November 25, 2025 · Research
A circular economy relies on relationships – how companies shape sustainable transformation
How can the transition to a circular economy be achieved? New interim findings from the SNF-study led by Sybille Sachs and Tiziana Gaito show that the path varies significantly between sectors. In retail, customers must support the transformation, whereas in manufacturing companies, cooperation along the supply chain is crucial.
The sustainable transformation of companies requires not only technical innovation, but also a new understanding of stakeholder relationships – with customers, suppliers and regulators. This is demonstrated by the ongoing study conducted by the HWZ Institute for Strategic Management: Stakeholder View, in collaboration with the Institute for Economy and the Environment (IWÖ-HSG) and the Zurich Center for Sustainability Leadership (ZHAW).
The researchers are examining how transformative leadership can help to engage both external and internal stakeholders in the circular economy. The current findings highlight the varying challenges and opportunities faced by retail and manufacturing companies.
Retail: Customers as a Key Factor
In the retail sector, the success of transformation depends largely on customer attitudes. Companies can only implement sustainable product lines or repair services successfully if customers are willing to support longer product life cycles—even when this involves higher prices or longer waiting times. Raising awareness and motivating consumers is therefore a key factor for success. Sales staff play a central role in this process: they must be able to clearly explain the differences between conventional and sustainable products, thereby fostering understanding of their added value.
It also becomes clear that customers are not only recipients of innovations, but themselves represent important sources of ideas and inspiration. Their everyday feedback, for example regarding durability or repair options, helps companies to review the effectiveness of their sustainability strategies and make targeted adjustments. Creative suggestions from customers are particularly valuable, such as the idea of using visible patches on clothing as a fashion statement.
For such initiatives to be effective, companies require open channels of communication and structures that enable customer feedback to be systematically collected, tracked and integrated into product development. Sustainable transformation in the retail sector therefore means involving customers as active co-creators and building trust in a shared learning process.
Production Companies: Cooperation as a Driver of Circularity
In manufacturing companies, the quality and stability of supplier relationships determine the pace of transformation. Circularity requires suppliers to increasingly provide components that are repairable and reusable. This demand often has a significant impact on existing production chains. Only through close cooperation along the value chain can standards be developed that ensure both durability and quality.
A second key aspect concerns the use and reuse of resources, particularly in relation to water and raw materials. For such processes to become economically viable, industry-wide cooperation is required between companies that rely on similar materials or processes. This creates synergies that accelerate the transition towards a circular economy.
Ultimately, the regulator also plays a decisive role. This is especially true in highly regulated sectors—such as water reuse—where companies face conflicting objectives between hygiene regulations and sustainability goals. In such cases, dialogue and coordination with authorities are essential in order to develop practical solutions that are both ecologically and economically viable. Sustainable transformation in production is therefore successful when companies are willing to view their supply and regulatory relationships as spaces for innovation.
Shared insights: What organisations can do now
The interim results show that there is no single solution for sustainable transformation – however, there are shared principles that are crucial in both sectors. Organisations should consider what conditions they need to establish in order to put these principles into practice in their day-to-day operations:
Upskilling employees: Sustainable transformation requires the skills to understand and integrate the ideas and needs of customers and suppliers within the organisation.
Strengthen cooperation: Dialogue with industry associations, partner companies and regulators is essential in order to establish the framework conditions for circular business models.
Rethinking production processes: Repairability, reusability and resource efficiency must be continuously reviewed and further developed.
Outlook
The results so far make it clear: sustainable transformation is a relational process – between organisations, their employees, and external stakeholders. It succeeds when trust, openness, and shared responsibility are fostered.
In the next phase of the study, the research team will examine how different types of leadership successfully involve stakeholders in a circular economy, and what effects this has.
