Cost-Benefit Analysis of Implementing Circular Economy in a Portuguese Company: From a Case Study to a Model
Abstract
Purpose: This work was carried out in a company of the upholstery sector in northern Portugal to demonstrate that Investment in Preventive Measures, within the scope of Environmental Management and supported by a Circular Economy approach, is a significant investment decision, with transversal benefits to the entire organization.
Methodology/Approach: This study focuses on an interview, a financial cost-benefit analysis and a sensitivity analysis. The company is in line with concerns about the Circular Economy.
Findings: The findings support that the cost-benefit analysis is a valuable tool for decision-making and for identifying the potential benefits that can arise from implementing measures from the Circular Economy perspective. An action plan was structured with several recommendations in a logic of action priorities. A case study was carried out in the company and a model was designed.
Research Limitation/Implication: The studied company is still at an embryonic stage. Nevertheless, it was possible to identify all environmental aspects, namely, impacts, consumption. The study in question was carried out only in one company. It can be extended to many more companies.
Originality/Value of paper: The measures to be implemented, in addition to bringing economic and financial benefits to the Company, will contribute to a better and greater environmental sustainability and a better intervention at a social level.
References
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Bravi, L., Santos, G., Pagano, A. and Murmura, F., 2020. Environmental management system according to ISO 14001:2015 as a driver to sustainable development. Corporate Social Responsibility and Environmental Management, 27(6), pp.2599-2614.
Camacho-Otero, J., Boks, C. and Pettersen, I.N., 2018. Consumption in the circular economy: a literature review. Sustainability, 10(8), pp.2758. DOI: 10.3390/su10082758.
Camón, L.E. and Celma, D., 2020. Circular Economy. A Review and Bibliometric Analysis. Sustainability 12(16), pp.6381. DOI: 10.3390/su12166381.
Carvalho, F., Santos, G. and Gonçalves, J., 2020. Critical analysis of information about integrated management systems and environmental policy on the Portuguese firms' website, towards sustainable development. Corporate Social Responsibility and Environmental Management, 27(2), pp.1069-1088.
Carvalho, H., 2015. Metodologia de análise de custo benefício para investimentos em infraestruturas energéticas. [pdf] U. Porto: FEUP. Available at: < https://paginas.fe.up.pt/~ee08333/wp-content/uploads/2013/10/HCV9.pdf > [Accessed 20 July 2021].
Costa, A.R., Barbosa, C., Santos, G. and Alves, M.R., 2019. Six Sigma: Main Metrics and R Based Software for Training Purposes and Practical Industrial Quality Control. Quality Innovation Prosperity journal, 23(2), pp.83-100. DOI: 10.12776/qip.v23i2.1278.
D’Amato, D., 2021. Sustainability Narratives as Transformative Solution Pathways: Zooming in on the Circular Economy. Circ. Econ. Sust., 1, pp.231-242. DOI: 10.1007/s43615-021-00008-1.
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Marques, A., Guedes, G. and Ferreira, F., 2017. Leather wastes in the Portuguese footwear industry: New framework according design principles and circular economy. Procedia Engineering, 200, pp.303-308. DOI: 10.1016/j.proeng.2017.07.043.
Masi, D., Day, S. and Godsell, J., 2017. Supply chain configurations in the circular economy: a systematic literature review. Sustainability, 9(9), pp.1602. DOI: 10.3390/su9091602.
Merli, R., Preziosi, M. and Acampora, A., 2018. How do scholars approach the circular economy? A systematic literature review. J. Clean. Prod. 178, pp.703-722. DOI: 10.1016/j.jclepro.2017.12.112.
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Ramos, D., 2013. Cost - benefit analysis in occupational risk assessment. Thesis. Tese de doutoramento - Programa Doutoral em Engenharia Industrial e de Sistemas. Universidade do Minho. Available at: < http://repositorium.sdum.uminho.pt/handle/1822/28766 > [Accessed 20 July 2021].
