Sustainable Scaling in Forest-Based Circular Models

The transition to a circular economy is essential for enhancing sustainability and resource efficiency, particularly in forestry-dependent regions. This study examines circular economy business models (CEBMs) in Kouvola, Finland, focusing on the utilization of forestry by-products. It compares two case studies: Keltakangas Waste Station, which processes wood waste into biogas, and Koumet, a forestry company producing biochar. Using a comparative case study approach, this research integrates financial analysis (2020–2023), interviews with managers, and policy reviews to assess economic performance, scalability, and environmental impact. Additionally, this study introduces a generalizable framework—Scalability Path Dependency (SPD)—which theorizes how early strategic decisions shape the long-term growth trajectories of circular business models. The findings reveal that Keltakangas follows a capital-intensive model with declining profit margins, while Koumet operates a resource-efficient model with stable but low profitability. Their scaling strategies diverge: Keltakangas relies on external financing for expansion, whereas Koumet emphasizes cost efficiency and market diversification. Despite ongoing challenges related to infrastructure, regulation, and financial viability, both models contribute meaningfully to circularity. This study offers actionable insights for policymakers and businesses aiming to support sustainable forestry practices.