Case study: Circularity metrics, LCA & reporting — a startup-to-enterprise scale story

When Circular IQ launched in Amsterdam in 2017, the founders faced a problem that seemed almost paradoxical: organizations that wanted to measure their circularity had no standardized way to do it. Life cycle assessment (LCA) tools existed, but they were expensive, slow, and designed for product engineers rather than procurement teams or sustainability officers. The gap between the ambition of the circular economy and the ability to measure progress toward it was enormous. Circular IQ set out to close that gap with a software platform that could make circularity measurement accessible, automated, and actionable for organizations of any size. Their journey from a three-person startup to an enterprise platform serving multinational corporations reveals critical lessons about scaling sustainability measurement tools in a market that was still defining what "circular" even meant.

Why It Matters

The circular economy represents a $4.5 trillion opportunity by 2030, according to estimates from the Ellen MacArthur Foundation. Yet without reliable metrics, organizations cannot track their progress, benchmark against peers, or demonstrate value to investors and regulators. The European Union's Corporate Sustainability Reporting Directive (CSRD), which began phasing in for large companies in 2024, requires detailed circularity disclosures including material flows, waste generation, and resource efficiency indicators. The EU Taxonomy Regulation further mandates that companies demonstrate "substantial contribution" to the circular economy through quantifiable metrics to qualify for green financing.

For procurement teams specifically, circularity metrics have become essential for supplier evaluation and selection. Research from the Sustainable Procurement Pledge found that 67% of European procurement organizations now include circularity criteria in tender requirements, up from 23% in 2020. The challenge is that measuring circularity across complex supply chains requires tools that can aggregate data from dozens or hundreds of suppliers, normalize it against consistent methodologies, and produce outputs that satisfy both internal decision-making needs and external reporting requirements.

The stakes are not abstract. Companies failing to provide adequate circularity data under the CSRD face penalties of up to 10 million euros or 5% of annual turnover, depending on the member state. Beyond compliance, organizations with mature circularity measurement capabilities report 15-25% reductions in material costs through waste elimination and resource optimization, according to a 2025 analysis by Accenture Strategy.

Background and Context

Life cycle assessment has existed as a methodology since the 1960s, with ISO 14040 and 14044 providing the standardized framework since 1997. Traditional LCA software platforms like SimaPro, GaBi (now Sphera), and openLCA require specialized expertise, with typical assessments taking 40-120 hours of analyst time and costing $15,000-50,000 per product. This cost and complexity limited LCA adoption to large corporations with dedicated sustainability teams.

The concept of "circularity metrics" emerged more recently, driven by the Ellen MacArthur Foundation's Material Circularity Indicator (MCI) published in 2015 and the World Business Council for Sustainable Development's Circular Transition Indicators (CTI) framework released in 2020. These frameworks attempted to simplify the measurement of circular economy performance into standardized, comparable indicators. But translating frameworks into operational tools that organizations could use at scale remained an unsolved problem.

The market landscape when Circular IQ launched was fragmented. ERP systems like SAP contained material flow data but lacked circularity analytics. LCA tools provided environmental impact analysis but required specialized operators. Spreadsheet-based approaches dominated, with procurement teams manually collecting supplier data through questionnaires and attempting to calculate circularity indicators without standardized methodologies.

The Scale-Up Journey

Phase 1: Finding Product-Market Fit (2017-2019)

Circular IQ's initial product was a web-based platform that allowed companies to calculate the Material Circularity Indicator for their products using guided data input. The founders, drawing on backgrounds in industrial ecology and software engineering, recognized that the primary barrier was not computational but organizational: procurement teams needed a tool they could use without LCA expertise.

The first paying customer was a Dutch furniture manufacturer that needed to demonstrate circularity credentials for government procurement contracts. The Netherlands had pioneered circular procurement requirements, with the national government committing to 100% circular procurement by 2030. This regulatory driver created early demand, but the market remained small and highly concentrated geographically.

