Circular economy is a fundamental principle governed by several national organizations worldwide. Drawing upon stakeholder theory, the current study establishes a synthesized model with constructs such as employee eco initiatives (ECO), psychological capital (PC), management support (MS), green knowledge management (GKM) and green engagement (GE). Within the context of circular economy in an educational institute, the present study underscores the positive outcomes of employee eco initiatives such as enhanced green engagement. Furthermore, the study explores psychological capital as a mediator and management support and green knowledge management as the moderators in influencing the dynamics between employee eco-initiatives and green engagement. A sample of 232 internal stakeholders was collected from a prestigious B-school in India, the data was statistically analyzed using IBM SPSS, AMOS, and Hayes Process Macros. The research findings indicate that the management support acts as a strong moderator between employee eco initiatives and psychological capital. If management support is high eco initiatives will lead to higher psychological capital.Further, green knowledge management appeared as a strong moderator between employee eco initiatives and green engagement. Theoretical implications of the study theorize internal stakeholder involvement. Further, practical implications underscore a need for top management as key stakeholders to focus on the psychological factors that motivate internal stakeholders to participate in green initiatives, and to increase green engagement.