Introduction

Circular Economy as an Evolving Study and Practice Field

Circular Economy (CE) is gaining traction as a suitable framework to move our current economy to a more sustainable and resource-efficient one. It brings together different stakeholders and opens the possibility for new business models, technologies, partnerships, and economic development. CE has been diversely defined (Kirchherr et al., 2017), two definitions are particularly relevant: the Ellen MacArthur Foundation (EMF) (Ellen Macarthur Foundation, 2013), which is widely used in the public spheres, and that of Kirchherr et al. (2017), which presents an academic perspective on CE (Kirchherr et al., 2017).

In sum, these definitions state that CE is “an economic system that is restorative and regenerative by intention and design. Based on business models that replace the ‘end-of-life’ concept with reducing, reusing, recycling and recovering materials in production/distribution and consumption processes. Shifting towards renewable energies, eliminating the use of toxic chemicals and waste through the superior design to accomplish sustainable development, which implies creating environmental quality, economic prosperity and social equity, to the benefit of current and future generations.” (Ellen Macarthur Foundation, 2013; Kirchherr et al., 2017).

The deployment of such an aim is complex, resulting in a wide array of needs, alternative business models and diverging approaches (Chiappetta Jabbour et al., 2019; Kalmykova et al., 2018). However, if CE is to be achieved, the assessment of such strategies becomes of fundamental relevance.

Current metrics to assess circularity emphasise resource efficiency. Nevertheless, this is not satisfactory (Parchomenko et al., 2019) as it does not allow to measure progress in the effort of maintaining the value of products, components, and materials. Furthermore, it neglects the social, economic and environmental impact that these practices can bring. This has the risk of overlooking the real change that CE strategies are making—or not. To propose CE as a viable strategy, a meaningful, reliable, transparent and accurate framework of indicators needs to be in place.

Therefore, this paper aims to present a comprehensive view of the Circular Economy as a standardised framework, with specific categories to be addressed and assessed to help practitioners move beyond organisational discourse and into ways to measure and operationalise the transition to circular systems. Furthermore, this work aims to provide the basis for the future development of an integrated assessment tool based on measurable indicators.

Indicators as Enablers of Circularity Transitions

Indicators are widely used across different sectors as a resource to highlight problems, identify trends, and formulate priorities for policymaking. They also support the processes of evaluation and monitoring of progress (Von Schirnding, 2002). These indicators are oftentimes arranged within analytical frameworks that have important uses in product design and policy making, such as Life Cycle Assessment (Ehrenfeld, 1997). However, the development of these frameworks is complex and requires attention and careful consideration. Until the date for this review, there is no standardised method for measuring the circularity of products yet (Linder et al., 2017). Several metrics have been proposed by various researchers (Elia et al., 2017; Ellen Macarthur Foundation, 2015; Mesa et al., 2018; Parchomenko et al., 2019; Pauliuk, 2018; Saidani et al., 2019; Smol et al., 2017). These metrics shape the thinking and language within the concept and influence its development (Parchomenko et al., 2019). For this reason, a clearly defined framework of indicators is key in moving the CE forward.

Such a framework should consider the very nature of CE: a complex and interconnected system that impacts and is impacted by its socioeconomic context. This means that products and components can no longer be seen as a single unit but as part of a bigger system, and thus its assessment requires a systems perspective (Pauliuk, 2018; Sushil, 1990). This invites to design solutions that are not only technological but that include economic, social, political, cultural, and ethical aspects (World Resources Forum, 2014). Some authors have attempted to bring together the different aspects of CE and provide a view on their specific values for circularity. These reviews are also worthwhile to consider.

Reviews on Circular Economy

In a fast-growing study field such as CE (Türkeli et al., 2018), the use of reviews helps to bring scattered knowledge together. So far, these reviews have focused on two aspects: What is understood as the CE (CE conceptualisation) and how can it be measured (CE assessment).

