Series of articles on methods of sustainability assessment: Circular Economy Approaches

An efficient and sustainable use of resources, as well as pathways to achieve climate neutrality, are central themes at FfE. Not least due to the EU’s Sustainable Finance Strategy, methods of sustainability assessment are gaining relevance. In the following series of articles, components and criteria of sustainability assessment will be introduced. The focus is on available methods, their application areas, and differences. This is the fourth contribution in the following topics of our article series: 

  1. Life Cycle Assessment
  2. „Scopes 1 – 3“ in Corporate Evaluation
  3. Future-oriented LCA in energy system assessment
  4. Circular Economy Approaches


The global challenges in the field of environment and resource utilization have led to an increased interest in sustainable business practices in recent years. In this context, the circular economy is gaining prominence as a forward-thinking concept.  

As part of the European Commission’s European Green Deal, the “Circular Economy Action Plan” [1] encompasses a broad range of measures for the transition to a circular economy. In the currently predominant linear economy, materials and products are exclusively made from primary raw materials [2]. In the EU, for example, materials are on average used only once, resulting in the loss of 95 percent of material and energy value in Europe. In contrast, material recycling and waste-based energy recovery contribute only five percent to the original raw material value [3]. The circular economy represents a fundamental change to the traditional economic model. By closing resource loops, materials and energy are intended to circulate, with an increased use of renewable energy for the energy input. 

The European Union pursues an ambitious goal with the introduction of a circular economy. Key issues include not only increasing competitiveness, promoting economic growth, and creating jobs but also reducing environmental impacts and resource dependencies [4]. According to the European Commission, the circular economy has evolved into an “irreversible, global megatrend” and is a crucial strategy for achieving a “sustainable, low-carbon, resource-efficient, and competitive economy” [5] 

The integration of the circular economy into regulatory frameworks such as the CSRD and the EU Taxonomy significantly contributes to the establishment of a sustainable economy. This development not only reflects the increasing societal focus on environmental aspects but also emphasizes the necessity for companies to make their efforts in the field of the circular economy transparent and measurable. 

The circular economy is not only a strategic focus of European policy but also a crucial driving force for innovations and sustainable business practices. In the following, we will explain what characterizes the principle of the circular economy and how it can be implemented. 

What does Circular Economy mean and what approaches exist?  

The Circular Economy (CE) is a pioneering economic concept that provides an effective response to global challenges related to the environment and resources. The fundamental principle is to counteract conventional linear models and instead establish a circular form of value creation [6]. By applying circular strategies in the circular economy, material cycles are closed, leading to a long-term sustainable and regenerative system [6–8]. Circular economy in a broader sense is defined as “an economic model in which planning, sourcing, production, and recycling are designed and managed in both process and outcome to maximize the functions of the ecosystem, the economy, and human well-being” [9]. 

In a circular economy, the optimization of the lifecycle of products is pursued by considering waste as a valuable resource rather than disposing of it after a single use [7, 8]. Through cyclical, slow, and closed-loop processes, the value of products, materials, and resources is intended to be preserved [8]. This guiding principle is implemented at various levels, whether at the corporate level, in product design, or among consumers [7, 9]. 

A recent example of implementing this concept is the introduction of new EU rules for packaging by the European Parliament in November 2023. The goal is to gradually reduce the consumption of plastic and other single-use packaging in the food trade and other sectors such as hotels. This aims to counteract the continuous increase in waste and promote reuse and recycling [10]. Despite these efforts, additional measures are needed to achieve the goal of transitioning to a circular economy across the production, consumption, and disposal sectors. Relevant measures involve resource efficiency, product lifespan, and raw material recovery [6]. 

Another focus is on the efficient use of energy and the use of renewable energy sources [14]. Circular economy approaches can lead to reduced greenhouse gas emissions and a decreased demand for critical raw materials through efficiency measures. The potential of the circular economy depends on technical capabilities, technological advancements, and overcoming implementation barriers [15, 16]. 

Principles for a sustainable economy 

Comprehensive guidelines for implementing and establishing a circular economy are provided by the principles of the so-called “R-Framework” [6, 12]. The holistic goal of these “R-Principles” is to minimize the consumption of primary resources while simultaneously promoting the use of secondary raw materials [6] 

As illustrated in Figure 1, the R-Principles span the entire lifecycle of a raw material or product – from resource extraction, production, and use throughout the product lifespan to the end of the lifecycle. In the initial lifecycle phase, the focus is on reducing resource consumption, especially of primary raw materials (“Narrow the Loop”). During the usage phase, products should be used longer and more intensively, with a focus on preserving value (“Slow the Loop”). At the end of the lifecycle, the R-Principles aim to “Close the Loop”, with a particular emphasis on reducing thermal utilization [6]. 

