CIRCULAR

TRANSITION
INDICATORS V4.0
Metrics for business, by business
 Contents

Foreword | 6

Executive summary | 7

Part 1. Circular Transition Indicators: Framework | 8

Circular Transition Indicators | 9
Need for circular metrics | 10
Use of CTI | 11
A value chain effort | 13
The CTI methodology logic | 14
The indicators | 15
The technical and biological recovery cycles | 28
The CTI process cycle | 30
Getting started | 31

Part 2. Circular Transition Indicators: User manual V4.0 | 32

1 Scope Determine the boundaries | 33

2 Select Select the indicators | 34

3 Collect Identify sources and collect data | 36

4 Calculate Perform the calculations | 43

5 Analyze Interpret results | 75

6 Prioritize Identify opportunities | 89

7 Apply Plan and act | 99

Annex | 102

CTI glossary | 105

Circular Transition Indicators V4.0 Metrics for business, by business 2

Thank you to the companies and organizations that have
contributed to the development and implementation of
the Circular Transition Indicators.

Advisory group

The Circular Transition Indicators framework is developed by members of the Circular Transition Indicators project of WBCSD’s
Products & Materials Pathway.
The Circular Transition Indicators are co-authored by

Circular Transition Indicators V4.0 Metrics for business, by business 3

We are proud to continue to partner with WBCSD to further business progress toward a more circular economy.
As a participant in the Circular Transition Indicators project, we helped identify tools to better self-assess our use and
reuse of resources. We can now prioritize and establish targets to monitor our progress within the circularity space.

Stephan B. Tanda
President and CEO, Aptar

At CHEP, we know that our share & reuse business model is inherently circular. The challenge is how to measure it! We initially
welcomed the CTI Tool with a view to finding a company-wide circular performance KPI. We soon realized it is actually much
more and also found their approach to material flows analysis complement other circularity measurement systems. We are
also able to quickly identify risks at an appropriate level of detail and prioritize actions to improve our circularity.
Juan Jose Freijo
Vice President, CHEP

Transforming towards sustainable mobility the Mercedes-Benz way means taking the lead in electric drives while at the same
time taking on responsibility as a company and in terms of products and production. Therefore, we drive the conversion
of the value chain into a value cycle, to get closer to our goal of CO2-neutral mobility. By implementing the CTI framework
into our business structures, we are able to measure and improve the circularity of our processes in a comprehensive and
standardized way in order to derive appropriate measures to accelerate our transformation into a circular economy.

Markus Schäfer
Member of the Board of Management, Mercedes-Benz AG

KPMG is proud of our continuous involvement in the development of the CTI Framework v3.0. As an implementation partner
we see the added value that this framework brings to our clients to help assess circular performance, identify risks and
opportunities and steer towards resilient and future-proof business practices.

Richard Threlfall
Global Head of KPMG IMPACT, KPMG International

The circular economy is not just about recycling – it is about a transformation of the entire value creation system by
decoupling growth from finite resources. At LANXESS, we support this transformation. Being in the middle of long value
chains, we are not only working on alternative raw materials, but are also exploring different recycling technologies for our
products. For example, our engineering materials are suitable for mechanical and multiple chemical recycling pathways.

Anno Borkowsky
Board member responsible for value-chain circularity, LANXESS

I believe in the circular economy. Today Holcim is one of the world’s leaders in this area, recycling 50 million tonnes of
waste into our products and processes. By 2030, I set the target to double this rate, to recycle 100 million tonnes across
our business. I see a big opportunity in recycling construction and demolition waste, as concrete can be infinitely recycled.
Using WBCSD’s Circular Transition Indicators (CTI), we are closing material loops and measuring our revenue from green
products and solutions. With the CTI framework we are actively measuring our contribution to building greener cities to keep
on raising the bar.
Jan Jenisch
CEO, Holcim

The Circular Transition Indicators (CTI) framework developed by the World Business Council for Sustainable Development
(WBCSD) provides a universal global definition and measurement method to make circular entrepreneurship understandable,
measurable and manageable. The framework brings us the right focus and encouraged us to move from a waste-report to an
inflow-report and outflow-report. For example, at this moment we use the framework to measure the level of circularity of our
trains, and to steer decision-making during procurement to achieve our goal: 100% circular trains in 2030.
Marjan Rintel
CEO, NS

Circular Transition Indicators V4.0 Metrics for business, by business 4

4 Circular Transition Indicators
The Port of Rotterdam, as a key hub for resources in Northwestern Europe, has used the CTI framework to assess the
circularity of production and throughput in the port. This exercise has resulted in a baseline for improvements in the future.
The scan made it clear that there is enormous potential to improve the circularity of our port and industrial cluster.
The circular economy is an increasingly important component of our strategy and we are actively working with our
partners to make supply chains more circular.
Allard Castelein
CEO, Port of Rotterdam

Security Matters (SMX) supports and acknowledges the leadership role of WBCSD and the importance of the Circular
Transition Indicators (CTI) framework as it complements SMX’s digital twin technology and blockchain platform solutions
enabling companies to successfully transition to a truly circular economy in a tangible, credible and measurable way – where
every material is fully utilized and nothing goes to waste.

Haggai Alon
CEO, Security Matters Ltd

Transitioning to a circular economy is about much more than just reducing the waste inherent in the linear economy. It’s about
sustainable growth that creates economic opportunities, environmental and social benefits and increases business resilience.
This transition requires a systemic shift that closes, optimizes and values resource loops across the value chain which makes
collaboration across companies pivotal.
Alistair Field
CEO, Sims

Circular Transition Indicators V4.0 Metrics for business, by business 5

Foreword
Circularity must be into how to increase Up to 75% of the Earth’s
accelerated to optimize circularity along their value land surface has been
resource use and chain and understand how significantly altered by
enable the systems that reduces their impact on human actions to meet the
transformation required climate and nature. growing demand for food,
for sustainable production fuel, and raw materials.1 The
and consumption. A net- We know that the adoption of circular practices
zero, nature-positive environmental benefits in materials sourcing is a
world can’t be delivered of a circular economy are critical step in ensuring
without significantly extensive. To date, however, healthy ecosystems and life
growing the circular businesses have struggled to on our planet. CTI v4.0 will
economy. The developing measure the effect help companies assess how
accountability systems of circularity on reducing regenerative production
for Climate and Nature carbon emissions and and minimizing resource
are accelerating business preserving nature. extraction can reduce
commitments to a low- In this updated version of impacts on land use, the
carbon, nature-positive CTI, we have extended the most impactful driver of
world. Equity is closely greenhouse gas (GHG) nature loss.
following. The circular impact methodology to
economy, through the Since the inception of CTI,
provide a more complete thousands of companies
adoption of circular picture of how circularity can
sourcing and design are now using consistent
affect the carbon footprint circular metrics to transform
strategies, longer and of a company’s products
multiple product lives, and their business toward
and materials. The updated building resilience, unlocking
the closing of resource methodology draws from
loops, is a fundamental new growth opportunities
widely adopted carbon and pathways to value
building block of the accounting practices and
transformations we need generation, delivering on their
focuses on incentivizing sustainability roadmaps and
for a world where more the reuse of products and
than nine billion people developing readiness toward
materials across value accountability systems for
can live well within the chains.
limits of the planet, by circularity and sustainability.
2050. In CTI v4.0 we begin the We welcome you with us on
journey toward quantifying this transformational journey!
Companies can reduce risks, the impact of circularity
maximize resource value on nature, where business
and develop organizational has a critical role to play in
resilience while mitigating protecting and restoring
climate change and reducing natural systems. This requires
pressures on nature by fundamental changes in the
increasing circularity. way we extract, produce
Moving from linear to and consume resources
circular economic models but promises to deliver
requires the adoption of new great benefits in halting and
metrics to drive progress in reversing nature loss. For
circularity. example, a landmark report by
Built for business, by Sitra estimates that a shift to
business, the Circular a circular food and agriculture
Transition Indicators (CTI) sector can deliver up to 73% Diane Holdorf
provide a reliable framework in biodiversity recovery by Executive Vice President,
2035. WBCSD
of metrics that companies
can use to develop insights

Circular Transition Indicators V4.0 Metrics for business, by business 6

Executive summary ANNOTATIONS
NEW CONTENT
EXAMPLES
NOTES

As the circular economy In addition to the ability to investor and regulatory

builds momentum, close the loop, CTI provides pressures to demonstrate
insights into overall resource circular performance increase,
it is imperative for use optimization and the link it is in each company’s best
companies to prepare between the company’s circular interest to respond credibly.
for their transition material flows and its business
based on insights performance. CTI delivers a framework to
prepare this response. The
into their circular The framework does not framework does not provide
performance and evaluate absolute environmental a rating but leaves it to the
associated risks and and social impacts. However, it company to determine whether
opportunities. To do gives insights into how circularity the results are in accordance
this, business needs a helps to achieve sustainability with its ambitions, putting the
objectives related to climate company in the driver’s seat of
universal and consistent and nature. This shows the its own circular transition.
way to measure its circular economy as a key
circularity. enabler in reaching sustainability We invite companies of all sizes
objectives. and industries worldwide to
According to the Circularity Gap demonstrate their commitment
Report, the global economy is Although the use of common to the circular economy by
only 7.2% circular today.2 indicators for circular measuring their circular baseline
performance is essential to with the launch of this updated
The Circular Transition Indicators accelerating the transition to the version of CTI in May 2023.
(CTI) shaped by 30 WBCSD circular economy, the value of
member companies help answer CTI for a company goes beyond
questions like: CTI VERSION 4.0:
the calculation in the guidance, WHAT’S NEW
analysis and explanation for
• How circular is my company? CTI v4.0 includes updates to
how circularity drives company
its Impact of the Loop module
• How do we set targets for performance. The CTI process which helps companies
improvement? helps companies scope and prioritize circular strategies
prepare the assessment and in light of their impact on the
• And how do we monitor interpret its results, understand company’s sustainability
improvements resulting from targets.
its risks and opportunities,
our circular activities? prioritize actions and establish In this version, we update
SMART targets to monitor greenhouse gas (GHG) impact
CTI is simple, applicable across with a methodology to measure
progress. the impact of using higher value
industries and value chains,
inflows (reused, refurbished,
comprehensive yet flexible, CTI is inward-facing, objective, remanufactured content)
complementary to a company’s quantitative and based on and enabling the recovery of
existing sustainability efforts and demonstrable data. This data outflows on material carbon
agnostic as to material, sector or footprint.
may sit in hidden corners of the
technology. company or even outside the CTI v4.0 includes a new
company, with its value chain indicator to measure impact
Central to CTI stands a self- on nature. CTI v4.0 begins this
partners. In order to support and important work focusing on a
assessment that determines a
guide companies through this key pressure on nature loss:
company’s circular performance.
process, we have partnered with land use. This report provides a
It focuses primarily on the methodology to measure land
Circular IQ to develop the CTI
circular and linear mass that use impact of circular sourcing
Online Tool available at www. strategies.
flows through the company, in
ctitool.com. Through the tool, CTI
which design, procurement and If you have already completed
initiates value chain discussions,
recovery models are crucial an assessment with CTI, the
which are essential to new content will not affect
levers to determine how well a
accelerating the transition to the your performance. CTI has
company performs. only become easier and more
circular economy. As customer,
valuable with these changes.

Circular Transition Indicators V4.0 Metrics for business, by business 7

Part 1.
Circular Transition Indicators:
Framework

Circular Transition Indicators V4.0 Metrics for business, by business 8

Circular Transition Indicators
Today the world is only The momentum to transition is Through this lens, the framework
7.2% circular.3 Not only growing and both the private and can guide companies in gaining
public sector are beginning to concrete insights into how they
is it clear that this is set ambitious circular targets. can most effectively transition
not sustainable, the to a circular economy and the
urgency to step away For example, the European associated opportunities.
from a take – make – Commission is promoting an
accelerated transition and
waste economic model the Netherlands introduced a
is growing. It will be government-wide program to
virtually impossible to reduce primary raw material use
achieve the Sustainable by 50% by 2030 and transition to
Development Goals a full circular economy by 2050.
(SDGs) and the Transparency and alignment
Paris Agreement if are critical to establishing a
this wasteful trend common language across
industries and governments to
continues, as we develop strategies and measure
will need the natural progress. For this reason, 30
resources of two Earths global companies have come
by 2030.4 Business must together through WBCSD’s
step up action to deliver Products and Materials pathway
to develop the Circular Transition
solutions for a net-zero Indicators (CTI).
emissions, nature-
positive and equitable We have developed an objective,
world. quantitative and flexible
framework, identifying risks
Where some see and opportunities to determine
circular priorities and set
waste, we see value, targets. We do not intend for this
opportunity and a framework to replace existing
business case to use sustainability frameworks
resources for as long already used by industry;
as they can last. As rather, we endeavor to provide
additional insights into circularity
the pressure to shift performance.
from linear to more
circular ways of doing This CTI framework is based on
business increases, the an assessment of material flows
within company boundaries,
good news is that the combined with additional
opportunity to improve indicators on resource efficiency
stands at over 91%. and efficacy, as well as the value
added by circular business.

Circular Transition Indicators V4.0 Metrics for business, by business 9

Need for circular metrics
Linear business models targets monitored by clear key The analysis concluded that
have been profitable for performance indicators (KPIs), there was an existing need for
companies need a system of an inward facing, quantitative
decades. However, with metrics that can guide their approach and guidance to
finite natural resources decision-making when adopting measure circularity for the whole
and the increasing circularity in their corporate company, business unit or
cost of externalities, strategy. product (group) with a framework
companies are that complements assessments
and tools used by companies
increasingly exposed today. Building upon material
to market, operational, ONE COMMON APPROACH
flows, CTI incorporates water,
legal and business risks. No company can drive the renewable energy and business
At the heart of the transition to a circular economy value into its scope to create a
business case for on its own. multidimensional perspective
of a company’s circular
circularity sits the The circular economy requires a performance.
opportunity for larger industry, value chain and
companies to create cross-sector effort. To transform,
more value by being companies must speak the same
language, regardless of size,
smarter about how they
industry or value chain position.
use resources. Through CIRCULAR ECONOMY
DEFINITION
circular business Having a common approach
models, companies to measuring and monitoring The circular economy is
circular performance is an economic model that is
can accelerate essential. This will allow value regenerative by design.
growth, enhance chains to become value cycles, The goal is to retain the
competitiveness, and progressing towards a shared value of the circulating
mitigate risk. vision. resources, products, parts
and materials by creating
This initiative started as the a system with innovative
Circular Metrics Landscape business models that allow
for renewability, long life,
TRANSITION Analysis,5 in which we carefully optimal (re)use, refurbishment,
studied and reviewed existing remanufacturing, recycling
While a circular economy is an protocols and standards for and biodegradation.
economic model that provides circular metrics. The analysis
opportunities for companies By applying these principles,
and subsequent conversation organizations can collaborate
across industries, the transition identified several ways to to design out waste, increase
to a circular economy is not calculate circularity, such as the resource productivity and
straightforward. Companies Material Circularity Indicator maintain resource use within
must change business models, and Circulytics by the Ellen planetary boundaries.
adapt strategies and evolve MacArthur Foundation;6 and Note: CTI is in alignment
the skills of their workforces, Circularity Gap Report Initiative with the Ellen MacArthur
and governments must adjust by Circle Economy7 or the Foundation circular economy
policies to enable the circular principles:
Circularity Check by Ecopreneur.
economy. eu for a qualitative circularity • Design out waste and
self-assessment. pollution
This makes it difficult to plan
• Keep products and
for and set clear targets for a These methodologies converge materials in use
coordinated transformation. on material flows – establishing a
To understand where a company • Regenerate natural
common language for circularity
currently stands in its circularity systems.
across industry and government.
and allow for the setting of

Circular Transition Indicators V4.0 Metrics for business, by business 10

Use of CTI

CTI offers companies insights As such, we endeavor to be as However, its influence on

into their circular economy non-prescriptive as possible. a company’s sustainability
performance, allowing them to: performance depends on
WBCSD does not play a role in the larger context of other
• Identify circular a company’s CTI assessment, sustainability indicators.
opportunities and which it developed as an inward- Companies are discouraged
linear risks, with the aim facing tool for companies to gain from communicating the
of improving company insights into their circularity. results of the framework
longevity and resilience As such, CTI does not: externally unless they
present them in the
• Set a baseline and monitor • Constitute an assessment
appropriate context.
progress on their circular of sustainability
transition performance. Through
the latest additions to the
• Respond to customers and Impact of the Loop module,
external stakeholders CTI is now able to estimate
(e.g., investors or civil society the impact of circular SHARED PRIORITIES
organizations) economy interventions
One of the key drivers behind
on sustainability targets
• Start value chain the aluminum industry’s
and, hence, can be seen highly effective recycling
conversations on shared
as complementary to infrastructure was a coalition
circular priorities
existing and commonly of aluminum value chain
• Attract new business by used frameworks that stakeholders that realized
cover a company’s wider the material was at risk
simultaneously advancing of both depletion and
customers’ circular sustainability performance reduced competitiveness
objectives (e.g., greenhouse gas (GHG) if linear consumption rates
emissions, biodiversity, continued their trajectory.
• Prepare for disclosure human capital, etc.). Their combined commitment
to regulatory standards and resources to develop
on circularity (e.g., the EU • Compare industries, a powerful recycling
Corporate Sustainability companies or products. infrastructure lay at the core
Each company’s circularity of today’s 70% recovery rate
Reporting Directive or GRI for aluminum cans.
306).8 journey is unique. It is
therefore only possible to In 2015, the Aluminium
We designed this framework make comparisons in a Stewardship Initiative (ASI)
to be easy to implement and relevant context and upon incorporated as a non-profit
versatile in scope. It allows careful consideration. entity to develop and operate
business to measure circularity an independent third-party
• Target non-sustainability certification program to
at any level, from product and drive a material stewardship
product level to the entire marketing and promotional approach for aluminum
business, so that companies can materials. Circular economy throughout the value chain.
use the indicators at the level is an important and
that best suits their business. necessary pathway to more Source: Aluminium
sustainable production and Stewardship Initiative
With CTI, we aim to empower consumption.
companies in their circular
transition by allowing them to
better understand their circular
economy potential.

Circular Transition Indicators V4.0 Metrics for business, by business 11

We consider the following to be To optimize CTI accessibility and
FRAMEWORK PRINCIPLES
an appropriate context: usability, we have partnered with
Circular IQ to develop the CTI Simplicity
• The company carefully online tool: www.ctitool.com.
discloses the scope of the Be as simple as possible
assessment to give the This tool structures data within the context of the
circular economy.
reader a comprehensive collection and calculates the
view of its circularity outcome per indicator. Consistency
performance;
It includes functionality that can Use one common, cross-
• The company clearly support users as they contact industry language and
states that the “Circular internal stakeholders or value provide consistent insights
into circular opportunities
Transition Indicators are not chain partners for data requests and linear risks regardless of
a full-scope sustainability to avoid confidentiality issues. organization size, sector or
assessment and that results value chain position.
should not be used to Additionally, it documents the
benchmark companies or exact scope and steps taken, Completeness and flexibility
industries on their full scope allowing for consistency and
Offer a complete set of
sustainability performance”; monitoring over subsequent metrics with the flexibility
cycles. The CTI online tool of accommodating diverse
• An independent third party serves a facilitating function and business needs.
assures the results. stores outcomes in a structured
manner; it supports decision- Complementarity
For product-level circularity, making and allows companies to Given that circularity is one
we encourage companies keep track of progress. However, pathway to more sustainable
to disclose the scope of we recommend that companies production and consumption,
the assessment and how it first read the methodology assessments should never
compares to the rest of the and user manual within this take place in isolation and
company’s portfolio. should always complement
document for optimal results and other existing sustainability
a smooth process. Further, we and business metrics.
recommend to involve different
THE CTI ONLINE TOOL experts from the company in the Neutrality
implementation of CTI’s seven Refrain from prioritizing
Data is a crucial ingredient in steps rather than attempting to specific materials over one
CTI. This includes data that may complete the tool in isolation. another insofar as they all
be readily available, as well as contribute to the circular
data hidden in pockets of the The CTI online tool guarantees economy.
company or even data that exists data security and confidentiality9
outside your company with and we are continuously
supply chain partners. improving it for user experience
Obtaining this data and and actionable and meaningful
performing the calculations outcomes.
constitute the most resource-
intensive parts of the framework.

Circular Transition Indicators V4.0 Metrics for business, by business 12

A value chain effort

The circular economy requires CTI is a catalyst in the initiation of

collaboration. The entire value cross value chain conversations. SHARED PRIORITIES
chain must work together to It provides a process for value
A Dutch telecom company
maximize the value created for chain partners to collectively
engages with its supplier
every unit of resource. pursue shared goals. through a Circularity
Manifesto, ensuring upstream
Figure 1 illustrates a simplified The CTI online tool helps value chain partners conduct
value chain. The further a companies obtain required their business in the same
company is from the red arrows, data from value chain partners circular way the telecom
the more difficult it can be to without raising privacy or company does.
obtain information. confidentiality concerns.
Source: KPN Circular
Manifesto and Appendix
2017

Figure 1: Simplified representation of the value chain recovery system

Biosphere

Biodegradation /
composting

Renewable
resources Collectors and (re)processors

Discard Discard Discard Discard

Recycle Remanufacture
& repurpose

Material Distribution
Manufacturers Users
producers channels

Extraction of Incineration or landfill

non-renewable virgin resources Recycle Reuse / repair / refurbish Reuse to be minimized
to be minimized (second hand)

Circular Transition Indicators V4.0 Metrics for business, by business 13

The CTI methodology logic

CTI is based on material components and materials at MATERIAL FLOWS

flows through the company. a functional equivalence (e.g.,
By analyzing these flows, the by designing for disassembly, Material flows can include
company determines its ability repairability, recyclability, etc.) nutrients, compounds,
materials, parts, components
and ambition to minimize or that they are biodegradable? or even products. For
resource extraction and readability, this report refers to
waste material. It entails the all of these as material flows.
assessment of the flows within OUTFLOW – ACTUAL
RECOVERY RECOVERY
the company’s boundaries at
three key intervention points: How much of the outflow does
Recovered refers to the
technically feasible and
the company actually recover? economically viable recovery
INFLOW of nutrients, compounds,
The outflow includes products, materials, parts, components
How circular are the resources, by-products and waste or even products (depending
streams. Companies can on the organization) at the
materials, products and parts same level of functional
sourced? improve actual recovery rates equivalence through reuse,
through closed loop business repair, refurbishment,
models or mandatory or repurposing, remanufacturing,
OUTFLOW – RECOVERY voluntary open loop recovery recycling, biodegradation
POTENTIAL scheme efforts. (including composting).

How does the company The results will illustrate how

design its products to ensure effectively a company closes
the technical recovery of the loop.

Figure 2: Illustration of material flows

w
Ci

flo
rc

la CO M PA NY B O U NDA RY
ut

ri ro
u

nfl la
ow cu
C ir

Linear inflow Linear outflow

L a n d fi l l
non-renewable non-recoverable i n c i n e ra t i o n
virgin resource products and waste streams
% % %
circular re c ove r y ac t u al
inflow p ote n ti al re c ove r y

%
circular
outflow

% material
circularity

Circular Transition Indicators V4.0 Metrics for business, by business 14

The indicators
Any company, regardless of size, Assessments start with the Impact of the Loop is a new
sector or position in the value completion of the full Close the module that helps companies
chain, can use this framework. Loop module. Companies may measure the impact of circular
As such, the selection of then calculate indicators from strategies on their sustainability.
indicators relevant for any Optimize the Loop and Value the
business will vary. CTI provides Loop for additional insights.
a menu of indicators, some of
which are optional.

Close the Loop Optimize the Loop Value the Loop Impact of the Loop
% material circularity % critical material circular material GHG impact
% water circularity % recovery type productivity nature impact
% renewable energy actual lifetime CTI revenue
onsite water circulation

Circular Transition Indicators V4.0 Metrics for business, by business 15

1. CLOSE THE LOOP
This module calculates the company’s effectiveness in closing BIOLOGICAL CYCLE
the loop on its material flows. GUIDANCE

This can be assessed on the level of the company, a business unit, CTI includes specific
guidance for the assessment
facility or product (group) level. of materials in both technical
% material circularity and biological cycles.
SEPARATE INDICATORS
A company’s performance in closing the loop is expressed in %
material circularity, which is the weighted average between % circular The resulting outcomes from
inflow and % circular outflow, as outlined in the formula structure the Close the Loop module
are:
below. The % circular inflow is determined by the % non-virgin content
and % renewable content (sustainably grown bio-based sources). The 1. % material circularity,
% circular outflow is determined by the % recovery potential (which which is the weighted
is focused on design) and the actual recovery. These three pillars average of:
address different aspects of the business: procurement for inflow, % circular inflow
% circular outflow
design for potential recovery and business model innovation (closed)
and legal and partnerships (open) for the actual recovery. 2. % water circularity
% circular water inflow
% circular water outflow
3. % renewable energy

Figure 3: % material circularity

% material circularity
company/business unit/production facility​
% circular inflow total % circular outflow total
(% circular inflow A * mass A)​ (% circular outflow D * mass D)​
+ (% circular inflow B * mass B)​ + (% circular outflow E * mass E)​
+ (% circular inflow C * mass C)​ + (% circular outflow F * mass F)
total mass A+B+C​ total mass D+E+F​

company/business unit/facility level

product/component/ material level

% circular inflow X % circular outflow X

% renewable​
or​ % recovery potential X * % actual recovery ​
% non-virgin content

% recovery potential X % actual recovery X

YES - full potential => 100%​ standard recovery rates​
NO - no potential => 0%​ or regional recovery rates​
some potential => X% or manual recovery rate + justification
or % biodegradable

Circular Transition Indicators V4.0 Metrics for business, by business 16

Water circularity
WORKING GROUP FOR
METRICS FOR WATER
In addition to material flows, we consider the circularity of freshwater CIRCULARITY
to be an important element of the circular economy. What sets water
apart from other materials and resources is the scale of the relevant WBCSD and BIER (Beverage
Industry Environmental
ecosystem. Where materials can circulate in a global system, it is
Roundtable) combined
necessary to assess water circularity on a local level for a water their expertise to develop
catchment area or local watershed. The purpose of water circularity a solid and meaningful set
is to lower freshwater demand and ensure water resource availability of indicators to assess the
for all users and the environment. Circularity of water is therefore circularity of water at the
determined through the % circular water inflow and % circular water facility level. Supplementary
guidance and a water
outflow, which in turn depend on local water conditions. circularity metrics tool that
provides more granular detail
and guidance on the water
indicators are available from
Context-
% water circularity WBCSD and BIER.
based % circular water inflow + % circular water outflow
indicators Consult the water metric
2
guidance and tool.

