What is a Circular Economy?

Circular economy refers to a model in which economic growth does not go hand in hand with the exploitation and consumption of natural, non-renewable resources.

The aim of a circular economy is the resource-efficient and sustainable use of natural resources, their reuse and recycling within a circulatory system and the prevention of waste.

The implementation of a circular economy should not be in conflict with economic interests.

The latter are served by the fact that in the system of circular economy companies generate an additional value from the materials used and the reduction of procurement risks in the form of material costs, price volatilities and supply bottlenecks. Unlike the linear economy, ecology and economy are not in competition with each other in the circular economy.

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Linear Economy and Circular Economy

"Take - Make - Throw away" vs. "Reusing, Repairing, Recycling". Two conflicting concepts with different impacts on the consumption of resources and pressures on the environment.

Linear Economy

In the linear economy resources and raw materials are extracted, processed and usually used for a specific purpose. At the end of life the products are disposed of in the landfill or thermally recycled. Linear economy is therefore often referred to as a "disposable economy".

Circular Economy

In a circular economy resources are kept in a circulatory system over the longest possible use phase. The materials are often used for several purposes and returned again and again in the recycling cycle. The ecological advantage of the circular economy is that it produces less waste and minimizes the extraction of fossil resources.

How to Measure the Level of Circular Economy

The circularity - also called "material circularity" - is an expression of the compatibility of the model under investigation with the principle of a circular economy.

But how is it possible to scientifically assess to what extent and how effectively companies or products correspond to the circular economy and what progress they make in their development away from the linear economic model towards a circular economy?

Valid information was hard to come by in the past, and the statements in this regard are rather vague and non-binding.

In the "Circularity Indicators" project, the EllenMacArthur Foundation and Granta Design have developed a methodology for capturing the circularity of products and companies based on facts and numbers.

Material Circularity Indicator (MCI)

The Material Circularity Indicator (MCI) represents the degree of the material flow's circulatory on a scale of 0 to 1. The higher the score, the more recyclable or circular the product.

The MCI can be a decision-making tool for product designers and buyers to select materials, use it for reporting or to evaluate companies. The assumption here is that the circularity of a company is made up of the individual material circularities of its products.

MCI = 1

To get a result of 1, all the raw materials used would have to come from reused components or recycled materials, without any loss in recycling (100% recycling efficiency). Any waste generated during the production and end of life of the product would also have to be reused or recycled without any loss ("zero waste").

MCI = 0,1

A product with completely linear material flows, where all raw materials come from virgin material and no waste is reused or recycled at all, is valued at 0.1. To achieve a value below 0.1, the benefit of the product would have to be lower than that of an average industrial product (i.e., the product would have to have a shorter life or lower intensity of use). A product with completely linear material flows but with a higher utility than an average industrial product would have an MCI > 0.1.

LCA and MCI Measuring Product Sustainability

Companies that want to improve the sustainability of their products or, at first, decide on their current status often use Life Cycle Assessments (LCA). Here, all incoming and outgoing material and energy flows of a product are recorded over its entire life cycle and on this basis the resulting possible environmental effects are derived.

In order to be able to calculate the results of LCAs, it is common to use dedicated software tools such as our GaBi Software. These allow the user to construct detailed models of the life cycle of the product systems they want to examine. There is a great deal of overlap in the data requirements for developing LCA models and for calculating the MCI.

Both require information on mass flows of raw materials and wastes, on whether raw materials are obtained from virgin, recycled or reused sources and on how waste are treated. Taking advantage of this commonality of data, Sphera has developed the GaBi Circularity Toolkit. This can be applied to GaBi LCA models and requires making some minor adjustments that then allows the MCI to be calculated alongside conventional LCA results. The GaBi Circularity Toolkit lets you apply the power of GaBi’s scenario analysis features to quickly and conveniently calculate MCI results of different alternatives. This is much faster and more reliable than attempting to calculate the MCI in a spreadsheet. In this form it is unique on the market.

Circular Economy Support - On Your Needs

Circular Economy Consulting

Choose the level of our Circular Economy consultancy you need! Sphera offers a wide range of solutions to identify, measure and monitor sustainability performance in the context of Circular Economy. Let us help you pave the way toward contributing to a circular economy.

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GaBi Circularity Toolkit

Quantify and benchmark the circularity of your products: the GaBi Circularity Toolkit, an add-on to GaBi, allows you to implement the Material Circularity Indicator within GaBi LCA models and supports the evaluation of alternative scenarios to identify an environmentally sound circular economy solution.

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Life Cycle Assessment Consulting

Our life cycle assessment consultants help you get an overview of the environmental impact of your products, processes or services. Our consulting experts support you in improving your understanding of the environmental impact of your products, processes or services.

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Useful Resources on Circular Economy

BlackRock Leaves No Stone Unturned in Announcing New Sustainable Investment Strategy

Sustainability has always been found in the bedrock...

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Make Your Business Circular

Driving your sustainability goals through Circular Economy

Download the brochure

Webinar | Circular Economy Meets LCA

Watch the Webinar with the Ellen MacArthur Foundation.

Watch now


Webinar | Life Cycle Thinking & ISO 14001

Watch our webinar on Life Cycle Thinking & ISO 14001.

Watch now