Figure 1: R-Framework with principles for implementing a circular economy (own illustration based on ​[6]​)

Figure 2 provides an overview of the R-Principles. With ascending numbering, the circular economic impact of the measures decreases. In general, the higher the circular economic impact, the lower the consumption of natural resources and environmental impact [12]. 

Figure 2: Overview of the R-Principles (own illustration based on ​[12]​)

After exploring the basic principles and approaches of the circular economy, the focus now turns to specific drivers. In the following sections, some exemplary drivers will be presented that contribute to implementing the R-Principles in different contexts. 

Product Design: 

Sharing, repairing, reusing, and refurbishing during the usage phase are crucial measures to efficiently utilize material and usage residues, thereby reducing the use of primary raw materials and the impacts of waste treatment [13]. In the literature, design is recognized as a catalyst to move away from the traditional model of taking, making, and disposing, aiming to achieve a restorative, regenerative, and circular economy. In a circular economy, the focus is not only on generating revenue but also on developing sustainable business models. For this, products must be designed from the ground up for closed-loop systems and be adaptable [11].  


Digitalization opens up new perspectives for implementing the circular economy. The main goal is to extend the lifecycle of products, conserve resources, optimize recycling, and thereby promote sustainable business practices through the use of digital technologies [17]. The application of technologies such as the Internet of Things (IoT) and digital platforms allows for better resource organization, for example, through intelligent resource tracking and management. Despite the positive aspects, digitalization also has potentially negative environmental effects. As illustrated in the article “Digitalization and sustainability: (How) do they fit together?” this includes issues such as energy and resource consumption associated with digital technologies. To make a constructive contribution to sustainability, it is therefore crucial for digitalization to take place under conditions that enable the sustainable design of digital technologies [18] 

Role of the Circular Economy in the Energy Transition 

The circular economy also plays a crucial role in the energy transition. The shift towards a low-emission energy system, especially the expansion of renewable energy sources and the enhancement of storage and network components, requires numerous valuable resources such as copper, steel, and rare earth elements. To reduce resource consumption and save greenhouse gas emissions throughout the entire lifecycle, circular economy approaches can make a significant contribution. In our research project “Circular Energy Transition: Assessment of Greenhouse Gas Reduction through Future Material Cycles in the Lifecycle of Energy-related Systems and Components” (abbreviated as Circular Energy Transition), we are developing practical methods for assessing the effects of circular economy approaches. We investigate which circular economy approaches can be applied to energy technologies in the lifecycle of energy system facilities. Additionally, selected measures are subjected to prospective ecological impact assessments through life cycle assessments. 

Role of the Circular Economy for companies 

The principle of the circular economy can also help companies to reduce emissions and achieve emission targets. The integration of the circular economy enables not only the reduction of direct emissions, but also of Scope 3 emissions resulting from the manufacture, use, and disposal of a product or service. A comprehensive material flow management contributes to identifying saving potentials regarding Scope 3 emissions. For example, measures such as reuse, recycling and the sustainable procurement of materials can have a direct impact on the carbon footprint along the supply chain. The circular alignment of supply chains allows for optimizing transport routes and logistical processes to minimize energy consumption and associated emissions. We have examined the impact of circular economy approaches on greenhouse gas emissions across Scope 1, 2 and 3 emissions in our ESTEM project. 

We are happy to support your company with:  

  • Identification of Circular Economy measures  
  • Assessment of potential savings of measures regarding emissions and critical raw materials 

Contact us without obligation at: aregett@ffe.de, +49 (0)89 158121-45; shaas@ffe.de, +49 (0)89 158121-69; oder info@ffe.de 


[1] European Commission, „Circular economy action plan: The EU’s new circular action plan paves the way for a cleaner and more competitive Europe.“, 2023. [Online]. Verfügbar unter: https://environment.ec.europa.eu/strategy/circular-economy-action-plan_en. Zugriff am: 23. November 2023. 

[2] F. Müller et al., 9 principles for a circular economy. [Online]. Verfügbar unter: https://www.umweltbundesamt.de/publikationen/9-principles-for-a-circular-economy (Zugriff am: 23. November 2023). 

[3] MacArthur Foundation, „Growth within: A circular economy vision for a competitive Europe“, 2015. [Online]. Verfügbar unter: https://circulareconomy.europa.eu/platform/sites/default/files/growth_within_a_circular_economy_vision_for_a_competitive_europe.pdf 

[4] M. Calisto Friant, W. J. Vermeulen und R. Salomone, „Analysing European Union circular economy policies: words versus actions“, Sustainable Production and Consumption, Jg. 27, S. 337–353, 2021, doi: 10.1016/j.spc.2020.11.001. 

