The circular economy represents one of the most significant economic opportunities of our time. According to the World Economic Forum, transitioning to circular business models could unlock $4.5 trillion in economic value by 2030. Yet despite this enormous potential, many organizations struggle to measure their progress toward circularity goals effectively.
The challenge isn’t a lack of ambition—it’s the absence of clear, actionable metrics that align environmental impact with business performance. Without robust Key Performance Indicators (KPIs), circular economy initiatives risk becoming aspirational statements rather than transformation drivers.
The Challenge of Measuring Circularity
Traditional metrics fall short when applied to circular economy initiatives. Linear economy KPIs—such as units produced, cost per item or quarterly revenue growth—fail to capture the value of keeping materials in use, designing out waste or regenerating natural systems.
Diana Goenaga, NETVIBES Strategy Director at Dassault Systèmes, emphasizes this disconnect: “Most of the time, companies try to improve sustainability metrics that would benefit economic performance. So this is good news: companies can be both ecological and economical, for example, by optimizing the weight of materials in the product. Less weight is generally more sustainable, which generates fewer costs for the company and incurs less materials to source.”
The complexity increases when sustainability goals don’t align with immediate economic objectives. Companies often face paradoxical situations where they must choose between revenue targets and environmental commitments. The solution lies in reframing the equation entirely, by incorporating the cost of non-sustainability into economic decision-making.
What Are the Key Performance Indicators in the Circular Economy?
Effective circular economy measurement requires a comprehensive set of indicators that capture performance across materials, products, operations and business models. The most impactful KPIs address three fundamental questions: How efficiently do we use resources? How long do our products remain valuable? How circular are our business models?
Material-Level Metrics
At the foundation of circular economy measurement are material circularity indicators. These track how effectively resources cycle through your value chain:
- Material Circularity Indicator (MCI): Measures the proportion of recycled or reused materials in products versus virgin inputs
- Material Recovery Rate: Percentage of materials successfully recovered at end-of-life for reuse or recycling
- Recycled Content Percentage: Proportion of recycled materials used in new products
- Waste Diversion Rate: Amount of waste diverted from landfills through reuse, recycling or composting
- Resource Productivity: Revenue or value generated per unit of material consumed
- Percentage of renewable/ bio-based materials: The share of input materials that are renewable or certified sustainable
- Material efficiency: Ratio of raw material input to final output— how much material is needed per unit of product
Product-Level Performance Indicators
Moving beyond materials, product-focused KPIs measure how circular economy principles manifest in design and lifecycle management:
- Product Lifespan Extension: Average increase in product usable life compared to previous generations
- Durability Score: Measure of product longevity under standard use conditions
- Repairability Index: Ease with which products can be repaired, increasingly mandated by regulations in markets like the European Union
- Modular Design Score: Degree to which products can be disassembled, upgraded or adapted
- Take-Back Rate: Percentage of products returned for refurbishment, remanufacturing or proper end-of-life processing
- Product Utilization Rate: How intensively products are used during their lifecycle (particularly relevant for shared or leased products)
- Percentage of product that is recyclable: The share of product components designed to be recyclable at end-of-life
Companies like Stryker, a medical device manufacturer, exemplify these principles through their refurbishment programs. According to John McCarthy, Business Value Consulting Senior Director for Life Sciences & Healthcare Industry at Dassault Systèmes, Stryker can “remanufacture and refurbish these devices at 60% of the original price—which usually costs millions—to the hospital. This provides sustainability from both an environmental perspective and from the cost and affordability of healthcare.”
Enterprise-Wide Circularity Metrics
Organization-level KPIs provide strategic visibility into circular transformation progress:
- Circular Revenue Share: Percentage of revenue from circular business models such as product-as-a-service, sharing-models, leasing or remanufacturing
- Resource Productivity: Revenue generated per unit of material consumed
- Carbon Footprint Reduction: Decrease in greenhouse gas emissions across the value chain
- Water Circularity Rate: Proportion of water recycled and reused in operations
- Supply Chain Transparency Score: Visibility into material origins and environmental practices across suppliers
- Circular Procurement Percentage: Proportion of purchases meeting circular criteria
- Reverse logistics efficiency: This measures the cost, speed, and effectiveness of bringing products and materials back from the consumer for reuse, repair, or recycling.
- Industrial symbiosis synergy: For companies operating in industrial parks, this metric could quantify the volume of waste or by-products from one facility that are successfully used as inputs for another
Karim Fradj, ENOVIA Senior Industry Process Expert at Dassault Systèmes, emphasizes the importance of strategic alignment: “Sustainable sourcing is the first step toward circularity. To achieve this, companies need to align their sourcing strategy with their ESG and sustainability goals globally.”
How Do You Measure Circular Economy Performance?
Measuring circular economy performance requires a systematic approach that combines quantitative metrics with qualitative assessments. The most effective measurement strategies follow a structured methodology that ensures consistency, comparability and actionability.
Setting the Stage: Measurement Scope and Current Impact
Building a circular economy starts with knowing what and how to measure. Begin by defining your measurement scope—decide whether you’re tracking one facility, a business unit, or the full value chain. Clarify which products or materials you’ll include, what lifecycle stages you’ll cover (from design to end-of-life), and over what timeframe. Once boundaries are set, conduct a baseline assessment to understand where you stand today. Lifecycle and material flow analyses reveal environmental hotspots, while waste audits and product durability reviews highlight where circular strategies can make the biggest impact.
