As industries worldwide strive to adopt circular economy (CE) principles, the imperative for robust indicators and assessment methodologies to quantify circularity becomes increasingly pronounced. According to Rincón-Moreno et al. (2021), while indicators ensuring simplicity and effectiveness can be found at the macro level, such as those established by the European Commission (EC), they require adaptation for micro-level (company-level) CE implementation. For instance, EC (2018) CE indicators, including the number of patents related to recycling and secondary raw materials, as well as self-sufficiency for raw materials, can be customized to align with the specific context and operations of individual companies. This adaptability ensures that the evaluation of circularity not only aligns with overarching sustainability goals but also accommodates the nuanced dynamics of diverse industrial ecosystems.
In the academic research field, many different indicators of circularity at the product- or firm-level have been proposed. For example, Linder et al. (2017) uses economic value (as opposed to volume, mass, embedded energy, etc.) as the unit of measurement to aggregate the parts of a product, creating a product-level circularity indicator. The indicator is based on the ratio of the economic value of recirculated parts to the overall economic value of all parts. This metric spans from 0 to 1, where 0 signifies 0% recirculated parts and 1 denotes 100% recirculated parts. Economic value is determined through a cost-based approach, which ensures robustness against market dynamics and innovation.
The Circular Economy Index (CEI), developed by Di Maio and Rem (2015), is another example of an applicable indicator. The CEI measures circularity by evaluating the ratio of recycled material value from end-of-life (EoL) products to the total material value required for producing new versions of the same product. Characterized by conceptual simplicity and ease of calculation, the CEI stands out for its applicability at both the product and firm levels.
While the above-mentioned indicators provide valuable information about how a company’s products contribute to the circularity objective, there are limitations to their use. One such limitation is the absence of information regarding certain critical aspects for the circular economy, such as workplace safety, toxicity, and local employment. To address these limitations, it is recommended to employ other indicators and metrics to assess additional sustainability dimensions (Linder et al., 2017). Life cycle assessment (LCA) and social life cycle assessment (S-LCA) are notable approaches in this regard. LCA evaluates the environmental impacts of a product or process throughout its entire life cycle, from raw material extraction to disposal. On the other hand, S-LCA extends this assessment to include social aspects, such as labor conditions and community impacts. LCA and S-LCA can aid in achieving sustainability goals within the circular economy by assessing the sustainability of circular economy strategies against their linear counterparts. This helps spot and avoid strategies that increase circularity but may lead to unintended environmental or social impacts or burden shifting (Carpenter, 2022). In other words, LCA and S-LCA can assist in evaluating the environmental and social impacts of circular economy strategies to ensure their true sustainability.
References:
Carpenter A. (2022). Role of Life Cycle Assessment in the Circular Economy. https://www.nrel.gov/docs/fy22osti/82677.pdf
Di Maio, F. and Rem, P. (2015) A Robust Indicator for Promoting Circular Economy through Recycling. Journal of Environmental Protection, 6, 1095-1104. doi: 10.4236/jep.2015.610096.
European Commission, 2018. Measuring Progress towards Circular Economy in the European Union e Key Indicators for a Monitoring Framework.
Linder, M., Sarasini, S., & Loon, P. (2017). A Metric for Quantifying Product-Level Circularity. Journal of Industrial Ecology, 21(3), 545–558.
Rincón-Moreno, J., Ormazábal, M., Álvarez, M. J., & Jaca, C. (2021). Advancing circular economy performance indicators and their application in Spanish companies. Journal of Cleaner Production, 279, N.PAG.
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