The CE conceptualisation has been studied in the work of Kirchherr et al., which proposes a general CE definition (Kirchherr et al., 2017) and in the work of Prieto-Sandoval et al. that addresses the evolution of the CE and its relationship to other concepts such as eco-innovation and industrial ecology (Prieto-Sandoval et al., 2018). For CE assessment, the work of Iacovidou et al. addresses circularity metrics specifically used in waste management systems (Iacovidou et al., 2017; Marić and Opazo-Basáez, 2019). Moraga et al. reviewed quantitative assessment methods that are used on product and material levels (Moraga et al., 2019). Other aspects of the CE have been addressed as well, such as the different ways in which CE indicators can be classified (Saidani et al., 2019); the business opportunities for the CE (Lüdeke-Freund et al., 2019); and the evolution of the concept in the academic spheres (Merli et al., 2018; Türkeli et al., 2018). These reviews, however, have not aimed at formulating a framework that can further work as an assessment tool.

The next section describes the methods followed in compiling and classifying the papers for this review. The Results section presents a conceptualisation of the CE categories and indicators in detail, while the indicators are summarised in tables. The Discussion section elaborates on the implications, gaps, and future research derived from this review. Finally, the main outcomes of this study and their potential applications are provided in the conclusion.

Methods

Based on the definition of a systematic research review by Littel et al. (2008) and Palmatier et al. (2018), the goal of this review was to comprehensively locate, identify, classify, map and synthesise any available information concerning measuring the CE using organised, transparent, and replicable procedures at each step in the process. Two types of search were performed: (a) an academic review in scientific journals and (b) a non-academic search in reports and online sources from other relevant stakeholders.

Figure 1 shows the systematic process followed for the completion of the analysis. Further details on each part of the methodology are described below.

Fig. 1
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Process description of the methodology

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Information Collection

Academic Search

Three servers were consulted: Google Scholar, Web of Science [v.5.34], and Scopus. Different keyword combinations were used, and all relevant papers were downloaded. The keywords used for the search are provided in Table 1:

Table 1 Matrix of keywords used for the academic search
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This process gave a total of 251 papers. Afterwards, a snowballing process was performed with three reviews: Moraga et al., (2019), Parchomenko et al., (2019), and Saidani et al., (2019), which added 32 more papers to the list.

Non-academic Search

This search considered official reports by national and international institutes and publicly available software to measure circularity. Nine official sources were compiled: Ellen MacArthur Foundation (EMF) (Ellen Macarthur Foundation, 2013, 2015), European Environment Agency (EEA) (EEA, 2016), European Commission (European Comission, 2015), Eurostat (Eurostat, n.d.), The Organization for Economic Cooperation and Development (OECD) (OECD, 2003), the World Resources Forum (World Resources Forum, 2014), and the United States Chamber of Commerce (U.S. Chamber of Commerce Foundation, n.d.). Additionally, two online available tools were included: The Circularity Calculator by Ideal&Co, which is part of the ResCoM project (Ideal&Co Explore B.V., n.d.; Ideal&Co Explore B.V, n.d.), funded by the European Union, and the Circular Economy Toolkit with collaboration of Accenture and Cambridge (Evans, 2013).

Template Formation and Categorisation

The total search yielded 298 documents, considered the initial universe of this study. In a systematic approach, a first review of papers was performed, where the titles, keywords and abstracts of each paper were read to filter the ones who specifically addressed the subject of measuring circularity and/or provided tools to measure it in some way. After this first filter, 142 papers were left, which were further reviewed in-depth. These were then compiled in a database for further processing (provided in Annex 5). This first—general—review shaped the main categories into which most of the indicators corresponded.

Clustering of Subcategories and Parameters

Each of the 142 papers and reports was read and analysed to understand the specific approach taken to measure circularity. The description of each indicator was added to the database within the category of the subject it aimed to measure (e.g. Recycling, Reuse, Direct Social Impacts, Water, etc.). In an iterative process, the categories were revisited based on the obtained results to form the clusters observed throughout the process. Afterwards, all the indicators for each category were grouped into common themes. These themes formed the subcategories, which, when possible, were further detailed into parameters.