Defining Your Priority Metrics
Next, choose the right KPIs for circular economy to guide your progress. Focus on metrics that are relevant, actionable, and aligned with stakeholder expectations. As sustainability expert Diana Goenaga notes, “By connecting the data that you have on your business and your activity, you start to have an overview of your environmental footprint… and identify the best levers to be more sustainable.” Strong data foundations enable better decision-making and clearer priorities.
Make Your Metrics Work: Implement, Analyze and Act
Finally, put systems in place to capture and act on insights. Standardize how data is collected, automate tracking where possible, and ensure accountability for each metric. Use dashboards or reports to make information visible and actionable. Regularly analyze performance trends, benchmark against industry peers, and refine targets as you learn. The goal isn’t just to measure circularity—it’s to turn those measurements into meaningful action that drives long-term value and resilience.
Aligning Environmental Impact with Economic Performance: The True Cost of Non-Sustainability
The most successful circular economy strategies demonstrate that environmental and economic objectives can reinforce rather than compete with each other.
The True Cost of Non-Sustainability
Companies are beginning to quantify previously externalized costs:
- Regulatory Compliance Costs: Fines, disposal fees and compliance expenses avoided through circular practices
- Resource Risk Mitigation: Reduced exposure to volatile commodity prices and supply disruptions
- Brand Value Enhancement: Customer preference for sustainable products translating to market share gains
- Waste Management Savings: Reduced disposal costs through waste elimination
- Lost revenue opportunity: given the rise of new business models
Diana Goenaga draws a parallel to the quality revolution of the 1980s and 1990s: “Companies wanted to make things of better quality, but it was more costly. When we added the cost of low quality into the economic equation, things started to unravel because having a low-quality product is more expensive. You’ll have unsatisfied customers and scraps to manage, which are costly.”
The same logic applies to sustainability. “When your company is not sustainable, you will consume more energy. As a result, you will have to manage waste, pay taxes and risk a loss of brand image.”
Common Pitfalls in Circular Economy Measurement
Avoiding Greenwashing Through Authentic Metrics
Transparency is key to building trust in circular initiatives. Companies must ensure their circularity claims are credible by using standardized methodologies, obtaining third-party verification, reporting both successes and areas for improvement, and providing clear calculation methods for all metrics.
Hrishikesh Mohan, Technical Director, Consumer Packaged Goods, Home & Lifestyle and Retail Industries at Dassault Systèmes warns that “companies need to eliminate greenwashing attempts or risk losing consumers’ trust. Companies need to continue improving their transparency because there are still issues regarding material sourcing.”
Balancing Short-Term Costs with Long-Term Value
Investing in circular practices often requires upfront expenditure with benefits realized over time. KPIs for circular economy should reflect this dynamic by considering total cost of ownership rather than just initial purchase price, weighing long-term resource security against short-term commodity costs, and accounting for impacts on brand value, customer loyalty, and regulatory risk mitigation. Framing metrics this way helps organizations make decisions that prioritize sustainable value over immediate savings.
Ensuring Data Quality and Consistency
Accurate measurement depends on robust data integrity. Companies should standardize data collection methods across operations, implement quality control checks, clearly define all metrics, train personnel on measurement protocols, and periodically audit data for accuracy. Strong data governance ensures that circular economy efforts are credible, measurable, and actionable, supporting both transparency and long-term strategic decision-making. The emerging Digital Product Passport illustrates this approach, helping strengthen circular economy practices by creating standardized, transparent methods for capturing and sharing product information.
The Future of Circular Economy Measurement
Emerging standards and frameworks, like the ISO standards for circularity ISO 59020 « Circular economy — Measuring and assessing circularity performance, are rapidly reshaping circular economy practices. The EU’s Corporate Sustainability Reporting Directive (CSRD) now mandates detailed environmental disclosures, while Digital Product Passports enhance material traceability across lifecycles. Extended Producer Responsibility (EPR) laws require manufacturers to manage products at end-of-life, and new Science-Based Targets for circularity are complementing climate goals.
Artificial intelligence and advanced analytics are also transforming how organizations measure and optimize circularity. Predictive models can forecast material flows and waste generation, while computer vision and machine learning improve sorting, recovery, and reverse logistics. Virtual twins enable companies to simulate circular strategies before implementing them physically. Meanwhile, collaborative measurement platforms, like Catena-X, are fostering cross-industry cooperation through shared databases, benchmarks, and material exchange systems. As Karim Fradj highlights, interconnected supply networks are emerging to enable the “reduce, reuse, recycle” strategy across industries—creating measurable, data-driven circular ecosystems.
Conclusion: Measurement Drives Transformation
The circular economy transition represents a fundamental reimagining of how businesses create value, designing out waste, keeping materials in use and regenerating natural systems. Yet this transformation cannot succeed without robust measurement systems that align environmental progress with economic performance.
Effective circular economy KPIs serve multiple critical functions. They provide visibility into current performance, enabling organizations to identify opportunities and track progress. They align stakeholder efforts around shared objectives, creating accountability across functions. They support strategic decision-making by quantifying trade-offs and returns. And they communicate progress to external audiences, building trust and differentiating brands.
The organizations that will gain a circular advantage are those that move beyond aspirational statements to implement rigorous, data-driven measurement systems. By establishing clear KPIs that capture material flows, product performance and business model innovation, companies can transform circular economy commitments into competitive advantages.