Interdisciplinary Circular Economy Centre for Mineral-based Construction Materials


Focus Area 3D – Accounting framework to enable capital investment into circular economy projects

This focus area aims to enable capital investment in Circular Economy (CE) projects by engaging with internal organisational and external funders' decision-making processes.



The main objective of the project is to develop a novel accounting-sustainability hybrid tool that embeds circular economy principles into capital investment decisions. The proposed tool will be shaped and developed based upon 1) literature reviews on the CE based on publications in the business and management literature, and on management accounting and controls on environmental sustainability, 2) insights and recommendations from academic and industrial expert stakeholders, and 3) interviews with construction and investment industrial collaborators on their key metrics used for internal and external investment decisions.

The first approach has helped to map a set of specified circular economy principles that are applicable to the construction industry against existing environmental management accounting tools, notably life-cycle assessment (LCA), life-cycle costing (LCC) and material flow cost accounting (MFCA). The facilitators and challenges on implementing these tools for a circular economy have been identified from the literature, and a start made on exploring each CE principle in relation to potential impacts on cost savings, revenue generation, mitigation of risks, and environmental-economic trade-offs. This work contributes to the field of management accounting and finance for the Circular Economy by proposing an agenda for future research, in particular, to better embed Circular Economy principles into decision making processes. The team will submit a paper detailing a prospective research agenda on accounting for a Circular Economy to a high-quality peer-reviewed journal.

The project team has connected with relevant academic and industrial experts within and outside ICEC-MCM. The engagement meetings have helped guide tool development and, importantly, contributed to the research design of the empirical data collection stage by suggesting orientation interviews with industrial experts. At present, an initial skeleton of the proposed tool has been developed for a selection of Circular Economy principles based on a comprehensive literature review and preliminary stakeholder engagement. They are also carrying out interviews with industrial collaborators to understand how Circular Economy principles are presently embedded or could be embedded into a tool to facilitate internal and external capital investment into projects. The findings will help to further shape and develop the tool, and the associated recommendations will be generated to be shared and disseminated across the Centre. In addition, a guideline for the tool implementation will be produced for it to be used by other organizations which seek to integrate circular economy principles.