Enhancing the circular economy (CE) using digitalization and green strategies is increasingly considered a crucial way to mitigate the impact of industrial operations on climate change while making compromises between economic, social, and environmental priorities. While digital and sustainable solutions reinforce each other in theory, sometimes they clash in practice. Higher-level management of interactions in twin digital and green transition can create performance synergy in the implementation phase and mitigate the impacts of upcoming actions. This study proposes an approach to advance CE decision-making in the presence of inevitable interconnectedness among involved systems in the manufacturing era, by incorporating system dynamics and model-based systems engineering to transition from traditional systems engineering to circular systems engineering. To this end, model-based systems engineering tools, by providing connectivity and traceability throughout the entire system life cycle, enable systems designers to not only consider the impact of interdisciplinary interactions in system dynamics modeling but also think beyond systems and include the external influential criteria. This paper presents an integrated framework for creating a holistic digital model to facilitate the optimization of the CE problem, spanning from system design to policy assessment. By connecting system dynamics, standards, and system functionalities across both operational and enterprise levels, the proposed framework enhances the ability to make resilient and purposeful decisions when encountering a complex network of systems in a CE problem.