Page 33 - CMA Journal (Nov-Dec 2025)

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Transformation from Linear Economy to

Circular Economy: Application of ESG Principles

Introduction The Linear economy is
a concept that describes
Globally, the threats to the existence of human lives are the use of resources
much more pronounced in present times than ever with a take-
before in history. The human-induced environmental make-waste approach
problems, unsustainable use and misuse of natural that has steadily
resources, and climate change warrant responsible played havoc with the
systems and practices on the part of the corporate sector. environment over a
Business organizations across the world are now period, and now a
expected to minimize the negative ramifications of departure from this
environmental impacts and damaging social approach has become
implications while ensuring their future financial imperative. The trans-
steadiness at the same time. The efforts to adopt a formative model of
sustainable and profitable approach by enterprises any economy from
depend broadly on ESG principles. Moving away from the linear to Circular Econ- Prof. Dr. Samina Khalil
linear take-make-waste model moving towards adoption omy is now envisioned Former Director,
of a circular economy model represents a regenerative as a viable solution to Applied Economics Research
and waste-minimizing approach that stretches the the adverse impacts of Center (AERC),
lifecycle of input materials and resultant products. University of Karachi
relentless resource
ESG Principles extraction, to arrest
accumulation of waste, and to ensure the lengthening of
ESG (Environmental, Social and Governance) is globally product and material lifecycle. This transition from Linear
characterized as a set of criteria used to evaluate a to Circular Economy is a complex process with which civil
company's sustainability and ethical impact. It is used by society and business organizations literally struggle. ESG
investors to measure how a company manages principles offer a compelling framework that aligns
environmental risks and opportunities, its relationships environmental, social, and governance considerations
with employees and communities, and the quality of its with sustainable practices (Van Tulder et al., 2021). It is
leadership and internal controls. The ESG principles in therefore important to understand the indispensable role
Pakistan are still in a nascent stage to be applied as a of governments and businesses working in coordination
comprehensive framework is at developing level. The to permeate and transcend the obstacles and nurture a
ESG model and its approach is inclusive and addresses conducive environment for circularity to flourish.
economic, social, and environmental challenges. Green
finance is considered a crucial component of ESG for the Hence, in today's dynamic global landscape, the pursuit
improvement of environmental quality, especially in of sustainability has become a paramount concern for
urban settings, which proves its growing importance. businesses and governments alike (El-Swaify, 2022).
Environmental, Social, and Governance (ESG) metrics
Concept of Linear Economy and have developed as a powerful tool to assess a business's
Circular Economy sustainability performance. Simultaneously, the circular
economy has gained traction as a model for sustainable
resource management (Jackson et al., 2014).
Teaming Up of ESG and Circular Economy

This concept has gained currency at the global level as
ESG, through sensible business practices, ensures
sustainability.

ICMA’s Chartered Management Accountant, Nov-Dec 2025