A Circular Economy Index for the consumer goods sector

Abstract

The potential of the Circular Economy (CE) is widely recognized as a solution for todays’ environmental and social problems associated with years of unsustainable economic growth. The circular economy is a new economic model that is restorative and regenerative by design and aim to keep products, components and materials at their highest utility and value at all time, distinguishing between technical an biological cycles. Specifically within the consumer goods sector, the CE is getting increasingly attention which is a crucial development considering the large uptake of agricultural output and enormous global waste levels. However, the CE is still an immature concept that needs to be further developed. There is a need for reliable CE indicators that measure actual CE performance of businesses, provide guidance on what to improve to become more circular and thereby accelerate the transition towards a circular economy, specifically within the consumer goods sector. A promising attempt is the Circular Economy Index (CEI) developed by Ruiter (2015) who identified Key Performance Indicators (KPIs) that can be used to assess and compare the level of circularity of companies and guide them in their transition. However, the CEI was not yet tested and did not enable a fair comparison of businesses because sector-specific differences in a circular economy transition were not incorporated into the CEI yet. Therefore, in this research the CEI is tested and improved in order to create an index which can be used to assess and stimulate the level of circularity of businesses within the consumer goods sector. This is done by testing the development of the CEI by Ruiter (2015), the performance of the individual KPIs and the usefulness of the KPIs for businesses in the consumer goods sector, with use of a CE indicator validation model and eight in-depth interviews. The main findings are that the usefulness and applicability of the CEI highly depend on two main business characteristics: 1) whether businesses sell consumables or usables and 2) whether businesses use biological or technical material for their products. Together with findings from the CE indicator validation model, a flow chart, KPIs, scoring card and circular economy performance ladder are developed that can be used to measure the CE performance of a business in five chronological steps and thereby improve and benchmark the level of circularity of businesses in the consumer goods sector.