Integrating Life Cycle Assessment, Monetised Externalities and Value Alignment for Strategic Reconfiguration of Circular Business Models: The Case of Smartphones

ABSTRACT The smartphone industry faces sustainability challenges from greenhouse gas emissions and resource depletion to growing e‐waste volumes. Circular business models have been proposed as a pathway to address these issues, yet their adoption remains limited, lacking integrative assessment frameworks that connect environmental performance with business viability. This study develops and applies such a framework combining life cycle assessment, monetisation of externalities via the eco‐cost method and a structured value alignment score. Using primary data from Fairphone 5 as a case study, four scenarios with increasing levels of circularity are analysed: (S0) a linear business‐as‐usual baseline, (S1) extended use with moderate user‐led repairs, (S2) long‐life use with intensified user‐led repairs and (S3) a product‐as‐a‐service model based on manufacturer‐led refurbishment. The results demonstrate that all circular business models outperform the linear baseline in terms of both environmental impacts and monetised externalities. Incremental models that extend product lifespans through user‐led repair (S1, S2) yield significant reductions in greenhouse gas emissions (up to −46%) and eco‐costs (−36%). However, their strategic alignment is constrained by weakened consumer value propositions and original equipment manufacturing profitability. In contrast, a product‐as‐a‐service model (S3) achieves superior outcomes by internalising life cycle responsibility and aligning incentives with longevity and service quality, reflecting systemic reconfiguration of value logics. The study contributes theoretically by operationalising an integrated framework that bridges environmental metrics with strategic value dimensions to evaluate circular business models. Practically, it provides firms a structured tool for evaluating trade‐offs and advancing scalable pathways towards a sustainable circular economy.