The purpose of dividing categories into subcategories and parameters was double-fold; to provide a clearer picture of what is being measured and to ensure the least overlap possible within categories.

Results

More than 400 indicators were found with different degrees of specificity. They were clustered into one framework with three concentric layers, as shown in Fig. 2a. The first layer (inner circle of the Figure) corresponds to the CE framework, which differentiates between circular processes and circular impacts. The second layer identifies the different categories within them and the last (outer) layer corresponds to the subcategories or indicators.

Fig. 2
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Summary of CE framework, a representation of the three layers of the CE framework; b categories and subcategories found in the literature review

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Details of each of the concentric layers can be seen in Fig. 2b and will be further explained throughout the results section of this paper.

Circular Processes and Circular Impacts

The Circular Processes refer to the different ways in which the maximum value of any product, component and material can be kept within a system. These are called value retention stages (VRS), and VRS constitute the building blocks of a circular system.

The Circular Impacts concern the ultimate aim of CE: the sustainable and fair improvement of quality of life for nature and society. These circular impacts can be summarised into three major blocks: contribute to social development, improve environmental performance and ensure a socially fair and market-relevant economic contribution, as also described by the Ellen MacArthur Foundation (Ellen Macarthur Foundation, 2013), United Nations Industrial Development Organization (United Nations Industrial Development Organization, n.d.) and the European Commission (European Commission, 2015a, 2015b).

The review revealed that there is a widely spread confusion and overlap between circular processes and circular impacts and that a clear differentiation and straightforward understanding of each category can significantly improve the tools and methods through which to assess CE.

Circular Processes

Eight VRS were found: redesign, (re)use, re-sell, remanufacture/ refurbish, recycle, recover and recirculate. They cover the different strategies available to keep value on four levels: (1) the product itself, (2) the components of the product -the pieces of which a product is made, (3) the materials that constitute these components, and (4) the logistics required to circulate such elements. A summary of the VRS and their specific aim within the CE framework is presented in Fig. 3.

Fig. 3
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Value retention stages and their aim within the CE

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Redesign

Redesign involves rethinking the current material and product uses and configurations to tackle specific concerns or to achieve a desired attribute. Redesign strategies can be a consequence of improving other of the circular processes or impacts. However, in this category, the focus is on the design principle. Within the current CE landscape, the redesign indicators can be assigned to seven main categories, which are presented in Table 2.

Table 2 Redesign indicators
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Redesign is a key element to enable the rest of the value retention stages. Current systems and products need to be redesigned to meet the new (circular) expectations that are placed on them. This places the Redesign stage at the forefront of tools to enable circular transitions.

Reduce

Reducing aims at increasing production efficiency, but also at reducing dependency on critical and scarce resources, the complexity of products (fewer components, fewer materials) and systems (fewer nodes, fewer intermediaries), and finally impact in terms of environmental pollution. Table 3 provides a summary of indicators to assess the reduction aspect of CE.

Table 3 Reduce indicators
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Use and Reuse

Considers the use and reuse phases at a product level without changes or disassembly. A match between the actual and desired use time is needed for which several strategies can be used. They are further detailed in Table 4.

Table 4 Use and reuse indicators
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Re-sell

The difference between Reuse and Re-sell lies in the economic transaction and energy involved in the transfer of a product to a second user. Re-selling of a product can happen between consumers or with a company as an intermediate (Table 5).

Table 5 Re-sell indicators
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Refurbish/Remanufacture

Refurbishment and remanufacturing occur at the component level. Refurbished products are of satisfactory quality but not necessarily equal to the original performance standards (Ijomah et al., 1999), and remanufacturing is a rigorous recovery process that returns products to the same quality level as the new counterpart product (Van Loon & Van Wassenhove, 2018) (Table 6).

