["Business Ethics, the Environment &Responsibility, EarlyView. ", "\nABSTRACT\nThis study investigates how the adoption of circular business models impacts consumer perceptions of luxury companies. Through two factorial scenario‐based experiments applied to a total sample of 736 participants from the UK, we analyse how the introduction of circular initiatives may impact corporate credibility (expertise and trustworthiness) and attitude towards the firm in both luxury and non‐luxury companies. The comparison allows us to contrast our unit of analysis (i.e., luxury companies) with organisations in other sectors (non‐luxury companies). Results reveal that while the disclosure of industrial waste harms brand perceptions, actions to minimise waste such as introducing parallel brands with recycled materials enhance them. Interestingly, luxury consumers' perceptions were unaffected by pricing strategies for recycled products, whereas non‐luxury consumers showed sensitivity, particularly to higher prices. These findings underscore that circular business models can mitigate reputational risks and align luxury companies with sustainability goals without compromising their superior image. The study contributes to the application of the theory of planned behaviour in organisational and sustainability‐related contexts and offers managerial insights for integrating circular practices in the luxury industry.\n"]