Abstract  Purpose:  The purpose of the research was to define Product-Service-System (PSS) and Product-as-a- Service (PaaS), identify the challenges and match mitigations with them when closing the supply chain from a B2C retailer’s perspective. The following three research questions were defined:  RQ1: How are Product-Service-System and Product-as-a-Service defined and related to the environmental sustainability context?  RQ2: What are the challenges that B2C-retailers with a Product-as-a-Service model encounter in regard to closing their supply chain loop?  RQ3: How can the closed loop supply chain related challenges that B2C-retailers encounter be mitigated to unfold the environmentally sustainable potential of PaaS business models?  Methodology: A systematic literature review was used for defining PaaS and PSS with an environmentally sustainable focus. The second part of the research is based on a qualitative research method with the use of an interview study setup where 2 industry experts and 4 PaaS companies from the fashion, furniture, mobility and whitegoods industries were interviewed. The empirical data was collected using six semi-structured interviews over zoom.  Findings:  Both PSS and PaaS are focused on providing the product with a service. The biggest difference between PSS and PaaS is that the former is seen as a paradigm shift with regards to linear models whereas the latter is seen as a practical business model to transform a linear system. Based on the intended use, PSS and PaaS are both not inherently more sustainable than linear business models. The standardised definition was further used and integrated for the development of the framework which displays the challenges and mitigations of different levels for an environmentally sustainable PaaS model. The final framework displays 25 challenges. To those challenges, 24 mitigations could be connected. Furthermore, there were 16 challenges that had not been cross validated and a total of 19 challenges that could not be matched with any mitigation. Those unmatched challenges show the need for further research in this area.  Contributions/value:  The contribution that this thesis brings to existing literature is threefold. First, PSS and PaaS are defined and related to environmental sustainability, solving the fragmentation that was caused in prior research. Secondly, the challenges found widen the scope of existing knowledge about PSS and PaaS in a CLSC. Thirdly, mitigation horizons were elaborated on in this research, giving practical handlebars to managers for overcoming challenges in the B2C PaaS field and theoretical insights for matching challenges and mitigations. Additionally, this thesis points out possibilities for future research, with which we hope to motivate other researchers to shed light on under-researched areas.  Keywords:  Product-as-a-Service (PaaS) - Product-Service-System (PSS) - Servitization - B2C Retailer - Circular Economy - Circular Business Model - Environmental Sustainability - Challenges - Mitigations - Closed Loop Supply Chain