A Comparative Case Study on the Environmental Performance of Circular Economy in Rental and Subscription Businesses: A Double Materiality Perspective on SK Magic and Coway

This research provides a comprehensive analysis of the transition from a linear "take-make-waste" economy to a circular model within the South Korean home appliance rental and subscription industry, specifically focusing on SK Magic and Coway. By applying the framework of Double Materiality, this study investigates how Product-Service Systems (PSS) facilitate resource circulation and create both environmental and financial value. The analysis is structured around four critical performance variables: product and resource re-covery rates, post-consumer recycled (PCR) and refurbished material ratios, carbon emission intensity (Scope 3), and the lifespan extension index. The findings reveal that SK Magic has established strategic leadership through its commitment to a 2040 Net-Zero target—validated by the Science Based Targets initiative (SBTi)—and aggressive material innovation in its "Green Collection," which utilizes up to 99.5% PCR plastic. Its internalization of the Hwaseong Recycling Center enables a robust closed-loop system for high-value material recovery. Conversely, Coway demonstrates superior operational maturity and scale, achieving a 100% waste recycling rate at its business sites and implementing a large-scale specialized recovery system for mattresses. A critical contribution of this study is the iden-tification of the "Circular Economy Rebound Effect" within the PSS model. While rental models structurally encourage product longevity, the greenhouse gas emissions associated with frequent "Care Services" and extensive reverse logistics can offset environmental gains if not managed through digital transformation, such as IoT-based remote diagnostics. The research concludes that extending product lifetimes from 3 to 5 years is the most potent strategy for dual-value creation, slowing material metabolism (Impact Materiality) while optimizing depreciation and maximizing Customer Lifetime Value (Financial Materiality). To meet emerging global disclosure standards like ESRS E5, the industry must move toward standardized metrics for resource inflows, outflows, and the quantification of financial effects arising from circularity risks and opportunities.