Table 6 Refurbish and remanufacture indicators
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Recycle

Recycle was the most common VRS found in the literature, this framework differentiates them as follows: recycling of products (described here as reuse and re-sell), recycling of components (refurbish/remanufacture) and the recycling of materials, which is summarised in Table 7.

Table 7 Recycle indicators
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Recover

After the recycling cycles have come to an end, and no further value can be extracted from the materials in their current form, or when the product composition makes it virtually impossible to recycle, strategies can be used to recover minerals, energy, or scarce elements from them (Table 8).

Table 8 Recover indicators
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Recirculate

The recirculation of products, components, and materials is as important as their value retention properties. This requires the integrated and coordinated effort of the complete supply chain to physically move them throughout the loops, which enables then the rest of the VRS (Table 9).

Table 9 Recirculate indicators
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The work of van Buren et al. regarding logistics (van Buren et al., 2016), Zheng and Zhang for green logistics (Zheng & Zhang, 2010), and Govindan and Solemani (Govindan & Soleimani, 2017; Govindan et al., 2015) in reverse logistics are a good starting point to design metrics for Recirculation in the CE.

Efforts in Measuring the Full Circularity of a Product

Additional to the above-mentioned value retention stages, some authors have attempted to use normalised circularity indicators (NCIs) as a means to provide a single score for circularity, by aggregating the results of more than one value retention stage. This approach allows having one unique value instead of a spread of indicators, which can be useful in terms of communication; however, by doing so, the granularity of each parameter gets lost. Three main clusters of NCIs were found, which are further described in Table 10.

Table 10 Approaches for full-circularity assessment
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Circular Impacts

Circular Impacts refer to the ultimate goal of CE: the sustainable and fair improvement of quality of life for nature and society. These can be summarised into three major lines: (1) improve environmental performance through regenerative flows that promote cleaner energy, processes, and technologies; (2) positively influence social development, employee and community engagement and advocate for better consumption patterns; and (3) create business models that ensure a socially fair and market-relevant economic contribution. These findings are further described in the next sections and summarised in Fig. 4.

Fig. 4
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Contribution of CE towards the Environment, Society and Economy

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Environmental Performance

The indicators on environmental performance in the CE can be categorised in general themes and specific concerns. The general themes suggest the broader aim that circular strategies should achieve, while the specific concerns are the particular topics of interest regarding the environmental impact of CE. Both general and specific themes are addressed in Tables 11 and 12, respectively.

Table 11 Indicators for environmental performance
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Table 12 Specific environmental concerns for the CE
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Social Impact

CE holds an intrinsic duty to improve our societies, making them fairer and improving the quality of life of all. The groups of interest that can be influenced by circularity initiatives are grouped into three: (1) employees (impact inside the company), (2) users and consumers (impact through the products and services offered), and (3) communities and other stakeholders (impact outside the company) (Table 13).

Table 13 Circularity indicators for social impact
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It is understood that economic-social behaviour is not only a matter of supply and demand, as it is influenced by the market forces (price), government incentives, environmental benefits and social trends and attitudes (Hazen et al., 2017). Therefore, sustained and sustainable change in the consumption patterns requires the consumers’ deeper understanding of the economic, social and environmental implications of their choices (Newton et al., 2018).

Economic Contribution

The economic benefits of CE have been estimated at a global net economic benefit of €1.8 trillion by 2030 (McKinsey, 2015). These can be considered as economic outputs of CE. Two more aspects need to be considered: the resources available (inputs) and the value that is kept in the cycles due to the different retention strategies (process). These three aspects are detailed in Table 14.

Table 14 Economic contribution
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Discussion, Limitations, and Future Work

The assessment of CE needs to provide insight into whether or not we are getting closer to a CE. This means that a fully circular system needs to fully accomplish CE’s definition, which leads to the core of our review: what is being measured when we measure the CE?