% circular inflow total % circular water outflow

(discharge, restore)
Q total circular water withdrawal Q total circular water
= x 100% discharge
= x 100%
Q total water withdrawal Q total water withdrawal

In addition, the water circularity section offers an internal-facing

indicator focusing on internal facility circulation through reuse and
recycling.

Onsite water circulation

(reuse & recycle)
Internal indicator​
Q water use - Q total water withdrawal
= +1
Q total water withdrawal

Renewable energy

The circular economy requires the transition to renewable energy.

As most companies already have metrics in place to measure
renewable energy consumption for business operations, CTI
considers energy separately for which companies can use this
existing data. The % renewable energy calculation is as follows:

% renewable energy
renewable energy (annual consumption)
X 100%
total energy (annual consumption)

Circular Transition Indicators V4.0 Metrics for business, by business 17

2. OPTIMIZE THE LOOP
This module provides insights on material criticality, CASCADING
resource-use efficiency and higher value recovery strategies. CTI includes a model for
This module and its indicators are optional. cascading in the technical
sphere and one for the
biosphere.
Critical materials
The % critical inflow highlights the share of the inflow considered
critical. Companies can refer to internal critical materials lists or existing
public lists such as those compiled by the European Commission
or the United States Geological Survey.10 This allows companies
to assess the risk level of specific material flows and to prioritize
accordingly.

The calculation is:

% critical inflow
mass of inflow defined as critical
x 100%
total mass of linear inflow

Recovery type

The other indicator of the Optimize the Loop module, % recovery type,
focuses on how the company recovers outflow and recirculates it into
the value chain. Recovery type is applied to % actual recovery.
The results provide a breakdown of the recovered outflow in shares
reused/repaired, refurbished, remanufactured recycled or biodegraded.
The CTI online tool automatically generates this breakdown based on
the Close the Loop data entered.

Depending on the value chain position of the company, the possibilities

for optimization in recovery loops may vary.

Figure 4: Recovery types and retained value

Re c yc l e

Re c yc l e Re m a n u f a c t u re

Re c yc l e n u fa
c t u re o r re f a i r o r re f u r b i s
ma
urb Re p h
Re ish

Re c y c l e Re u s e o r Re u s e o r Re u s e o r
re p a i r re p a i r re p a i r

Material Retail /
Manufacturers Users
producers distribution

Low RETAINED VALUE High

Circular Transition Indicators V4.0 Metrics for business, by business 18

Lifetime extension strategies such as reuse, refurbish or remanufacture
are considered to be recovery strategies that retain higher value as NOTE
they allow companies to preserve the economic value embedded in
products and materials, slow down resource flows, and reduce waste In designing products for
and negative environmental impacts. While recycling is a circular longevity and exercising
strategy under recovery type, it does not lead to lifetime extension. product lifetime extension
strategies, companies should
As a preference, lifetime extension strategies should be considered
ensure that these do not do
above recycling whenever possible. significant harm to efforts to
mitigate and adapt to climate
To encourage companies to consider lifetime extension strategies
change, the sustainable use
whenever available, CTI v3.0 provides the % recovery by lifetime and protection of water and
extension sub-indicator to help companies track their performance marine resources, pollution
across strategies aimed at retaining higher value: reuse, refurbish and and prevention control,
remanufacture. and the protection and
restoration of biodiversity
and ecosystems. For more
Actual lifetime
background, companies
Longer design lives and the lifetime extension of products contribute may refer to the European
to slowing down the overall flow of resources, reducing environmental Commission’s Do no
impacts and the production of waste while preserving the economic significant harm (DNSH)
value embedded in products and materials.11 principles or other similar
regional, national, sector or
CTI recognizes design for longevity and lifetime extension of products industry directives.
as a circular practice. Designing durable products and materials and
implementing strategies to extend their lifetime once they become
obsolete leads to higher circularity and value retention through the life EXAMPLE
cycle of materials and products.
A computer mouse is
A product’s lifetime is intended as the duration of the period that starts designed to last 6 years
at the moment a product is released for use after manufacturing or but the average lifetime of a
recovery and ends at the moment a product becomes obsolete.12 computer mouse is 4.5 years.
Its durability, intended as the ability to “function as required, under The actual lifetime indicator
specified conditions of use, maintenance and repair, until a limiting in CTI will provide a positive
event prevents its functioning”, drives longer product lifetime.13 score for companies whose
computer mouse stays in use
A product’s technical lifetime and functional lifetime enable its demonstrably longer than the
durability. The technical lifetime is the time span or number of usage industry average. (Lifetime
cycles for which a product is considered to function as required, under data source: Product Life
defined conditions of use, until a first failure occurs. Functional lifetime Database, International Living
is the time a product is used until the requirements of the user are no Future Institute).
longer met, due to the economics of operation, maintenance and repair
or obsolescence. While the technical lifetime is part of the intrinsic
properties of the product, the conditions created around the product
determine its functional lifetime.14 NOTE

For more context on product

lifetime, its impact on slowing
the loop and relevant policies
and strategies refer to the
Product Lifetime Extensions
Working Group’s reports
under UNEP Circularity
Platform.

Circular Transition Indicators V4.0 Metrics for business, by business 19

These conditions facilitate the repairability, upgradability and reusability
of products extending their useful life. We have developed CTI’s actual
lifetime indicator with the intention of driving companies to develop an
understanding of a product’s average life duration.15 This means the
duration of life that the product actually experiences, on average, rather
than design life or warranty period.
The actual lifetime indicator provides a higher score for products that
stay in use for longer than the industry average and is calculated as
follows:

actual lifetime
product actual lifetime
=
average product actual lifetime

Companies can measure lifetime in number of years OR number

of use cycles.

Circular Transition Indicators V4.0 Metrics for business, by business 20

3. VALUE THE LOOP
This module illustrates the added business value of a company’s
circular material flows. The indicators are optional.
While the Close the Loop and Optimize the Loop modules focus on
material flows, the Value the Loop module goes beyond material
flows to address how circularity creates maximum value with
minimum resources.

Circular material productivity

This indicator illustrates the company’s effectiveness in decoupling
financial performance and linear resource consumption. Companies
can calculate circular material productivity by dividing revenues
generated by the mass of linear inflow as considered in the Close the
Loop module.

The calculation is:

circular material productivity

revenue
total mass of linear inflow

The greater the circular material productivity, the better a company

is at decoupling financial performance from linear resource
consumption. Insights stem from looking at historic data to
understand the evolution of material productivity and by monitoring
progress over time to demonstrate a decoupling (or increasing
dependency).
CTI revenue
Financial institutions increasingly recognize the value that the circular
economy presents in terms of risk mitigation, financial opportunity
and positive environmental and social impacts. A solid grasp of value
created through circular investments allows investors to proactively
recognize and reward companies that make progress on circularity.
However, the lack of a consistent methodology to measure circular
performance in terms of both resource efficiency and its associated
financial benefits has served as a barrier in scaling up circular
investments.
Using the Close the Loop results, a company measures its circular
CTI revenue by multiplying the sum of a product (group) or business
unit’s weighted average of the % circular inflow and % circular outflow
and multiplying that by the revenue generated by that product (group)
or business unit. As outlined under Close the Loop, calculate both %
circular inflow and % circular outflow based on weight of the material
flows.
In other words, a company’s CTI revenue is its revenue adjusted for
the % material circularity of its product portfolio. To calculate CTI
revenue for a product:

CTI revenue (product)

(% circular inflow + % circular outflow) X revenue
2

Circular Transition Indicators V4.0 Metrics for business, by business 21

To calculate CTI revenue for a business unit or company, sum up all
product CTI revenues calculated:

CTI revenue (company)

CTI revenue A
+CTI revenue B
+CTI revenue C +...

The greater the CTI revenue, the better a company can generate
revenues from its circular products/business. This metric also reflects
decoupling as revenues increase from circular flows.
The methodology is currently based on material circularity and does
not provide revenue measurement for services and digital solutions.

Circular Transition Indicators V4.0 Metrics for business, by business 22

4. IMPACT OF THE LOOP
CTI v4.0 provides an
Transitioning to a circular economy will be key to addressing the approach to understanding
world’s most pressing challenges: the climate emergency, the loss the impact of circular
strategies on GHG emissions
of nature and growing inequality.16
reduction targets. It includes
a methodology to understand
Moving to a circular economy offers numerous benefits for both the circular sourcing impact
people and planet. It has the potential to significantly reduce on GHG emissions for reused,
greenhouse gas emissions and pressure on nature by decreasing refurbished, remanufactured
the need for new production and reducing energy consumption. and recycled inflow and
It can promote social and economic equity by creating new jobs, the recovery of technical
increasing access to resources and to affordable and sustainable outflows versus linear
products. Shifting to circular approaches may involve trade- disposal methods (landfilling/
offs that companies must be aware of to maximize benefits and incineration).
minimize any negative impacts. By combining impacts on GHG
emissions and land use, for example, companies can capture trade- Along with climate impact,
offs of switching from oil-based to bio-based inputs. companies can now start to
understand how their circular
performance impacts nature.
The fourth module, called Impact of the Loop, aims to help Land use is the biggest driver
companies understand the impact of circular strategies on of nature loss. Companies
achieving sustainability objectives related to climate, nature and can help halt nature loss by
equity. This module measures the difference in impact between switching to circular sourcing
the company’s current material circularity performance versus strategies.
improved circularity performance, striving to achieve 100% material
circularity, which – in CTI – means using 100% secondary or This indicator allows for
comparison between different
renewable materials and enabling 100% reuse, remanufacturing
sourcing strategies to identify
or recycling of materials and products into a next cycle through the most effective circular
design and recovery strategies. CTI v4.0 includes methodologies to actions in reducing land-use
measure the impact of circular strategies on climate and nature. The impacts.
next version of the CTI report will address equity.

GHG impact
Greenhouse gas(GHG) impact aims to provide companies with a
high-level indication of the GHG emissions savings they may obtain
by applying circular strategies. Circular strategies include the use of
secondary or renewable materials as inflow and enabling recovery
via “higher value retention” recovery such as reuse, refurbish and
remanufacture or recycling of the outflow (products and materials).
Companies can use this information to better understand GHG
emissions savings, evaluate trade-offs and help prioritize circular
improvements.

CTI v3.0 focuses on material inflow impact on GHG emissions by

measuring the savings of sourcing a higher percentage of recycled
content for technical materials. It provides guidance for companies
to determine the difference in material carbon footprint of the
current amount of recycled materials used, compared to a situation
in which the inflow is composed of 100% recycled materials.

CTI v4.0 expands the GHG impact focus for circular inflow, to provide
guidance on the impact of sourcing reused/refurbished products and
remanufactured components on a company’s scope 3 emissions
accounting. Additionally, it addresses the impact of renewable
(sustainably grown) biobased materials versus non-renewable
(conventionally grown) biobased materials on GHG emissions. For the
GHG impact of circular outflow, CTI v4.0 focuses on the difference in
the impact on the material carbon footprint of enabling higher value
retention recovery (reuse, refurbish, remanufacture) and recycling,
versus linear disposal methods (landfill, incineration).

Circular Transition Indicators V4.0 Metrics for business, by business 23

 Linear inflow Linear outflow
L and fill
non-renewable non-recoverable incinerat io n
virgin resource products and waste streams
% % %
circular re c over y actual
inflow potenti al recover y

CTI v4.0 provides an approach to understanding the impact of

circular strategies on GHG emissions reduction targets.
% It includes The system model “Allocation,
a methodology to understand the circular sourcing
circular
outflow
impact on GHG cut-off by classification”, or
emissions for reused, refurbished, remanufactured and recycled the cut-off system model,
inflow and the recovery of technical outflows versus linear disposal is based on the recycled
methods (landfilling/incineration). % material content, or cut-off, approach.
circularity In this system model,
wastes are the producer’s
The material flow illustration in figure 5 presents the approach responsibility (“polluter pays”),
developed in both CTI v3.0 and CTI v4.0 and provides an overview and there is an incentivisation
of material carbon footprint savings that companies may obtain by to use recyclable products,
applying circular strategies. that are available burden free
(cut-off).

Learn more: https://

ecoinvent.org/the-
ecoinvent- cut-off

Figure 5: Material carbon footprint savings of circular strategies

O u t o f sco pe
fo r CT I v 4 . 0
N o d i ffe re n ce

Fre e o f p rod u c t i o n E m i s s i o n b u rd e n fo r
e m i s s i o n s b u rd e n , u se r h i g h e r va l u e re te n t i o n
i s a l l oc a te d h i g h e r va l u e p roce s s i n g i s a l l oc a te d
re te n t i o n p roce s s i n g to n ex t u se r ’ s i n fl ow.
emissions
le
Re

yc
ne

)
ue
-c

ab o
o Bi
w

le C O M PA N Y B O U N DA RY E m i s s i o n b u rd e n fo r
al

Fre e o f p rod u c t i o n n- v
N

e m i s s i o n s b u rd e n , u se r vi
rg h er re cyc l i n g i s a l l oca te d
in ig to n ex t u se r ’ s i n fl ow
i s a l l oc a te d re cyc l i n g (hi (h
al )
p roce s s e m i s s i o n s ghe nic ng
No r val
ue) Te c h cli
n -v cy
irgi l ( re
n ( re c
yc l e d) Te chnica

L i n e a r p roce s s Linear inflow L a n d fi l l

i n c i n e ra t i o n
emissions non-renewable Landfill / incineration emissions
virgin resource

Circular Transition Indicators V4.0 Metrics for business, by business 24

To determine the GHG impact of circular flows, CTI adopted
the “Allocation, Cut-off by classification” system model,17 also EXAMPLE
referred to as “recycled content method” in the GHG Protocol.18
In this methodology the producer of a material or product is GHG impact – Circular inflow
fully accountable for the GHG emissions of the production of In a laptop the average
that material or product. The non-virgin material part or product amount of recycled aluminum
becomes available free of burden emissions for the user of the is 60%. Based on the weight
non-virgin material or product in the next production cycle. The of the aluminum used in the
user of the non-virgin material or product only accounts for the laptop and the emissions
GHG emissions related to the preparation for reuse or recycling factor per kg for both the
processes needed. The producer also accounts for the GHG processes related to virgin
emissions of any incineration or landfilling of not recoverable (mined) and non-virgin
material or waste. The producer of the materials or product is (recycling from scrap
aluminum sourcing, there is an
encouraged to make products and materials available for a next
emissions savings of 15% on
production process. aluminum when the amount
of recycled content increases
In this approach, users and producers of non-virgin materials from 60% to 100%.
benefit from materials that are free from the burden of production
GHG impact Circular outflow
emissions while the producers of primary materials benefit from
incentivizing product and material recovery to avoid high landfill and The manufacturer of an
incineration emissions. aluminum laptop cover
produces two types of laptop
Figure 6: Allocation of emissions scope for circular versus linear covers. One that is designed
scenarios to be fully refurbished and
used in a second cycle, one
Prod uce r 1: cycle one Prod uce r 2 : cyc l e t wo that is not designed for reuse
and can only be landfilled at
end of life. The two recovery
Prod u c t io n Re fur b i s h i n g strategies are compared.
C i rcul a r

Prod uc t A : Prod uct C :

e missio ns
Product tha t ca n
e m is s i o n s
Re f u r b ish e d Based on the “Allocation,
be refur bi shed p ro d u c t Cut-off by classification”
system model, the aluminum
in strategy one becomes
available free of primary
production emission burden
Prod u c t io n L andfi l l i n g for the user of the refurbished
Prod uc t B:
laptop cover. In that case,
Li n e a r

e missio ns e m is s i o n s
Product tha t ca n
onl y be l a ndfi l l ed the user is only allocated
emissions associated with
the refurbishment process on
the inflow side. The emissions
A lloc a te d e mis sion scope
of strategy two (landfilling),
are fully accounted to the
Circular process producer of the aluminum
laptop cover, since the
product could not be used in
Producer 1 is only responsible for the emissions of the primary a second cycle, leading to a
production when the product is refurbished and used in a second linear disposal method.
production cycle. This second production cycle leads to Product C
(refurbished product).

Producer 2 is only responsible for the emissions of the refurbishing

process for the refurbished product (cycle two). Due to the use of
the “Allocation, Cut-off by classification” methodology, Producer 2
is not responsible for the production emissions of production
cycle one.

Linear process

Producer 1 is allocated the emissions of the production of Product

B. Producer 1 is also allocated the landfilling emissions of Product
B since the product was designed in a way that could not be
refurbished and used again in a second use cycle.

Circular Transition Indicators V4.0 Metrics for business, by business 25

Nature impact
Key drivers of nature loss
Biodiversity is declining at an unprecedented rate. Estimates show
that extinctions are currently occurring a thousand times faster The key drivers that lead to
than the “natural” extinction rate.19 Some 90% of nature loss is due nature loss are: land- and
to the extraction and processing of natural resources.20 The third sea-use change, direct
principle of the circular economy is to regenerate nature.21 This can resource exploitation, climate
be achieved by applying regenerative production practices, extending change, pollution and invasive
product lifetimes, reducing waste and resource extraction.22 Through species.25 On a global scale,
this principle, the circular economy can reverse and halt nature loss, land-use change is the
leaving more room for nature to thrive. Circular interventions have the biggest and most direct driver
potential to recover the world’s biodiversity to year 2000 levels by of nature loss. CTI already
2035.23 addresses water use and GHG
emissions. Future updates will
This indicator focuses specifically on impact from land-use change. include other key drivers to
Land-use change is the most impactful driver of nature loss and complement this indicator.
includes land occupation, land-use change, land degradation and
deforestation impacts.24 This indicator will provide an initial screening
of land-use impacts from the material extraction and cultivation
related to a company’s material inflow. It helps companies understand
how their circular performance impacts nature by measuring the
land-use impacts of their current inflow and potential improvement
by shifting to circular sourcing. The indicator is especially relevant
for companies that are highly dependent on materials that have a
significant contribution to negative impacts on nature. Measuring What it is (not)
land-use impacts is in line with the vision of a nature-positive world by This indicator measures land-
2030 and complements ongoing efforts among WBCSD members use impacts associated with
to develop the Roadmaps to Nature Positive that will deliver a tailored a company’s material inflow,
sectoral framework for business accountability, ambition and support focused on measuring extent
the implementation of the Global Biodiversity Framework. of land used, the intactness
of the biodiversity on the land
There are three dimensions to consider when estimating the impact and the significance of land
of land-use change on nature: the extent of land use, the condition of for biodiversity. This indicator
the land used and the significance of the land (Figure 7). can be used for technical
materials and biological
resources.
For simplicity and usability,
the scope of this indicator
is limited to the extraction
Figure 7: Key components of land use impacts to calculate impact on and cultivation stage of
nature sourced materials only.
This stage has the most
impactful land-use impacts.
This indicator excludes land
use of other stages along
the value chain, such as
Significance processing manufacturing or
Ex t e nt Co nditio n
The g eog raphical The quantity or the
Th e “ va lu e ” of th e
biod ive rs it y,
distribution or recovery. It also
volum e of h abitat a m o u n t o f b i o d i ve rs i t y
p re se n t
re pre se n te d by “t ype s ”
of biod ive rs it y pre se n t
excludes toxicity or other air,
a n d h ow s ign ifica n t th e ir
los s wou ld be globa lly
soil or water emissions that
negatively impact nature.

E s t i mate d phys ic al ex tent E stim a ted ch a nge in E s ti m ated g l o bal

of l an d t ran s forme d or condition of la n d rela tive s i g n i fi c an ce o f l an d fo r
occ u pie d, base d on to in ta ct sta te, b a sed g l o bal bi od i vers i t y, based
vol u me of raw commodit y on p ra ctices. o n i ts i m po r tan ce fo r
an d yie ld dat a . th reaten ed s pec i es .

Circular Transition Indicators V4.0 Metrics for business, by business 26

EXAMPLE/S
SBTN & TNFD
Consider a company whose material inflow consist of aluminum to
produce laptops. The company analyzes the land-use impacts of their Understanding and
inflow in 2022, producing 10 million laptops. The impact on nature addressing land-use impacts
will depend on how the aluminum is produced and from where the is a priority for alignment
with voluntary corporate
company sources it. For example:
biodiversity frameworks
such as the Science-based
• Scenario A. Virgin materials: The company produces laptops
Targets for Nature by the
using virgin-sourced aluminum derived from bauxite. Bauxite is Science Based Targets
typically mined in large open pits, resulting in impacts on nature Network (SBTN) and the
due to the transformation and occupation of land for mine shafts Taskforce on Nature-Related
and storage of mine tailings. Moreover, these mines are often Financial Disclosures
located in places that are globally significant for biodiversity (i.e., (TNFD). For example, SBTN
has recently published draft
home to threatened species and high-integrity ecosystems) such guidance on developing
as Brazil, Guinea or Australia. science-based targets
for metric can support
• Scenario B. Recycled material: In contrast, if the company companies to understand
produces laptops using recycled aluminium, the recycling whether they have material
process entails a significantly lower change in the extent of land impacts on land and
used since the material is an input in the recycling process. conduct an initial materiality
assessment for products and
commodities.

Circular Transition Indicators V4.0 Metrics for business, by business 27

The technical and biological
recovery cycles
The circular economy recognizes depicted on the left side of
BIOLOGICAL CYCLE
two distinct sides, as shown the graph. They circulate back GUIDANCE
in Figure 8. It is possible to into the biological cycle at their
recover technical materials end of life for the reuse of their CTI offers extensive guidance
through the technical cycle nutrients for a new cycle. on how to understand both
biological and technical
by means of different loops: It is important to note that
cycles and what that means
maintenance and repair, reuse bio-based resources are not for the circularity of the
and redistribution, refurbishment unlimited in supply and need material flows.
and remanufacturing, and finally to originate from sustainably
recycling. managed sources.

Bio-based resources follow

a different recovery path, as

Figure 8: Technical and biological recovery cycles

TECHNICAL
Mining & materials MATERIALS
Farming & manufacturing
collection

BIOLOGICAL Materials & parts

Biochemical
MATERIALS feedstock
Recycle
Product manufacture
Soil Refurbish &
restoration remanufacture
Services provider
Reuse &
redistribute

Cascades
Biogas
Maintain
Consumer User

Anaerobic
digestion &
composting
Collection Collection

Extraction of
biochemical
feedstock
Energy recovery Leakage

Landfill

*Adapted from the Ellen MacArthur Foundation: https://www.ellenmacarthurfoundation.org

Circular Transition Indicators V4.0 Metrics for business, by business 28

The classification of technical materials and biological
resources
For optimal consistency between different circularity
measurement frameworks, the classification of materials
in either cycle draws from the Ellen MacArthur Foundation:

Materials suitable for the technical cycle

Those that companies can use, reuse/redistribute, maintain/

prolong, refurbish/remanufacture or recycle. This includes all
inorganic and fossil materials, such as metals, plastics and
synthetic chemicals, as well as bio-based materials designed
to be used within the technical cycle. Note that this category
also includes materials of biological origin used as reactants in
chemical processes and that form the basis of another material
or product that behaves as a technical material.

Materials suitable for the biological cycle

Those that the company consumes or otherwise safely

recovers into the biological cycle for conversion into nutrients,
fibers or non-nutrient-rich materials in the next cycle.

Circular Transition Indicators V4.0 Metrics for business, by business 29

The CTI process cycle

The framework outlines seven However, repeating the cycle

COMPATIBILITY
process steps that cover one regularly allows the company to
assessment cycle. Running the monitor progress in its circular This process step approach
assessment for the first time will transition. is adapted from and
be informative and insightful. consistent with other industry
frameworks, like the Natural
Capital Protocol.

Figure 9: The process cycle

1. SCOPE
Determine
the boundaries

7. APPLY 2. SELECT
Plan and act Select the
indicators

3. COLLECT
6. PRIORITIZE
Identify
Identify sources and
opportunities collect data

5. ANALYZE 4. CALCULATE
Interpret Perform the
results calculations

Circular Transition Indicators V4.0 Metrics for business, by business 30

Getting started

If you are interested in learning more and/or potentially using CTI and
KEEP IN TOUCH
the online tool to start calculating your company’s circularity, we have
a few recommendations. These are the ways to stay
informed or involved.
It may seem like a challenging exercise, but there are many free Stay informed
resources available to you to facilitate the process. We recommend Regularly check www.wbcsd.
the following: org/ctice for updates on the
framework.
1. Review the user manual for more instructions on how to find data,
interpret outcomes and convert insights into action (see page 33). • Sign up for CTI circular
and receive notifications
2. Visit the CTI Academy at www.wbcsd.org/ctice to watch webinars, on framework updates.
access case studies and sign up for upcoming events like training
• Keep an eye on the
sessions and other learning opportunities.
events calendar for
3. Then sign up for your free Essential CTI Online Tool license at planned webinars and
www.ctitool.com to help you start your assessment. training opportunities and
sign up.
4. Start a simple and small scoped test assessment, something you
Get involved
may already have the data for. Share your insights and
ideas through the feedback
functionality in the CTI online
tool www.ctitool.com
Actively help shape future
CTI developments by joining
WBCSD and the Circular
Transition Indicators project.

Circular Transition Indicators V4.0 Metrics for business, by business 31

Part 2.
Circular Transition Indicators:
User manual V4.0

Circular Transition Indicators V4.0 Metrics for business, by business 32

 1 Scope
Determine the boundaries
Before choosing indicators from the indicator menu, we recommend
QUESTIONS
planning your circularity assessment to ensure you:
• Where do I start and what
are my opportunities?
• Invest your time in finding the right data sets for the right reasons; • Which business unit is the
• Know what insights you are looking for in the outcome of the most circular and how can
assessment; we adopt cross-learnings?
• How do I assess whether
• Have a plan for how you can take them forward.
my circular activities are
good for my business?
Starting question: What is the intent for the assessment?
AUDIENCE
Consider the following questions in setting the objectives:
Who do we want to talk to about
this: the board, our employees,
• Why is circularity important for the company? our suppliers, our clients? And
• Which questions do we want to answer by doing this assessment? what do we expect from them
after we present our findings?
• Who is the audience of the assessment’s outcomes and insights?
What do we want this audience to do with these insights and FOCUS MATERIALS
information? What other questions are they likely to ask after This mass-based
seeing the results? methodology presents a
• What business unit, product group or even specific materials risk of overlooking potential
should we focus on to start with? Where could impact drive optimal in material streams that are
inherently light in weight (e.g.,
value for all stakeholders? plastics and packaging). This is
the moment where your team
Stakeholder dialogue and collaboration here may be valuable. Once the should determine any material
streams you want to put extra
objectives are set, use these questions to establish your scope: focus on to ensure you capture
opportunities.
1. What level of the business do we assess?
You can assess the full company, but also specific parts of the EXCLUDED FLOWS
company, such as a business unit, production facility or product For manufacturing companies,
the relative mass of operational
line.
materials (e.g., office supplies)
2. What is the timeframe? as compared to production
A yearly timeframe consistent with annual financial cycles will be resources may be negligible.
a natural choice. However, it could be useful to use a production It could make sense for such
cycle or another more meaningful timeframe (such as one that is a company to decide to not
include such relatively small
relevant to the construction sector or for capital equipment). Give flows in the assessment.
this consideration some serious thought and choose something
that complements the other scope parameters.
3. What do we include and exclude?
For most companies, it will be extremely difficult to get all data on
100% of all material flows. This means that you might not include
some flows in the assessment or that you may have to use proxies
and assumptions. The company is free to set these proxies,
assumptions and excluded streams, but must carefully document
and fully disclose them if it intends to share the results.

