Interview: Practitioners on Circularity metrics, LCA & reporting — what they wish they knew earlier

A 2025 survey by the Ellen MacArthur Foundation found that 72% of companies reporting circularity metrics had changed their measurement methodology at least once in the preceding three years, and 41% said their original metric set gave misleading results that influenced poor strategic decisions. Behind these numbers are sustainability professionals who learned the hard way that circularity measurement is not a spreadsheet exercise but a systems design challenge. We spoke with practitioners across consumer goods, construction, electronics, and consulting who shared what they wish they had known when they first started measuring, modelling, and reporting circular economy performance.

Why It Matters

The EU's Corporate Sustainability Reporting Directive (CSRD), which entered mandatory reporting cycles in 2025, requires companies to disclose resource use and circular economy metrics under the European Sustainability Reporting Standards (ESRS) E5 module. Over 50,000 companies will eventually fall under CSRD scope, and many are discovering that their existing circularity data is incomplete, inconsistent, or built on assumptions that do not hold up to assurance scrutiny. The International Organization for Standardization published ISO 59020 in 2024, establishing a framework for measuring circularity at the organization level, but practitioners report that applying the standard to real operations exposes data gaps that take 12 to 18 months to close (ISO, 2024).

Life cycle assessment, the analytical backbone of circularity reporting, has matured significantly since the foundational ISO 14040/14044 standards. Yet LCA practitioners consistently report that the gap between textbook methodology and practical application remains wide. Database coverage is uneven, allocation choices can swing results by 30 to 50%, and communicating uncertainty to non-technical decision-makers remains a persistent challenge. The practitioners interviewed for this article have collectively conducted over 400 LCAs across 15 industries and managed circularity reporting programmes for companies with combined revenues exceeding EUR 200 billion.

Key Concepts

Material Circularity Indicator (MCI): Developed by the Ellen MacArthur Foundation and Granta Design, the MCI scores products and companies on a 0-to-1 scale based on how much virgin material input is used and how much waste is generated. A score of 1 represents a fully circular product with no virgin input and no waste. Practitioners note that while the MCI provides a useful headline metric, it does not capture material quality degradation across recycling loops (downcycling) or the energy intensity of recovery processes.

Life Cycle Assessment (LCA): A standardised methodology (ISO 14040/14044) for quantifying environmental impacts across a product's entire life, from raw material extraction through manufacturing, use, and end-of-life treatment. LCA results are expressed in impact categories including global warming potential (kg CO2 equivalent), acidification, eutrophication, and resource depletion. Practitioners emphasise that LCA is not a single number but a multi-dimensional profile that requires careful interpretation.

Circularity Gap: The difference between the total material throughput of an economy or organisation and the portion that is cycled back into productive use. The Circularity Gap Reporting Initiative's 2025 report found that global circularity declined to 7.2%, down from 9.1% in 2018, driven by rising total material consumption outpacing recycling gains (Circle Economy, 2025).

ESRS E5 (Resource Use and Circular Economy): The CSRD reporting standard that requires companies to disclose material inflows and outflows, circularity rates, waste generation and treatment, and resource efficiency targets. Practitioners report that ESRS E5 data requirements significantly exceed what most companies had been collecting voluntarily.

What's Working

Practitioners consistently highlighted three areas where circularity measurement has delivered genuine strategic value.

First, product-level LCA is driving design improvements in consumer goods and electronics. Philips conducted LCAs on its entire medical imaging portfolio in 2023 and 2024, identifying that the manufacturing phase accounted for only 12% of lifetime carbon impact while the use phase (electricity consumption during clinical operation) drove 74%. This insight shifted R&D investment toward energy efficiency improvements that reduced the carbon footprint of new MRI systems by 28% compared to the previous generation, while also lowering customer operating costs. Philips reported that LCA-informed design decisions contributed to EUR 1.9 billion in "green revenue" in 2024, defined as revenue from products with measurably improved environmental performance (Philips, 2025).

