Circular Economy 5.0 on Its Way: A Digital Sustainability Transition

Our research introduces the concept of Circular Economy (CE) 5.0 into the digital sustainability paradigm. We argue that CE 5.0, which integrates CE with Industry 5.0, can unlock new opportunities to boost business resilience, environmental sustainability, and societal welfare. We explore a key set of drivers and enablers of the CE 5.0 transition, focusing on the influence of institutional pressures and organizational readiness. Through systems thinking, we develop a model that maps the complex cause–effect interactions between organizations and their institutional environment when shifting to CE 5.0. Our analysis shows how institutional pressures create feedback dynamics that stimulate CE 5.0 adoption, with organizational readiness catalyzing this process. To highlight the model’s practical value, we share insights from real-world CE 5.0 implementation cases, and offer actionable implications for managers and policymakers to navigate this digital sustainability transition.