Circular Transition Indicators V4.0 Metrics for business, by business 33

 2 Select
Select the indicators
Once your company understands its objectives, CTI offers a menu of
QUESTION A
indicators that enable the company to answer the questions from the
scoping step. How can two business units
learn from each other’s
Close the Loop circularity performance?
A company’s ability to close material loops sits at the heart of the Running the assessment for
framework. both business units can help
compare them and allow
Consequently, companies start their assessment with these indicators: for the replication of best
• % circular inflow practices across units.
• % circular outflow QUESTION B
• % water circularity How can we present
the circular business
• % renewable energy performance to our CFO?
Circular material productivity
Optimize the Loop can help determine the
financial and economic
These indicators illustrate how companies perform in lowering performance of circular
risks and maximizing high-value recovery beyond closing material business, enabling
loops. communication with internal
The module includes two indicators: stakeholders.
• % critical materials QUESTION C
• % recovery type Which materials could
- % recovery by lifetime extension provide a starting point for
our circular procurement
• Onsite water circulation (facility reuse and recycle) strategy?
• Actual lifetime % critical materials gives an
indication of which materials
the organization could prioritize
Value the Loop to reduce its supply risks.
This module provides insights into the value the circular business
creates.
It connects the material flow indicators with conventional financial
metrics. Indicators included in this module are:
• Circular material productivity
• CTI revenue
While selecting your indicators, we recommend considering each
indicator carefully and documenting why you have chosen to assess
each one, as well as why you have excluded any.

Circular Transition Indicators V4.0 Metrics for business, by business 34

Impact of the Loop
This module illustrates the impact that circular strategies may have
on a company’s sustainability targets related to climate, nature and
equity action.
• GHG impact
• Nature impact
- Land use Land use is the biggest and
most direct driver of nature
While selecting indicators, we recommend considering each indicator loss.26 Future updates will
carefully and documenting why you have chosen to assess each one, include other key drivers to
as well as why you have excluded any. capture the complexity of
nature.

Circular Transition Indicators V4.0 Metrics for business, by business 35

 3 Collect
Identify sources and collect data
Data collection is likely to be the most labor-intensive part of the
MFA
process. Some data points might be relatively easy to obtain, while
others will require collaboration with other departments. It is likely that Performing a material flow
companies will have to connect with value chain partners to gather analysis (MFA) could be
the relevant data, particularly on inflow and actual outflow recovery helpful in preparing for a
structured assessment.
numbers. The following is the list of data sets required for each
This would increase
indicator module. the robustness of the
assessment and may be
Close the Loop a good option for some
% circular inflow (per material flow) companies. However, to
optimize accessibility, we
• % of renewable content or % non-virgin content per inflow type have not included it nor
(see guidance on determination on page 44) considered it necessary in
• Mass of each inflow type the framework as a required
process step. Results
% circular outflow (per material flow) from existing MFAs could
• % of the recovery potential per outflow type (see guidance on be valuable to start an
determination on page 46) assessment with.
• Material recovery rates per outflow type: ONLINE TOOL
- Regional recovery rates The CTI online tool helps to
- Sector-specific recovery rates collect data to minimize the
burden of this step.
- Material recovery rates from own buy-back/take-back
contract, partnership system, collection and recovery programs, DOCUMENTATION
etc. (if applicable) When collecting data, we
- Mass of outflow per outflow type recommend to documenting
sources and provide
justification. Uploading this
% water circularity documentation in the tool
will help retrieve data in
• Volume, quality and source of water inflow upcoming cycles and will
• Source vulnerability of water withdrawn enhance the robustness of
the results and institutional
• Volume, quality and source of water outflow memory.
• Local regulatory standard for discharge

% renewable energy
• Renewable energy used (annual consumption)

• Total energy used (annual consumption)

Circular Transition Indicators V4.0 Metrics for business, by business 36

Optimize the Loop DATA QUALITY
% critical flow For CTI Tool users, the online
• A company’s internal critical materials list; The quality of insights gained
• Existing public national or regional lists (e.g., European from CTI depends on the
Commission 30 critical raw materials list or United States list quality of data entered. Data
of 35 critical minerals).27 needs differ depending on the
set scope and the selected
indicators. The main types of
% recovery type data used in CTI are material
inflows and outflows, which
Recovery type per recovered outflow. For example: includes data on the end of
• Reused, repaired, refurbished, remanufactured, recycled for life of the material streams.
products moving in the technical cycle. Data quality includes aspects
covering data completeness,
• Consumption by an organism, extraction of biochemical feedstock, representativeness and
biodegradation, biogas or biomass energy recovery under set precision.28
conditions for products moving in the biological cycle.
• Completeness
All relevant indicators
Onsite water circulation that meet the objective
• Required water volumes per process in the facility. of the assessment are
selected and all material
• Required water quality level per process in the facility. inflows and outflow are
included.

Actual lifetime • Representativeness

The data reflects the
Companies should determine a reference lifetime value, for example same time period
lifetime (in time span OR number of use cycles) of prior product version and geography as
or, if appropriate, an average of at least a few prior products; or the determined in the scope.
lifetime (in time span OR number of use cycles) of an “industry average” • Precision
product, which is either: The data needs to be
• Calculated using a methodology consistent with both life-cycle as precise as possible,
and uncertainties need
analysis (LCA) best practices and with the methodology used to be reviewed and
elsewhere in the company’s CTI response; or documented.
• Obtained from reference literature, taking care to use the most up-
to-date data and, at a minimum, not using data that is too outdated
to reflect the current state of the industry.

Value the Loop

Circular material productivity
• Revenue of assessed part of the business

CTI revenue
• Revenue per product (group)
• Level of circularity per product or product group
(based on the Close the Loop indicators)

Circular Transition Indicators V4.0 Metrics for business, by business 37

Impact of the Loop NOTE
GHG impact For CTI Tool users, the online
Inflow tool provides these values
based on ecoinvent database
• All data points for the % circular inflow indicator v3.8 (cut-off version). In this
case, the factors used are
• CO₂-eq/kg sourced virgin materials global averages based on
• CO₂-eq/kg secondary sourced (recycled) material a market approach where
available. Factored into these
values are the processes
We recommend that the collection of information on the CO₂ of virgin mining (linear),
equivalent for comparison between sourcing virgin and recycled collection and recycling
versions comes from a credible secondary emissions factor (circular) and transport. For
database. an overview of all data points
considered, refer to Figure 10.
If your company has already collected supplier-specific information
on the GHG footprint of both the virgin and secondary material You may also use other
sourcing options, you could use this information instead of collecting credible databases providing
generic factors from secondary emissions factor databases. Pfrom GHG emissions factors
secondary emissions factor databases. Please refer to Figure 10 for related to material production.
the boundaries of the comparison. A list of recommended
secondary emissions factor
databases is available in
WBCSD’s Pathfinder Network
Figure 10: Setting the system boundaries of baseline and circular material guidance (page 31).
flows
1. Setting the system boundaries of linear and circular material flows.

BASELINE Extraction Process L₁ Process L₂ Incineration

/ Landfill

Process S Use Collection

CIRCULAR Collection Sorting Process C₁ Process C₂

Transport must be assessed between each process (linear and circular)

When collecting information on GHG emissions factors, companies

should keep in mind that an exact specification of the material might
not be available in existing databases. In that case, you may use the
GHG emissions factors of a reference material instead.
Bio-based materials can be considered circular if they are renewable.
A criterion of renewability is that the materials are sustainably grown.
Research into the ”sustainably managed” criterion did not provide
supportive evidence of a lower GHG emissions burden compared to
biobased material that is not sustainably managed. As a result, the
material carbon footprint for renewable biobased material is not, by
default, considered to be lower than the material carbon footprint of
conventionally sourced biobased material.29

Circular Transition Indicators V4.0 Metrics for business, by business 38

We recommend CTI users use their company’s own emissions factors
The Waste Framework
or supplier-specific information to determine the GHG footprint of the Directive (Directive 2008/98/
renewable biobased materials used. EC of the European
Parliament and of the
Outflow Council of 19 November
2008 on waste and
• All data points for the % circular outflow indicator repealing certain Directives)
• CO₂-eq/kg preparation for reuse30 presents the basic waste
management principles to be
• CO₂-eq/kg recycling process31
used in the EU. The directive
• CO₂-eq/kg incineration (with/without energy recovery) presents the distinction
• CO₂-eq/kg landfill between ”waste” and
”secondary materials” and
a hierarchy to prioritize the
preferred recovery options.
To structure the data required for the different recovery strategies The aim of the directive is
and support companies in data collection, we adopted the structure to structure the recovery of
of the waste hierarchy (presented in the Waste Framework Directive). emissions factors of different
The waste hierarchy presents the following categories: preparation recovery strategies. It adopts
for reuse, recycling, energy recovery and landfill. Preparation for no further definitions of
reuse activities clusters the reuse, remanufacturing, and refurbishing “waste” or the ”waste status”.
emissions. The hierarchy only provides
a clear structure for different
We recommend that the information on the CO₂ equivalent for emissions factors associated
comparison between linear scenarios (incineration, landfill) and with recovery strategies.
circular scenarios (preparation for reuse, recycling) originate from ( Waste Framework Directive
a credible secondary emissions factor database. If companies (europa.eu))
have already collected company-specific or third party-specific
information on the GHG emissions impact of the presented circular
recovery strategies and linear disposal strategies, they can use this
information instead of collecting generic factors from secondary
emissions factor databases. This provides the CTI user with the
opportunity to use detailed GHG emissions impact data on the
process under assessment and more precisely estimate savings.

Figure 11: Waste hierarchy

Source: European Commission Waste Framework Directive

Circular Transition Indicators V4.0 Metrics for business, by business 39

Nature impact FLEXIBILITY IN CHOICE
OF CONDITION &
The nature impact indicator requires an overview of incoming
SIGNIFICANCE METRIC
materials and products, a necessary step to calculate % circular
inflow, measured in the Close the Loop module. It also requires We recommend using
additional data on land-use type, land-use intensity and sourcing MSA to measure condition
location. This allows for the estimation of the extent, condition and change and the STAR-t score
significance (Figure 7) associated with a company’s inflow. Scores can to measure significance.
be summed across materials for a constituent product or entire value Companies can use
chain. alternatives to these metrics,
e.g., the Ecosystems Health
In general, each dimension requires the following primary data: Index or Ecosystems Integrity
Index, to measure condition
• Extent: change. See Annex II: Choice
- All data points for the % circular inflow indicator of land use metrics for more
information.
• Condition:
- Type (qualitative) based on the raw material type (e.g., natural
forest, plantation forest, cropland, mine or industrial site)
- Intensity (qualitative) based on the specific land use
practices that are in place (e.g. conventional, organic, certified)
• Significance:
- Sourcing location (e.g., country, sub-national region or
precise location)
Companies can differ in their availability of primary data. Table 1 lists
data availability scenarios varying from full primary data availability to
limited data. The table recommends appropriate secondary datasets
that can be used. Contextual datasets must complement all primary
and secondary data.
Contextual datasets are data needed for interpretation, a company’s
own datasets can be used but the following ones are recommended:
• Extent:

- Yield per unit area estimates.

• Global and regional crop yields are freely available
from FAO
• Crop yields per country are freely available from
OurWorldInData
• Land use per unit of agricultural production per country
is freely available from OurWorldInData

• Global rock-to-metal ratios for inorganic materials

estimated by Nassar et al. (2022).32 Land required
for the mine can then be estimated using simple
mass to volume conversions and mine site geometry
assumptions depending on the mine type. See Annex I
for more details.

Circular Transition Indicators V4.0 Metrics for business, by business 40

• Condition:

• Biodiversity loss coefficients, based on Mean Species

Abundance (MSA). MSA is based on the GLOBIO model33
and allows for quantification of biodiversity loss relative
to a pristine condition according to distinct categories of
land-use types and intensities. We recommend adopting
the biodiversity loss co-efficients outlined in Table 1
of the supplementary materials of the Natural Capital
Impact Group’s Biodiversity Impact Metric,34 which is
freely available.
• Significance:

• Extinction risk, based on the Species Threat Abatement

and Restoration (STAR) metric STAR-t score. STAR-t
scores provide spatially-explicit quantitative estimates of
the species extinction risk associated with a given area
of interest. These data are not publicly available and can
be accessed via the Integrated Biodiversity Assessment
Tool Alliance (IBAT) platform or in the forthcoming
country profiles in the WWF biodiversity risk filter.

Table 1: Definitions of data availability scenarios

Data scenario Data source Extent Condition change Significance

Limited data Primary data Circular & linear inflow. Company has no primary Company has no primary data
availability available data on land use practices. on sourcing location.

Secondary Generic yield per unit Precautionary assumption: Precautionary assumption:

contextual data area estimates (e.g., FAO) assume the most intense assume the commodity is
or rock-to-metal ratios form of land use for the sourced from the country with
(e.g. Nassar et al. 2022) commodity and assign the highest Species Threat
to calculate extent. relevant biodiversity loss Abatement Restoration (STAR)
co-efficients. metric score among the five
market-leading countries (or
fewer if they cover 80% or
more of the market).

Moderate data Primary data Circular & linear inflow Qualitative data on land use National or sub-national
availability available specified per country type and intensity. sourcing information.
origin.

Secondary Country-specific yield Biodiversity loss co- Country or regional-level

contextual data per unit area estimates efficients per land use type significance based on 80th
(e.g., OurWorldInData) or and intensity. percentile STAR score35
rock-to-metal ratios (e.g.
Nassar et al. 2022) to
calculate extent.

High data Primary data Circular & linear inflow, Detailed data onsite- Exact coordinates of
availability available site-specific information specific land-use practices. production site.
on origin, extent of land
use known.

Secondary NA Biodiversity loss co- Significance based on STAR

contextual data efficient per land-use type score for 5 km x 5 km pixel of
and intensity. sourcing location.

Note: As per the primary data your company has available for each dimension and additional contextual
data sets and assumptions that can be used according to the scenario

Circular Transition Indicators V4.0 Metrics for business, by business 41

Data compilation process
1. List all raw material inflows for the selected scope used for
calculation of % circular inflow and % material circularity. An
additional step may be to convert the inflow from processed
materials, parts, components or products into raw, unprocessed
minerals or biomass for renewable materials. Conduct this step
internally. However, where precise conversion is challenging, use
approximate figures in line with the scoring card (see section:
calculate).

2. Identify what material inflows are most impactful for nature. Check
the list against the high priority commodity list provided in Table
2 or the SBTN High Risk Commodities List for initial prioritization
screening (please find the latest version online). Note that the
nature indicator can be used for both technical materials and
biological resources. However, we propose this step to identify
the materials that are likely to be most impactful for nature and
thus simplify the process for companies with many different
commodities and sourcing locations in their value chain.

3. Identify data availability based on definitions provided in Table 1

by asking the following questions:
• Is the exact location of production (extraction, mining,
cultivation, etc.) known?
• Are the types of practices used for production known
(e.g., organic vs industrial agriculture, strip vs open pit
mining, any sustainability certifications)?
• For inflow where detailed sourcing information is missing,
is it possible to provide at least the country
of production?

Table 2: Indicative, non-exhaustive, high-priority commodity list

Animal products Crops (annual + plantation) Mineral and fossil fuel commodities

• Cattle (beef, dairy, leather) • Cacao • Bauxite

• Fisheries • Coffee • Coal
• Pork • Cotton • Copper
• Poultry (chicken, eggs) • Maize • Gold
• Sheep (lamb, mutton, wool) • Oil palm • Iron ore
• Pulp and paper • Limestone
• Rice • Oil + gas (inc. plastics)
• Soy • Sand
• Sugar
• Rubber
• Wheat

Note: We will replace this list with the SBTN High Impact Commodity List when released.

Circular Transition Indicators V4.0 Metrics for business, by business 42

 4 Calculate
Perform the calculations
CLOSE THE LOOP
Figure 12 shows the high-level methodology to calculate ASSESSMENT LEVEL
% meterial circularity. CTI can assess the full
company, as well as specific
Figure 12: % material circularity parts of the company,
such as a business unit or
% material circularity production facility.
company/business unit/production facility​
WEIGHTED AVERAGE
% circular inflow total % circular outflow total
(% circular inflow A * mass A)​ (% circular outflow D * mass D)​
The percentage of material
+ (% circular inflow B * mass B)​ + (% circular outflow E * mass E)​ circularity is based on the
+ (% circular inflow C * mass C)​ + (% circular outflow F * mass F)
average of the weight-based
total mass A+B+C​ total mass D+E+F​
circular inflow and circular
company/business unit/facility level
outflow divided by the total
inflow and outflow. In most
product/component/ material level
cases, this will be around
50%/50% but in specific
% circular inflow X
% renewable​
% circular outflow X cases (e.g., high stock) it is
or​ % recovery potential X * % actual recovery X​ necessary to correct that
% non-virgin content
difference by taking the
weighted average.
MATERIAL FLOWS
% recovery potential X % actual recovery X Material flow can include
YES - full potential=> 100%​
NO - no potential => 0%​
standard recovery rates​
or regional recovery rates​
nutrients, compounds,
some potential => X% or manual recovery rate + justification materials, parts, components
or % biodegradable
​ or even products (depending
on the organization).
The percentage of material circularity – the weighted average WATER
between the % circular inflow and the % circular outflow – reflects the
ability of a company to Close the Loop. Water is a unique resource
companies use for different
purposes. Due to its weight
Figure 13: Four main material flows and the quantities companies
use, water may distort the
outcome of the assessment.
Water is therefore not part of
overall % circularity. Rather,
C w
irc C O M PA N Y B O U N DA RY t flo it has its own indicator.
ul
ar ou
lar
infl
ow Circu

Linear outflow
Linear inflow

Both the % circular inflow and the % circular outflow include the
weighted average of the flows’ % material circularity. Therefore, it is
necessary to assess the % material circularity at a flow level.

Circular Transition Indicators V4.0 Metrics for business, by business 43

Figure 14: % material circularity formula
CLASSIFICATION
% material circularity
Depending on the company
company/business unit/production facility​ and its position in the value
% circular inflow total % circular outflow total chain, it may be challenging
(% circular inflow A * mass A)​ (% circular outflow D * mass D)​ to determine the amount of
+ (% circular inflow B * mass B)​ + (% circular outflow E * mass E)​ each of the three streams.
+ (% circular inflow C * mass C)​ + (% circular outflow F * mass F)
The most important
total mass A+B+C​ total mass D+E+F​
distinction here is to separate
circular from linear flows.
WASTE MANAGEMENT
% Circular inflow It may not be possible to
identify whether waste
This indicator assesses the total circularity of inflowing materials:
streams that flow into the
company are renewable or
secondary.
% circular inflow total
Inherently this incoming
(% circular inflow A * mass A)
Circularity

waste is not virgin; therefore,

+ (% circular inflow B * mass B) in this case, companies
+ (% circular inflow C * mass C) can count this material as
total mass of all inflow (A+B+C) non-virgin or secondary. As
long as you account for any
additional flows (like process
This means that % circular inflow needs to be materials), you can consider
determined on a material level the rest of the total as circular.
Circularity

MATERIAL PRODUCTION
On the other end of the value
chain, for material producers
GUIDANCE FOR THE TECHNICAL CYCLE it can be much easier to
identify virgin renewable and
Technical inflow can be either secondary inflows. In this
case companies can account
• Virgin/primary: linear for all remaining inflows as
linear.
These materials have not been used before. For these materials:

% circular inflow V = 0%

• Non virgin/secondary: circular

These materials have been (partially) used in a previous cycle (for
example reuse, remanufacturing, recycling). For these materials

% circular inflow NV = % recovered content

For the % circular inflow it makes no difference whether a material

is considered circular because it is renewable or non-virgin. Both
classifications count as equally circular.

In some cases, inflow can be both renewable and non-virgin. In such

cases, only count the inflow in one of the circular categories to
prevent double counting.

Circular Transition Indicators V4.0 Metrics for business, by business 44

GUIDANCE FOR THE BIOLOGICAL CYCLE
CIRCULAR ECONOMY,
Bio-based inflow can be either REGENERATIVE OR
SUSTAINABLE?
• Renewable: circular The circular economy is a full
restorative model in which
Companies can consider bio-based inflow as circular if it is ecosystems are relieved of
sustainably grown and replenished or regrown through natural their current pressure and
cycles after extraction. It is preferably regenerative and at a minimum managed to have a chance
sustainably managed. (See the glossary on page 105 for complete to restore and become self-
definitions and references.) regenerative systems. As a
result, they will automatically
Inflow may consist of fully or partially renewable content. produce sustainable
In this case: resources.
The renewable inflow in
CTI, for now, focuses on
% circular inflow R = % Renewable content preferably regenerative but
at least sustainably managed
resources.
For companies that have
• Non-renewable: linear the ambition to go beyond
sustainability and want to
CTI does not consider unsustainably managed bio-based resources measure their regenerative
as renewable; therefore they are not circular. For these resources: performance in restoring
ecosystem health, WBCSD
is considering developing an
% circular inflow NR = 0% additional indicator set.
If you are interested
in participating in this
development, please contact
[email protected]

Circular Transition Indicators V4.0 Metrics for business, by business 45

Alternative calculation method % circular inflow
In addition to the bottom-up calculation of % circular inflow, CTI offers DOUBLE COUNTING
a top-down calculation for the % circular inflow, which may be easier Companies should account
for some companies to use: once for inflow that is both
renewable and non-virgin.
It is up to the company
% circular inflow to select which one the
(mass of renewable inflow + mass of non-virgin inflow) x 100% material should qualify for.
total mass of all inflow OUTFLOW INCLUDED
Flows to consider as
The required data set is the same and the outcome of the two outflow include sold product
approaches should be the same as well. (including packaging), by-
product and waste, either in
solid, liquid or evaporated
% circular outflow form. This can include
Like total % circular inflow, this formula assesses the total process or operational by-
product or waste.
circularity of outflowing products, by-products and waste streams:
Circularity

% circular outflow total

(% circular outflow D * mass D) HIGH POTENTIAL, LOW
+ (% circular outflow E * mass E) ACTUAL RECOVERY
+ (% circular outflow F * mass F) Old information and
total mass of all outflow (D+E+F) telecommunication
equipment can often
be partially dismantled,
This means that the % circular outflow needs to be determined per meaning it can have high
recovery potential.
type of outflow.
However, its incineration
% circular outflow reflects the combined effectiveness of your (either with or without
company to: energy recovery) destroys
the materials. They lose their
value and potential for reuse,
1. Design or treat its outflow to be recoverable. For example, the refurbishment or recycling
outflow should be repairable, refurbishable, manufacturable or and will therefore score 0%
recyclable for the technical cycle and biodegradable for the in actual recovery, resulting
biological cycle. This is the % recovery potential. in 0% circular outflow.

2. Demonstrate that the economy or biological cycle recovers

products, by-products and waste streams that leave the company.
This is the % actual recovery.
Circularity

% circular outflow X
% recovery potential X * % actual recovery X

If the materials are neither treated in such a way that they have any
technical recovery potential, nor able to be reintroduced into the value
chain or biological cycle, consider the outflow as linear.

Circular Transition Indicators V4.0 Metrics for business, by business 46

% recovery potential
PANELS
The % recovery potential reflects the ability of the company to design
its outflow to ensure it is technically recoverable through either the Construction panels
produced by glueing metal
technical or biological cycles. and plastic sheets together
will have no recovery potential
For most flows, the typical categorization is: as, after the product’s
technical lifetime, it is not
YES, this outflow is fully recoverable – resulting in 100% recovery possible to separate and
potential. recover these materials. The
recovery potential is 0%.
Or
In comparison, panels
NO, this outflow is not recoverable – resulting in 0% recovery connected with screws
potential. or rivets can have 100%
potential, since it is possible
to separate and recover
Circularity both materials (depending
on the individual material
Company/BU/site

% recovery potential X characteristics). The screws

YES - full potential= 100% or rivets may even be
NO - no potential = 0% reusable or recyclable.
some potential = X%
or % biodegradable PAPER
Natural paper can be 100%
recovered through the
biosphere.
Guidance for the technological cycle However, contamination by
bleaching, dying, printing
For technical outflow that can consist of (by-)products or waste, the or coating with inorganic
substances can disturb its
company must determine the recovery potential. Should you require biodegradability, making it
support in determining this for your company, please contact us for unrecoverable, and could
additional guidance. therefore cause it to have 0%
recovery potential.
As new technologies develop, drawing the line between circular and
linear for the recovery potential becomes more difficult. Since debates
are raging worldwide on what qualifies as circular for processes such
as chemical recycling, this framework does not offer a universal answer.
As a temporary guiding principle: if a technical material on any level
(potentially molecular) can remain a functional equivalent material in a
second life in a technically feasible and economically viable manner, it is
circular. If the company downcycles inorganic or fossil material or turns
it into a fuel or burns it in any shape or form, it is linear.

Circular Transition Indicators V4.0 Metrics for business, by business 47

Guidance for the biological cycle FOOD WASTE

What does recovery potential mean for resources that are suitable for By default, consider food
waste as biodegradable.
absorption in the biosphere? Two criteria – biodegradability and If local authorities (e.g.,
toxicity – determine this. U.S. Food and Drug
Administration) clear
Biodegradability it for human or animal
consumption, you can safely
consider recovery potential
To what extent can the product or material flow biologically to be 100%.
decompose?
For food, the focus within CTI
The % recovery potential is the weighted average of the % will be on whether that food
is in fact used for its purpose
biodegradability of its components or compounds, under the condition (consumed and so providing
that it is possible for the consumer to separate bio-based resources its nutrients to other life
from technical components at end of life. Consider so-called hybrids forms in the biosphere or
designed in a way that intertwines technical and bio-based materials repurposed) or whether it is
and the consumer cannot separate them (for example a garment wasted or lost.
with both cotton and synthetic yarns or shower scrubs containing Therefore the % actual
microplastics) to have a 0% recovery potential. recovery will be the key
indicator to determine
The Organisation for Economic Co-operation and Development success in closing the loop
(OECD) biodegradability testing standard describes biodegradability on food products.
and other International Standards Organization (ISO) and Royal
Netherlands Standards Institute (NEN) norms are also available for
reference (e.g., compostability).

