Abstract
There are widely differing experiences and practices in the development of indicators to monitor, report and communicate progress towards the implementation of the circular economy (CE). We present a framework for developing CE indicators which link to the core goals, principles and building blocks of a CE. To do this we utilise the Ellen MacArthur Foundation butterfly model as a coherent systems overview of key material stocks and flows, and representation of relationships between inputs, outputs, recovery processes, emissions, energy and value loops in physical and financial measures which constitute the CE supply chain. Based on nine multinational organisations and four cases of leading companies engaged with CE activity, we address the types of indicators being used and make recommendations for indicators to reflect key goals and principles of CE. Our research on the development and expansion of circular practices leads to the question of what new opportunities and challenges CE raises for such companies in terms of competitive business advantage and resultant requirements for supply chain redesign and indicator development, over and above pre-existing closed-loop production.
Highlights
This paper examines the indicators of circular economy (CE) in terms of how they are used by large multinational organisations in transitioning from sustainable or ‘eco-efficient’ conventional supply chain operations, towards a regenerative and circular system
Our paper addresses three critical questions: 1. What are the founding principles and concepts of CE, and what are the implications for developing indicators? 2
We find that the literature is currently fragmented and misaligned to some of the key principles of CE, which makes it confusing for business to make sense of what is different or is required in terms of implementation
Summary
This paper examines the indicators of circular economy (CE) in terms of how they are used by large multinational organisations in transitioning from sustainable or ‘eco-efficient’ conventional supply chain operations, towards a regenerative and circular system. A key reason for the popularity of this framework, sometimes referred to as the butterfly diagram (Figure 1), is that it aligns a compelling business rationale with the need to decouple wealth creation from the consumption of finite resources. Proponents of this characterisation of a CE have argued that there is a business opportunity and advantage from circular business models when compared to traditional sales-ownership-disposal models (e.g. EMF 2012, 2016; Webster 2014). A number of leading companies are showing interest in the extension and expansion of circular practices, leading to the question of what new opportunities and challenges CE raises for such companies in terms of competitive and collaborative business advantage and resultant requirements for supply chain redesign and indicator development, over and above pre-existing closed-loop production practices
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