reference CA21103.
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Haase, M., Bernegger, H., Meslec, M. (2024). Stakeholder Mapping for Value Creation of New Circular Business Models. In: Ungureanu, V., Bragança, L., Baniotopoulos, C., Abdalla, K.M. (eds) 4th International Conference "Coordinating Engineering for Sustainability and Resilience" & Midterm Conference of CircularB “Implementation of Circular Economy in the Built Environment”. CESARE 2024. Lecture Notes in Civil Engineering, vol 489. Springer, Cham. https://doi.org/10.1007/978-3-031-57800-7_30
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