Companies may freely choose their standard of preference based on

what best represents their business needs.

Toxicity
Is the product or material flow (solid, liquid or evaporated) free from
harmful substances to the biological cycle?

Only consider a product to have recovery potential if its levels of toxins

or hazardous substances fall within predetermined thresholds.

For the purpose of consistency across the metrics landscape for the
circular economy, CTI refers to the Cradle to Cradle Certified Products
Program, DRAFT v4 Restricted Substances List (RSL).

The RSL includes acceptance thresholds for all identified substances

and it can be used to check the acceptance levels of harmful
substances in your biodegradable outflow.

Circular Transition Indicators V4.0 Metrics for business, by business 48

% actual recovery
The % actual recovery indicator captures the amount of outflow FASHION
recovered at the end of its initial life cycle. Some clothing brands
collect old garments with the
ambition to recycle them. This
framework only considers
Circularity
Company/BU/site

% actual recovery X the actual fabric and fibers

that find their way back
standard recovery rates into another used garment,
or regional/sector recovery rates accessory, household cloth,
or manual recovery rate + justification etc. as recovered.
SELLING LIGHT
In addition to buying
Recovery is not the same as collection. After collection, materials lightbulbs, it is now possible
can still end up in landfill or incinerated. Therefore, this indicator is not to solely buy light. In a
maintenance contract, the
based on estimates but requires actual data. If your company keeps
lighting company retains
control and tracks its product flows after they leave your facility, this ownership of the light fixtures,
data should be available. For transparency and robustness, when using allowing it to maintain control
internal recovery data for the calculation, we recommend to secure the of outflow and data on
appropriate supporting documentation. repaired and reused material
and making it available
internally.
In case your company does not keep track of its outflows, it can refer to
standard (often national or regional) recovery rates available for a wide T-SHIRT
range of product groups (for example specific electronic equipment, When a biodegradable
food, textiles, etc.). product (like a cotton
t-shirt with no toxic dyes)
ends in a landfill, the toxic
mix of combined waste
Guidance for the technological cycle contaminates it and it can no
longer serve as nutrients in
Recovery data for many technical materials is dependent on region or the biosphere. Although it had
sector. For an accurate view, we recommend considering default rates a recovery potential of 100%,
for the product/material based on the geographic scope of sales/use it is considered linear outflow.
and/or sector-specific data, where available. Recovery for technical
materials includes only material recovery, not energy recovery.

In step 1, companies establish a timeframe for their CTI assessment,

usually one year. Recognizing that many products go into products
and use stages that last over a year, companies should use the actual
recovery rates for that year in their calculations.
As recovery rates generally improve over time due to regulations,
taking the current recovery rates serves as a worst-case scenario
assumption for the actual recovery of those products, components
and materials.

If a product is going into stock for years or decades, the focus of

CTIshould be on circular inflow and recovery potential to ensure that all
possible measures for the company to take today are in place.

Circular Transition Indicators V4.0 Metrics for business, by business 49

Guidance for the biological cycle FOOD WASTE
Except for food and feed,
Like the technical cycle, CTI proposes different loops in which the
consider most biological
biological cycle can absorb biological resources. The Optimize the resources as circular as
Loop section outlines this further. long as their nutrients return
Consider a product or material flow as actually recovered in the safely to the biological cycle.
biological cycle only if it biodegrades as intended during design (e.g., The purpose of food is to
composting). nurture human beings and
animals and simply returning
it to the biological cycle is
Biofuel and energy recovery from biomass insufficient for classification
as circular. Therefore,
One important difference with the technical cycle is that bio-based consider only consumed
resources can, through the process of combustion that may occur food as 100% recovered
in nature (e.g., fire caused by lightning), return to the biological cycle. (circular).
However, the conditions in which this occurs can only be considered Consider the valorization
circular for CTI under specific criteria drawn from the Ellen MacArthur of food waste through
Foundation Material Circularity Indicator framework: biodegradability or biofuels/
biogas as only 50% circular.
1. Other end-of-life options, besides landfill, must have been Consider landfill and
exhausted (in terms of technical capability and economic viability). incineration of food waste
(with and without energy
2. The material must be from a biological source. recovery) as linear.
3. The biological material must be demonstrably from a source of
sustained production (i.e., regeneratively produced).
4. The biological material must be uncontaminated by technical
materials – except where these are demonstrably inert and non-
toxic.
5. Energy recovery must be optimized and the energy usefully
employed to displace non-renewable alternatives.
6. The by-products of the energy recovery must themselves
be biologically beneficial and must not be detrimental to the
ecosystems to which they are introduced.

Consider landfill and incineration in mixed waste as linear. Even though

50% may still consist of biological matter, it does not follow the above-
mentioned criteria for classification as circular. In cases where no data
is available for a flow AND there is no downstream tracking, consider
the actual recovery as 0%.

The challenge in monitoring flows, particularly multiple steps up

or down the value chain, is recognized. Only through value chain
collaboration is it possible to effectively communicate the importance
of collecting and sharing this data. The hope is that the CTI provides a
consistent process and reason to initiate these discussions if they have
not started already.

Circular Transition Indicators V4.0 Metrics for business, by business 50

Cascading
PLASTIC
Recovery goes beyond giving a material a second life. The current If a high-grade plastic in
criterion for technical circular flows is that the material can technically small IT equipment is not
achieve a functional equivalence state of inflow at which it entered reusable in the same product
the company (whether it is a material, part, product, etc.). This same but is reusable in the body
functional equivalence means that the company or other companies of a coffee machine and
can use it for the same or similar purpose. can loop multiple times as
recycled content, it is circular
Technical flows turned into energy through incineration are not since this is functionally
equivalent.
circular in this framework as they do not return at the same functional
equivalence after incineration.
RUBBER
Consider ground-up tires
used in playground floor tiles
as circular when, after their
life as playground flooring,
they could be used again,
either as new playground
flooring or something else.

CO-PROCESSING
Co-processing refers to
the simultaneous use of
residual waste as a source of
mineral resources (material
recycling) and as a source of
energy to substitute fossil
fuels in a single industrial
process. In this case, the
residual waste would qualify
as circular inflow but the
only portion of the outflow
that would be circular is the
residual fully recovered and
used in another process
while maintaining functional
equivalence. Consider the
rest of the outflow as linear
as it is a technical cycle or a
mixed waste stream that is
incinerated, prohibiting its
reuse.

Circular Transition Indicators V4.0 Metrics for business, by business 51

% water circularity
Freshwater is a finite yet vital resource. It is critical to use it responsibly
and to apply circular principles where possible.

What sets water apart from other materials and resources is the scale
of the relevant ecosystem. Where materials can circulate in a global
system, it is necessary to assess water circularity on a local level for
a water catchment area or local watershed. This will determine the
actual availability of water for the company facility and all surrounding
stakeholders depending on water supply in the water catchment. The
purpose of water circularity is to lower freshwater demand and ensure
water resource availability for all.

In Figure 15 below, note how the company (facility) boundary resides

within the watershed boundary.

Figure 15: Water system diagram

CONTEXT BASED INDICATORS

Collected INTERNAL INDICATOR

rainwater
Circularity depending on
catchment replenishment
cycles (supposed to be
replenishing catchment)
Seawater All water NOT returned
Circular to the local watershed
e.g., evaporation,
Water from the local consumed water, shipped
watershed water, wasted as by-
product
Surface water
Linear
(rivers, ponds, lakes,
reservoirs) and ground
water wells
Circularity depending on Facility boundary Water returned to
catchment replenishment local watershed
cycles
Circular when quality is
Third party equal to watershed quality
(reclaimed water) (restored internally or by
Watershed boundary 3rd party)
Circular

Fossil Linear for quality is lower

than sourced water
water
Linear Global ecosystem

% CIRCULAR WATER INFLOW ONSITE CIRCULATION % CIRCULAR WATER OUTFLOW

Determined in context of Internal reuse and recycling Determined in context of impact to

replenishment capacity of local local water ecosystem.
ecosystem How many times does the average drop of
water cycle through the facility? Is water safely returned to the local
Is sourced water replenished faster watershed for ecosystems to continue
than it is being withdrawn? to thrive?

Circular Linear

Circular Transition Indicators V4.0 Metrics for business, by business 52

Basic principle for water circularity
To assess water circularity, CTI offers two context-based indicators
and one internal indicator. While the context-based indicators are
necessary, the internal indicator is optional. The two types of indicators
are based on the same data set.

Context-based water indicators

The water circularity of a product facility or the location of the
company is the average between % circular water inflow and %
circular water outflow (assuming the volume is the same).

% water circularity
production facility or location

% circular water inflow % circular water outflow

Circular Transition Indicators V4.0 Metrics for business, by business 53

% circular water inflow CIRCULAR WATER
INFLOW DECISION TREE
This indicator determines the total circularity of all water inflow over the The decision tree can help
chosen timeframe. Its calculation is as follows: to define whether the source
of inflow is circular or linear.
Ultimately, it aims to drive
% circular water inflow decision-making towards
Q total circular water withdrawal x 100% more circular inflow options.
In using the decision tree, it
Q total water withdrawal is important to have access
to credible local data on
freshwater sources.
Determine the circularity of water inflow by using the following
WATER QUALITY
decision tree:
Water quality is a measure
of the suitability of water
Is the water from a non-virgin source, for a particular use based
including reused or recycled water
from a third party? Yes on selected physical,
chemical, and biological
No characteristics. Different
water uses, such as drinking
Is the water from a renewable
freshwater source, such as surface,
water, irrigation or industrial
ground and harvested rainwater processes, will have specific
that is consistently and completely
renewed by precipitation and the Yes
Yes
quality thresholds or
Once used by the facility, can the
natural water cycle? water be discharged back directly to parameters as determined by
No
the original source upon treatment? ​
an appropriate authority (e.g.,
No
government ministry) and/or
Is good water governance in place
industry standards.
to manage equitable and sustainable
Yes Once used by the facility, can
supply versus demand for the
No
the water be discharged back
indirectly to the original source upon
HUMAN-MANAGED
water source, including interannual
seasonality? treatment? ​ VERSUS NATURE-
MANAGED WATER
No
In a rudimentary way, it is
0% 50% 75% 100%
possible to divide the water
cycle into what nature
Linear water Circular water
manages and what humans
manage. Within a given
basin, the natural water
% circular water outflow cycle acts to reoptimize,
reuse and replenish water.
This indicator determines the total circularity of all water outflow over On the human-managed
the chosen timeframe. Its calculation is as follows: side, human actions impact
water’s circularity when we
alter the natural water cycle
through withdrawal, use and
% circular water outflow (restored) replenishment.
Q total circular discharge x 100% For more guidance on
Q total water withdrawal WBCSD’s circular water
metrics, consult the water
metric guidance and tool.

Following the basic principle for water circularity, circular outflow has
three criteria:
1. Water outflow is circular if it is recycled (offsite) by other sites, this
includes drinking water supply to communities within the basin.
2. Discharged water is circular if it returns to the local watershed at
a quality that makes it readily available for environmental, social,
agricultural or industrial purposes.
3. Product water is circular if returned to the local watershed to a
quality that makes it readily available for environmental, social,
agricultural or industrial purposes.

Circular Transition Indicators V4.0 Metrics for business, by business 54

The facility itself or a third party can do the necessary water
WATER CIRCULARITY,
treatment before discharge. WATER STEWARDSHIP
AND SUSTAINABILITY
Facility internal indicators Several approaches
and initiatives aim to
Onsite water circulation measure different aspects
and impacts of water
This indicator expresses the number of times the company uses the management: sustainability,
average drop of water onsite before it leaves the facility as outflow. stewardship and circularity.
It is important to frame these
aspects as not the same yet
The calculation is as follows: related.

For example, circularity

can help realize water
Onsite water circulation stewardship goals, which
(reuse & recycle) in turn can lead to more
sustainable water use; but
= Q water use - Q total water withdrawal +1 circularity is not equal to
Q total water withdrawal sustainable water use. Other
methodologies – current or
under development – aim to
measure these aspects.
The total quantity of water used by the facility is the sum of all water
required by all its processes (e.g., washing, cooling, ingredient water, For sustainability, the
tap water, etc.). Science Based Targets
Network is developing
Energy and nutrient recovery guidance to apply science-
based targets for nature,
including freshwater. And
It may be possible to recover energy and/or nutrients from water for water stewardship,
before discharging it. CTI recognizes this as circular practice; WRI and others have
however, the water circularity indicator does not include it. Both types published a method for
of recovery can contribute to either % renewable energy or % circular implementing and valuing
outflow. Process the absolute values of either data set in these water stewardship activities:
chapters. Volumetric Water Benefit.

Circular Transition Indicators V4.0 Metrics for business, by business 55

% renewable energy MATERIAL FLOWS AND
ENERGY GENERATION
In a circular economy, energy production depends on renewable
Classify inflow for energy
sources and shifts away from fossil fuels. generation as circular inflow
if it is renewable or non-
Because of the complexity involved in calculating it and the potential to virgin.
cloud the results, CTI measures renewable energy used for business
Always classify outflow that
operations separately. is either used as fuel and/or
incinerated as linear.
The formula for the % renewable energy is:
ENERGY CARRIERS
If the energy carriers enter
the company as a physical
% renewable energy material flow, consider them
within the inflow calculation
renewable energy (annual consumption) x 100%
of the company. If these are
total energy (annual consumption) non-virgin or renewable,
consider them as circular
inflow. Alternatively, consider
any energy entering the
Most companies already use globally recognized and generally company as energy content
adopted protocols for measuring and reporting renewable energy (i.e., electricity for processes
delivered by the grid) within
consumption.
the % renewable energy
calculation.
In line with WBCSD’s approach, CTI allows companies to use existing
policies and procedures, permitting the reuse of existing data sets.

Should you need guidance on the definition of renewable energy,

please refer to the energy sources published by IRENA (International
Renewable Energy Agency).36
• Solar energy
• Wind energy
• Hydropower energy
• Geothermal energy
• Ocean (tidal) energy
Bioenergy

Measurement expresses the energy content and includes all the

energy carriers that flow into the company (including, but not limited to,
gas, electricity and fuels).

For the purposes of CTI, it is not possible for a company to achieve

greater than 100% renewable energy in this indicator. Consequently,
even if a company generates more renewable energy onsite than
it uses and sells it back to the grid (utility), it’s necessary to cap the
renewable energy indicator at 100%. The intent here is to maintain a
relatively simple focus on encouraging the shift to renewable energy
consumption.

Circular Transition Indicators V4.0 Metrics for business, by business 56

OPTIMIZE THE LOOP CRITICAL MATERIALS
Critical materials Obtaining this information
may be challenging for
industries with high
This indicator provides a first impression of the percentage of inflow product complexity (e.g.,
at risk by making an initial distinction between critical and non- in the electronics sector).
critical materials. Additionally, critical materials
might exist in very low
The first step is to identify, within the inflow, what mass of the total quantities in components
inflow is critical. Critical materials are prone to becoming scarce that travel through the value
chain.
in the relatively near future and are difficult to substitute without
hampering functionality. Several institutions have identified critical The company can decide
raw materials. For example, the European Union (EU) lists 30 raw whether to assess the
exposed risk associated
materials as critical.37 In addition, the United States has developed
with a dependency on
a list of 50 mineral commodities deemed critical to US national any of these materials.
security and the economy.38 Efforts to gain supply chain
transparency at this level
These lists do not include criteria on problematic supply chains, could be significant. On the
such as from human rights violations perspectives. Time may see other hand, the risks involved
the addition of other sources, including human and environmental could be worth looking into.
capital-related supply chain issues.

Other authorities may be developing or have already published

comparable lists of critical or scarce materials. Although regional
lists can deviate, materials that appear on any list warrant a
second look.

% critical material
mass of inflow defined as critical x 100%
total mass of linear inflow

Circular Transition Indicators V4.0 Metrics for business, by business 57

Recovery type
ALL LOOPS ARE EQUALLY
Within the Close the Loop module and the % material circularity, the CIRCULAR
scoring for the recovery types for flows moving in the technical cycle
Although tighter loops are
is not different when excluding downcycling and energy recovery. This generally preferable, all
position is necessary as each strategy may need to take place at some types of recovery are equally
time at some place in the value chain. circular in CTI.
As such, all recovery types
Figure 16: Retained value contribute to a company’s
Re c yc l e
circularity performance
equally in the Close the Loop
calculations. This means that
a shift in recovery type will
Re c yc l e Re m a n u f a c t u re not change the % circular
outflow. The recovery type
indicator would, however,
capture this.
Re c yc l e n u fa
c t u re o r re f a i r o r re f u r b i s
ma
u rbi Re p h
Re sh

Re c y c l e Re u s e o r Re u s e o r Re u s e o r
re p a i r re p a i r re p a i r

Material Retail /
Manufacturers Users
producers distribution

Low RETAINED VALUE High

For example, it is not possible to recover a product endlessly and

at some point it might require the recycling of its materials. For the
Optimize the Loop module the % recovery type provides a deep
exploration of higher value retention strategies within company reach.
As illustrated in Figure 16, tighter recovery loops typically require less
energy or processing and are more efficient forms of material/product
recovery providing more retained value. For example, repairing instead
of recycling a product requires fewer logistics and less reproduction
and retains more product value.

Generally, it is in the best interest of a business to explore opportunities

to keep recovery loops as tight as possible.

The CTI online tool includes optional data entry at the outflow level,
specifying the type of recovery used for recovered products, by-
products, waste streams, etc. The feedback provides a breakdown
of the shares of recovered material reused/repaired, refurbished,
remanufactured, recycled or biodegraded.

Circular Transition Indicators V4.0 Metrics for business, by business 58

Recovery type: % recovery by lifetime extension

In a circular economy, the most effective way to retain the value of

resources is by keeping products, components and materials in use
for as long as useful. Companies can achieve this by incentivizing
the uptake of lifetime extension strategies (reuse, refurbish,
remanufacture) whenever these are available.

For companies wishing to track their performance across strategies

that retain higher value in the technical cycle, CTI v3.0 provides a
separate score: % recovery by lifetime extension. This score compiles
a separate performance score for those outflows that are reused,
refurbished or remanufactured. The online tool provides this score
automatically based on data entry at the outflow level for the %
recovery type indicator. The indicator applies to actual recovery types
for technical materials and for bio-based materials that behave like
technical materials (e.g., wood).

Table 3: Recovery by lifetime extension strategies

Type of recovery Description

No changes made except for

% reuse cleaning and minor repairs,
same functionality
LIFETIME EXTENSION

Changes made in the form

of refurbishment or large
% recovery
% refurbishing repair, components or parts by lifetime
CIRCULAR

might be replaced, same extension

functionality

Changes made, components

or parts are replaced or
% remanufacturing
used elsewhere, different
functionality

Mechanical or chemical
% recycling
recycling of the materials

Circular Transition Indicators V4.0 Metrics for business, by business 59

You must take outflows that are considered waste during lifetime
extension activities into account as either recycled or not recovered.
While recycling is a recovery type and considered circular in CTI, it
does not lead to lifetime extension and therefore this sub-indicator
excludes all mass flows recycled in the next cycle.

Figure 17: Example of recovery types breakdown for a washing machine -

% recovery by lifetime extension

Recovery type – breakdown 35 kg

Recovery
by lifetime
Re-use 0kg extension
LT EXTENSION

10%
CIRCULAR
CIRCULAR

Refurbish 1kg Recycle

28%
Remanufacture 2.5kg
61%
Recycle 10kg

Landfill / mixed waste incineration 21.5kg No recovery

LINEAR
LINEAR

Unknown / Other 0kg

Circular Transition Indicators V4.0 Metrics for business, by business 60

Cascading hierarchy for the biological cycle
CTI recognizes different types of recovery in both technical and
biological cycles. Figure 18 shows the generic cascading hierarchy
according to their valorization levels for biodegradable products, by-
products or waste streams returning to the biological cycle.

Note that this hierarchy only accounts for recovery through the
biological cycle (left side of the Ellen McArthur Foundation butterfly
diagram). The top bar summarizes recovery through the technical cycle
but could entail any of the strategies in Figure 18.

Figure 18: Cascading hierarchy for the biological cycle

Actual
Cascading hierarchy | Biological cycle Recovery

Recovery through technical cycle

(e.g., reuse, recycling, etc.)​
High ​valorization
Nutrient absorption ​through Recovered
biodegradation

Some valorization Biogas / biomass energy recovery

(under set conditions)

No valorization Not
Landfill /​mixed-waste incineration recovered

Figure 19: Cascading hierarchy for food and food waste

Actual
Cascading hierarchy | Food Recovery

Full use Consumption

Recovered

High ​valorization Recovery through consumption

alternative (e.g., animal feed)

Nutrient absorption ​through

biodegradation
Some valorization Partially
recovered​
Biogas/biomass energy recovery 50%
(under set conditions)

Not
No valorization Landfill /​mixed-waste incineration recovered

Circular Transition Indicators V4.0 Metrics for business, by business 61

Looking at the cascading of biodegradable products, by-products
or waste streams suitable for recovery through the biological cycle,
there is one stream that needs a modified approach: food. Since food
growth and production are for the sole purpose of consumption, do not
consider recovery through biodegradation instead of consumption as
an equally circular recovery model. Specifically, for food the valorization
hierarchy looks like Figure 19.

Note that this hierarchy only covers edible food parts. The main
biological cycle cascading hierarchy covers non-edible food waste
streams such as eggshells, orange peels and coffee grounds.

It is up to the company to assess the improvement opportunities to

optimize the loop. Upgrading food waste recovery from partial recovery
to high recovery or full use will result in a higher score on the % actual
recovery and therefore the % circular outflow. The reasoning for this
is that it is different from the recovery strategies in the technical cycle,
where we assume that all recovery strategies take place at some time
and at some place in the value chain. This is not the case for the edible
streams in the biological cycle. For example, consumed food can no
longer biodegrade (as food). Therefore, for biological cascading, there is
a clear hierarchy of activities varying in circular nature.

Circular Transition Indicators V4.0 Metrics for business, by business 62

Actual lifetime
NOTE
Keeping products and materials in the loop to the end of their useful A product’s design should
lives minimizes the consumption of resources and generation of ensure that its durability
waste. The actual lifetime indicator allows companies to monitor their and useful lifetime have a
direct relationship with its
performance on a product’s lifetime by providing a higher score for environmental impact and
those goods whose lifetime is longer than the industry average. embodied energy.
A product’s lifetime is intended as the duration of the period that starts
at the moment a product is released for use after manufacturing or
recovery and ends at the moment a product becomes obsolete.39
Its durability drives a longer product lifetime, meaning the ability to
“function as required, under specified conditions of use, maintenance EXAMPLE
and repair, until a limiting event prevents its functioning.”40 The average product lifetime
of a mattress is 10 years.
A product’s technical lifetime and functional lifetime enable its durability. A mattress that has a
lifespan demonstrably higher
The technical lifetime is the time span or number of usage cycles for
than the industry average
which a product is considered to function as required, under defined (e.g., 15 years) will have a
conditions of use, until a first failure occurs. The functional lifetime is positive actual lifetime score.
the time a product is used until the requirements of the user are no (Lifetime data source:
longer met, due to the economics of operation, maintenance and repair Product Life Database,
or obsolescence. While the technical lifetime is part of the intrinsic International Living Future
properties of the product, the conditions created around the product Institute).
determine its functional lifetime.41

We developed CTI’s actual lifetime indicator with the intention of driving

companies to develop an understanding of a product’s average life
duration.40 This is the lifespan that the product actually experiences, on
average, rather than design life or warranty period.

The actual lifetime indicator provides a higher score for products that
stay in use for longer than the industry average and the calculation is
as follows:

actual lifetime
= product actual lifetime
average product actual lifetime

Companies can calculate the actual lifetime in number of years OR

number of use cycles.

In calculating this indicator companies may determine a reference

lifetime value, for example lifetime (in time span OR number of use
cycles) of the prior product version or, if appropriate, an average of at
least a few prior products; or the lifetime (in time span OR number of
use cycles) of an “industry average” product, which is either:

• Calculated using a methodology consistent with both LCA best

practices and with the methodology used elsewhere in the
company’s CTI response; or

• Obtained from reference literature, taking care to use the most up-
to-date data and, at a minimum, not using data that is too outdated
to reflect the current state of the industry.

Circular Transition Indicators V4.0 Metrics for business, by business 63

The strength of the indicator relies on the methodology that companies
adopt to calculate the actual lifetime of assessed products. For EXAMPLE
example, reference products would target the same overall customer A computer mouse is
base, in similar geographies and timeframes. Widespread adoption and designed to last 6 years but
comparability will depend on the harmonization and standardization of the average lifetime of a
an appropriate methodology to measure lifetime by relevant industries computer mouse is 4.5 years.
The actual lifetime indicator
and sectors. in CTI will provide a positive
score for companies whose
In calculating the actual lifetime indicator, companies should aim to computer mouse stays in
capture the actual average life duration of the product under scope. use demonstrably longer
In developing an understanding of the average life duration of their than the industry average.
products, companies may consider tracking maintenance, repair and (Lifetime data source:
upgrade operations the product underwent and the number of its Product Life Database,
successive users.43 International Living Future
Institute)
The actual lifetime indicator measures the performance for finished
products. Components and materials are currently not within the scope
of this comparison.

Companies may use CTI’s actual lifetime indicator for durable

products that require no or minimal consumption of water, electricity
or detergents during use, whose highest environmental impact issues
from the production or disposal phases, such as furniture, clothing or
technical equipment.

Durable products that consume electricity, water or detergents during

use, such as home appliances or electronical goods and equipment,
should always consider the optimal replacement rates of products
under scope.

Do not apply CTI’s actual lifetime indicator to non-durable products

with an intrinsically short lifespan (e.g., fast-moving consumer goods).44

Circular Transition Indicators V4.0 Metrics for business, by business 64

VALUE THE LOOP CURRENCY SELECTION
This module helps companies gain insights into how effective they are The company should use the
same currency that it uses
at generating revenue per unit of material they depend on. in its financial reporting. In
cases where the company
Circular material productivity uses multiple currencies,
consider the scope of the
The first indicator launched in this module is circular material CTI assessment and the
productivity, which expresses the value a company generates per unit objective to determine the
of linear inflow. The outcome produces a value that companies can most effective currency
monitor over time. The calculation is: for informing the targeted
decision-makers.

circular material productivity

revenue
total mass of linear inflow

An increase in this indicator demonstrates a successful decoupling of

financial growth from (linear) resource dependence.

CTI revenue

The CTI revenue indicator creates an objective and quantitative

bridge between a company’s performance in closing the loop on
the resources it uses and how that affects a company’s financial
performance.

