- Ferdinand Heck
The Relevance of a Circularity Score - Hurdles, Benefits and Calculation
Circular economy (CE) and especially how to accelerate the transition to more circularity is on everyone's lips at the moment. Many leading industrial companies have publicly announced ambitions to close resource loops and implement CE concepts into their processes within the next few years. However, there is still a lot of discrepancy about what CE actually means, how can end-to-end circular process solutions be practically implemented as well as how to measure progress and success - especially in light of the lack of common standards and definitions for CE practices? Nevertheless, immense turnover potentials are predicted across all sectors through successful circular economy integrations already now. However, based on which justification and quantifiable parameters? Clearly, a solid industry-wide baseline (benchmark) is still missing. Hence, what do we start with?
The benefits of a circularity score
To overcome the hurdles of a missing benchmark, measurability practices and transparency, the circularity index score lays the groundwork for scaling and actually gain the required fundamental understanding of the status quo. A measurable score is a starting point for companies to assess their organizations’ and products’ circularity potentials. “What gets measured, gets done” holds nicely in this context and therefore kicking off the journey to more circularity with a measurable score allows to validate the right strategies, KPIs and partner engagements. Since each company is different, when considering the entire value chain (which is one of the core principles of CE), there is no one-size-fits-all solution.
A circularity rating that takes into account the individual differences of value chains is therefore necessary to make individual change management endeavors visible, measurable and comprehensible. At the same time, one cannot ignore the ongoing standardization and certification efforts. Hence, correlation of the circularity performance to existing frameworks such as ESG, Carbon Emission reporting and/or EU Taxonomy is mandatory - especially since such growing regulation efforts on a national level are incentivizing the development of consistent industry standards for CE.
As stated previously in one of our other posts, data transparency and reliability to generate a circularity scoring across all value chain stakeholders is key. This works best when everyone involved in the process knows where and how to add value to the CE development. In other words, it only works when everyone is able to identify and quantify the information that is needed to comply with the forthcoming regulations. Hence, another benefit of a circularity score is that it fosters a collaborative approach towards circularity using common levers. Like this, each player in the industry is able to equally profit from the outcome.
In addition, consumer centricity and the knowledge of product use are becoming increasingly relevant for an effective CE transition. Consequently, having a rating system allows to improve communication by the public announcement of the score and provides means to enhance the visibility of the company’s sustainability efforts.
How is Circulix generating a circularity score?
Circulix was designed to kickstart the circularity journey in a fast, efficient and practical way in order to allow tapping on the above-mentioned benefits without the burden of building up specialized knowledge on CE and tediously collecting tons of information upfront.
The Circulix journey starts with calculating the circularity score (see image 1).
This is done by assessing different data clusters on a product but also on the organizational level of a company. This first assessment is performed through an algorithm of a questionnaire output evaluation. The questionnaire is filled out by the different departments involved in the product streams. From that, an automated circularity index score is derived. At the same time, a high-level ESG analysis (as well as potentially any other framework) can be extrapolated. Our algorithm offers several integration possibilities with current and upcoming industry regulations and certification standards. From the circularity index scoring, different strategy proposals are automatically created and prioritized based on feasibility and scope of integration options. Like this, you can start implementing circularity within only a couple of hours and will be supported by the network and ecosystem of the Circulix environment and its tools.
The Circulix circularity score assessment is your entry ticket for your end-to-end circularity transition solution. On the other end of the transition journey is our network-partnership integration, based on the proposed strategies. More on this in our next article.