The circular economy and business transformation are top priorities for almost every company, but which strategies are truly effective in intelligently combining environmental benefits with opportunities for business growth? In today’s rapidly evolving business landscape, sustainability and trust have become critical pillars for companies striving to meet the demands of a changing world. The circular economy, in particular, has emerged as a transformative approach to reducing environmental impact by closing the loop while fostering trust between companies, customers, and suppliers.

The Circular Economy: A Business Imperative

The circular economy is no longer just a buzzword – it is a necessity. For decades, the linear economy has dominated, with resources extracted, used, and discarded. However, this model is no longer sustainable. As resources become scarcer and environmental concerns grow, businesses must rethink their approach.

The circular economy is not a new concept. In fact, Bosch has been practicing remanufacturing in the mobility aftermarket sector for over 60 years. What is new though is the urgency and scale at which this model must now be adopted across industries. The automotive sector, for example, faces a paradigm shift as electric vehicles (EVs) become more prevalent. Unlike traditional combustion engine vehicles, EVs require fewer replacement parts over their lifetime, reducing production volumes and increasing costs for new parts. This shift necessitates a fundamental change in business models, with remanufacturing and recycling playing a central role.

The Business Case for Circularity

To the surprise of many, the circular economy is not just an environmental imperative – it can also be a profitable business strategy. A study cited by the European Commission estimates that Europe loses 0.5% of its GDP annually due to inefficient recycling practices, amounting to €80 billion. Globally, this figure rises to an astonishing €600 billion. These losses represent untapped value that businesses can capture by adopting circular practices.

For Bosch, the circular economy is already a profitable venture. The company has demonstrated that remanufacturing can be as profitable as traditional linear production. By reusing materials and components, Bosch reduces costs, ensures supply chain reliability, and minimizes environmental impact. For example, during the COVID-19 pandemic, remanufactured parts were more readily available than new ones, as they were not dependent on disrupted global supply chains.

Overcoming Barriers to Circularity

Despite its benefits, the circular economy faces significant barriers. One of the biggest challenges is overcoming the inertia of traditional linear models. Many businesses are accustomed to the efficiency and predictability of linear production and fear the risks associated with change.

To drive adoption, companies need to overcome some barriers to demonstrate the business case for circularity:

• Showcase Success Stories: Pilots and lighthouse projects can demonstrate the viability of circular models. For example, Bosch has successfully scaled remanufacturing for high-value parts like starters, injectors or steering gears.
• Leverage Technology: Technologies like blockchain and artificial intelligence (AI) can streamline reverse logistics, assess the condition of returned parts, and build trust across supply chains. In particular, blockchain enables transparent and efficient information exchange, while AI reduces the cost of assessing used components.
• Engage Stakeholders: Trust is essential for circularity. Companies must work closely with suppliers, customers, and regulators to build confidence in circular practices. This includes incentivizing customers to return used parts and ensuring that all parties benefit from the model.

The Role of Technology in Building Trust

It may sound counterintuitive at first glance, but technology plays a central role in fostering trust and certainly in enabling the circular economy:

• Artificial Intelligence: AI can automate the assessment of returned parts, reducing costs and increasing efficiency. For example, Bosch uses AI to evaluate the condition of components like injectors already in the workshop, enabling more products to enter the circular economy.
• Blockchain: Blockchain technology ensures transparency and traceability across supply chains. In the automotive aftermarket, where parts often pass through multiple intermediaries, blockchain can track the movement of components and incentivize returns.

A Holistic Approach to Sustainability

While carbon neutrality often dominates the sustainability discussion, a holistic approach that incorporates all 17 Sustainable Development Goals (SDGs) is key. Circular economy practices, for instance, synergize with multiple SDGs by reducing resource extraction, minimizing pollution, and creating local jobs.

However, businesses must prioritize their efforts. With so many KPIs and reporting requirements, it is impossible to address every aspect of sustainability simultaneously. Companies should focus on initiatives that offer the greatest leverage and align with their core business objectives.

Key Takeaways for Business Leaders

• EMBRACE CIRCULARITY AS A BUSINESS STRATEGY: The circular economy is not just an environmental initiative—it is a profitable business model that ensures supply chain resilience and reduces costs.
• LEVERAGE DIGITAL TECHNOLOGIES: AI and blockchain can streamline circular practices, reduce costs, and build trust across supply chains.
• FOCUS ON HOLISTIC SUSTAINABILITY: While carbon neutrality is important, businesses should adopt a broader approach that aligns with the SDGs and creates long-term value.
• BUILD TRUST THROUGH COLLABORATION: Engaging stakeholders, from suppliers to customers, is essential for scaling circular practices and ensuring their success.

The transition to a circular economy is not without challenges, but it offers immense opportunities for businesses willing to innovate and adapt. By embracing circularity, leveraging technology, and building trust, companies can reduce their environmental footprint, enhance supply chain resilience, and create long-term value. The circular economy is not just a sustainability initiative – it is a business driver that fosters innovation, builds customer loyalty, and ensures long-term success. The time to act is now, and businesses that lead the way will be well-positioned to thrive in a sustainable future.

This speech was delivered by Dr. Peter Lukassen at bluegain’s exclusive CxO Luncheon 2025 during the World Economic Forum’s Annual Meeting in Davos.

/ About the Speaker

Dr. Peter Lukassen serves as Director of Operational Sustainability at Bosch’s Mobility Aftermarket division, where he leads efforts to integrate sustainability principles into product lifecycle management, focusing on reducing environmental impact through circular economy practices. With a background in automotive engineering and sustainability, Dr. Lukassen is dedicated to optimizing resource efficiency and driving innovation in sustainable mobility solutions.