Abstract
Circular economy practices can provide co-benefits beyond resource utilization that potentially result in climate mitigation. Drawing on co-benefits theory and using a panel of 1599 manufacturing companies for the period 2014–2021, this study investigates the relationship between circular economy practices and carbon emissions, evaluating two hypotheses. The first hypothesis speculates a negative association between circular economy and Scope 1, Scope 2, and Scope 3 emissions—meaning greater circular practices relate to fewer emissions. We then turn to legitimacy theory to evaluate this relationship within sustainability-sensitive and non-sensitive industries. The results show that only the product redesign strategy is associated with lower levels of Scope 1 and Scope 2 emissions. No circular economy practice is related to improvements in Scope 3 emissions. Industry-specific characterizations are also evaluated. The work provides interesting and sometimes counterintuitive results that require greater investigation to further understand the phenomena. From a theoretical perspective, the study contributes to the literature on organizational antecedents of carbon emission intensity and extends the application of co-benefits theory to the firm level, linking it to a legitimacy theoretical perspective. Practically, the study provides managers with insights into the effects of individual CE practices on the three emissions scopes, complemented by industry-contingent findings.