Second, the Material Circularity Indicator is proving useful as an internal benchmarking tool when applied consistently across product lines. Renault Group has used the MCI framework since 2021 to track circularity performance across its vehicle models. By 2025, Renault reported an average MCI of 0.33 across its passenger vehicle portfolio, up from 0.24 in 2021, driven primarily by increased recycled plastic content (from 9% to 21% by mass) and a systematic programme to recover and remanufacture high-value components including turbochargers, gearboxes, and electronic control units. The MCI framework provided a common language that connected procurement, engineering, and sustainability teams around a shared target (Renault Group, 2025).

Third, digital product passports are creating the data infrastructure that circularity metrics have always lacked. The EU Battery Regulation, effective February 2027, requires every EV and industrial battery placed on the EU market to carry a digital passport disclosing material composition, recycled content, carbon footprint, and repairability information. BASF has been piloting digital product passports for its battery materials since 2024, using blockchain-verified data from mining through cathode production. The passport data feeds directly into customer LCA models, eliminating the proxy data and industry averages that previously introduced 20 to 40% uncertainty into battery carbon footprint calculations (BASF, 2025).

What's Not Working

The practitioners interviewed identified several persistent challenges that continue to undermine circularity measurement and reporting.

Data quality in LCA remains the most commonly cited frustration. The two dominant commercial LCA databases, ecoinvent and GaBi (now Sphera), cover roughly 18,000 and 15,000 processes respectively, but practitioners report significant gaps in coverage for recycled materials, emerging bio-based feedstocks, and end-of-life treatment processes specific to newer product categories. One practitioner at a major European packaging company described spending four months attempting to model the environmental impact of chemical recycling of multilayer flexible packaging, only to find that available datasets relied on pilot-plant data from 2019 that bore little resemblance to current commercial-scale operations. The resulting LCA carried uncertainty ranges of plus or minus 45% on the global warming potential result, making it nearly unusable for marketing claims or regulatory submissions.

Allocation methods in recycled content accounting continue to generate controversy. The "cut-off" approach (used in the EU Product Environmental Footprint methodology) assigns no environmental burden from virgin material production to recycled content, effectively giving recycled materials a zero-burden entry point. The "end-of-life recycling" approach (common in ISO 14044-compliant LCAs) shares environmental burdens between the first life and subsequent lives of a material. These two approaches can produce results that differ by 25 to 50% for the same product, and companies frequently select whichever method produces the more favourable result. The EU Product Environmental Footprint Category Rules (PEFCRs) are attempting to standardise allocation, but only 19 product categories have finalised PEFCRs as of early 2026, leaving most sectors without binding guidance.

Circularity metrics often fail to capture environmental trade-offs. A product can score highly on material circularity while having a larger environmental footprint than its less circular alternative. One practitioner cited the example of recycled PET (rPET) in food packaging: mechanical recycling of PET bottles into food-grade rPET requires energy-intensive washing, decontamination, and super-cleaning steps that, in some EU member states with carbon-intensive electricity grids, result in higher lifecycle greenhouse gas emissions than virgin PET production from natural gas feedstocks. The MCI would rate the rPET package as more circular, but the LCA would show it as less climate-friendly in certain regional contexts.

Key Players

Established companies:

• Sphera (formerly thinkstep/GaBi): provider of the GaBi LCA database and software, used by over 10,000 companies worldwide for product and corporate-level environmental assessment
• PRe Sustainability: developer of SimaPro, one of the most widely used LCA software platforms, with over 10,000 licensed users in 80 countries
• Ecoinvent Association: operator of the ecoinvent database, the most cited LCA background database in academic and commercial applications, covering 18,000+ processes
• SAP: integrated circularity and LCA data management into its SAP Sustainability Control Tower and Green Token supply chain traceability solution

Startups and scale-ups:

• Makersite: AI-powered product lifecycle intelligence platform that automates LCA data collection from supply chain partners and regulatory databases
• Circular IQ: provider of digital product passport and circularity assessment tools used by brands including H&M, Philips, and Tarkett
• Ecochain: Amsterdam-based LCA automation platform that reduces the time required for product-level LCA from weeks to hours through automated data mapping

