The Sustainable Development Goals (hereinafter: SDGs) are 17 interrelated goals established by the United Nations in 2015 to address global challenges.
The importance of the SDGs lies in their comprehensive framework that recognizes the interconnectedness of economic and environmental issues. Their goal is to eradicate poverty, promote inequality, promote economic growth, protect the environment and promote inclusive societies.
As a national call to action, the SDGs provide governments, businesses and global civil society with a clear roadmap for efforts, guiding investments and policy decisions for a better world.
Out of the 17 UN Sustainable Development Goals, the 12th goal is "Responsible consumption and production", which in turn is closely affiliated with the circular economy, which implies the transition to a circular model as opposed to a linear economy.
The reminder process is included for the widespread use of circular business models (hereinafter: CBMs) that promote resource efficiency, waste importation and maintenance of care in the economic system.
The aim of this article is to bring together metrics to measure the success of CBMs, which in turn are affiliated with and focus on material flow analysis, life cycle assessment, circular indicators and systems thinking.
Evaluation of circular business models:
Material Flow Analysis (MFA)
Material flow analysis (hereinafter: MFA) is a systematic assessment method that determines the material flow and transformation of systems, for example, a geographic area, an industry or a product's life cycle.
In addition, MFA promotes the transition to a circular economy, the use of resources, the practical promotion of waste minimization, recycling and reuse.
MFA is based on methodically managed accounts in physical units. It uses the principle of mass balance to analyze the interrelationships between material flows (including energy), human activities (including economic and trade events) and environmental changes (OECD 2008).
The basic principle of MFA also uses the law of conservation of energy and mass: matter is neither created nor destroyed. The MFA illustrates what the approach means in practice and how practitioners can demonstrate the conservation law to solve real-world problems of varying degrees of complexity related to the environment.
Life Cycle Assessment (LCA)
Life cycle assessment (hereafter: LCA), provides a comprehensive framework for assessing the environmental impact of products and services related to CBMs.
This setting explores how LCA can be used to quantify the potential benefits and trade-offs of CBMs, which in turn requires the quantification of resource trajectories, energy use and by-product emissions throughout the life cycle of a service, from raw material acquisition to end-of-life processing.
Using advanced modeling methodologies and rigorous data sets, self-sustaining systems and qualitative value generation in circular business models demonstrate their effectiveness in reducing environmental pressures and enhancing resource management.
Circular indicators are tools for assessing the circularity of a business model. These metrics consider indicators such as the Circular Economy Indicator Measure (CEIP) and the Materials Circular Indicator (MCI) and their use in assessing and comparing the effectiveness of CBMs.
The Circular Economy Indicator Measure (CEIP) for circular business models is a crucial tool that allows businesses to measure their progress towards circularity. By integrating key performance indicators (KPIs) such as material efficiency, waste reduction, product life extension and resource recovery, environmental impact and resource management assessments can be carried out.
However, as a result of the CEIP, businesses will be able to identify areas for improvement, which is also a critical factor, as well as identify relevant goals and evaluate themselves against best practice in their industry.
Ultimately, CEIP promotes innovative solutions, increases long-term competitiveness and contributes to global sustainability goals, which in turn stimulates the change in the business model of companies, moving from a linear model to a circular model.
The Material Circularity Indicator (hereinafter: MCI) is an important metric for circular business models that helps businesses evaluate their circularity performance by tracking the flow of materials throughout the product's life cycle. MCI considers factors such as resource use, material life and recycling rates to determine the extent to which a company uses circular models.
By adopting MCI, businesses can identify opportunities for optimization, set circular goals and benchmark their performance against existing players.
MCI not only supports informed decision-making but also promotes the process of integrating circular business models, which is ultimately linked to economic growth and environmental sustainability.
A systems thinking approach can offer valuable insights into the complex interactions and dependencies of CBMs.
Systems thinking plays a crucial role in evaluating circular business models, as it emphasizes the interconnectedness of different components within an economic ecosystem. By defining a holistic perspective, businesses can determine the complex interrelationships between materials, products and stakeholders, which in turn creates a multifaceted opportunity to evaluate the effectiveness of circular models.
The use of scientifically robust methods and metrics, such as material flow analysis, life cycle assessment, circular indicators and systems thinking, is critical to assessing the impact of circular business models on resource efficiency and sustainability.
By adopting these approaches, researchers and practitioners can better understand and improve the environmental, social and economic benefits of CBMs, which will ultimately help stakeholders to implement circular business models.