To calculate CTI revenue for a product:

CTI revenue (product) CTI REVENUE

% circular inflow + % circular outflow A product that qualifies
x revenue as 25% circular (weighted
2
average of its circular inflow
and circular outflow) and
generates USD $1 million
To calculate CTI revenue for a business unit or company, sum up all in sales would contribute
the product CTI revenue calculated: USD $250,000 towards the
company’s total CTI revenue.

CTI revenue (company)

∑ CTI revenue A
+CTI revenue B
+CTI revenue C +...

This calculation allows a company to attribute more of its revenues

as circular through product portfolio steering by (1) innovating new
products that are more circular, (2) improving the circularity of the
existing product portfolio, and (3) driving sales of more circular
products in the portfolio.

Circular Transition Indicators V4.0 Metrics for business, by business 65

 Companies should input their CTI revenue into a table like Table 4,
allowing them to observe how their revenues fall across circular
performance tiers (e.g., deciles). The more bottom-heavy a company’s
revenues are in this table, the less the portfolio depends on a linear
economic model. Note that the 0% and 1-10% performance tiers are
(largely) linear and do not add much to the CTI revenue amount. The
ambition should be for companies to move their product portfolios
down the table over time.

In calculating circular revenues with this method, the CTI revenue

indicator:
• Directly links circular performance between mass flows and
financial results.
• Allows companies to identify new and continuous improvement
opportunities and set quantitative targets (i.e., a 60% circular
product still has the potential to move to higher tiers).
• Enables consistent communication with executives and investors
• Minimizes additional effort by using the results from the Close the
Loop indicator.
• Avoids subjective qualification of defining a “circular product”
• Complements binary-qualification (YES/NO) circular indicators by
providing more granularity through the three pillars of circularity:
circular inflow, recovery potential (design) and actual recovery.
• Provides more granular insights into linear risk and circular
opportunities of a company’s portfolio.
• When using the CTI online tool, automatically calculate this
indicator based on the data collected through the circular inflow
and circular outflow indicators supplemented with product (group)
revenues.

Table 4: CTI revenue

% circularity ​ Weighted average revenue” (%

Revenue (USD $)
(Close the Loop indicator) circularity x revenue)

0% USD $400 million USD $0 million

1-10% USD $150 million USD $7.5 million

11-20% USD $200 million USD $30 million

21-30% USD $150 million USD $37.5 million

Company A - CTI revenue

31-40% USD $50 million USD $17.5 million

41-50% USD $30 million USD $13.5 million

51-60% USD $20 million USD $11 million

61-70% - -

71-80% - -

81-90% - -

91-100% - -

Total revenues USD $1 billion

CTI revenue USD $117 million (11.7%)

Circular Transition Indicators V4.0 Metrics for business, by business 66

IMPACT OF THE LOOP
For CTI Tool users:
GHG impact GHG impact (Inflow Technical
To calculate the GHG emission savings associated with circular Materials) is only available for
strategies, allocation rules need to be used to navigate the complexity CTI Tool Pro users. Note that
the CTI Tool uses ecoinvent
of who carries the burden of emissions. The system model: “Cut-off by
database V3.8 to establish
classification” was used.45 This system model maintains to the following the emissions factors per
rules: unit of materials for both the
• The producer of a material or product is fully accountable for the virgin and non-virgin (recycled)
GHG emissions of the production of that material or product. Even version of the material
if that becomes a secondary material, part or product after use, is assessed. Companies that
reused, remanufactured, refurbished or recycled. do not use the tool can use
the collected for % material
• The non-virgin material part or product becomes available free of circularity and follow the
GHG emissions burden for the user of this non-virgin material or methodology outlined in
product in the next production cycle. this report to understand
• The user of this non-virgin material or product is only allocated the GHG impact of material
the GHG emissions of preparation for reuse (preparation for reuse flows by combining these
activities cluster the emissions of the reuse, remanufacturing and with emission factors from
credible databases or supplier
refurbishing)46 or recycling processes needed.
specific sources. A list of
• For linear end-of-life disposal (incineration and landfill), all recommended secondary
emissions associated with linear disposal processes are allocated emissions factors databases
to the producer as these are not assigned to other users. is available in WBCSD’s
Pathfinder Network guidance
(page 31).
Figure 20 shows the individual process steps included in the
comparison.

Figure 20: Setting the system boundaries of baseline and circular material flows

BASELINE Extraction Process L₁ Process L₂ Collection Incineration

/ Landfill

(Producer) Linear
outflow emissions
Process S Use
are allocated to the
manufacturer of
the product

CIRCULAR Collection Sorting Process C₁ Process C₂

Shared processes are left out

inflow outflow (Producer) Materials/
of the comparison products become
available free of the
production emissions
burden. (User) Circular
Next production cycle: User is allocated only the emissions outflow emissions are
of higher-value retention recovery (preparation for reuse / allocated to the user in the
refurbishment / remanufacturing) or recycling processes next cycle. Producer
avoids allocation of
collection and disposal
emissions.

Circular Transition Indicators V4.0 Metrics for business, by business 67

The “Allocation, Cut-off by classification” system model leads to the
following calculations to assess the potential GHG emissions savings For CTI Tool users:
of circular strategies:
The CTI Tool has chosen
the Intergovernmental Panel
Inflow technical materials– Recycled content on Climate Change (IPCC)
as its impact assessment
model as it has a 100-year
The outcome of this calculation is the % GHG emissions savings time frame. The primary
realized if the material is made out of 100% recycled content versus (first) production of materials
the GHG emissions related to the current composition. is always allocated to the
primary user of a material.
If a material is recycled, the
The impact on GHG emissions is calculated using the following formula primary producer does not
for the absolute amount of CO₂ equivalent: receive any credit for the
provision of any recyclable
materials. As a consequence,
(Mx x GHGxr) - [ (Mxr x GHGxr) + (Mxv x GHG xv) ] recyclable materials are
available to recycling
processes and secondary
Or the following formula for a percentage value: (recycled) materials bear only
the impacts of the recycling
processes.
(Mx x GHGxr) - [ (Mxr x GHGxr) + (Mxv x GHG xv) ]
x 100 The GHG factors used in the
(Mxr x GHGxr) + (Mxv x GHG xv) CTI Tool are based on global
averages using a market
approach where available.
Factored in the values are
Mx: Total weight material X the processes of virgin
GHGxr: GHG emission factor recycled material X mining (linear), collection
and recycling (circular)
Mxr: Weight of recycled content material X and transport (see system
Mxv: Weight of virgin content material X boundaries outlined in
Figure 20).
GHGxv: GHG emission factor virgin material X
For companies performing
the assessment outside of
As an example, consider a 700-gram PET cover that consists of 5% CTI Tool, we recommend
recycled content. The GHG emissions factor for the sourcing of the using primary data where
available. If the company is
recycled content is 1.7 kg CO₂-eq/kg material and 3.1 kg CO₂-eq/kg
deriving GHG emissions from
material for the virgin content.47 databases, it could adhere
to choices made for other
purposes or take the above-
Based on the calculation below, the company will obtain a 44% mentioned impact model and
reduction in GHG emissions when it increases the recycled content of time frame as a default.
the PET cover from 5% to 100%.

(0.7 x 1.7) - [ (0.035 x 1.7) + (0.665 x 3.1) ]

x 100
(0.035 x 1.7) + (0.665 x 3.1)

When the materials for which the GHG emissions factor for the
circular version is not available in existing databases, the company
can calculate the GHG impact by combining the GHG footprint of the
individual process steps needed to source the recycled material (see
Figure 20).

Circular Transition Indicators V4.0 Metrics for business, by business 68

Inflow – Higher value retention and closed loop recycling
Guidance for users of secondary products/materials Higher value retention
recovery strategies facilitate
The GHG impact related to the collection, sorting and recovery the cycling of products and
methods (recycling and “higher value retention”) are accounted for at components within a circular
the inflow side in CTI as ”non-virgin materials” based on the “Allocation, economy.
Cut-off by classification” system model. In closed loop recycling – CTI users are encouraged
and when materials are recovered by a third party – we propose the to explore opportunities
following emissions formula to calculate the absolute emissions for recovery via reuse,
refurbish or remanufacturing
savings on the inflow side: whenever these are available
to them.
Recent research on higher
(Mt x GHGr) – (Mr x GHGr) – (Mv x GHGv) value retention recovery
strategies demonstrates
their significantly lower
environmental impact
Or the formula for the percentual savings: potential versus conventional
product life cycles.
For more information, see
(Mt x GHGr) – [(Mr x GHGr) – (Mv x GHGv)] Russell, J.D. & Nasr, N.Z.
x 100 (2023). “Value-retained
(Mr x GHGr) + (Mv x GHGv) vs. impacts avoided: the
differentiated contributions
of remanufacturing,
refurbishment, repair, and
Mt = total mass material reuse within a circular
economy”. Jnl Remanufactur
GHGr = emission factor of the recovery methods (kgCO2 / kg) 13, 25–51 (2023).

Mr = mass recovered material used (either via preparation for reuse, or

recycling)

GHGv = emission factor of the virgin material (kgCO2 / kg)

Mv = mass virgin material used

The outcome is the % GHG emissions savings realized if the material

is made out of 100% virgin content minus the emissions associated
with the recovery method. The indicator gives insights into the amount
of GHG emissions saved (by the user of the recovered materials) if the
materials go from the current % recycled/prepared for reuse content to
100% recycled/prepare for reuse content.

Circular Transition Indicators V4.0 Metrics for business, by business 69

Outflow – Technical materials
Producers

The use of the “Allocation, Cut-off by classification” system model

leads to a situation in which GHG emission savings are observable
once a product or material is recovered with a circular recovery
strategy:

• Circular recovery methods: preparation for reuse or recycling will

not lead to any emissions burden for the producer and therefore
represent savings compared to the linear disposal method.
• Linear disposal methods: incineration or landfill will lead to an
emissions burden for the producer of the unrecoverable products
and materials.
Formula for the absolute savings:

(Mr x GHGxl) – (Mt x GHGxl)

Formula for the relative savings:

(Mr x GHGxl) – (Mt x GHGxl)

x 100
(Mt x GHGxl)

Mt = total mass material

GHGxl = emission factor of the linear recovery method: incineration,

landfill

Mxr = mass to be recovered outflow

GHGxr = emission factor of the mass to be recovered = 0 kgCO /kg

Mxl = mass linear outflow

The outcome of the formula is the % GHG emissions savings

compared to a scenario in which 100% of the material is disposed of in
a linear way, via incineration or landfill. It gives insights into the amount
of GHG emissions a producer can save, if the products or materials
under scope are recovered through higher value retention recovery or
recycling versus incineration or landfill. Based on the “Allocation, Cut
-off by classification” system model, savings are equal to the emissions
of the % of material that avoids incineration or landfilling because the
producer makes them available for recovery for use by another user in
a following cycle.

Circular Transition Indicators V4.0 Metrics for business, by business 70

Building on the example used for inflow, consider that the 700-gram
PET laptop cover is 30% recycled and 70% incinerated. The GHG
emissions factor for the incineration of PET is 0.0904 CO2 -eq/kg.48
According to the “Allocation, Cut-off by classification” system model,
the producer of the PET laptop cover accounts for the emissions
associated with linear disposal methods. In this case, the producer
of the PET is allocated the GHG emissions associated with 70%
incineration. In the example, potential emissions savings from
transitioning to a 100% circular scenario would be 70%. With the
current 30% recycling, the producer saves 30% of emissions that
otherwise would be allocated for the linear disposal of the cover. If the
producer works with value chain partners to increase the recycling rate
of the cover to 100%, this would provide an additional 70% savings on
the emissions allocated for the linear disposal through incineration or
landfill.

(0.21 x 0.0904) – (0.7 x 0.0904)

x 100
(0.7 x 0.0904)

Since the producer is not allocated emissions for the incineration and
landfilling of the product or material, the emissions savings are 70%.
This is because the emissions savings are based on the transition
from 70% incineration to 0% linear disposal. In this approach, users of
non-virgin materials benefit from materials that are free from the burden
of production emissions while producers of primary materials benefit
from incentivizing the recovery of products and materials to avoid high
landfill or incineration emissions.

PET Laptop Cover

Figure 21: Potential emissions savings of transitioning to circularity for a PET laptop cover

Producer 1: cycle one Producer 2: cycle two

Total material inflow Total CO2/ kg (absolute) Total material inflow Total CO2/ kg (absolute)
(absolute) kg CO2 eq: due to linear disposal: (absolute ) kg CO2 eq: due to linear disposal:
2.121kg CO2 eq 0.044296kg CO2 eq 1.19 kg CO2 eq 0 kg CO2 eq
q
O2 e
C

100% Recycled
5%

kg
:0
re

r Value
ed
c

le
yc

cy
cl

d
lue

PE Re
T
30 %
g) Va
ig he
lH

in
ycl

i
ca

hn
Tec
ec

30 %
(R

ic
al

hn
95% Virgin PET 70% Landfill Tec
70 %

Point of cut-off Point of cut-off

100% recycled content 100% recovery leads to

leads to 44% emissions 70% emissions savings
savings compared compared to cycle one
to cycle one

Circular Transition Indicators V4.0 Metrics for business, by business 71

Nature impact
Nature Impact
Impact on nature is calculated using the following formula for each raw The nature impact score
material separately: measures the land use
impacts of material
extraction and cultivation.
It represents the loss of
quality-adjusted km2 that
(M rx X Extent) X (M xrp X Condition Change) X (M xrl X Significance) a company is responsible
for, weighted according to
the global extinction threat
associated with sourcing
locations.
• Mxr: total weight raw material X Land-use impacts
• Mxrp: land use type and land use intensity raw material X associated with
manufacturing processes
• Mxrl: sourcing location raw material X are not included (but can also
• Extent (in km2) of land occupied: the allocated physical area of be estimated using LCA-
habitat occupied due to production of raw materials for inflow. based methods), while any
Based on estimated yield per area of raw material. The smaller the additional primary sourced
parts introduced into
extent the better the performance on this metric. circular processes, (e.g., new
• Condition change (from 0-1) of biodiversity on the land: the elements added in repaired
”quantity” or ”amount” of biodiversity lost on the occupied land, products) are considered
relative to an undisturbed reference state, based on the type and within the standard
framework.
intensity of land use. Condition change is based on biodiversity
loss co-efficient calculated from Mean Species Abundance (MSA),
ranging from 1 (intact habitat) to 0 (loss of all biodiversity). The
smaller the condition change from an undisturbed reference state
to current land use the better the performance of a company on
this metric. Apart from MSA a company could use another metric
to measure condition change. See Annex II: Choice of Land use STAR metric
metrics for more details. CTI adopts the Species
• Significance (on a scale of 1 to 5) of biodiversity impacted: the Threat Abatement and
Restoration (STAR) metric
”value” of the biodiversity, represented by the types of biodiversity to assess Significance.
present in the area and how significant their loss would be for STAR is accessed through
biodiversity protection and recovery globally. CTI recommends the Integrated Biodiversity
using the STAR metric49 as it is the best metric currently available Assessment Tool (IBAT),
data for setting company targets to reduce species extinction which requires an IBAT
risk. The lower the significance of a particular area, the smaller the license. Country-level
STAR data will be freely
global biodiversity impact of the sourcing activities. Apart from available through using
STAR-t scores, a company could use another metric to measure the WWF biodiversity filter.
significance. See Annex II: Choice of land-use metrics for more At present few suitable
details. Significance metrics are
available globally and free of
charge for commercial use.
The resulting unit represents “threat-weighted quality square Another option is the Global
kilometers”, where threat refers to extinction risk of terrestrial extinction probability (GEP)
vertebrate species (mammals, birds, amphibians). The smaller the metric created by Verones
number, the smaller the associated biodiversity land use impacts. et al. (2022).

Circular Transition Indicators V4.0 Metrics for business, by business 72

Scoring card

For the purposes of simplification and usability, the assessment

can be simplified through use of a score card (Table 5). The score
card provides broad value categories, with quantitative lower and
upper bounds, for extent, condition and significance. Categories
are selected based on the best available information, applying
plausible assumptions. This approach requires only estimates for the
scale, impacts and location of sourced materials, rather than exact
quantification. A more comprehensive, fully quantitative approach
can be applied in a data-rich scenario where companies wish to fully
quantify their land-based biodiversity footprint.

EXAMPLE
For example, if the extent of land required to produce all of the cotton or
palm oil a company uses in its value chain is estimated to be 1 – 10km2
the extent would fall into the ”small-medium” category. If intensively
farmed, the condition change is likely to be at least loss of 0.7 MSA
and therefore the category will be ”very large”. If organically farmed,
the MSA loss may fall into the category of 0.5 – 0.7 and therefore be
considered ”large”. Within CTI, organic farming and materials grown
using regenerative agricultural practices are considered renewable and
therefore circular in CTI. Within the nature indicator, this “renewable”
criteria is expressed in the improvement in the condition change. Finally,
if it is sourced from a highly biodiverse country (e.g., in the tropics)
the significance may be “very high”, while if it is sourced from a less
biodiverse country (e.g., in northern Europe) the significance may be
“moderate” or ”low”.

Table 5: Nature Impact score card, which uses broad “bins” for rapid estimation with uncertain data/assumptions

Estimated extent (km2) ~0 0- <0.1 0.1-<1 1-<10 10<100 100<1,000 1,000<10,000 >10,000
Small- Medium-
Category description Negligible Very small Small Large Very large Extremely large
medium large
Use actual area
Score for extent dimension (E) 0.01 0.1 1 10 100 1000 10000
estimate

Estimated condition change

0- <0.1 0.01-<0.1 1-<0.3 0.3-<0.5 0.5-<0.7 >0.7-1
(on 0-1 scale, based on MSA)
Small- Medium-
Category description Very small Small Large Very large
medium large

Score for condition dimension (C) 0.01 0.1 0.3 0.5 0.7 1

Estimated significance
0- <10 10<100 100<1,000 1,000<10,000 10,000<100,000
(80th percentile STAR-t score)
Category description Low Moderate High Very high Highest

Score for significance dimension (C) 1 2 3 4 5

TOTAL SCORE = E x C x S

Circular Transition Indicators V4.0 Metrics for business, by business 73

How to treat types of circular inflow

Estimating the land use required for materials with recycled,

remanufactured, refurbished and reused content can be complex as
these processes are specific to the materials being processed. The
nature indicator aims to provide a simplified, initial screening on the
pressure on nature through land use. Therefore we made different
assumptions on how to treat the different types of inflow (Table 6).

Table 6: Description of assumptions and scoring procedures for different circular inflows

Type of inflow Treatment in scoring Reasoning

No changes are made except for cleaning and minor

repairs, this inflow is considered burden free from the
Assumed burden free, nature impact
Reused perspective of land-use impacts on nature, since there
score is zero.
is effectively zero land use linked to the process of
making a product available for a new life cycle.

Repaired, refurbished
Repaired, refurbished There will be small land-use impacts for the inputs
Remanufactured and processes required for these circular inflows (e.g.,
Extent assumed to be approaching zero cleaning, small volumes of new materials added, energy
Remanufactured
Recycling and therefore “negligible” in the scoring for sorting and treatment). However, the inflow impacts
framework. attributable to a company are difficult to quantify and
small enough to be negligible in the context of this
Recycling scoring framework.

Renewable materials are treated the same as for linear

No assumptions – follow the same materials. Renewable alternatives will most likely
Renewable
procedure as for linear materials. outperform the linear alternatives on the ”condition”
variable due to improved land-use practices.

Circular Transition Indicators V4.0 Metrics for business, by business 74

 5 Analyze
Interpret results
This section focuses on interpreting the results for decision-making. MEASURING CIRCULARITY
Companies should involve the relevant decision-makers in this part of
the process. WBCSD often cites Circle
Economy’s Circularity Gap
Report (CGR) as a benchmark
The results from the CTI calculation provide the quantitative foundation for the circularity of the global
for identifying, prioritizing and implementing circular initiatives. economy. However, due to
their respective objectives,
CURRENT PERFORMANCE AND PERFORMANCE there are key differences in the
CTI and CGR methodologies
OVER TIME that make it difficult to directly
compare results. Whereas
Current performance WBCSD developed CTI to
inform and enable companies
We developed CTI for wide applicability across various companies, in their circular transition,
Circle Economy devised CGR
industries and value chains. As performance is likely to vary to establish a macroeconomic
substantially depending on the company’s characteristics, the model understanding (e.g., national,
does not subjectively judge what “bad” or “good” performance is. CTI regional or global). Specific
empowers companies to study their own potential for improvement differences between the two
methodologies include:
by examining the percentage of their business still considered linear.
Analyzing the underlying indicators is relevant to understanding what is • CGR includes the entire
material footprint of
necessary to increase the level of circularity. the specific economic
system or value chain.
Performance over time CTI focuses on the inflow
and outflow of a single
The most valuable insights might come from tracking performance company.
over time. A company can compare progress to any time-bound • CTI makes a distinction
goals, objectives or targets that it has formulated. While a different between potential and
methodology, a company could also compare an increase or decrease actual recovery, where
CGR only observes actual
in circularity to the change in performance on a global level (such as recovery.
Circle Economy’s Circularity Gap Report (CGR)50) or on an industry
• CGR considers a stream
level (either via governments or via aggregated data from companies or circular only when it is
industry associations). If performance does not meet the expectations, coming from a circular
the company may further analyze the underlying indicators and origin and it is fully
parameters that influence their outcomes. recovered again. CTI
makes a split between
inflow and outflow, each of
it contributing to roughly
50% of the total score.
• CGR includes the
resources consumed
for energy use. These
resources are captured by
CTI in a separate indicator
on renewable energy use.
WBCSD and Circle Economy
are currently exploring options
to align the two metrics to
provide users with the benefits
of both approaches.

Circular Transition Indicators V4.0 Metrics for business, by business 75

ANALYSIS OF THE UNDERLYING INDICATORS:
CIRCULAR INFLOW AND CIRCULAR OUTFLOW

The results are often based on a broad range of flows that enter and
leave the company, which can differ significantly on the mass and
circularity parameters.

The mass of flows

A mass-based indicator means heavier material flows have a greater
contribution to the percentage. A relevant assessment is to list the
linear flows from largest to smallest mass. Closing the loop on the
larger mass streams will provide a larger contribution to the level
of circularity. However, this may result in the overlooking of other
parameters, such as critical or priority.

The circularity of flows

GUIDANCE FOR THE TECHNICAL CYCLE

The circularity of the inflow in the technical sphere depends on the

characteristics of the flows to be non-virgin. The opportunity for
improvement is in assessing the characteristics of linear flows and
exploring renewable (moving towards the biological cycle) or non-virgin
alternatives.

The circularity of the outflow contains two components: recovery

potential and actual recovery. To improve recovery potential, the
analysis focuses on opportunities to optimize the design. For example,
modular design, design for disassembly, repairability, high recyclability
by using mono-materials, etc.

Improving actual recovery requires different actions. For example,

adopting new business models, such as product-as-a-service or
buy-back/take-back schemes, will likely significantly improve actual
recovery rates. Another option is to collaborate with value chain
partners that drive circularity, bringing more clarity into mass flows
down the value chain and a greater ability to develop a shared value
proposition.

Circular Transition Indicators V4.0 Metrics for business, by business 76

GUIDANCE FOR THE BIOLOGICAL CYCLE
IMPORTANT
Bio-based flows are not circular by definition. Bio-based materials CONSIDERATIONS ON
need to be at least renewable and preferably regenerative. Consider BIODEGRADABILITY
bio-based inflow as circular and label it as renewable if it is sustainably
grown and harvested at a rate that natural growth and replenishment Not all biodegradable
can occur after extraction. The circularity of flows in the biological products are bio-based
cycle therefore depends on the stream management characteristics: or made from renewable
if streams are not minimally sustainably managed, label them as resources: some fossil-
non-renewable. Therefore, the opportunity for improvement to have based polymers are
more circular inflow for bio-based streams is to increase the share of fully biodegradable (e.g.,
polybutylene adipate-
sustainably grown materials, for example by using certified sources.
coterephthalate (PBAT) or
polycaprolactam (PCL)).
The circularity of the outflow contains the same two components in
the biological cycle as for the technological cycle: recovery potential Not all bio-based products
and actual recovery. In the biological cycle biodegradability and are biodegradable. While
toxicity determine the recovery potential (see the Organisation for biodegradability is a property
Economic Co-operation and Development (OECD) biodegradability inherent to some bio-based
testing standard). Therefore, the improvement potential is to ensure products, many of them
that the bio-based product is biodegradable and does not contain are durable and do not
restricted substances beyond threshold levels. In the case of biodegrade. Biodegradation
hybrids (products containing both bio-based and technical flows) is a chemical process while
disintegration is a physical
it is possible to improve the recovery potential through the design: process. For a product to
separating the bio-based and technical components should be made decompose completely both
possible by design. must occur.

Improving actual recovery for products, by-products and waste Biodegradation is highly
streams moving in the biological cycle will depend on the type of dependent on factors such
valorization (refer to the hierarchy for the bioeconomy on page 61). as temperature, time and the
For non-edible bio-based flows the company can consider presence of bacteria and
valorization through technical cycle strategies and explore the related fungi. Higher temperatures
new business models. As these strategies are unlikely to be endless and controlled conditions
make industrial composting
for bio-based materials (i.e., paper fiber loses length and strength with
the most ideal environment
each recycling loop, leading to maximum recycling of around seven for plastics to decompose.
times) the flow needs to be prepared for recovery in the biosphere as
well (i.e., through biodegradation and/or nutrient recovery). For edible
flows, the key is for an actual living organism to consume it to be Source:
considered recovered. Therefore, avoid food waste and losses within This content is drawn from
the value chain and at the end-consumer to increase circular outflow. an EU project funded by
Although not fully circular, biodegradation of edible flows will provide a the Horizon 2020 program
50% recovery score (whereas for non-edible biodegradable streams, InnProBio: Biodegradability,
biodegradation is 100% recovery) and therefore could provide a Exposing some Myths and
slightly better alternative over landfill. Facts.

Circular Transition Indicators V4.0 Metrics for business, by business 77

EXAMPLES FOR THE TECHNICAL CYCLE
Non-virgin inflow
A construction company could increase circularity levels by replacing
virgin steel beams with reused beams or recycled steel.
Renewable inflow
A cosmetics company could increase circularity levels by replacing
virgin synthetic ingredients with renewable content.
Recovery potential
An ICT company could change the design of a product to enable
disassembly, allowing for repair, reuse and refurbishment.
Actual recovery – business model
An ICT company could change to a pay-per-use-business model,
enabling higher collection and reuse rates.
Actual recovery – collaboration
A company producing electronic equipment could collaborate with a
retailer to collect used equipment by stimulating the consumer with a
take-back scheme, ensuring the recovery of parts and materials.