The proposed framework makes a distinction between circular processes and circular impacts. In this sense, processes act as a means to achieve a goal, which is reflected in the impacts. This is very much in line with what the CE holds as core principles: to replace end-of-life and keep value for longer through the different value retention stages with the ultimate goal of achieving sustainable development, understood as positive environmental performance, economic contribution, and social impact. However, for this to hold, the following aspects still require substantial improvement:

  1. 1.

    Refinement of subcategories and parameters

The categorisation process for this framework revealed that even though the main categories of both circular processes and impacts are well established and developed, the subsequent subcategories and parameters do not have the same maturity level. The results presented in this review make a significant contribution to increasing the understanding and availability of such subcategories and parameters. However, there are areas where further development is needed at the parameter level, particularly in tackling how to measure the reuse, re-sell, and recirculation efforts. In addition, as CE advances and gets implemented, new parameters within the proposed categories will become relevant and available, which will enrich the CE practice. Furthermore, essential considerations, such as supply chain flexibility and resilience, are not yet considered at an indicator level, even though it has been shown that value chain flexibility is necessary to build sustainable initiatives and strengthen corporate risk management (Dwivedi et al., 2021; Sarker et al., 2021; Settembre-Blundo et al., 2021).

  1. 2.

    Possible use of a scoring system or weighting factors for VRS

The eight value retention stages are understood as sequential steps of circularity; closer loops (reduce, reuse, re-sell) are prioritised over longer loops (recycle, recover). In this sense, a system that aims to increase circularity must do so by first enabling the shorter loops and not resorting immediately to longer loops where value is lost. However, this is not applicable for every system; therefore, specific adaptations can be developed for specific systems, where weighing factors could support decision-making.

For CE assessment, considerations on the role of the unit of assessment remain largely unexplored. As is observed in other frameworks, such as Life Cycle Assessment (LCA), the unit of assessment, the functional unit, greatly affects the results of such evaluation, affecting the ease of acceptance by different stakeholders. For circularity assessment, careful consideration of the performance requirements that the product system fulfils (functional unit) and the scope (system boundaries) should be considered for the future development of CE assessment tools.

  1. 3.

    Better integration of existing methodologies to measure circular impacts

For CE to be successful, it must contribute to sustainable development, in this work referred to as circular impacts. However, at the intersection of circular processes and circular impacts, we found overlap, confusion, and misunderstanding of concepts. The use of already existing methodologies such as LCA, Social-LCA, LCC, and the Sustainable Development Goals (SDGs) to reflect circular impacts can accelerate the disentangling and understanding, as long as they are updated to reflect and better represent the effect that circular systems may have in sustainable development.

  1. 4.

    A deeper understanding of the influence and reach of CE in socioeconomic and environmental systems

It is fundamental to ensure that the implementation of circular practices follows ethical principles and safeguards the social, cultural, political, and economic integrity of the society it plans to serve. For this, further alignment between CE and the SDGs is of special interest.

To bridge the gaps presented here, joint efforts of academics, industries, and policy-makers are envisaged to propose appropriate and useful indicators. Our review provides a wide array of indicators categorised and grouped for a better understanding of the overarching framework. Future research should aim at proofing these indicators for different sectors and optimising them so that with the minimum data requirements, the best assessment possible is made for the different impact levels of circularity.

The indicators provide a comprehensive understanding of the tools being used to measure CE (e.g. standardised methods, specific formulas, integrated approaches, and models for quantitative and qualitative assessment). The variety of scopes was addressed by building three layers within this framework; in this way, future research can focus on selecting the adequate assessment level for different purposes. However, future research must also consider the consequences of the different VRS (upper half of the circle) into the Social, Environmental and Economic dimensions of society (lower half of the circle). Without this consideration, Circular Economy runs the risk of increasing overall production and consumption through increased efficiency, which can partially or fully offset their benefits (Zink & Geyer, 2017) with the unwanted consequence of a Circular Economy rebound effect.