Revenue in the first year was below 100,000 euros. The founders invested heavily in user research, conducting over 200 interviews with procurement professionals across 12 European countries. The critical insight was that procurement teams did not want a circularity calculator; they wanted a supplier assessment platform with circularity metrics embedded alongside other sustainability criteria. This realization prompted a significant pivot.

By 2019, the platform had evolved into a supplier sustainability assessment tool with circularity metrics as a core module alongside carbon footprint, social compliance, and chemical safety indicators. The pivot proved decisive: the average contract value tripled, and the customer base expanded from 8 to 47 organizations.

Phase 2: Building the Data Infrastructure (2019-2021)

The next challenge was data quality. Circularity measurement requires detailed information about material composition, recycled content, recyclability, product lifetime, and end-of-life pathways. Most suppliers could not provide this data in standardized formats, and many could not provide it at all.

Circular IQ invested in building a reference database containing material circularity properties for over 12,000 materials and components, drawing on published LCA databases (ecoinvent, ELCD), industry association data, and original research. This database allowed the platform to estimate circularity indicators even when suppliers provided only basic material composition data, filling gaps with statistically validated defaults.

The company secured a 2.5 million euro Series A round in 2020, led by SET Ventures with participation from Pymwymic. The funding was used primarily to expand the engineering team from 6 to 22 people and to build API integrations with major ERP and procurement systems including SAP Ariba, Coupa, and Oracle Procurement Cloud.

A pivotal partnership with the World Business Council for Sustainable Development (WBCSD) in 2021 embedded the Circular Transition Indicators (CTI) methodology directly into the platform, giving Circular IQ credibility as the first software tool officially aligned with the CTI framework. This endorsement opened doors to multinational corporations that had been hesitant to adopt tools from an unproven startup.

Phase 3: Enterprise Scale and Regulatory Tailwinds (2021-2025)

The announcement of the CSRD in April 2021 transformed the market. Suddenly, over 50,000 European companies would need standardized sustainability metrics, including circularity indicators. Circular IQ's platform was positioned directly in the path of this regulatory demand.

Enterprise adoption accelerated. Philips became an anchor customer in 2022, deploying the platform across its supply chain to measure circularity performance for over 2,000 suppliers. The implementation required integrating with Philips' internal systems, customizing reporting dashboards for different business units, and training procurement teams across 15 countries.

The Philips deployment revealed a critical scaling challenge: enterprise customers needed not just software but implementation support, change management, and ongoing methodology guidance. Circular IQ responded by building a professional services team and a partner ecosystem of consulting firms certified to implement the platform. By 2024, partner-led implementations accounted for 40% of new enterprise deployments.

Revenue grew from 1.2 million euros in 2021 to 8.7 million euros in 2024. The customer base expanded to over 300 organizations, including Ikea, Unilever, and the European Investment Bank. A Series B round of 12 million euros closed in 2023, led by Circularity Capital with participation from existing investors.

The EU's adoption of the European Sustainability Reporting Standards (ESRS) in 2023, which included specific circularity disclosure requirements under ESRS E5 (Resource Use and Circular Economy), created a compliance-driven demand surge. Circular IQ's platform was among the first to offer ESRS E5-aligned reporting templates, capturing significant market share during the initial compliance wave.

Results and Impact

By the end of 2025, the platform processed circularity data from over 45,000 suppliers across 73 countries. Key measurable outcomes include:

Measurement Coverage: Organizations using the platform increased their measured material flows from an average of 12% of procurement spend to 78% within 18 months of implementation. This dramatic improvement in visibility enabled data-driven decisions about material selection, supplier selection, and product design.

Cost Savings: Users reported average material cost reductions of 8-14% through insights generated by circularity analytics, primarily from identifying opportunities to substitute virgin materials with recycled alternatives and from reducing waste in manufacturing processes. Philips reported 11% material cost savings across product lines where circularity data informed design decisions.

Time Reduction: Automated data collection and calculation reduced the time required for circularity assessments from 40-80 hours per product (using traditional LCA methods) to 2-4 hours. For supplier assessments, the platform reduced evaluation time from 3-5 days per supplier to approximately 45 minutes.

