A Procedure to Support Systematic Selection of Leading Indicators for Sustainability Performance Measurement of Circular Economy Initiatives

Abstract

Circular economy (CE) is considered a vital model to tackle resource scarcity and reduce waste by promoting strategies that redefine production and consumption systems. Industrial actors integrate CE principles in their strategic and operational practices to overcome these challenges, simultaneously aiming at enhancing their sustainability performance. Despite numerous frameworks to guide organizations in innovating towards CE, very few have embedded explicit sustainability considerations to assist practitioners in understanding the potential sustainability performance of the CE initiatives early in the development process. To assist a structured process of measuring sustainability performance, the main goal of this paper is to propose a procedure for a systematic selection of suitable leading performance indicators to support an informed sustainability-oriented decision-making process. To fulfill this aim, a hypothetical-deductive approach has been followed to, firstly, develop the selection procedure, and secondly, evaluate and improve it using a case study approach. The findings reveal that the procedure enables a systematic selection of relevant indicators by taking into account the manifold combinations of CE strategies and business processes, characteristics of the company and its sustainability objective. Different from many other approaches, the novelty lies in relying on a dynamic, as opposed to ‘prescriptive’, indicator selection process to induce learning about sustainability considerations significant for a particular CE initiative and corporate context.

A Trade-Off Navigation Framework as a Decision Support for Conflicting Sustainability Indicators within Circular Economy Implementation in the Manufacturing Industry

“…Step 1 focused on the identification of a need for a trade-off decision support. Initially, the challenge regarding trade-offs became distinctive during the empirical work conducted in the preceding research that focused on the selection and application of relevant sustainability indicators to support development of CE initiatives [20]. Subsequently, a literature review was performed with the aim of exploring whether the challenge of sustainability-related trade-offs, when implementing sustainability considerations during business processes, is a common challenge in the experience of manufacturing companies.…”

“…3.) [28,52] or measurement methods to quantify sustainability [34,53], which could signal about either the lack of support available in industries to systematically select relevant sustainability indicators among hundreds of potentially applicable [20] or uncertainty about suitability of some methods for sustainability measurement in the early stages (e.g., diametrically opposite views on suitability of LCA for BM measurement as in [54,55]; or for PD as in [35,56], or for logistics planning as discussed in [53]). Application of sustainability indicators requires setting up a procedure to collect relevant data.…”

“…As highlighted before, the criteria might need to be expressed as indicators, which allow for more granularity to measure performance on the criteria: criteria 'resource use' can be expressed by indicators measuring material use, material sourcing origin, or material toxicity. Several procedures are available to support such evaluation, such as quantitative evaluation of business model concepts for circular economy by [83], sustainable manufacturing indicators by [84], and leading performance indicators for sustainability screening of CE initiatives by [20]. Ideally, 10 to 15 indicators ought to be used (ibid.…”

“…The criteria were calculated as indicators using a database of the leading performance indicators for sustainability screening of CE initiatives proposed by [20]. For some criteria, the qualitative assessment was used: 'yes' and 'no' grading was done for the criterion 'local supply of materials' as well as for the 'toxicity of materials', which was marked for both alternatives as 'yes' to indicate that both are likely to contain hazardous substances according to the REACH regulation.…”

“…In summary, several challenges exist: firstly, none of the analyzed methodologies, including a life cycle assessment (LCA), seem to assess the impacts of CE initiatives that concern redesign of business models for a shared or access-based product use or service provision [17]; secondly, many methodologies do not go beyond the assessment of material and energy parameters [16]; thirdly, the lack of assessment from a social perspective is missing [18], yet alone the assessment from a holistic triple bottom line perspective [19]. The holistic TBL assessment is not only needed to document the impact of CE implementations [5], but to support the development stages of CE initiatives for early assessment of CE potential and possibilities of introducing improvements [20]. Indeed, business model and product development are seen as driving processes to enable CE development [21]; additionally, other operational business processes might need to be considered to support CE implementation [22].…”