EXAMPLES FOR THE BIOLOGICAL CYCLE

Non-virgin inflow
A paper company could increase the recycled content of paper and
card box.
Renewable inflow
A furniture manufacturer could only use Forest Stewardship Council
(FSC)-certified wood to ensure renewability and alignment with a
cycle of growth and replenishment.
Recovery potential
A cosmetics company could change the design of a product to
ensure the separation of biological and technical streams of hybrid
products, allowing for biodegradability of the bio-based streams.
Actual recovery
A fragrances company could change to a higher valorization type,
enabling full recovery of its residual streams by using them as input
for the food industry.
A supermarket could provide almost expiring products to food banks
to avoid food waste and increase the recovery.

Circular Transition Indicators V4.0 Metrics for business, by business 78

WATER AND ENERGY
Water circularity WATER CIRCULARITY

A company can improve its water circularity in two ways: Increase circular water
inflow
1. Better demand management, reducing the overall use of water, If located in a water-scarce
with a focus on reduction of linear water in- and outflows; area, a company can explore
opportunities to contact
2. Substitute linear water in- and outflows with circular water in- and other businesses to explore
outflows. sourcing third-party water
directly from other users.
Since local water source demand is a combination of all local
stakeholder needs (other businesses, communities, the ecosystem Increase circular water
itself) it is important to consider opportunities for improvement at a outflow
catchment scale and look through a wider lens when considering any When outflowing water
opportunities for improvement. Companies must engage with other circularity is low, an easy step
stakeholders in the water catchment area to collaborate on potential the company can take is to
circular solutions. either treat all its discharge
water to the standards of the
Renewable energy local water regulations or
make sure of its outsourcing
to a third party (water
This indicator demonstrates the percentage of renewable energy
treatment plant) that upholds
used. In theory, a fully circular economy runs on renewables and the same standards.
therefore the goal should be to reach 100%. Opportunities for
improvement are:
Increase internal circulation
• Decreasing overall energy consumption (relative to increasing the Exploring opportunities
% of renewable energy used), or to reuse or recycle water
flows from the company’s
own processes both
• Substitute fossil fuels with renewable alternatives. increases internal circulation
and improves demand
management, automatically
OPTIMIZE THE LOOP INDICATORS reducing the need for
% critical materials potential linear water in- or
outflow.
The results of this indicator demonstrate to what extent a company is
dependent on materials identified as critical. Even if the percentage
of critical materials is small, it may be relevant to further analyze it to
understand:

NATURE OF A
• The diversity in critical materials CRITICAL MATERIAL
• What material is it?
• The substitutability of critical materials • What is the respective
criticality of the material?
• The absolute use of critical materials • Is the material virgin or
secondary?
• Revenue dependent on critical materials (revenue at risk).

The characteristics of the critical materials

A company may have multiple critical materials in its inflow. It is
important to understand the nature of these materials. Not all materials
defined as critical have the same score on criticality, which is a
combination of supply risk and regional economic importance. It can
be relevant to evaluate the critical material flows based on size, revenue
dependent on the flow, and the relative criticality of the material.

Circular Transition Indicators V4.0 Metrics for business, by business 79

Substitutability of the critical materials
If it is possible to substitute the critical materials with alternative, non-
critical materials with the same or similar functionality, a company may
partly mitigate its risk. Therefore, it is relevant to assess whether any
substitutes are available.

The absolute use of critical materials

Even if the relative use of critical materials (in percentage) is low, the
absolute amount or costs of critical materials could reach a point where
absolute scarcity, price increase and price volatility affect business
continuity. Therefore, it can be relevant to also monitor the absolute use
of critical materials.

Figure 22: Recovery types

Re c yc l e

Re c yc l e Re m a n u f a c t u re

Re c yc l e n u fa
c t u re o r re f a i r o r re f u r b i s
ma
u rbi Re p h
Re sh

Re c y c l e Re u s e o r Re u s e o r Re u s e o r
re p a i r re p a i r re p a i r

Material Retail /
Manufacturers Users
producers distribution

Low RETAINED VALUE High

Recovery types

GUIDANCE FOR THE TECHNICAL CYCLE

In the technical cycle, the assumption is that all recovery strategies
should take place at some time at some place in the value chain. The
opportunities for an individual company to shift between recovery
types will largely depend upon the type of company and its position
in the value chain. Nonetheless, a company may evaluate the
opportunities to ensure the outflow retains the highest value possible
by moving towards higher value maintaining strategies (i.e., reuse over
recycling). A company explores the effects of innovative business
models such as product-as-a-service or sell-and-buy-back and
also less-radical changes such as new value chain collaborations on
enabling the shift towards higher value-retaining recovery strategies.

Circular Transition Indicators V4.0 Metrics for business, by business 80

GUIDANCE FOR THE BIOLOGICAL CYCLE
NOTE
In contrast to the technical cycle, the assumption that all recovery A product’s design should
strategies take place at some time at some place in the value chain ensure that its durability
does not hold for the biological cycle. Therefore, the driver of every and useful lifetime have a
individual company should be to climb up the hierarchy to enable high direct relationship with its
valorization strategies. A company may collaborate with other partners environmental impact and
embodied energy.
in the value chain to look for alternative recovery types or set up
adjusted logistics itself to achieve higher valorization of its outflow. Companies should ensure
that efforts to extend the
Actual lifetime lifetime of products and
materials do not harm
The goal of a circular economy is to retain the value of resources, recycling potential at the end
products, parts and materials by creating a system that allows for of life.
renewability, long life, optimal (re)use, refurbishment, remanufacturing,
recycling and biodegradation. Transitioning to a circular economy Types of product
obsolescence:
entails completely rethinking how products are designed, produced
and discarded, with a view to optimizing resource loops across the • Technological and
value chain. functional – products
with improved
Environmental concerns and consumer demand are driving legislation performance come to
to support product longevity, with the aim of maximizing value created market
per each unit of resources. New legislation spanning countries rewards
• Psychological (cultural or
companies that promote product durability (e.g., repairability index, right esthetic) – desire to buy
to repair) and discourages premature or planned obsolescence. more or newest version
based on fashion and
With CTI’s actual lifetime indicator, companies can assess their marketing
performance in effectively slowing down resource loops.
• Systemic – alter the
We have developed the indicator to drive companies to monitor what ecosystem to make
actually happens to products when they leave the company’s gate product more difficult to
use
and identify actions that will promote longer useful lives for products,
including through reuse, refurbishment and remanufacturing. • Economic – loss of
useful properties
A product can achieve a longer than average actual lifetime when because cost of repair is
it’s designed for maximum performance across both technical and higher than new product
functional lifetimes. While the technical lifetime is part of the intrinsic
Source: Policy Instruments
properties of the product, the conditions created around the product
on Product Lifetime
determine the functional lifetime.51 Extension, PLE
Companies may improve their actual lifetime indicator score by
designing products and product ecosystems that enable maximum
technical and functional lifetimes. They can achieve this by improving
product design for durability and reliability, modularity and part
standardization, ease of maintenance and repair, upgradability,
disassembly and reassembly, and component recovery52 via
refurbishment or remanufacturing.

Along with designing for durability, companies will achieve longer

lifetimes for their products by preventing premature obsolescence.
This will entail a product ecosystem that keeps products performing,
relevant, easy to use, upgradable, repairable and desirable.

Circular Transition Indicators V4.0 Metrics for business, by business 81

VALUE THE LOOP INDICATORS

Circular material productivity

This indicator expresses monetary value per unit of mass. This

absolute value will vary greatly across companies and it is best to use
it to compare performance over time. An increase in circular material
productivity demonstrates a decoupling of financial growth from
material consumption.

In addition, it is relevant to compare a decrease or increase in circular

material productivity externally. For example, if enough anonymized and
aggregated data is available, one possible insight is that the company
had a 2% increase in circular material productivity over one year while
the sector had a 5% increase, which could indicate that the company
has additional opportunities to seize.

Companies should consider how different factors like exchange rates,

inventory and CTI revenue will affect circular material productivity over
time and measure the calculation’s sensitivity to such factors.

Even though the calculation for circular material productivity is not

the same as that for domestic material consumption (DMC)/gross
domestic product (GDP), both metrics demonstrate decoupling.
Therefore, it might be interesting to compare changes in circular
material productivity with the increase in DMC/GDP on a national or
sector level.

CTI revenue

This indicator can illustrate a few insights for the company:

• Understanding the percentage of the company’s total revenues

derived from circularity

• How the company’s revenues of more circular products compare

to less circular ones

• How the company’s product portfolio breaks down across Close

the Loop performance tiers, highlighting where the company may
want to focus improvement efforts on product circularity or sales.

On this last point, charting the company’s or business unit’s product

portfolio across the Table 7 will help bring each of these insights to
light. Within the analysis phase the company can use opportunities for
portfolio steering by:

• Innovating new circular product (groups)

• Increasing the circularity of existing products, and/or

• Driving sales of more circular alternatives over less circular

alternatives.

In doing this exercise, a company may find that its overall circularity
score (based on mass of % circular inflow and % circular outflow) may
be different from the percentage of total company revenue quantified
as circular as per the CTI revenue indicator.

Circular Transition Indicators V4.0 Metrics for business, by business 82

 If a company finds that its CTI revenue as a percentage of total revenue
is greater than the (mass-based) circularity % material circularity, this
may imply that the company makes disproportionally more revenue off
more circular products or services.

If % CTI revenue/total revenue is less than % material circularity, the

company likely depends on more linear products in its portfolio to
generate most of its revenue.

To analyze this further, Table 7 allows the company to observe how

its revenues fall across circular deciles (e.g., 0%, 1-10%, etc.). This will
show how linear its revenues are (and vice versa). The company can
then use this table to adopt targets for improving the product portfolio
to become more circular.

Table 7: CTI revenue

% circularity ​ Weighted average revenue” (%

Revenue (USD $)
(Close the Loop indicator) circularity x revenue)

0% USD $400 million USD $0 million

1-10% USD $150 million USD $7.5 million

11-20% USD $200 million USD $30 million

21-30% USD $150 million USD $37.5 million

Company A - CTI revenue

31-40% USD $50 million USD $17.5 million

41-50% USD $30 million USD $13.5 million

51-60% USD $20 million USD $11 million

61-70% - -

71-80% - -

81-90% - -

91-100% - -

Total revenues USD $1 billion

CTI revenue USD $117 million (11.7%)

The company can implement this analysis at the product group level
(if there is sufficient variation within the group) or higher, including
business unit or the whole company portfolio. Taking this table further,
the company may wish to add additional columns on stock keeping
units (SKUs) or % of total product portfolio to capture more relevant
insights side-by-side. This will allow the company to see both where its
revenues fall across % circularity performance tiers and where most of
its products reside.

Companies should illustrate the findings of this table in graphical form,

including histograms, bar and a combination of bar and line.

Circular Transition Indicators V4.0 Metrics for business, by business 83

IMPACT OF THE LOOP NOTE
GHG impact For CTI Tool users:
In Step 5 – Analyze,
Inflow — Technical cycle companies can visualize
potential emissions savings
Companies should analyze the information derived from the Impact the by increasing the amount of
Loop module in light of the % material circularity. The combination of recycled content to 100% for
increase in material circularity and potential for emissions savings can selected materials flows.
support companies in ranking different solutions and focusing on the
largest gains from both a material flow and GHG perspective. For companies performing
the assessment outside
The result of the calculation phase is the amount of GHG emissions of the CTI Tool: In addition
that can be saved if the materials go from the current % recycled to the current vs 100%
content to 100% recycled content. This information can be used for GHG impact comparison,
internal purposes to analyze improvement opportunities. We would companies with specific %
like to emphasize that the output is not a carbon footprint or life-cycle recycled content objectives
may find it relevant to
assessment (LCA). We strongly recommend that companies use
calculate the impact that
granular approaches such as LCA or others for final decision making increases in % recycled
and external communication. content may offer in terms of
GHG emissions savings.
Based on the previous example, we demonstrated a 44% reduction
in the GHG emissions of a plastic cover that went from 5% to 100%
recycled content. In addition to a 700-gram plastic cover, the product
contains a 1,500-gram aluminum frame that consists of 85% recycled
content. The GHG emissions factor for the sourcing of the recycled
aluminum is 1.2 kg CO2-eq/kg material and 5.7 kg CO2-eq/kg material
for the virgin aluminum.53

(1.5 x 1.2) - [ (1.2752 x 1.2) + (0.225 x 5.7) ]

x100
(1.2752 x 1.2) + (0.225 x 5.7)

The GHG impact measurement shows a 36% reduction in GHG

emissions when the recycled content of the aluminum frame is
increased from 85% to 100%.

From a % material circularity perspective, there is a clear preference

to start by improving the PET flow used for the cover over a marginal
improvement of the aluminum frame, which is already 85% circular.
Based on the GHG emissions impact measurement, the company
may obtain a significant reduction in their carbon footprint by moving
to 100% circular aluminum sourcing. Depending on the company’s
sustainability targets, the company will decide whether to include a
transition to 100% circular aluminum sourcing in its action plan.

Circular Transition Indicators V4.0 Metrics for business, by business 84

Inflow – Higher value (reuse, refurbish, remanufacture)

Consider a company whose inflow consists out of 200 new laptops

for their employees. Currently their inflow is 100% linear as the laptops
are newly produced, emitting 281.2 kg CO2eq per laptop (175.75 kg
CO2eq/kg).54 The company is considering increasing their percentage
circular inflow by purchasing refurbished laptops.

The emissions of refurbishing a laptop are 0.9 kg CO2eq per laptop

(0.375 kg CO2eq/kg). 55 The laptop weighs 1.6 kg.

(320 x 0.375) - (0 x 0.375) - (320 x 175.75)

(0 x 0.375) + (320 x 175.75)

In total -56,060 kg CO2 can be saved (-99.7% reduction) for the

transition from 0% circular laptops to100% circular laptops.

Outflow

For the outflow, the results of the calculation phase is the amount of
GHG emissions that can be saved if the materials go from the current
% of recovery to 100% recovery via recycling, remanufacturing or
reuse. Based on the example provided for the outflow, we showed a
70% reduction in GHG emissions of a PET laptop cover that went from
30% recycling to 100% recycling. In addition to the 700-gram cover,
the product contained of a 1,500-gram aluminum frame that is for
90% recycled and 10% landfilled. The emissions factor of recycling the
aluminum frame is 0 CO2-eq/kg (on the outflow end) and 0.0393 CO2-
eq/kg for the landfilling.56

(1.5 x 0.0393 ) – (0.9 x 1.5 x 0) – (0.1 x 1.5 x 0.0393)

x100
(1.5 x 0.0393)

The GHG impact measurement shows a 10% reduction in GHG

emissions when the reuse of the aluminum frame is increased from
90% to 100%. In this case the savings are based on the savings related
to the 10% recovery via reuse. From the material circularity perspective
on the outflow side there is a clear preference to start improving the
recovery of the PET cover, since there is a marginal improvement for
the aluminum frame, which is already 90% recycled.

Circular Transition Indicators V4.0 Metrics for business, by business 85

Nature impact

The nature impact indicator helps companies understand how

their circular performance impacts nature. The indicator allows for
comparison between different sourcing strategies, including circular
sourcing, to see which one is most effective in reducing land-use
impacts and pressure on nature.

EXAMPLE

Bio-based material

Consider a car company whose material inflow consists of 6,250 tons

of cotton each year for the production of upholstery. Currently 80%
of the inflow is virgin inflow sourced from a farm in India that uses
conventional agricultural practices (Source A, Table 8). This inflow is
considered linear as conventional agricultural practices are used that
do not promote renewability. The company is considering whether it
should aim to convert the remainder of virgin inflow to more non-virgin
content or instead go for the renewable option of organically certified
cotton. Both are considered circular options.

• Source B: A farm in China with certified organic agricultural

practices (Table 8)

• Source C: A cotton recycling centre in the UK (Table 9)

We plotted the extent, condition change and significance of the current

state and the two circular scenarios using the scoring card in Table 8.
The results show that Source C: recycled cotton is likely to be the
circular alternative with the lowest nature impact related to land use.
Therefore, the company may achieve synergies between circularity and
nature impacts by moving to 100% recycled cotton sourcing.

Source B: organic cotton from China, is better than conventional

farming in India as the on-land practices of organic farming are
better for nature. Another beneficial aspect is that the significance of
biodiversity in China is moderate whereas it is high in India, meaning
that producing cotton in China has less of a land-use impact than it
does in India. Note that organic agriculture can be less productive
than conventional agriculture in the short term,57 which may lead to a
higher score on the extent indicators. We also reiterate that the impacts
of conventional cotton farming via pollution, water use and GHG
emissions are likely to be larger than those from organic farming but are
not taken into account here.

Consequently, purely from a land-use perspective, it is preferable to

introduce recycled cotton instead of changing the primary sourcing.

Circular Transition Indicators V4.0 Metrics for business, by business 86

Table 8: Illustrative example of indicator application for recycled sourcing

Source Extent Condition Change Significance Score

A. India, conventional farming Small - medium Very large High 10 x 1 x 3 = 30

B. China, organic farming Small - medium Large Moderate 10 x 0.7 x 2 = 14

C. UK, recycled Negligible Very large Low 0.01 x 1 x 1 = 0.01

The scores can also allow companies to visually compare different

circular strategies, e.g., relative to each other (Figure 23) or relative to
lowest (0.0001) and highest possible scores (>5,000) or with other
companies for benchmarking, if scores disclosed.

Figure 23: Visual comparison of the different cotton sourcing

scenarios described in the bio-based material example above

35

30

25
Na t u re i m p a c t N a tu re i m p a c t
N a t u re i m p a c t score

d e c re a se of B d e c re a se o f C
re l a t i ve to A re l a ti ve to A
20

15

10

0
S cen ario A S cen ario B S ce na r i o C

Mineral-based material:

Consider a company whose inflow consists of 100% virgin aluminum

for the production of laptops. The company analyzes the land-use
impacts for their inflow in 2022 sourcing 15 million kg of aluminum. The
company currently sources virgin aluminum from Carajas open pit mine
in Brazil (Source A, Table 9) and is considering two potential alternative
sourcing strategies: sourcing linear materials from Sweden or a circular
alternative from the UK.

• Source B: An underground mine in Kiruna, Sweden (Table 9)

• Source C: An aluminum recycling center in the UK (Table 9)

Circular Transition Indicators V4.0 Metrics for business, by business 87

Based on published rock-to-metal ratios,58 15 million kg of aluminum
requires extraction of approximately 105 million kg of rock. Applying
simple rock density and mine site geometry calculations estimates
an attributable extent of 42.75 m2 (very small, see technical annex for
details). Since this entire area is converted either into a mine pit or
associated infrastructure, the condition impacts are very high. The
extent and condition of an underground mine are also likely to be very
small and very high, respectively, while the extent of land use from
recycling is negligible (Table 9). The condition change of the recycled
aluminum is very large, as the recycling center holds no biodiversity.
The significance of biodiversity in Carajas Brazil is high, while it is low for
Sweden and the UK.

Using the scorecard represented in 5, with results outlined in Table 9

and Figure 24, the nature impact indicator shows that Source C, the
recycled aluminum from the UK, is the sourcing strategy with the lowest
impact on nature. This shows that improving circular performance goes
hand in hand with reducing pressure on nature.

Table 9: Illustrative example of indicator application for recycled

sourcing

Condition
Source Extent Significance Score
Change

A. Brazil, Carajas Very

Very large High 0.1 x 1 x 3 = 0.3
open pit mine small

B. Sweden, Kiruna Very

Very large Low 0.1 x 1 x 1 = 0.1
underground mine small

C. UK, recycled Negligible Very large Low 0.01 x 1 x 1 = 0.01

Figure 24: Visual comparison of the different aluminum sourcing

scenarios described in the mineral-based material example above

0 . 35

0 . 30

0 . 25
Na t u re i m p a c t sco re

N a t u re i m p a c t
re d u c t i o n o f B
0 . 20
re l a t i ve to A
( i .e. , n a t u re sy n e rg y )
N a t u re i m p a c t
re d u c t i o n o f C
0 . 15
re l a t i ve to A
( i .e. , n a t u re sy n e rg y )

0 . 10

0 . 05

0
S cenario A S cenario B S cen ar i o C

Circular Transition Indicators V4.0 Metrics for business, by business 88

 6 Prioritize
Identify opportunities
The insights gathered on circular performance indicate which flows
have the greatest potential for improvement. However, to use this
information to make decisions and prioritize, the company might want
to understand how circular performance relates to linear risks. By
assessing company exposure to risks, and by subsequently evaluating
opportunities via a business case, companies can start prioritizing
actions. For this section, we refer to WBCSD’s 2018 Linear Risks
report,59 which explains circular risk and opportunities.

IDENTIFY LINEAR RISKS AND CIRCULAR

OPPORTUNITIES
As it is possible to link the indicators used in the assessment to linear
risks and circular opportunities, these connections can give the
company an initial picture of what kind of risk and opportunities are
relevant (see Table 10).

Table 10: Examples of risks and opportunities.

Note: Might contain overlap; list is not exhaustive.

Type of risk Market Operational Business Legal

Involve market- and trade- Involve factors that Are a result of emerging Arise from current
related factors that impact impact a firm’s internal societal, economic and and future regulations,
Definition business assets and operations political trends that standards and protocols
liabilities impact the firm’s strategic
business objectives

Tech: cost New partnerships Disruptive new Tech: subsidies for

advantage non-virgin technologies secondary material use
resources Tech: set-up take-back
and collection schemes Tech: tracking and tracing Bio: subsidies for
Opportunity

Bio: premium for in value chain for return logistics renewable (certified
certified bio-based resources)
resources Bio: food waste Bio: increased technology
reduction program for supply chain
within value chain transparency

Resource price Supply chain failures Changing consumer Fines or lawsuits

% circular volatility demand
inflow Tech: eco-design
Tech: scarcity of Tech: growing demand for directives requiring a
certain inorganic second-hand products minimum % recycled
materials with content
specific functionality Bio: growing demand for
(i.e., critical minerals) plant-based diets Bio: new regulations
Risk

and policies for bio-

Bio: scarcity of based materials
renewable resources
– i.e., competition in
land use between
food crops and
crops for renewable
energy

Circular Transition Indicators V4.0 Metrics for business, by business 89

 Tech: valorizing Attracting and retaining Tech: New business Governmental
waste as secondary talent models such as product stimulation of circular
resource as a service or sell and buy solutions
back
Bio: valorizing Tech: subsidies and
Opportunity waste to distill bio- Bio: higher valorization incentives for business
nutrients and avoidance of valuable model innovation
food loss
Bio: subsidies and
incentives for high
valorization of
% circular biodegradable flows
outflow
Trade bans (on Internal process Changing consumer Extended producer
resources & waste) failures demand responsibility
Tech: i.e., Basel Tech: right to repair Tech: mandatory
convention for movement contribution to open-
border crossing of loop collection and
Risk

electronics Bio: consumer-driven recycling schemes

initiatives to combat food
Bio: discrimination waste Bio: new regulations or
between edible and policies for avoidance
non-edible waste of food loss
stream handling

Trading water rights Reliability of water Advantage over Potential for more
Opportunity

in states with formal inflow with consistent competitors secure water rights
water markets flow and pressure due to demonstrable
sustainable
% water management
circularity
Dependency on Water shortages Local reputation and loss Upcoming tightening of
low water prices, disrupting operations of social license to operate regulations with rising
Risk

which can rise when and unforeseen water scarcity

scarcity increases mitigation cost Local activism

Abundance of New partnerships Decreasing cost of Renewable energy

Opportunity

renewable resources renewables subsidies

% renewable
energy
Resource scarcity Worker safety issues Increasing fossil energy More stringent laws
Risk

prices

Closing the loop Job creation Disruptive new (New) government

Opportunity

technologies policies

% critical
materials
Lower investor Worker safety issues Changing consumer Sourcing rules and
interest demand regulations
Risk

More resilient and Drive internal Brand equity and Preparedness

Opportunity

steady cash flows competition across reputation benefits for reporting and
from portfolio business disclosure

CTI revenue

Lack of insights Avoidable layoffs due Competitive disadvantage Upcoming regulations

responding to to failure to improve due to inaction on more linear products
Risk

investor inquiries portfolio

Circular Transition Indicators V4.0 Metrics for business, by business 90

 Reduced VAT Identification of design Customer fidelity (e.g., Digital product
rate for repaired/ improvements for product as a service) passport
refurbished future products
products Supply chain security Repairability index/
Work with higher added scoring system (e.g.,
Opportunity Market expansion value materials Ifixit)
opportunities
Reduction of waste Green procurement
Increase of product generation to require min. 25%
portfolio refurbished and
second-hand products
Reduction of
manufacturing costs
Actual
lifetime Reduction of
sourcing costs

Ensure availability Lack of take-back, Consumer concern for Legislation against

of technical service technical support or prioritizing products from premature or planned
and supply/spare repair infrastructure companies that address obsolescence
parts after warranty key value chain issues
expires (e.g., Legislation to promote
minimum durability
Risk

ecoinvent requires
availability of spare criteria, extended
parts of 10 years product responsibility
for cold and wet
Right to repair
appliances)

Better positioning Better positioning Providing alternatives with Benefits for products
by using less carbon by using less carbon a lower carbon footprint offerings with lower
Opportunity

intensive materials​ intensive materials carbon footprint

Better positioning
by using less carbon
intensive materials

Increased demand Factoring of carbon Providing alternatives with Ability to meet waste
GHG impact for circular recovery price into procurement a lower carbon footprint GHG reporting
of materials due of virgin materials​ requirements
to end of life GHG
scope 3 savings
commitments
Risk

Increased demand Ability to meet consumer Ability to meet waste

for circular recovery demand for lower impact GHG reporting
of materials due products requirements
to end of life GHG
Scope 3 savings
commitments

Access to consumer Reduce or substitute Provide alternatives Advance preparation

premiums and dependencies with with a lower impact on for compliance
impact investment highest nature-related biodiversity to (new) with new regulatory
Opportunity

for reduced nature- risks. Contribute clients. frameworks for

related damage. to sector-level biodiversity, such as
conservation and the EU’s Corporate
restoration practices in Sustainability Reporting
sourcing landscapes. Directive.

Nature Failure to meet Nature-related risks Inability to meet Failure to anticipate or

impact increased demand could threaten the consumer demand for comply with existing
for materials that production of key sustainably-sourced regulations could limit
are sustainably- commodities across products. Reputational access to certain
sourced, in particular a supply change. For risk / opposition from local markets or financing,
for materials that example, land-use communities, indigenous create financial and
Risk

are deforestation & change past certain groups and environmental legal liabilities.
conversion free. ecological thresholds organizations.
can affect water
quantity, regional
climate, pollination, and
yields.