  1. 5.

    Alignment between policy, assessment, and practice of the CE

Little literature was found on the assessment of public policies and their impact on the different CE strategies. While policies can greatly influence institutions, the evaluation of such policies in the micro-, meso-, and macro-levels remains unclear. Furthermore, the analysed official documents often present incomplete views on the Circular Economy, strongly emphasising one aspect over the others (e.g. Recycling) or presenting both processes and impacts as synonyms.

As policy navigates in between producers and consumers, it remains an important research gap to understand the role of the ‘Green-Circular Premium’ (Appolloni et al., 2022) in which the consumer accepts a higher price for the use of circular strategies in the manufacturing of products. Furthermore, a policy is needed to ensure that this premium trickles down to various social actors and that new, innovative, circular business models are fostered to enable this transformation.

In terms of the application of this framework, the presented results provide insight and research pathways for academics and researchers working on the operationalisation of CE. The results also highlight the multidisciplinary nature that is required to better understand, implement and assess circularity efforts. The developed framework lays out what is available in terms of circularity assessment. The categories and subcategories can guide educators, researchers, policy-makers, managers, sustainability practitioners, and other relevant stakeholders into the different areas that must be considered for a successful transition to a CE. Additionally, the parameters presented provide insight into different ways to measure specific aspects of circularity, which can serve either directly as an indicator, or as a benchmark for the development of indicators for particular sectors.

Conclusions

We performed a detailed analysis of 298 documents to understand how to measure the different aspects of the Circular Economy (CE). Our analysis shows that there is a widely spread confusion and overlap between indicators referring to circular processes and circular impacts. We distinguished the strategies to retain value (referred to as Circular Processes) and the social, environmental and economic consequences that this implies (referred to as Circular Impacts), as well as their respective subcategories and parameters. The clear differentiation and straightforward understanding of each category proposed can significantly improve the tools and methods to assess the CE.

The proposed CE framework makes use of the Value Retention Stages (VRS) as a way to organise 27 circular process indicators. There are eight processes found through the clustering of indicators, which act as a chain: Redesign products and systems; Reduce impact, dependency, complexity and quantity of materials and products; Use and Reuse products for longer and re-sell them taking advantage of new, innovative markets. Once a product is obsolete, Refurbish and Remanufacture can help to keep value at the component level and to prevent early disposal. When further cycling of products and components is no longer possible, Recycling gives further use to materials that can be converted into raw elements of other or similar processes. When materials cannot be used on further cycles, then Recovery processes aim to keep nutrients, rare elements and energy from otherwise waste as a last attempt to keep value. The final element is the Recirculation within these stages, which takes care of the material and information flow within a circular network.

Complementing the VRS, the Circular Impacts aim to measure the goals of CE concerning environmental performance, economic contribution, and social impact. The environmental performance of circularity efforts emphasises the creation of regenerative flows and can make use of methodologies such as LCA for quantification. It pays particular attention to areas such as water and wastewater, waste production and waste recovery, toxicity, land use, energy use and efficiency, and air pollution and GHGs. The economic contribution of CE is relevant at three levels: the inputs required to make a circularity transition, including technological and human inputs, the processes to add and maintain -economic- value in a circular system, and the outputs obtained, such as economic growth and profitability. Finally, the social impact of these VRS permeates on three segments, within the company (employees), with the companies’ consumers, and in the communities and other stakeholders where the company has presence or influence, such as the supply chain.

Overall, the goal of our framework is to provide a basis for CE assessment and to give specifics on the approach and methods to use for it. Nevertheless, the specific models and indicators may change among industries and for different technology readiness levels. This framework increases the overall understanding of circularity indicators and is a useful guide for researchers, industries, and policy-makers to test circularity metrics in study cases more systematically and comprehensively while also providing the basis for further structure and development of CE indicators.