Ramos, D.G., Afonso, P. and Costa, R., 2020. Cost-Benefit Analysis of Occupational Health and Safety: A Case Study. In: P.M. Arezes, J. Santos, Baptista, M.P. Barroso, P. Carneiro, P. Cordeiro, N. Costa, R.B. Melo, A.S. Miguel and G. Perestrelo, eds. 2020. Occupational and Environmental Safety and Health II. Springer Nature Switzerland. pp.689-695. Available at: < https://link.springer.com/chapter/10.1007%2F978-3-030-41486-3_73 > [Accessed 20 July 2021].
Ramos, D.G., Arezes, P.M. and Afonso, P., 2017. Analysis of the return on preventive measures in musculoskeletal disorders through the benefit–cost ratio: A case study in a hospital. International Journal of Industrial Ergonomics, 60, pp.14-25.
Rebelo, M., Santos, G. and Silva, R., 2015. Integration of Standardized Management Systems: A Dilemma? Systems, 3, pp.45-59.
Rodrigues, J., Sá, J.C., Ferreira, L.P., Silva, F.J.G. and Santos, G., 2019. Lean management “quick-wins”: Results of implementation. A case study. Quality Innovation Prosperity Journal, 23(3), pp.3-21. DOI: 10.12776/QIP.V23I3.1291.
Sá, J.C., Vaz, S., Carvalho, O., Morgado, L., Lima, V., Fonseca, L., Doiro, M. and Santos, G., 2020. A model of integration ISO 9001 with Lean six sigma and main benefits achieved. Total Quality Management & Business Excellence, 33(1-2), pp.218-242. DOI: 10.1080/14783363.2020.1829969.
Santos, D., Rebelo, M. and Santos, G., 2017. The Integration of certified Management Systems. Case Study Organizations located at the district of Braga. Portugal. Procedia Manufacturing, 13, pp.964-971.
Santos, G., Doiro, M., Mandado, E. and Silva, R., 2019a. Engineering learning objectives and computer assisted tools. European Journal of Engineering Education, 44(4), pp.616-628.
Santos, G., Gomes, S., Braga, V., Braga, A., Lima, V. and Teixeira, P., 2019b. Value creation through quality and innovation - a case study on Portugal. TQM Journal, 31(6), pp.928-947.
Santos, G., Sá, J.C., Félix, M.J., Barreto, L., Carvalho, F., Doiro, M., Zgodavová, K. and Stefanović, M., 2021. New Needed Quality Management Skills for Quality Managers 4.0. Sustainability, 13(11), pp.6149. DOI: 10.3390/su13116149.
Santos. G., Rebelo, M., Barros, S., Silva, R., Pereira, M., Ramos, G. and Nuno Lopes, N., 2014. Developments regarding the integration of the Occupational Safety and Health with Quality and Environment Management Systems (2014). In: I. Kavouras and M.-C.G. Chalbot, eds., 2014. Occupational Safety and Health – Public Health in the 21st Century. New York: The Nova Science Publishers. Chapter 6.
Sassanelli, C., Rosa, P., Rocca, R. and Terzi, S., 2019. Circular economy performance assessment methods: a systematic literature review. J. Clean. Prod., 229, pp.440-453. DOI: 10.1016/j.jclepro.2019.05.019.
Silva, S., 2020. Cost-Benefit analysis of implementing measures for a circular economy: a case study in an upholstery company. [pdf] Instituto politécnico do Cávado e do Ave. Available at: < http://winlib.biblioteca.ipca.p t/Nyron/Library/Catalog/winlibsrch.aspx?skey=00C7E81F0BF64A15A9FCBB90C7FE5BBC&cap=&pesq=5&thes1=23966&doc=11659 > [Accessed 20 July 2021].
Talapatra, S., Santos, G., Uddin, K. and Carvalho, F., 2019. Main benefits of Integrated Management Systems Through Literature Review. International Journal of Quality Research, 13(4), pp.1037-1054. DOI: 10.24874/IJQR13.04-19.
Teixeira, P., Araújo, M.J.F., Araújo, M.V.F., Araújo. A.H., Barros, J., Almeida, M., Fonseca, B., Reis, J.M., Barbosa, L., Santos, G. and Sampaio, N., 2021a. Pollution Credit Certificates Theory: An Analysis on the Quality of Solid Waste Management in Brazil. Quality Innovation Prosperity Journal, 25(3), pp.1-17. DOI: 10.12776/QIP.V25I3.1574.