Circular Transition Indicators V4.0 Metrics for business, by business 91

LINEAR RISK ASSESSMENT AND PRIORITIZATION
NATIONAL OR
We recommend that companies formulate and prioritize actions in INTERNATIONAL LEVEL
light of their impact on identified linear risks in different scenarios. TARGETS SCENARIO
This process can be as simple (half-day workshop with experts in Various countries and
the company to go through the steps) or as elaborate (days to weeks international authorities, like
with detailed data for thorough analysis) as desired, depending on the the European Commission,
needs and resources of the company. Either way, we recommend the have set goals and targets
following steps: to adopt a circular economy.
Policy packages describe
(potential) policy measures
over time. It is relevant to
Define and describe how those would
Scenario Establish risk
assess action influence the four risk
analysis severity
roadmaps categories and how it relates
to the targets formulated at
the company level.
Outline circular economy Establish the severity of Define and assess action
scenarios: linear risks: roadmaps based on:
1. No regulatory or market 1. Threat prioritization 1. Ability to mitigate linear
pressure 2. Vulnerability prioritization risks
2. Diverse national or regional 2. Benefits from circular
POLICIES
regulatory pressure opportunities For an overview of circular
3. Strong global market and economy policies, see
regulatory pressure
our policy brief Driving
the Transition to a Circular
Economy.
1. Scenario analysis

Similar to climate scenarios, there are endless scenarios for how

the transition to a circular economy may develop for each sector. By WHAT IS A SCENARIO?
researching and forecasting alternative scenarios, companies can A scenario describes a path
take into consideration future developments in the formulation and of development leading
prioritization of actions. to a particular outcome.
Scenarios are not intended
At this stage, a company should investigate possible future scenarios to represent a full description
and develop an understanding of how these may affect the business. of the future, but rather to
Companies may apply a time-bound approach to understand highlight central elements
developments in each possible scenario (e.g., today, in 5 years, in 10 of a possible future and
years). In this exercise, companies should include: to draw attention to the
key factors that will drive
• No regulatory or market pressure: How will the company be future developments. It is
affected if the playing field remains the same? important to remember that
scenarios are hypothetical
• Diverse national or regional regulatory pressure: How will constructs; they are not
national or regional targets affect the business of a company in forecasts or predictions, nor
the future? are they sensitivity analyses.
Scenario analysis is a tool
• Strong global market and regulatory pressure: How will robust to enhance critical strategic
combined global trends (technology, markets, regulation) affect thinking. A key feature of
the business of the company? scenarios is that they should
challenge conventional
In each of these scenarios, companies can decide which factors to wisdom about the future.
use to assess the impact on the business. Suggestions for monetary, In a world of uncertainty,
quantitative or qualitative factors are: scenarios are intended to
explore alternatives that
• Costs may significantly alter
the basis for “business-
• Revenues (including CTI revenue) as-usual” assumptions.
(Source: Task Force on
• Profit Climate-related Financial
• Customer relationships Disclosures 2017 report
on The Use of Scenario
• Employee relationships Analysis in Disclosure of
Climate-Related Risks and
• Supply chain collaboration Opportunities.)

Circular Transition Indicators V4.0 Metrics for business, by business 92

 In addition to scenario analysis, other tools might be useful, including
expert input, forecasting and valuation and other environmental, social COSO
and governance (ESG)-specific tools. The COSO Enterprise Risk
The Committee of
Management (ERM) framework elaborates on all of these.60 Sponsoring Organizations of
the Treadway Commission
(COSO) is a joint initiative
2. Establish risk severity: Threat and vulnerability assessment bringing together five private
sector organizations. It
is dedicated to providing
In this step, companies use the information gathered from the thought leadership through
scenario analysis to rank and prioritize linear risks. Common criteria the development of
for risk prioritization are severity of adverse impact and likelihood; frameworks and guidance on
however, relying on these factors alone might limit the accuracy of the enterprise risk management,
prioritization. Therefore, we suggest using two more-elaborate criteria internal control and fraud
defined by the COSO ERM framework: deterrence.
Source: www.coso.org
• Threat (inherent risk), where the impact (the consequences) and
the velocity or speed of onset (the speed at which risk impacts an
entity) determine the magnitude of the threat.

• Vulnerability (residual risk), defined in terms of adaptability

and recovery. The magnitude of the vulnerability depends on
adaptability (the capacity of an entity to adapt and respond
to risks) and recovery (the capacity of an entity to return to
tolerance).

Companies can visualize the above-mentioned risk factors in

one overview to enable formulation of potential actions and final
prioritization. Illustrates the threat of a hypothetical company’s linear
risk (y-axis) versus vulnerability (x-axis).

The graph only shows the main risk categories for demonstration
purposes. However, it can be more specific and include all linear risk
subcategories, including resource scarcity and changing consumer
demands.

This visualization can help prioritize which risk to address first. Based on
this prioritization, and in combination with the insights obtained during
the analysis phase, companies can plan the roll out and next steps.

Figure 25: Plotting the risks

Threat (impact & velocity)

Business Market

Legal

Operational

Vulnerability adaptability & recovery

Circular Transition Indicators V4.0 Metrics for business, by business 93

3. Define potential action roadmaps

In this step, companies define and assess potential action roadmaps.

The purpose of this step is to use the insights gathered on circular
economy scenarios outlined in Step 1 and relevant linear risks explored
in Step 2 to describe how the business of the company may develop in
the future.
We recommend starting by evaluating a “business as usual” (BAU)
situation that describes how the company’s business will develop
without taking additional action for circularity.
Afterward, companies can use the BAU situation as a baseline
and to outline potential action roadmaps in which different actions are
taken to:
• Mitigate the identified linear risks
• Unlock potential benefits from circular opportunities.
Companies can carry out the description of how each action roadmap
changes the future of the company using a text-based system,
meaning similar to writing a story, or can visualize it graphically, for
example as a timeline with different future events. We recommend
using the quantitative and qualitative factors defined in Step 1 in order
to highlight the effects achieved in each action roadmap.

Circular Transition Indicators V4.0 Metrics for business, by business 94

LINKING CIRCULAR SOLUTIONS TO ACTION REPLACING VIRGIN
ROADMAPS INFLOW WITH
SECONDARY OR
In the previous steps, companies identify: RENEWABLE INFLOW
Replacing virgin inflow
1. Material flows with improvement potential (Step 5) with secondary inflow or
renewable inflow reduces
2. Action roadmaps to address linear risks and circular linear inflow mass. If the price
opportunities. of the product remains the
same, the performance on
Companies should consider both aspects as they assess the most the indicator improves.
appropriate circular solutions at a material flow level. At this stage,
companies should engage with stakeholders from different business LIGHT-WEIGHTING
processes, (e.g., from product development, supply chain, production, A PRODUCT
business models or end-of-life operations), to analyze how proposed Light-weighting a product
solutions will affect corresponding material flows and indicators’ should not affect the price
results in the CTI framework. of the product and therefore
will not impact company
Some recognized circular solutions to improve performance for revenue. If the material
indicators included in the CTI framework are: removed from the product
(partly) consists of linear
For inflow inflow, the linear inflow will
• Replace current linear inflow with non-virgin alternatives decrease. This results in
a higher circular material
• Replace current linear inflow with renewable alternatives productivity.
DIGITALIZATION
• Replace non-renewable bio-based resources with renewable FROM HARDWARE TO
alternatives (for example through certification for sustainably SOFTWARE
managed bio-based resources)
If software is offered in
• Reduce resource use through light-weighting of products addition to hardware, the
absolute revenue grows.
• Reduce resource use through use optimization, digitalization, The software can provide
replacing physical products with services (called “servitization” in additional functionality to
some sectors), durability, etc. the hardware or can replace
part or all of the hardware.
• Reduce resource use through optimizing nutrient consumption If this is (partly) made from
(i.e., avoiding food waste and replacing nutrients/protein with less linear inflow, the linear inflow
resource-intensive alternatives) will decrease. This results
in higher circular material
For recovery potential productivity.
• Redesign to incorporate, among others, modular design, design
for disassembly, high recyclability by using mono-materials
(technical cycle) and/or biodegradability and non-toxicity
(biological cycle)
For actual recovery
• Increase actual recovery by selling a product as a service or
instituting pay per use (technical cycle)
• Increase actual recovery through buy-back/take-back schemes
(technical cycle)
• Increase the actual recovery through value chain collaboration
and partnerships for collection and recovery programs
• Increase biodegradable outflow that is actually consumed (i.e., by
avoiding food waste or high valorization) (biological cycle)

Circular Transition Indicators V4.0 Metrics for business, by business 95

For water circularity
TRANSITION TO PAY-PER-
• Replace linear water sources with circular alternatives like USE MODEL
third-party water or reused wastewater from the facility’s own
processes where possible increase treatment of wastewater In the transition from a
(either onsite or through a wastewater treatment facility) to product sales model to a
regional regulatory quality levels before discharge into the local pay-per-use model, circular
watershed material productivity
increases as the business
• Find alternatives to minimize transportation of water out of the model will enable the cycling
local watershed (either through shipping of product, evaporation of products and payment as
or discharge in the sea) a service (therefore the linear
inflow goes down relative to
For actual lifetime revenue generated).

• Design products for durability, reusability, upgradability and SELLING MORE DURABLE
PRODUCTS
repairability
The assumption is that
• Implement business models that incentivize longer useful lives products made at a higher
(e.g., product as a service) quality are more durable,
thus the price per product
• Provide accessible technical service and supply/spare parts for can increase. Therefore, the
products beyond warranty relative revenue in relation
to linear material use will
• Limit software obsolescence to improve durability of electronics improve if linear material use
remains similar.
For CTI revenue
• Improve product portfolio circularity by implementing solutions
highlighted under “for inflow”, “for recovery potential” and “for
actual recovery”
• Drive increased sales in more circular products (compares to less
circular products)
This list is not exhaustive and could grow over time, but it is a good
starting point to look at possible solutions to consider. The examples
on this and the following page illustrate what some of these solutions
could look like.
By making assumptions on the changes in material flows, companies
can calculate the effects on material circularity performance in each
course of action. In this way, it is possible to identify improvement
potentials in relation to the BAU scenario (see Figure 26).61
Additionally, companies can use the results to define ambition levels
as part of their strategic target setting.

Figure 26: Comparing action roadmaps to improve material circularity

performance
70%

60%
Material circularity

Ambition level for target setting

50% Business as usual

40%
Maximize circular inflow

30%
Enhance actual recovery

20%
Optimize recovery types

10%

0%
2020 2025 2030

Circular Transition Indicators V4.0 Metrics for business, by business 96

CIRCULAR OPPORTUNITIES: EVALUATE THE
BUSINESS CASE

At this stage in the process, companies have more clarity about:

• The material flows with improvement potential (Step 5)

• Prioritized action roadmaps to address linear risks and circular

opportunities

• The circular solutions and their effects on material circularity

performance

Evaluating the business case can help, either by selecting potential

options or by verifying their expected business outcomes. Our
8 business cases for the circular economy report emphasizes
that circular business practices can accelerate growth, enhance
competitiveness and mitigate risk. To seize circular opportunities, it is
necessary to demonstrate the business case.

In principle, the circular business case is like any other business

case; but there is potential to overlook some circular business case
characteristics when applying business-as-usual. Therefore, we list
some relevant considerations when evaluating the business case for
circularity below.

1. Evaluate as any other business case

The first step is to assess it like any other business case. If there
is already a clear case, there may be no need to demonstrate the
circular added value.

2. Consider potential cost savings in a circular business case

• Savings can be related to the inflow by replacing linear (virgin non-

renewable) by circular inflow (either renewable or non-virgin).

cost savings = costs 100% linear inflow – costs current inflow

potential cost savings = costs current inflow

– costs 100% circular inflow

• Savings can be related to better client retention and acquisition

(either by the “green image” or by fostering long-term
relationships in product-as-a-service or buy-back/take-back
contracts), which can reduce marketing costs.

• Savings can be related to better retention and attraction of

talented employees (driven by the “purpose” of circular business).

• Savings can be related to the avoidance of losses (for example

nutrient loss related to food waste for the biological cycle or
reusing rest streams for the technical cycle).

• Savings can be related to reduced waste management costs as

resources are recovered and reused.

Circular Transition Indicators V4.0 Metrics for business, by business 97

3. Identify increases in revenues

• New customers attracted by circularity, convenience and/or

sustainability.

• New segments because of lower initial investment for a service

than a product (pay-per-use model) by clients.

• New revenues related to high valorization of waste streams and

(by-) products.

4. Anticipate and respond to growing investor interest

As investors increasingly become aware of circular economy

opportunities, companies should proactively communicate with
investors about their commitments to the circular economy and
be prepared to demonstrate performance when approached by
investors.

5. Account for the long(er) term perspective

Product-as-a-service or trade-in offers are based on longer term

service contracts or buy-back/take-back offers. Adopting these
business models may stabilize profits over time and improve future
cash flow predictability.

• By maintaining ownership of the products or regaining access,

the company secures future supply and hedges against future
resource inflow price volatility.

The societal shift to a circular economy may create future changes

in costs savings, profitability and legal requirements (see also the
section on scenario planning).

Sanity check:

To avoid adversely impacting other externalities when at scale, it

is important to ensure that the company avoids tunnel vision in
pursuing circular ambitions and instead accounts for the broader
sustainable impacts. Complete the picture by complementing circular
performance assessments with environmental and social life cycle
assessments (LCAs) and other tools. LCAs and other product-related
indicators remain key tools to assess or compare circularity between
different products.

Always implement these considering the local context to account for

all intermediary steps and to identify the most appropriate solutions.
This will ensure that the company recognizes any potential trade-offs
that may present themselves in analyzing circular strategies across
different environmental and social impacts and dependencies.

Circular Transition Indicators V4.0 Metrics for business, by business 98

 7 Apply
Plan and act
After analyzing the results, prioritizing the risks and opportunities,
SMART TARGETS
assessing the circular solutions and defining the business case, the
next step is to formulate targets for improvement and execute related Specific: focus on one
actions. element of the indicator at
a time (formulate separate
targets for the % non-virgin
Formulate targets inflow and the % renewable
inflow)
Based on the analysis, the potential opportunity for improvement has
become apparent. In addition, the prioritize phase has identified the Measurable: focus on
quantitative targets captured
risk and opportunities to address. When combined, this information
within the framework
provides relevant evidence to formulate SMART targets.
Ambitious yet achievable:
based on the controllability
Roll out actions assessed in the planning
It is necessary to create actions in order to achieve the targets. phase, focus on targets that
largely depend on internal
Although it is up to the company to further define the specific actions factors to ensure it
per target, the following is some guidance on elements to consider. is achievable
Relevant: focus targets on
Define what needs to happen the most relevant areas
based on the analysis (i.e.,
The target gives direction on what needs to happen. As described in
the largest flows or the most
the analysis section and in the first column of the tables below, there critical materials)
are high-level examples of possible directions to take. It is up to the
company to further formulate specific actions based on the nature of Time-bound: define
deadlines for meeting targets
the company and the outcomes of the analysis. and plan the assessment
cycle accordingly
Define when it needs to happen
Companies should set up an action plan through back casting. With the
time-bound target in mind, companies can roll out intermediate targets
and actions based on a roadmap. It is important to define the timelines
within the roadmap to ensure the alignment of assessment cycles with
the intermediate targets.

Define who needs to take action

To ensure action, it is necessary to identify an owner to drive action. Figure 27: The process cycle
The tables below list the possible actions from the analyze phase, with
the relevant departments internally, the external parties to consider and
considerations to take into account when executing the action. 1. SCOPE

2. SELECT
7. APPLY

Assess the actions and progress on formulated targets

It is important to recognize that this phase is not the final phase of
the Circular Transition Indicator framework. As visualized in Figure 27, 3. COLLECT

the process steps follow each other in a cycle and this phase will feed
6. PRIORITIZE

into the scoping phase to start the next assessment and monitor
improvement on the targets resulting from the actions executed in the 5. ANALYZE
4. CALCULATE

apply phase.

Table 11 provides some additional insights into elements for

consideration when planning and rolling out some of the circular
solutions as discussed earlier.

Circular Transition Indicators V4.0 Metrics for business, by business 99

Table 11: Elements for consideration when planning and rolling out circular solutions

Other
Departments Considerations
parties Example target Example action
to involve when executing
to consider

Reduce linear inflow by replacing it with renewable inflow

Sustainability Suppliers Suppliers Launch a new fashion line Explore how certificates
Procurement using natural materials by consider sustainability and
Product design Certification 2023 land use and explore the
Product bodies functionality of certified
management materials for purpose
R&D

Reduce linear inflow by replacing it with secondary inflow

Sustainability Suppliers Sustainability Product category X should Discuss technical feasibility

Procurement Technical feasibility contain 40% recycled and availability with supplier
Product design content by 2025
Product Acceptance by Switch supplier if needed
management customer
R&D Functionality

Clients Functionality Double the lifetime use of Discuss technical feasibility

Sustainability product category X by 2025 with design department
Acceptance by the
Product design customer Research bottlenecks
Product for product use among
management consumers (i.e., technical
R&D limitations, fashion, status,
etc.)

Increase recovery potential by optimizing product design (for modularity, disassembly, mono-material’s
biodegradability)

Sustainability Clients Technical feasibility 60% of bottles produced Change supplier

Product design consist of mono-materials
Service and Suppliers Economic viability by 2022 Set up research with
maintenance supplier
Product 20% less in food waste
management residues by optimizing
R&D packaging by 2025

Sustainability Clients Technical feasibility Ensure the replacing of Request supplier overview
Product design all technical materials in of biodegradable
R&D Suppliers Economic viability the “hybrid product” with (according to OECD)
biodegradable alternatives alternatives

Increase actual recovery by maintaining ownership or buy-back/take-back schemes

Sustainability Clients Financial implications, 30% of revenues from high- Pilot with a supplier for
Product design e.g., on balance sheet value assets should come return logistics
Sales Financiers and cash flow from pay-per-use models
Account by 2025 Market research to
management Legal implications understand client needs
Customer relations and barriers for the new
Service and model
maintenance
Legal
Product
management

Circular Transition Indicators V4.0 Metrics for business, by business 100

Increase actual recovery by setting up take-back/buy-back or recovery schemes with third parties in the value chain

Sustainability Clients Collaboration forms Set up a take-back or buy- Set up an agreement with a
Product design Suppliers with other parties back scheme for all newly refurbishment company
sold phones by 2023
Sales
Account
management
Customer relations
Product
Management
R&D

Sustainability Clients Collaboration with Set up a program with Explore collaboration

Account other parties retailers to give discounts partners for such a
management on almost expiring food program
products to increase high
Customer relations valorization by consumption
Marketing

Increase actual recovery by investing in and advocacy for public schemes

Sustainability Customers Achievable influence Support public scheme Join forces with peers on
Public relations and impact advocacy in 95% of offset advocacy
Public markets by 2025
authorities

Increase actual recovery by investing in and advocacy for public schemes

Utilities/ engineering, Local Acceptance by

Procurement, stakeholder customer (flavor,
Product quality, community in
Manufacturing watershed safety)
Facility management,
Public affairs, Municipal Watershed water
Government affairs wastewater balance,
service
provider Regulatory permit
Universities/ compliance
research
institutions
Civil society
Regulators

Circular Transition Indicators V4.0 Metrics for business, by business 101

 Annex
Annex I — Nature impact: Assessment of mine site extent
This technical annex aims to provide the formula needed to assess
the extent of land required for a mass of a mineral commodity (Mm)
from a mining site without knowing the yield of the site. It is based on a
geometric approach and covers two types of mine sites (Figure 28)
• Open pit, a surface mining technique with conical shape as visible
on Figure 28a;
• Strip mine, a surface mining technique with cuboid shape as visible
on Figure 28b;
Underground mines are always assumed to have a very small extent,
since a very small area of land is converted for the mine pit, since
mining takes place below the surface.

Figure 28: Schematic representation of the mines and dimensions used

for the calculation

a) Open pit scheme

6m

100m

b) Strip mine

6m

100m

Circular Transition Indicators V4.0 Metrics for business, by business 102

To assess the extent based on volume and geometry, it is first
necessary to estimate the total volume of rock extracted from the mine
(Ve), as per the following steps:
1. Convert the mass of mineral (Mm) into a mass of total rock (Mr), as
per published rock-to-metal ratios (R), where Mr = R x Mm
These ratios provide a simple estimate of the total mass of material
extracted from the ground per unit mass of metal required.
2. Convert the mass of rock into a volume, based on the formula
Ve = Mr / ρr, where ρr is the estimated density of the mined rock

As such:

R x Mm
Ve =
ρr

Once the volume has been estimated, it is possible to use simple

mine geometry assumptions (Figure 28) to estimate the extent of land
converted for mineral extraction as per:

3ve
Extent = for an open pit mine
100

ve
Extent = for a strip mine
6

In the case of aluminum, the estimated rock-to-metal ratio is 7, while

the density of bauxite is 1,100– 2,000 kg/m3. Therefore the extracted
volume for 15 million kg of aluminum can be estimated as
Ve = 15,000 x 7 / 1,100 = 95 m3, and the estimated attributable extent
for an open pit mine is 3 x 95 / 100 = 2.85m2.
Once the extent of the mine is assessed, extent multipliers should
be added to take into account associated indirect impacts of
infrastructure. The can be approximated to around 15x the pit area,
where:
• Any associated infrastructure - 2x pit area
• The land area for any waste rocks – 1.43x pit area
• The area required for storage of mine tailings – 10x pit area
These assumed amounts are taken from the GBS mining critical
review document. More precise data could be used where available.
Therefore, the estimated attributable extent for sourcing 15 million kg
of aluminum from an open strip mine is 42.75m2

Circular Transition Indicators V4.0 Metrics for business, by business 103

Annex II — Choice of land-use metrics

Choice of ecosystem condition metrics

The extent, condition and significance framework is flexible with
regards to the selection of condition metric. There are many indicators
against which a condition metric can be assessed. For example,
condition metrics should ideally be scientifically robust (having
undergone peer-review is an indicator of this), practical to use, simple
to interpret, have global coverage, and be based on transparent
and regularly updated data. Alignment with regulatory and voluntary
reporting frameworks is also a bonus. Our framework proposes the
Mean Species Abundance (MSA), which is based on the GLOBIO
model, as an example. Many other ecosystem condition measures
could also be used – for example Potentially Disappeared Fraction,
Proportion of Land Degraded, Marine Cumulative Human Impacts,
Ecoregion Intactness Index, Ecosystem Integrity Index, Ecosystem
Health Index, and Ecosystem Area Index. MSA aligns well with the
criteria described above, but other ecosystem condition metrics listed
here could also be used instead. They are all highly correlated with each
other so this would not substantially change the results.
The Ecosystem Integrity Index (EII) has been proposed for the draft
SBTN Land Step 3 methods. We did not include it in CTI because it has
not undergone peer review and the underlying data and tools are not
available yet. We expect this to change by mid-2023 and are potentially
open to including EII as a condition metric pending review of the final
product.
How does this help companies align with TNFD?
Companies are required to disclose the metrics used by the
organization to assess and manage impacts on nature, including
“Whether and how the organization assesses the condition and extent
of the ecosystems in priority locations, with reference to the tools,
data platforms, indicators and metrics used, and the science-basis
for the link to response to nature-related risks and opportunities.” Find
more information on TNFD. The extent and condition components of
the framework address this and STAR (significance) can be used for
prioritization.
Is significance included in SBTN?
Yes, SBTN Step 2 guidance (p. 95) requires companies to prioritize
sites according to general State of Nature indicator (SoNG) and
recommends using the threat abatement component of the Species
Threat Abatement and Restoration metric (START) which we have
incorporated into the Significance component of the CTI Nature impact
indicator.

Circular Transition Indicators V4.0 Metrics for business, by business 104

CTI glossary
% material circularity Circular economy principles It indicates a loss of the material/
The weighted average of the product’s original characteristics
• Design out waste and
% circular inflow and % circular that precludes use in a similar
pollution
outflow for a given product function to its previous cycle
(group or portfolio), business unit • Keep products and materials (functional equivalence).
or company. in use Downcycling is usually used to
describe a product’s material
Biodegradable outflow • Regenerate natural systems properties, their level of
Outflow of material or substance
Circular inflow degradation or, in the case of
that microorganisms can
metals, if they have become
decompose and that degrades Inflow that is: impure, which leads to a loss
to organic molecules that living
• Renewable inflow (see of economic value.64
systems can use further,62 for
definition) and used at a rate
example via composting and Durability
in line with natural cycles of
anaerobic digestion. Durability means the ability of a
renewability
A product can only be product to function as required,
considered biodegradable if its OR under specified conditions of
levels of toxins or hazardous use, maintenance and repair,
substances fall within recognized • Non-virgin until a limiting event prevents its
thresholds (e.g., Cradle to Cradle Circular outflow functioning.
Certified Products Program,
Functional equivalence
DRAFT v4 Restricted Substances Outflow that is: “The state or property of being
List (RSL)). Companies can
• Designed and treated in equivalent” (or equal)
refer to existing testing
standards on biodegradability a manner that ensures in function.65
and compostability such as products and materials have
a full recovery potential In the context of CTI, this defines
the OECD, the International an outflow (a product, product
Standards Organization (ISO) or and extend their economic
lifetime after their technical part, waste stream, etc.) designed
the Royal Netherlands Standards so that it is technically feasible
Institute (NEN) among others. lifetime
and economically viable to bring
By-products AND it back to inflow (as a material,
Unintended but inevitable product part, etc.) preserving a
• Demonstrably recovered
additional material stream of similar function to its previous
material processing that is not Circular performance cycle. For example, it is possible
the intended main product. The multidimensional results of to recycle the plastics used
a product (group), business unit, in mobile phones for kitchen
Co-processing including % circularity (% circular appliances because properties
The simultaneous use of residual inflow and % circular outflow) and like strength and esthetics are
waste as a source of mineral at least one other CTI indicator. equivalent.
resources (material recycling) This indicator may be from any of
and as a source of energy to Inflow
the three modules.
substitute fossil fuels in a single Resources that enter the
industrial process. During co- CTI revenue company, including materials,
processing the mineral part The revenue generated by a parts or products (depending on
of the waste replaces primary product (group or portfolio), a company’s position within the
materials (such as limestone, business unit or company supply chain). Not included are
clay or iron) and the combustible multiplied by its % circularity water and energy, which are part
part provides the energy needed of the specific water and energy
Company boundary indicators.
for the industrial process (e.g., Physical or administrative
cement production). perimeter of the organization, Land-use change
consistent in scope with financial Land-use change is the
and sustainable reporting conversion of natural areas into
human-dominated landscapes,
Downcycling caused by activities such as
Recycling “something in such a urbanization, deforestation,
way that the resulting product is agriculture and infrastructure
of lower (economic) value than development. This process is
the original item.”63 a key driver of biodiversity loss.

