Growing awareness of environmental, social and governance (ESG) issues drives a significant transformation in the global business environment, making sustainability an urgent necessity and a source of competitive advantage. However, despite advances in research, there are still significant gaps in how these practices can confer competitive advantages to startups. We seek to fill this gap by conducting a systematic literature review on the competitive advantages of sustainable startups. We used the PRISMA 2020 protocol to conduct a comprehensive search in the Scopus and Web of Science databases, which led to the inclusion of 44 articles in the final review. The results indicate that sustainable startups align economic and environmental benefits, promote continuous innovation, attract investment, mitigate regulatory risks, and adapt quickly to market changes. The analysis reveals that adopting advanced technologies and circularity strategies is critical to operational efficiency and regulatory compliance. In addition, this study has mapped gaps in the literature, identifying key areas for future research into the competitive advantages of sustainable startups.

Circular Economy (CE) models have gained attention in the academic community for their ability to promote sustainability and efficiency in resource use. It promotes advances in the traditional linear economy and offers innovative solutions to environmental issues. In this context, start-ups play a key role in implementing Circular Business Models (CBMs), leading the transition to more sustainable practices and positively impacts on the market and the environment. In the current academic literature, there are relevant studies on the implementation of the CE in traditional companies. Still, discussions on how start-ups transition from linear economy to circular business models remain limited. To address this gap, we conducted a systematic literature review on how start-ups design and adapt the linear economy to their circular business models. Our methodology followed the PRISMA 2020 protocol, thoroughly searching the Scopus, Science Direct, and Web of Science databases, resulting in 42 articles. The findings highlight the crucial role of Circular Start-Ups (CSUs) in the transition to a Circular Economy, identifying the challenges and opportunities they face and the internal and external barriers they need to overcome to ensure long-term sustainability. Furthermore, this study highlights the existing gaps in the literature and suggests key areas for future research.