How circular economy strategies enable positive social impact in global value chains: evidence from Merino wool

Introduction: While the circular economy (CE) is widely promoted as a means of improving environmental sustainability, comparatively little is understood about how CE strategies enable positive social impact across geographically dispersed global value chains. Using the Merino wool value chain (MWVC) as an exemplar, this study investigates stakeholder perspectives on the mechanisms through which CE strategies may enable positive social impact.

Materials and methods: An exploratory qualitative research design was adopted using twenty-two semi-structured interviews with stakeholders representing the MWVC across ten countries, including farmers, processors, manufacturers, retailers, recyclers, certification bodies, and industry organisations. Interview data were analysed using a hybrid deductive–inductive framework: the United Nations Environment Programme Social-Life Cycle Assessment (UNEP S-LCA) indicators provided the deductive coding structure used to identify positive and negative social impacts across value chain stakeholders, while qualitative interpretation of participant accounts was used inductively to develop broader themes and mechanisms.

Results: Participant accounts indicated that upstream stakeholders, particularly farmers and shearers, were most frequently noted to experience negative social impacts, including unequal wealth distribution, low profitability and limited influence over market and regulatory decisions. The qualitative analysis identified four interconnected mechanisms through which CE strategies may enable positive social impact across geographically dispersed value chains: end-of-life responsibility, transparency, contribution to economic development, and technology development. Across these mechanisms, participants highlighted the importance of preserving fibre integrity and associated information, investing in enabling technology and infrastructure, strengthening local capability, and improving coordination across stakeholders to maintain circular opportunities throughout the value chain. Beyond the four mechanisms, participants support a reframing of CE governance towards more equitable value distribution and the long-term viability of the upstream natural fibre production on which the circular value chains depend.

Conclusions: This study contributes to CE scholarship by moving beyond identifying patterns of social impact to exploring how positive social outcomes may be enabled. The hybrid deductive–inductive framework used UNEP S-LCA indicators to identify patterns of social concern and potential positive opportunities within participant accounts, while the inductive analysis revealed the organisational and governance mechanisms through which participants perceived these outcomes might be shaped. The findings suggest that positive social impact is not an inherent outcome of material circularity but depends on how circular systems are governed and coordinated. The study also develops an adapted circular MWVC framework, showing how interconnected micro-loops operate across the value chain and how governance, technology, information integrity, and collaborative value creation can support both circularity and positive social impact across geographically dispersed global value chains.