Teixeira, P., Sá, J.C., Silva, F.J.G., Santos, G., Ferreira, L.P. and Fontoura, P., 2021b. Connecting lean and green with sustainability towards a conceptual model. Journal Cleaner production, 322, pp.129047. DOI: 10.1016/j.jclepro.2021.129047.
Zgodavová, K. and Slimák, I. 2008. Advanced Improvement of Quality. In: B. Katalinic, ed., 19th DAAAM International Symposium on Intelligent Manufacturing and Automation (DAAAM 2008). Trnava, Slovakia, 22-25 October 2008. Red Hook, NY: DAAAM International Vienna. pp.1551-1553.
Zgodavova, K., Bober, P., Majstorovic, V., Monkova, K., Santos, G. and Juhaszova, D., 2020. Innovative methods for small mixed batches production system improvement: The case of a bakery machine manufacturer. Sustainability 12(15), pp.6266. DOI: 10.3390/su12156266.
Bennett, J.W., Pearce, D.W. and Turner, R.K., 1991. Economics of Natural Resources and the Environment. American Journal of Agricultural Economics, 73(1), pp.227-231. DOI:10.2307/1242904.
Bošnjakovic, M., Cikic, A. and Zlatunic, B., 2021. Cost-Benefit Analysis of Small-Scale Rooftop PV Systems: The Case of Dragotin, Croatia. Appl. Sci. 11(19), pp.9318. DOI: 10.3390/app11199318.
Bravi, L., Santos, G., Pagano, A. and Murmura, F., 2020. Environmental management system according to ISO 14001:2015 as a driver to sustainable development. Corporate Social Responsibility and Environmental Management, 27(6), pp.2599-2614.
Camacho-Otero, J., Boks, C. and Pettersen, I.N., 2018. Consumption in the circular economy: a literature review. Sustainability, 10(8), pp.2758. DOI: 10.3390/su10082758.
Camón, L.E. and Celma, D., 2020. Circular Economy. A Review and Bibliometric Analysis. Sustainability 12(16), pp.6381. DOI: 10.3390/su12166381.
Carvalho, F., Santos, G. and Gonçalves, J., 2020. Critical analysis of information about integrated management systems and environmental policy on the Portuguese firms' website, towards sustainable development. Corporate Social Responsibility and Environmental Management, 27(2), pp.1069-1088.
Carvalho, H., 2015. Metodologia de análise de custo benefício para investimentos em infraestruturas energéticas. [pdf] U. Porto: FEUP. Available at: < https://paginas.fe.up.pt/~ee08333/wp-content/uploads/2013/10/HCV9.pdf > [Accessed 20 July 2021].
Costa, A.R., Barbosa, C., Santos, G. and Alves, M.R., 2019. Six Sigma: Main Metrics and R Based Software for Training Purposes and Practical Industrial Quality Control. Quality Innovation Prosperity journal, 23(2), pp.83-100. DOI: 10.12776/qip.v23i2.1278.
D’Amato, D., 2021. Sustainability Narratives as Transformative Solution Pathways: Zooming in on the Circular Economy. Circ. Econ. Sust., 1, pp.231-242. DOI: 10.1007/s43615-021-00008-1.
De Jesus, A., Antunes, P., Santos, R. and Mendonça, S., 2018. Eco-innovation in the transition to a circular economy: an analytical literature review. J. Clean. Prod., 172, pp.2999-3018. DOI: 10.1016/j.jclepro.2017.11.111.
European Commission, 2014. Guide to Cost Benefit Analysis of Investment Projects - Economic Appraisal Tool for Cohesion Policy 2014-2020. Luxembourg: Publications Office of the European Union.
European Commission, 2015. Public Consultation on the Circular Economy. [online] EU Database. Available at: < https://ec.europa.eu/environment/ consultations/closing_the_loop_en.htm > [Accessed 20 July 2021].
