Circularity index

A circularity index is a metric that assesses the degree to which an organisation, sector, territory or product operates under circular-economy principles. It measures how far the resources used in a system are kept in circulation through prevention, reuse, repair, recycling and recovery, reducing reliance on virgin raw materials and minimising the generation of waste.

Circularity indices have become a central tool for evaluating public policies, industrial processes and corporate strategies aimed at decarbonisation, resource efficiency and a lower environmental impact. Their use has grown alongside the EU's circular-economy framework, the Spanish Circular Economy Strategy 2030 and the disclosure requirements introduced by the CSRD.

Why circularity needs to be measured

A circularity index rests on the premise that linear economies, based on take, make, use and dispose, place unsustainable pressure on ecosystems. The circular economy instead aims to keep materials in use for as long as possible through biological cycles (composting, anaerobic digestion) and technical cycles (repair, remanufacturing, recycling).

Measuring circularity makes it possible to quantify how far a system has decoupled its economic activity from the consumption of virgin materials, supporting efforts to:

• Reduce greenhouse gas emissions.
• Minimise waste sent to landfill.
• Increase the use of secondary (recycled) materials.
• Improve process efficiency.
• Strengthen industrial resilience and security of supply.

How circularity is measured today

There is no single universal method, but a recognised international reference now exists. ISO 59020:2024 (Circular economy, measuring and assessing circularity performance), published in 2024, sets out a framework for defining system boundaries, selecting mandatory and optional indicators and interpreting the results in a consistent, verifiable way at regional, inter-organisational, organisational and product level.

In practice, circularity is assessed through several complementary lenses:

Material circularity

The share of recycled or reused materials against total material input.

Product-flow circularity

How far products or components re-enter the value chain through repair, refurbishment or reuse.

Territorial circularity

Flows of materials, waste, water and energy at municipal, regional or national scale. The Circularity Gap Report, an independent annual study by Circle Economy, is a well-known benchmark of this kind: its 2025 edition put the global circularity rate at 6.9% of the roughly 106 billion tonnes of materials consumed each year.

Corporate circularity

Company-level metrics that many manufacturers use to track progress against ESG objectives and climate commitments.

Data sources

A circularity index draws on data from several areas:

• Input flows: virgin materials, energy and water.
• Internal flows: processes, repairs, reuse and by-products.
• Output flows: products, waste and recycled materials.
• Associated impacts: emissions, landfilling and energy use.

Tools used in the calculation include life-cycle assessment (ISO 14040/14044), ISO 14083 for transport emissions, material footprint accounting and digital traceability systems.

How companies use it

Organisations use circularity metrics to:

• Prioritise ecodesign strategies.
• Justify investment in repair, recovery or digitalisation.
• Evaluate the efficiency of business models based on product-as-a-service.
• Align reporting with the EU Taxonomy and ESG assurance.
• Demonstrate progress to regulators and customers.

In the electronics sector, for example, manufacturers assess how many components are recovered after end of use and what share of material comes from secondary sources. In construction, firms measure the percentage of recycled materials (aggregates, steel, timber) incorporated into new projects.

Relevance for public policy

Circularity metrics are used as planning instruments in:

• The European Circular Economy Strategy and its 2020 action plan, which aims to double the EU's circular material use rate by 2030 (Eurostat reported 12.2% in 2024, the highest on record, against a target of around 23%).
• The Spanish Circular Economy Strategy 2030.
• NextGenerationEU funding programmes for resource efficiency.
• National SDG and environmental-footprint reporting.

At municipal level, circularity data informs separate-collection schemes, pay-as-you-throw charging, recycling infrastructure and zero-waste strategies.

Related indicators

A circularity index is read alongside other metrics:

• Material footprint: total material extraction.
• Waste footprint: the impacts of waste treatment.
• Recycling rate: the share of materials recovered.
• Recovery rate: recycling plus energy recovery.
• Landfill rate: an inverse indicator of circular progress.

Enabling technologies and current limitations

Digital traceability, IoT sensors, digital twins, artificial intelligence and automated sorting all help to generate the data behind circularity metrics, and the forthcoming Digital Product Passport is expected to improve material data along the value chain. Even so, measurement still faces real constraints: scarce reliable data in global supply chains, difficulty comparing sectors at different levels of maturity, limited methodological standardisation and dependence on life-cycle analysis, which is costly and complex.

What comes next

The European Commission is moving towards embedding circularity metrics in mandatory CSRD reporting, digital eco-labelling, green public procurement and product rules such as the Ecodesign for Sustainable Products Regulation (ESPR), with the aim of making circularity comparable and interoperable across Member States.

At Manglai we help companies measure their carbon footprint and prepare their sustainability reporting, including the circularity and resource-efficiency metrics increasingly required under EU rules. Discover how Manglai can help you.