Circular Economy Practices and Firm Financial Performance: Empirical Evidence from FMCG Companies in Southeast Asia

Abstract

This article examines how circular economy practices influence financial performance and market valuation among fast-moving consumer goods (FMCG) companies in Southeast Asia. It focuses on two operationally consequential dimensions: waste-management practices and compliance with green regulation. These dimensions are considered alongside resource efficiency, circular product and packaging design, reverse logistics, and the quality of environmental disclosure. The study develops an accounting-oriented framework that connects circularity to cost of goods sold, operating expenses, working-capital requirements, capital expenditure, risk exposure, brand reputation, and investors’ assessment of future cash flows. The article adopts a structured evidence-synthesis approach, drawing on peer-reviewed studies published from 2021 onward and authoritative regional and global reports. The synthesis indicates that circular practices are not uniformly or immediately profitable: waste prevention and material efficiency can produce relatively direct cost savings, whereas redesign, collection infrastructure, recycled-content procurement, and compliance systems may impose substantial up-front costs and uncertain payback periods. Financial benefits are more likely when circular initiatives are embedded in operating routines, supported by reliable measurement, and aligned with product economics and supply-chain capabilities. Regulatory compliance can reduce expected penalties and transition risk, but disclosure alone does not establish operational circularity. For market value, credible, comparable, and financially material evidence is more persuasive than broad sustainability claims. Because no harmonized firm-year dataset is supplied or newly estimated in this manuscript, the article does not report invented regression coefficients or claim original causal estimates. Instead, it consolidates available empirical evidence and specifies a transparent panel-data design for testing these relationships in Southeast Asian FMCG companies. The framework offers implications for management accounting, capital allocation, investor communication, and future empirical research.