Regulatory Compliance: 94% of enterprise customers reported that the platform met their CSRD circularity disclosure requirements without additional manual data collection, compared to an industry average of 35% readiness reported by KPMG in their 2025 CSRD preparedness survey.

Lessons Learned

Regulatory catalysts matter more than technology excellence. Circular IQ's product was technically sound from 2018 onward, but enterprise adoption only accelerated after the CSRD announcement in 2021. Companies invest in measurement infrastructure when regulation requires it, not when it becomes available. Startups in sustainability measurement should align their roadmaps with regulatory timelines and position their products as compliance solutions rather than purely discretionary tools.

Data infrastructure is the moat. The reference database of 12,000+ material circularity properties, built over seven years of continuous investment, became the platform's primary competitive advantage. Competitors could replicate the user interface or calculation methodologies, but the underlying data required years of accumulation and validation. Startups should invest in proprietary data assets early, even before they generate direct revenue.

Enterprise sales require ecosystem thinking. No startup can provide the full scope of services that multinational enterprises require. Circular IQ's decision to build a partner ecosystem of consulting firms and system integrators proved essential for scaling beyond 50 enterprise customers. The partner channel reduced customer acquisition costs by approximately 35% while increasing implementation success rates.

Methodology standardization is a double-edged sword. The WBCSD partnership provided credibility but also constrained product development. When customers requested customizations that deviated from the CTI framework, Circular IQ had to balance partner obligations with customer needs. The resolution was to offer the standardized methodology as the default while allowing configurable extensions for specific use cases.

Procurement is the right entry point for circularity measurement. The founders' early pivot from a standalone circularity calculator to a procurement-embedded platform proved strategically decisive. Procurement teams control material specifications, supplier selection, and purchasing decisions. Embedding circularity metrics into existing procurement workflows generated adoption rates 3-4 times higher than standalone sustainability tools that required users to adopt new processes.

Broader Implications

The Circular IQ case illustrates a pattern that is repeating across sustainability technology: measurement infrastructure becomes critical infrastructure when regulation converts voluntary metrics into mandatory disclosures. The circularity metrics market, valued at approximately 890 million euros in 2025, is projected to grow to 3.2 billion euros by 2030 as CSRD implementation expands and similar regulations emerge in other jurisdictions.

For procurement professionals evaluating circularity measurement platforms, several criteria should guide vendor selection: alignment with recognized frameworks (CTI, MCI, or ISO 59020), integration capabilities with existing procurement and ERP systems, reference database coverage for relevant material categories, and demonstrated scalability through enterprise customer references.

The transition from startup to enterprise scale in circularity measurement also highlights the importance of interoperability. As more organizations adopt digital product passports under the EU's Ecodesign for Sustainable Products Regulation (ESPR), circularity data will need to flow seamlessly between manufacturers, suppliers, recyclers, and regulators. Platforms that can serve as data hubs connecting these stakeholders will capture disproportionate value in the emerging circular data ecosystem.

Sources

• Ellen MacArthur Foundation. (2025). Circular Economy: Global Market Sizing and Growth Projections. Cowes, UK: EMF Publications.
• World Business Council for Sustainable Development. (2024). Circular Transition Indicators v4.0: Methodology and Implementation Guide. Geneva: WBCSD.
• European Commission. (2023). European Sustainability Reporting Standards: ESRS E5 Resource Use and Circular Economy. Brussels: Official Journal of the EU.
• KPMG. (2025). CSRD Readiness Survey: European Corporate Preparedness for Sustainability Reporting. Amsterdam: KPMG International.
• Accenture Strategy. (2025). The Circular Advantage: Measuring the Business Value of Circular Economy Transitions. Dublin: Accenture.
• Sustainable Procurement Pledge. (2025). Annual Benchmark Report: Circularity in Procurement Practices Across Europe. Brussels: SPP Foundation.
• Linder, M., Sarasini, S., and van Loon, P. (2024). "A Metric for Quantifying Product-Level Circularity." Journal of Industrial Ecology, 28(2), 412-428.