Circular Transition Indicators V4.0 Metrics for business, by business 105

Addressing land-use change is nutrients, compounds, materials, Recycle
vital to preserving biodiversity parts, components or even To reduce a product back to its
and ensuring sustainable products (depending on the material level, thereby allowing
development. organization) at the same level of the use of those materials in new
functional equivalence through products.
Linear inflow
reuse, repair, refurbishment,
Virgin, non-renewable resources Biodegrade
repurposing, remanufacturing,
Microbial (bacteria and fungi)
Linear outflow recycling or biodegrading.
breakdown of organic matter
Outflow that is not classifiable
in the presence of oxygen to
as circular. This means that the This excludes energy recovery
produce soil with high organic
outflow: from waste and any biological
(humus) content.
cycle waste that does not satisfy
• Is not circular in design/ all criteria as outlined on p. 45. Regenerative
consists of materials treated
To have the ability to restore
in a manner that they have Recovery types
material resources and improve
no recovery potential The different forms of material
ecosystem health to ensure
recovery, such as (in order of the
OR productivity and other benefits
recirculation loops in the Ellen
(e.g., carbon capture, biodiversity,
• Neither demonstrably Macarthur Foundation’s Circular
and other ecosystem services).
recovered nor flowing back Economy System Diagram67 or Note that regeneration goes
into the economy. butterfly diagram): beyond retaining the status quo
Linear risk Reuse of natural systems that may
The exposure to the effects of To extend a product’s lifetime already have degraded from their
linear business practices – use beyond its intentional designed initial state.68
scarce and non-renewable life span, without changes made
resources, prioritize sales of Renewable inflow
to the product or its functionality.
new products, fail to collaborate Sustainably managed resources,
and fail to innovate or adapt – Repair most often demonstrated
which will negatively impact a To extend a product’s lifetime by internationally recognized
by restoring it after breakage or certification schemes like
company’s license to operate.66 tearing, without changes made the Forest Stewardship
Non-virgin inflow to the product or its functionality. Council (FSC), Programme for
Inflow previously used the Endorsement of Forest
Refurbish
(secondary), e.g., recycled Certification (PEFC), Roundtable
To extend a product’s lifetime
materials, second-hand products on Sustainable Palm Oil (RSPO),
by large repair, potentially with
or refurbished parts. replacement of parts, without etc.69 that, after extraction, return
changes made to the product’s to their previous stock levels by
Outflow
functionality. natural growth or replenishment
Material flows that leave the
processes at a rate in line with
company, including materials, Remanufacture use cycles. Therefore, they are
parts, products, by-products and To disassemble a product to the replenished/regrown at a faster
waste streams (depending on a component level and reassemble
company’s position within the rate than harvested/extracted.70
(replacing components where
supply chain). necessary) to as-new condition Virgin inflow
Recovery with possible changes made to Inflow not previously used
The technically feasible and the functionality of the product. or consumed (primary).
economically viable recovery of

Circular Transition Indicators V4.0 Metrics for business, by business 106

Endnotes
1
Intergovernmental Science- Transition Indicators.” (p. 45). Retrieved from: https://
Policy Platform on Biodiversity Compact_. Published by KPMG environment.ec.europa.
and Ecosystem Services IT Advisory. Retrieved from: eu/publications/proposal-
(IPBES). (2019). Global https://www.compact.nl/en/ ecodesign-sustainable-
assessment report on articles/measuring-circularity- products-regulation_en.
biodiversity and ecosystem how-to-gain-insights-with-
services. circular-transition-indicators/ 14
Alfieri, F., Cordella, M., Sanfelix,
J., & Dodd, N. (2018). “An
2
Based on Circle Economy’s 9
For more information, see approach to the assessment
Circularity Gap Report 2023, CircularIQ (n.d.). “General of durability of energy-related
which states that only 7.2% of Terms of Service”. Retrieved products”. Procedia CIRP, 69,
the world’s current economy is from: https://circular-iq.com/ 878-881.
circular. For more information, wp-content/uploads/2020/06/
see https://www.circularity- NEW-terms-of-service-CIQ. 15
See European Commission
gap.world/2023. pdf. (2022). “Proposal for a
regulation on Ecodesign for
3
Circle Economy (2023). 10
European Commission Sustainable Products” (p.
Circularity Gap Report 2023. (n.d.). “Critical raw materials”. 100). Retrieved from: https://
Retrieved from https://www. Retrieved from: ec.europa.eu/ environment.ec.europa.
circularity-gap.world/2020. growth/sectors/raw-materials/ eu/publications/proposal-
specific-interest/critical_en. ecodesign-sustainable-
4
Based on the WWF Living United States Geological products-regulation_en.
Planet Report 2012. Survey (USGS) (2018). “Interior
Releases 2018’s Final List of 16
For more context, refer to
35 Minerals Deemed Critical WBCSD Vision 2050: Time to
5
WBCSD (2018). Circular to U.S. National Security and
Metrics – Landscape Analysis. Transform.
the Economy”. Retrieved from:
World Business Council for https://www.usgs.gov/news/
Sustainable Development national-news-release/interior-
17
The system model “Allocation,
(WBCSD). Retrieved from: releases-2018s-final-list-35- cut-off by classification” – or
https://www.wbcsd.org/ minerals-deemed-critical-us the cut-off system model – is
Programs/Circular-Economy/ based on the recycled content
Metrics-Measurement/ – or cut-off – approach. In
Resources/Landscape-
11
For more context on the this system model, wastes are
analysis. impact of product lifetime and the producer’s responsibility
product lifetime extension (“polluter pays”), and there is
on the circular economy, see an incentive to use recyclable
6
Ellen MacArthur Foundation United Nations Environment
2020). Material Circularity products that are available
Programme (2017). The burden-free (cut-off). Source:
Index. Retrieved from: https:// Long View: Exploring Product
ellenmacarthurfoundation.org/ ecoinvent (n.d.). “Database –
Lifetime Extension. Retrieved System Models - Allocation
material-circularity-indicator. from: https://wedocs.unep. cut-off by classification”.
org/20.500.11822/22394. Retrieved from https://
7
Circle Economy (2020). ecoinvent.org/the-ecoinvent-
Circularity Gap Report 2020. 12
Definition from United Nations database/system-models/#!/
Retrieved from: https://www. Environment Programme allocation-cut-off.
circularity-gap.world/2020. (2017). The Long View:
Exploring Product Lifetime 18
GHG Protocol. Product Life
8
For more information on Extension (p. 14). Retrieved Cycle Accounting Reporting
how CTI can help prepare from: https://wedocs.unep. Standard, page 73. Retrieved
for disclosure on developing org/20.500.11822/22394. from: https://ghgprotocol.
circular economy regulatory org/sites/default/files/
requirements, see: Walrecht, 13
See European Commission standards/Product-Life-
A., Engegård, Ö, Kuiper, S. & (2022). “Proposal for a Cycle-Accounting-Reporting-
Park, Y. (2023). “Measuring regulation on Ecodesign for Standard_041613.pdf.
Circularity: How to gain Sustainable Products”
Insights with the Circular

Circular Transition Indicators V4.0 Metrics for business, by business 107

19
Pimm, S., Raven, P., Peterson, and Ecosystem Services. corroborated the research,
A., Şekercioğlu, Ç.H. & Ehrlich, E. S. Brondizio, J. Settele, S. which confirmed that there is
P.R. (2006). “Human impacts Díaz, and H. T. Ngo (Ed). IPBES no conclusive evidence that
on the rates of recent, secretariat, Bonn, Germany. regeneratively or sustainably
present, and future bird Retrieved from: https://ipbes. grown biobased materials, by
extinctions”. Proc Natl Acad net/global-assessment. default, generate lower GHG
Sci USA. 2006;103(29):10941- emissions than conventionally
10946. doi:10.1073/ Jaureguiberry, P., Titeux,
25 grown biobased materials.
pnas.0604181103.. N.,Wiemers, M., et al. “The We continue to monitor
direct drivers of recent developments in research and
20
International Resource global anthropogenic existing databases.
Panel (IRP) (2020). Resource biodiversity loss”. Sci Adv.
Efficiency and Climate Change: 2022;8(45):eabm9982. 30
Using the company’s own
Material Efficiency Strategies doi:10.1126/sciadv.abm9982. or supplier-specific data to
for a Low-Carbon Future. determine.
Hertwich, E., Lifset, R., Pauliuk, 26
Intergovernmental
S., Heeren, N. A report of the Science-Policy Platform on 31
If a company’s own or supplier-
International Resource Panel. Biodiversity and Ecosystem specific data is not available,
United Nations Environment Services (IPBES) (2019). companies may use inventory
Programme, Nairobi, Kenya. Global assessment life-cycle databases to
report on biodiversity and determine the emissions.
21
Ellen MacArthur Foundation ecosystem services of the
(n.d.). Regenerate nature. Intergovernmental Science- 32
See Table S4 in Nassar,
Available at: https:// Policy Platform on Biodiversity N.T., Lederer, G.W., Brainard,
ellenmacarthurfoundation.org/ and Ecosystem Services. J.L., Padilla, A.J., & Lessard,
regenerate-nature. E. S. Brondizio, J. Settele, S. J.D. (2022). SUPPORTING
Díaz, and H. T. Ngo (Ed). IPBES INFORMATION for Rock-to-
22
Sitra (2022). Tackling root secretariat, Bonn, Germany. metal ratio: a foundational
causes - Halting biodiversity Retrieved from: https://ipbes. metric for understanding
loss through the circular net/global-assessment. mine wastes. Retrieved
economy. Forslund, T., Gorest, from: https://pubs.acs.org/
A., Briggs, C., Azevedo, D. 27
European Commission doi/suppl/10.1021/acs.
& Smale, R. Retrieved from: (n.d.). “Critical raw materials”. est.1c07875/suppl_file/
https://www.sitra.fi/en/ Retrieved from: ec.europa.eu/ es1c07875_si_001.pdf.
publications/tackling-root- growth/sectors/raw-materials/
causes/ Ellen MacArthur specific-interest/critical_en 33
Schipper, A.M., Bakkenes, M.,
Foundation (2021). The Nature United States Geological Alkemade, R., Huijbregts, M.
Imperative: How the circular Survey (USGS) (2022). “Interior (2016). The GLOBIO Model. A
economy tackles biodiversity Releases 2022’s List of Critical Technical Description of
loss. Retrieved from: https:// Minerals”. Retrieved from: Version 3.
ellenmacarthurfoundation.org/ https://www.usgs.gov/news/
biodiversity-report national-news-release/us- 34
See table 1 in Natural Capital
geological-survey-releases-
Impact Group (n.d.). Measuring
23
Sitra (2022). Tackling root 2022-list-critical-minerals.
business impacts on nature: A
causes - Halting biodiversity framework to support better
loss through the circular 28
International Organization stewardship of biodiversity
economy. Forslund, T., Gorest, for Standardization. in global supply chains –
A., Briggs, C., Azevedo, D. (2006). Environmental Supplementary material.
& Smale, R. Retrieved from: management — Life Retrieved from: https://www.
https://www.sitra.fi/en/ cycle assessment — cisl.cam.ac.uk/system/files/
publications/tackling-root- Requirements and guidelines. documents/biodiversity-
causes/. (ISO/DIS Standard No. metric-supplementary-
14044:2006). Available at: material.pdf.
24
Intergovernmental https://www.iso.org/obp/
Science-Policy Platform on ui/#iso:std:iso:14044:ed- 35
The 80th percentile is
Biodiversity and Ecosystem 1:v1:en.
recommended because of the
Services (IPBES) (2019). long-tailed distribution of STAR
Global assessment 29
We conducted extensive desk scores. The 80th percentile is a
report on biodiversity and research by consulting life- balance between incentivizing
ecosystem services of the cycle inventory databases, collection of higher resolution
Intergovernmental Science- such as ecoinvent and data and avoiding scores that
Policy Platform on Biodiversity Idemat. Select uses cases are skewed by the tail values of
STAR.

Circular Transition Indicators V4.0 Metrics for business, by business 108

36
See IRENA International (p.100). Retrieved from: https:// 50
See Circle Economy’s 2018
Renewable Energy Agency at environment.ec.europa. Circularity Gap Report.
www.irena.org/. eu/publications/proposal-
ecodesign-sustainable- 51
Refer to European
37
European Commission products-regulation_en. Environment Agency (2017).
(n.d.). “Critical raw materials”. Circular by design – Products
Retrieved from: https://single- 44
United Nations Environment in the Circular Economy.
market-economy.ec.europa. Programme (2017). The Long Retrieved from: https://www.
eu/sectors/raw-materials/ View: Exploring Product eea.europa.eu/publications/
areas-specific-interest/ Lifetime Extension. Retrieved circular-by-design.
critical-raw-materials_en. from: https://wedocs.unep.
org/20.500.11822/22394. 52
Refer to Fontana, A., Leone,
38
United States Geological D., Rossi, L. & Barni, A. (2021).
Survey (USGS) (2018). “Interior 45
ecoinvent (n.d.). “Database – D4.1 Circular Economy-
Releases 2018’s Final List of System Models - Allocation driven lifetime-extension
35 Minerals Deemed Critical cut-off by classification”. strategies. RE-manufaCturing
to U.S. National Security and Retrieved from https:// and Refurbishment LArge
the Economy”. Retrieved from: ecoinvent.org/the-ecoinvent- Industrial equipment
www.usgs.gov/news/interior- database/system-models/#!/ (RECLAIM). Retrieved from:
releases-2018-s-final-list-35- allocation-cut-off. https://ec.europa.eu/research/
minerals-deemed-critical-us- participants/documents/.
national-security-and. 46
CTI adopts the European
Waste Framework 53
Emissions factor for aluminum
39
Definition from United Nations Directive definition of virgin content: Bourgault, G.,
Environment Programme “preparation for reuse” market for aluminium, cast
(2017). The Long View: which clusters emissions alloy, GLO, Allocation, cut-off
Exploring Product Lifetime of reuse, refurbishing and by classification, ecoinvent
Extension (p. 14). Retrieved remanufacturing activities. database version 3.8.
from: https://wedocs.unep. For more context, refer to Emissions factor for aluminum
org/20.500.11822/22394. European Commission (n.d.). recycled content : Wu, L.,
Waste Framework Directive. treatment of aluminium scrap,
40
See European Commission Retrieved from: https:// post-consumer, by collecting,
(2022). “Proposal for a environment.ec.europa.eu/ sorting, cleaning, pressing,
regulation on Ecodesign for topics/waste-and-recycling/ RoW, Allocation, cut- off by
Sustainable Products” (p. waste-framework-directive_ classification, ecoinvent
45). Retrieved from: https:// en. database version 3.8 & Wu,
environment.ec.europa. L., treatment of aluminium
eu/publications/proposal- 47
Emissions factor PET virgin scrap, post-consumer,
ecodesign-sustainable- content: Bourgault, G., market prepared for recycling, at
products-regulation_en. for polyethylene terephthalate, refiner, RoW, Allocation, cut-
granulate, amorphous, off by classification, ecoinvent
RoW, Allocation, cut-off by database version 3.8.
41
Alfieri, F., Cordella, M., Sanfelix,
J., & Dodd, N. (2018). “An classification, ecoinvent
approach to the assessment database version 3.8. 54
IVL Swedish Environmental
of durability of energy-related Emissions factor PET recycled Research Institute (2020).
products”. Procedia CIRP, 69, content: Kägi, T., market for Product databases: the
878-881. polyethylene terephthalate, environmental benefits of
granulate, amorphous, reuse – The climate benefits
recycled, RoW, Allocation, cut- of reusing IT products and
42
See European Commission off by classification, ecoinvent the method for creating
(2022). “Proposal for a database version 3.8. data bases. (Report no.
regulation on Ecodesign for B 2372). Retrieved from:
Sustainable Products” (p. https://www.ivl.se/download/
100). Retrieved from: https://
48
Emission factor for landfilled
PET: Doka G. Life Cycle 18.4c0101451756082
environment.ec.europa. fbad193d/1603899258637/
eu/publications/proposal- Inventories of Waste
Treatment Services, 2007, B2372E.pdf
ecodesign-sustainable-
products-regulation_en Vol.13
55
IVL Swedish Environmental
49
IBAT (n.d.). Species Threat Research Institute (2020).
43
See European Commission Product databases: the
(2022). “Proposal for a Abatement and Restoration
Metric (STAR). Retrieved from: environmental benefits of
regulation on Ecodesign reuse – The climate benefits
for Sustainable Products” https://www.ibat-alliance.org/
star. of reusing IT products and

Circular Transition Indicators V4.0 Metrics for business, by business 109

 the method for creating enterprise risk management 65
Definition from Merriam-
data bases. (Report no. to environmental, social and Webster(n.d.). “equivalence”.
B 2372). Retrieved from: governance-related risks. Retrieved from: https://
https://www.ivl.se/download/ Retrieved from: https://www. www.merriam-webster.com/
18.4c0101451756082 wbcsd.org/erm. dictionary/equivalence.
fbad193d/1603899258637/
B2372E.pdf 61
Schulz-Mönninghoff, M., 66
Circle Economy, PGGM,
Neidhardt, M., Niero, M. KPMG, European Bank
56
Emission factor for landfilled (2022). “What is the role for Reconstruction and
Aluminum: Doka G. Life of company- level circular Development (EBRD) and
Cycle Inventories of Waste economy indicators in an WBCSD (2018). Linear Risks.
Treatment Services, 2007, organization? A case study Retrieved from: https://docs.
Vol.13 for electric vehicle batteries.” wbcsd.org/2018/06/linear_
Journal of Cleaner Production. risk_report.pdf.
57
Seufert, V., Ramankutty, N. & Volume 382, 1 January 2023,
Foley, J. A. (2018). Comparing 135232. Retrieved from: 67
See the Ellen MacArthur
the yields of organic and https://www.sciencedirect. Foundation’s circular economy
conventional agriculture. com/science/article/pii/ infographic at: https://www.
Nature Plants, 4(5), 267-272. S0959652622048065. ellenmacarthurfoundation.org/
doi: 10.1038/s41477-018- circular-economy/concept/
0130-4. 62
This definition is based on infographic.
that of the Cradle to Cradle
58
Nassar, N.T., Lederer, G.W., Products Innovation Institute 68
Definition adapted from
Brainard, J.L., Padilla, A.J. (2016). Cradle to Cradle the Ellen MacArthur
& Lessard, J.D. (2022). Certified – Product Standard. Foundation: https://www.
SUPPORTING INFORMATION Retrieved from: https://cdn. ellenmacarthurfoundation.org/
for Rock-to-metal ratio: c2ccertified.org/resources/ explore/the-circular-economy-
a foundational metric for certification/standard/ in-detail.
understanding mine wastes. STD_C2C_Certified_V4.0_
Retrieved from: https://pubs. FINAL_031621.pdf. 69
For example, Forest
acs.org/doi/suppl/10.1021/ Stewardship Council (FSC) and
acs.est.1c07875/suppl_file/ 63
Definition from Merriam- Roundtable on Sustainable
es1c07875_si_001.pdf. Webster. “downcycle” (n.d.). Palm Oil (RSPO) certifications.
Retrieved from: https://
59
WBCSD (2018). Linear Risks. www.merriam-webster.com/
dictionary/downcycle.
70
Definition is based on that
Retrieved from: https:// of the Organisation for
www.wbcsd.org/Programs/ Economic Co-operation
Circular-Economy/Factor-10/ 64
Campbell, K., Johnston, W., and Development (OECD).
Resources/Linear-Risks. Vermeulen, J.V., Reike, D., Retrieved from: stats.oecd.org/
Brullot, S. (2020). “The Circular glossary/detail.
60
Committee of Sponsoring Economy and Cascading:
Organizations of the Treadway Towards a framework.”
Commission (COSO) and Resources, Conservation &
WBCSD (2018). Enterprise Recycling: X, vol. 7, September
Risk Management: Applying 2020, 100038.

Circular Transition Indicators V4.0 Metrics for business, by business 110

DISCLAIMER Shinki Nonaka, Goto Hiroyuki, Fujitsu Ltd assess their circular performance,
Yuichi Aoyama, Akito Tanihata, Honda; they require consistent measurement
This report is released in the name Suzanne Kuiper, Julius Groenendaal, processes and metrics. To address
of WBCSD. Like other reports, it Arnoud Walrecht, Elisabeth Bakker, this need, jointly with our members
is the result of collaborative efforts Nicolas Jourdain, KPMG; Christopher and stakeholders, we have developed
by WBCSD staff and experts from Seely, Constantin Erens, Microsoft; Al a universal framework to measure
member companies. WBCSD’s Falah Alhas A Latif, Charlotte Wolff- circularity. The Circular Transition
Circular Transition Indicators project Bye, Petronas; Raquel Rebelo de Mira, Indicators (CTI) is a transparent,
participants reviewed drafts, ensuring Maria Hernandez, PMI; Eleonora Giada objective and evolving framework that
that the document broadly represents Pessina, Matteo Magnaghi, Pirelli; Harald can be applied to businesses of all
the majority of project members’ views. Tepper, Sophie Thornander, Philips; industries, sizes, value chain positions
It does not mean, however, that every Leon Jacobs, SAP; Ananda Sekar, and geographies. Explore more at the
member company of WBCSD agrees Sabic; Cindy Chen, Albert Janssen, following link: https://www.wbcsd.org/
with every word. Please note that the Shell; Krisada Ruangchotevit, Chairat Programs/Circular-Economy/Metrics-
data published in the report are as of Pomorate, SCG; Mark Schneider, Sika; Measurement
April 2022. Olivera Medugorac, David Quass,
Niccolo Gervasoni, VF Corporation. ABOUT WBCSD
ATTRIBUTION CIRCULAR METRIC ADVISORY WBCSD is the premier global, CEO-led
The Circular Transition Indicators v1.0, MEMBERS community of over 200 of the world’s
v2.0, v3.0, v4.0 by the World Business leading sustainable businesses working
Council for Sustainable Development are François Saunier, Manuel Margni, collectively to accelerate the system
licensed under CC BY-ND 4.0 (Creative CIRAIG; Jacco Verstraeten- transformations needed for a net zero,
Commons Attribution-NoDerivatives 4.0 Jochemsen, Circle Economy; Julia nature positive, and more equitable
International). Hunt, Ellen MacArthur Foundation; future.
Harold Pauwels, Global Reporting
Initiative (GRI); Arthur Ten Wolde, MVO We do this by engaging executives
ACKNOWLEDGEMENTS Nederland; Kari Herlevi, Tim Forslund, and sustainability leaders from
SITRA; Ke Wang, Lotte Holvast, business and elsewhere to share
WBCSD CIRCULAR ECONOMY Platform for Accelerating Circular practical insights on the obstacles
Economy (PACE), David Fitzimons, and opportunities we currently face
Jeff Turner | Acting Director, Circular Remanufacturing Council. in tackling the integrated climate,
Economy nature and inequality sustainability
Irene Martinetti | Manager, Circular CIRCULAR TRANSITION INDICATORS challenge; by co-developing “how-
Economy (Project lead) CLIMATE IMPACT WORKING GROUP to” CEO-guides from these insights;
Larissa van der Feen | Associate, by providing science-based target
Circular Economy Michele Del Grosso, Aptar Group; Priya guidance including standards and
Sudarsanam, Bayer; Jaimin Jethwa, protocols; and by developing tools and
CO-AUTHORS BP; Carlo Giardinetti, Cecilia Dall’Acqua, platforms to help leading businesses in
Deloitte; Simon Jespersen, Dow; Gerard sustainability drive integrated actions
Brendan Edgerton, Carolien Van Kwant, DSM; Selina Leusch, Lanxess; to tackle climate, nature and inequality
Brunschot, Suzanne Kuiper Christopher Seely, Constantin Erens, challenges across sectors and
Julian Wilmouth, Microsoft; Matteo geographical regions.
WBCSD would like to thank the Magnaghi, Pirelli.
following companies for providing their Our member companies come from
insights and collaboration: CIRCULAR TRANSITION INDICATORS all business sectors and all major
NATURE IMPACT WORKING GROUP economies, representing a combined
CIRCULAR TRANSITION INDICATORS revenue of more than USD $8.5
FRAMEWORK DEVELOPMENT Ryan Maloney, Apple; Michele Del trillion and 19 million employees. Our
PARTNERS Grosso, Aptar Group; Noel Zilberfarb, global network of almost 70 national
Arkema; Sumana Roy, BASF; Priya business councils gives our members
Arnoud Walrecht - KPMG Sudarsanam, Bayer; Jaimin Jethwa, unparalleled reach across the globe.
Suzanne Kuiper (Co-author)- KPMG Mark Johnston, BP; Laurent Sebire, Since 1995, WBCSD has been uniquely
Julius Groenendaal -KPMG Corteva; Ron Abbott, CPChem, Carlo positioned to work with member
Hollie Booth – The Biodiversity Giardinetti, Cecilia Dall’Acqua, Deloitte; companies along and across value
Consultancy Nicole Ray, EY; Christopher Seely, chains to deliver impactful business
Graham Prescott – The Biodiversity Microsoft; Simon Jespersen, Dow; solutions to the most challenging
Consultancy Elisabeth Bakker, Suzanne Kuiper, sustainability issues.
Alice Bouchez – The Biodiversity KPMG; Selina Leusch, Lanxess; Lourens
Consultancy Meijer, Phillips; Matteo Magnaghi, Together, we are the leading voice of
Pirelli; Ezinne Osuamadi, SAP; Roberta business for sustainability, united by
CIRCULAR TRANSITION INDICATORS Bernasconi, Mohamed Alshourbagy, our vision of a world in which 9+ billion
SOFTWARE DEVELOPMENT Whirlpool people are living well, within planetary
PARTNERS boundaries, by mid-century.
WBCSD would like to thank the
Roy Vercoulen following individuals for their Follow us on LinkedIn and Twitter
Niels van der Linden contribution to this report: www.wbcsd.org
Rolf Gelpke
Florian Alward Content: Nadine McCormick, Marvin Copyright
Henry Copyright © WBCSD,
CIRCULAR TRANSITION INDICATORS Copy-editing: Danielle Carpenter May 2023.
WORKING GROUP MEMBERS Design: Ana Macau, Carolina Borges
Sacoto
Naresh Tyagi, Deeksha Vats, Aditya
Birla; Michele del Grosso, Taylor Price, ABOUT THE CIRCULAR TRANSITION
Aptar; Noel Zilberfarb, Arkema; Caludia INDICATORS PROJECT
Mariconda, Debbie Shakespeare,
Avery Dennison; Sumana Roy, Talke In recent years, the circular economy
Shaffranek, BASF; Priya Sudarsanam, has increasingly appeared as the new
Bayer; Pascale Atallah, CP Chem; Carlo model to pursue sustainable economic
Giardinetti, Cecilia dall’Acqua, Deloitte; growth. For companies to be able to
World Business Council
for Sustainable Development

Geneva, Amsterdam, Beijing, Delhi, London, New York, Singapore

www.wbcsd.org