Circular Economy and Sustainability Capability: The case of H&M

While sustainability has been a central focus of the multinational corporations and global value chain (GVC) literature, there has been a lack of understanding of sustainability capability (SC) and its link to the circular economy (CE) practice. Our study conceptualises SC in light of the CE and derives a framework to measure a firm’s SC in the GVC. Drawing on the three parameters, a) perfect duty, b) specific goals for economic, social and environmental sustainability, and c) a well-defined structure and strategies, we develop a framework to measure SC, leading to six different levels of SC: i) perfectly sustainable corporation, ii) imperfectly sustainable corporation, iii) occasionally sustainable corporation, iv) consistently sustainable corporation in selective areas, v) inconsistently sustainable corporation in selective areas, and vi) occasionally sustainable corporation in selective areas. In addition, we present a discussion of the challenges associated with SC achievement and CE practices. Our proposed framework is validated through the case of H&M. Our study bridges sustainability, the CE, and firm capability, thereby contributing to sustainable strategic management in the global value chain.