Do Manufacturing Companies’ Key Performance Indicators Support Circularity? – An Explorative Study on Swedish Manufacturing Companies

Abstract

Manufacturing companies today are facing a grand challenge to become more sustainable. One way this can be achieved is through circularity, which can support companies in creating a regenerative system by closing and narrowing loops of material and energy. To strive towards becoming more circular, companies can deploy key performance indicators (KPI:s) that are able to communicate the strategic direction of the company. Although KPI:s have received significant attention related to sustainability, it still remains to be seen how they can be used to support circularity. By analysing the sustainability reports of 20 of the most sustainable companies in Sweden, this paper presents a current state if manufacturing companies’ KPI:s support circularity. In total, 469 KPI:s were extracted from the reports, which were then grouped into themes and connected to if they help companies to Reduce, Reuse, or Recycle resources. The analysis showed that a majority of the KPI:s used support Reduce, whereas significantly fewer support Reuse and Recycle. It is further seen that a disconnect between the strategic intent and the KPI:s used within the companies exist, where all companies highlight to different extent that circularity is of importance and something they work with, but the KPI:s presented are not connected to this. The paper further presents some ways forward to help manufacturing companies in their endeavour to become more circular, as well as discusses avenues for future research.