Circular Economy in Climate-related Disclosures: Risks, Opportunities, and Corporate Strategies

The circular economy (CE) is increasingly recognised as being relevant to climate-change mitigation and investor-oriented disclosure. However, despite the substantive links of the CE to climate-transition issues (e.g. material-related emissions, regulatory exposure, and technology pathways) prior research has paid limited attention to how firms connect CE initiatives to climate-related risks and opportunities. Therefore, this study examines how companies position the CE in climate reporting and what this positioning reveals about strategy, risk management, and accountability under the financial-materiality lens. Using a mixed-methods design, we analyse disclosures from fifty-three chemical-industry firms supporting the Task Force on Climate-related Financial Disclosures. Quantitatively, we apply structural topic modelling with low-dimensional mapping to identify the thematic location of the CE; qualitatively, we conduct targeted textual analysis and case reviews to assess the substance of CE–climate linkages. Three main findings emerge. First, climate narratives are risk-heavy, whereas CE is framed predominantly as an opportunity with limited discussions of CE-related risks. Second, although firms emphasise collaboration among diverse stakeholders, the disclosed CE activities are technologically narrow. Third, while many firms link the CE to business strategy, integration with climate- or sustainability-transition strategies—especially through environmental-impact assessment such as LCA—remains limited. The results clarify where CE contributes substantively to climate communication and where disclosure practices are lacking, offering benchmarks for report preparers, guidance for stakeholder collaboration, and reference points for improving the comparability and credibility of CE-related climate reporting. • CE disclosure stresses opportunities while risk and impact evidence remain limited. • Firms should diversify beyond recycling and material substitution. • Weak CE–climate linkage shows firms must align CE with transition plans/metrics. • LCA gaps limit credibility; regulators need stronger guidance on impact assessment. • The do–disclose framework supports more credible CE–climate reporting.