European Commission, 2019a. Circular economy indicators. [Indicators > Main tables > Circular economy indicators] Eurostat. Available at: < https://ec.europa.eu/eurostat/web/circular-economy/indicators/main-tables > [Accessed 20 July 2021].
European Commission, 2019b. Circular Economy: Implementation of the Circular Economy Action Plan. [online] European Union. Available at: < https://ec.europa.eu/environment/circular-economy/index_en.htm > [Accessed 20 July 2021].
European Commission, 2020. Circular economy action plan. [pdf] Luxembourg: Publications Office of the European Union. Available at: < https://ec.europa.eu/environment/circular-economy/pdf/new_circular_ economy_action_plan.pdf > [Accessed 20 July 2021].
Fonseca, L.M., Amaral, A. and Oliveira, J., 2021. Quality 4.0: The EFQM 2020 Model and Industry 4.0 Relationships and Implications. Sustainability, 13(6), pp.3107. DOI: 10.3390/su13063107.
Fonseca, L.M., Domingues, J.P., Pereira, M.T., Martins, F.F. and Zimon, D., 2018. Assessment of circular economy within Portuguese organizations. Sustainability, 10(7), pp.2521. DOI: 10.3390/su10072521.
Marques, A., Guedes, G. and Ferreira, F., 2017. Leather wastes in the Portuguese footwear industry: New framework according design principles and circular economy. Procedia Engineering, 200, pp.303-308. DOI: 10.1016/j.proeng.2017.07.043.
Masi, D., Day, S. and Godsell, J., 2017. Supply chain configurations in the circular economy: a systematic literature review. Sustainability, 9(9), pp.1602. DOI: 10.3390/su9091602.
Merli, R., Preziosi, M. and Acampora, A., 2018. How do scholars approach the circular economy? A systematic literature review. J. Clean. Prod. 178, pp.703-722. DOI: 10.1016/j.jclepro.2017.12.112.
Portugal, C.E., 2019. Circular Economy Portugal. [online] Retrieved from: < https://www.circulareconomy.pt > [Accessed 20 July 2021].
Ramos, D., 2013. Cost - benefit analysis in occupational risk assessment. Thesis. Tese de doutoramento - Programa Doutoral em Engenharia Industrial e de Sistemas. Universidade do Minho. Available at: < http://repositorium.sdum.uminho.pt/handle/1822/28766 > [Accessed 20 July 2021].
Ramos, D.G., Afonso, P. and Costa, R., 2020. Cost-Benefit Analysis of Occupational Health and Safety: A Case Study. In: P.M. Arezes, J. Santos, Baptista, M.P. Barroso, P. Carneiro, P. Cordeiro, N. Costa, R.B. Melo, A.S. Miguel and G. Perestrelo, eds. 2020. Occupational and Environmental Safety and Health II. Springer Nature Switzerland. pp.689-695. Available at: < https://link.springer.com/chapter/10.1007%2F978-3-030-41486-3_73 > [Accessed 20 July 2021].
Ramos, D.G., Arezes, P.M. and Afonso, P., 2017. Analysis of the return on preventive measures in musculoskeletal disorders through the benefit–cost ratio: A case study in a hospital. International Journal of Industrial Ergonomics, 60, pp.14-25.
Rebelo, M., Santos, G. and Silva, R., 2015. Integration of Standardized Management Systems: A Dilemma? Systems, 3, pp.45-59.
Rodrigues, J., Sá, J.C., Ferreira, L.P., Silva, F.J.G. and Santos, G., 2019. Lean management “quick-wins”: Results of implementation. A case study. Quality Innovation Prosperity Journal, 23(3), pp.3-21. DOI: 10.12776/QIP.V23I3.1291.
Sá, J.C., Vaz, S., Carvalho, O., Morgado, L., Lima, V., Fonseca, L., Doiro, M. and Santos, G., 2020. A model of integration ISO 9001 with Lean six sigma and main benefits achieved. Total Quality Management & Business Excellence, 33(1-2), pp.218-242. DOI: 10.1080/14783363.2020.1829969.