[5] Europäische Kommission, „MITTEILUNG DER KOMMISSION AN DAS EUROPÄISCHE PARLAMENT, DEN RAT, DEN EUROPÄISCHEN WIRTSCHAFTS- UND SOZIALAUSSCHUSS UND DEN AUSSCHUSS DER REGIONEN: Den Kreislauf schließen – Ein Aktionsplan der EU für die Kreislaufwirtschaft“, 2015. [Online]. Verfügbar unter: https://ec.europa.eu/transparency/documents-register/api/files/COM(2015)614_0/de00000000332174?rendition=false. 

[6] A. Trawnitschek, „CIRCULAR THINKING in Standards: Wie Normung eine Circular Economy unterstützen kann“, 2023. [Online]. Verfügbar unter: https://www.din.de/resource/blob/954722/817ac05b868cad6959d3358b58127050/circular-thinking-in-standards-normen-zur-umsetzung-der-r-strategien-data.pdf. Zugriff am: 24. November 2023. 

[7] J. Kirchherr, D. Reike und M. Hekkert, „Conceptualizing the Circular Economy: An Analysis of 114 Definitions“, SSRN Journal, 2017, doi: 10.2139/ssrn.3037579. 

[8] A. Mestre und T. Cooper, „Circular Product Design. A Multiple Loops Life Cycle Design Approach for the Circular Economy“, The Design Journal, Jg. 20, sup1, S1620-S1635, 2017, doi: 10.1080/14606925.2017.1352686. 

[9] A. Murray, K. Skene und K. Haynes, „The Circular Economy: An Interdisciplinary Exploration of the Concept and Application in a Global Context“, J Bus Ethics, Jg. 140, Nr. 3, S. 369–380, 2017, doi: 10.1007/s10551-015-2693-2. 

[10] Europäisches Parlament, Kampf gegen Verpackungsmüll: Neue Regeln für den Umweltschutz. [Online]. Verfügbar unter: https://www.europarl.europa.eu/news/de/press-room/20231117IPR12213/kampf-gegen-verpackungsmull-neue-regeln-fur-den-umweltschutz (Zugriff am: 23. November 2023). 

[11] M. Moreno, C. de los Rios, Z. Rowe und F. Charnley, „A Conceptual Framework for Circular Design“, Sustainability, Jg. 8, Nr. 9, S. 937, 2016, doi: 10.3390/su8090937. 

[12] J. Potting, M. P. Hekkert, E. Worrell und A. Hanemaaijer, Circular Economy: Measuring innovation in the product chain, 2017. 

[13] Q. Oberpriller, F. Weber, R. Iten, R. Fasko und U. Frei, „Beurteilung von ausgewählten Massnahmen zur Förderung der Kreislaufwirtschaft in der Nutzungsphase“, Zürich, 2019. [Online]. Verfügbar unter: https://www.infras.ch/media/filer_public/da/e3/dae37037-a8a9-4c36-9206-e76ca0ffb8bf/massnahmen-foerderung-kreislaufwirtschaft.pdf. 

[14] Ellen MacArthur Foundation, „Towards the circular economy Vol. 1: An economic and business rationale for an accelerated transition“, 2013. [Online]. Verfügbar unter: https://www.ellenmacarthurfoundation.org/towards-the-circular-economy-vol-1-an-economic-and-business-rationale-for-an. Zugriff am: 21. November 2023. 

[15] Anika Regett, „Development of Instruments for a Circular Energy Economy: Potential of the Circular Economy to Reduce the Critical Resource Demand and Climate Impact of Electric Vehicle Batteries“. Dissertation, Elektrotechnik und Informationstechnik, Technische Universität München, München, 2020. [Online]. Verfügbar unter: https://www.ffe.de/wp-content/uploads/2021/06/Development-of-Instruments-for-a-Circular-Energy-Economy.pdf 

[16] J. Korhonen, C. Nuur, A. Feldmann und S. E. Birkie, „Circular economy as an essentially contested concept“, Journal of Cleaner Production, Jg. 175, S. 544–552, 2018, doi: 10.1016/j.jclepro.2017.12.111. 

[17] A. H. Trevisan, I. S. Zacharias, C. G. Castro und J. Mascarenhas, „Circular economy actions in business ecosystems driven by digital technologies“, Procedia CIRP, Jg. 100, S. 325–330, 2021, doi: 10.1016/j.procir.2021.05.074. 

[18] RIFS Potsdam, Chancen und Risiken der Digitalisierung für eine nachhaltige Entwicklung. [Online]. Verfügbar unter: https://www.rifs-potsdam.de/de/news/chancen-und-risiken-der-digitalisierung-fuer-eine-nachhaltige-entwicklung (Zugriff am: 23. November 2023).