Santos, D., Rebelo, M. and Santos, G., 2017. The Integration of certified Management Systems. Case Study Organizations located at the district of Braga. Portugal. Procedia Manufacturing, 13, pp.964-971.
Santos, G., Doiro, M., Mandado, E. and Silva, R., 2019a. Engineering learning objectives and computer assisted tools. European Journal of Engineering Education, 44(4), pp.616-628.
Santos, G., Gomes, S., Braga, V., Braga, A., Lima, V. and Teixeira, P., 2019b. Value creation through quality and innovation - a case study on Portugal. TQM Journal, 31(6), pp.928-947.
Santos, G., Sá, J.C., Félix, M.J., Barreto, L., Carvalho, F., Doiro, M., Zgodavová, K. and Stefanović, M., 2021. New Needed Quality Management Skills for Quality Managers 4.0. Sustainability, 13(11), pp.6149. DOI: 10.3390/su13116149.
Santos. G., Rebelo, M., Barros, S., Silva, R., Pereira, M., Ramos, G. and Nuno Lopes, N., 2014. Developments regarding the integration of the Occupational Safety and Health with Quality and Environment Management Systems (2014). In: I. Kavouras and M.-C.G. Chalbot, eds., 2014. Occupational Safety and Health – Public Health in the 21st Century. New York: The Nova Science Publishers. Chapter 6.
Sassanelli, C., Rosa, P., Rocca, R. and Terzi, S., 2019. Circular economy performance assessment methods: a systematic literature review. J. Clean. Prod., 229, pp.440-453. DOI: 10.1016/j.jclepro.2019.05.019.
Silva, S., 2020. Cost-Benefit analysis of implementing measures for a circular economy: a case study in an upholstery company. [pdf] Instituto politécnico do Cávado e do Ave. Available at: < http://winlib.biblioteca.ipca.p t/Nyron/Library/Catalog/winlibsrch.aspx?skey=00C7E81F0BF64A15A9FCBB90C7FE5BBC&cap=&pesq=5&thes1=23966&doc=11659 > [Accessed 20 July 2021].
Talapatra, S., Santos, G., Uddin, K. and Carvalho, F., 2019. Main benefits of Integrated Management Systems Through Literature Review. International Journal of Quality Research, 13(4), pp.1037-1054. DOI: 10.24874/IJQR13.04-19.
Teixeira, P., Araújo, M.J.F., Araújo, M.V.F., Araújo. A.H., Barros, J., Almeida, M., Fonseca, B., Reis, J.M., Barbosa, L., Santos, G. and Sampaio, N., 2021a. Pollution Credit Certificates Theory: An Analysis on the Quality of Solid Waste Management in Brazil. Quality Innovation Prosperity Journal, 25(3), pp.1-17. DOI: 10.12776/QIP.V25I3.1574.
Teixeira, P., Sá, J.C., Silva, F.J.G., Santos, G., Ferreira, L.P. and Fontoura, P., 2021b. Connecting lean and green with sustainability towards a conceptual model. Journal Cleaner production, 322, pp.129047. DOI: 10.1016/j.jclepro.2021.129047.
Zgodavová, K. and Slimák, I. 2008. Advanced Improvement of Quality. In: B. Katalinic, ed., 19th DAAAM International Symposium on Intelligent Manufacturing and Automation (DAAAM 2008). Trnava, Slovakia, 22-25 October 2008. Red Hook, NY: DAAAM International Vienna. pp.1551-1553.
Zgodavova, K., Bober, P., Majstorovic, V., Monkova, K., Santos, G. and Juhaszova, D., 2020. Innovative methods for small mixed batches production system improvement: The case of a bakery machine manufacturer. Sustainability 12(15), pp.6266. DOI: 10.3390/su12156266.
Authors
Ramos, D., Fonseca, L., Gonçalves, J. ., Carvalho, R., Carvalho, S. ., & Santos, G. (2022). Cost-Benefit Analysis of Implementing Circular Economy in a Portuguese Company: From a Case Study to a Model. Quality Innovation Prosperity, 26(1), 52–69. https://doi.org/10.12776/qip.v26i1.1657
This work is licensed under a Creative Commons Attribution 4.0 International License.