Investors and enablers:

• Ellen MacArthur Foundation: developer of the Material Circularity Indicator framework and the Circularity Indicators project, which has been adopted by over 500 organisations
• European Commission DG Environment: funder of PEF pilot programmes and administrator of the ESRS E5 reporting requirements driving corporate circularity measurement adoption

Action Checklist

• Conduct a gap analysis of current circularity data against ESRS E5 disclosure requirements before the first mandatory reporting cycle
• Establish a consistent LCA methodology document specifying database choices, allocation methods, system boundaries, and uncertainty reporting conventions for use across all product assessments
• Invest in primary data collection from tier 1 and tier 2 suppliers rather than relying solely on industry-average database proxies, prioritising materials that contribute more than 5% of product mass or environmental impact
• Implement the Material Circularity Indicator or an equivalent composite metric as an internal KPI, with annual targets linked to design and procurement decisions
• Prepare for digital product passport requirements by establishing material composition tracking systems at the SKU level for products sold in the EU market
• Engage an external LCA reviewer or verifier for any circularity claims used in public communications to ensure compliance with EU Green Claims Directive substantiation requirements
• Build internal LCA literacy through training programmes that enable product designers, procurement managers, and marketing teams to interpret and act on assessment results without requiring specialist support for every decision

FAQ

Q: How long does it take to build a credible circularity metrics programme from scratch? A: Practitioners consistently report 12 to 18 months from initial scoping to reliable data output. The first 3 to 4 months involve mapping material flows and identifying data gaps. Months 4 through 8 focus on establishing data collection systems with suppliers and internal operations. The final phase, months 9 through 18, covers iterative measurement, validation against physical audits, and refinement of methodology. Companies that attempt to accelerate this timeline by relying heavily on proxy data often produce metrics that fail assurance review or, worse, drive incorrect strategic decisions.

Q: Which LCA database should we use, ecoinvent or GaBi (Sphera)? A: Both databases are scientifically rigorous and widely accepted. The practical choice often depends on geographic coverage (GaBi has historically stronger coverage of European and North American industrial processes, while ecoinvent has broader global coverage including developing economies), software compatibility (GaBi data integrates natively with GaBi software and SAP, while ecoinvent integrates with SimaPro and openLCA), and sector focus. Many experienced practitioners maintain licences for both databases and select datasets on a per-study basis. The critical point is consistency: once you select a database for a product category, maintain that choice across reporting periods to ensure year-over-year comparability.

Q: How do we handle the tension between circularity metrics and carbon footprint results? A: Report both metrics transparently and resist the temptation to optimise for one at the expense of the other. Establish decision rules that define which metric takes priority in specific contexts. For example, one interviewed practitioner's company uses a policy where circularity improvements are pursued only when the corresponding LCA shows no more than a 10% increase in lifecycle carbon impact. When trade-offs exceed that threshold, the decision escalates to a cross-functional review that weighs climate targets against resource efficiency goals. This structured approach prevents the "circularity washing" risk where high recycled content claims mask genuine environmental burden shifts.

Q: What is the biggest mistake companies make when starting circularity reporting? A: Measuring too many things at too fine a granularity before establishing basic material flow understanding. Multiple practitioners described organisations that attempted to calculate MCI scores for hundreds of SKUs simultaneously, producing a large volume of low-quality data that nobody trusted or used. A more effective approach is to start with 5 to 10 representative products or product families, invest in high-quality data for those, validate the results through physical audits and cross-checks, and then scale the methodology once it has been proven. Quality of measurement matters far more than breadth of coverage in the early stages.

Sources

• Ellen MacArthur Foundation. (2025). Circularity Indicators: Programme Results and Methodology Update. Cowes, UK: Ellen MacArthur Foundation.
• Circle Economy. (2025). The Circularity Gap Report 2025. Amsterdam: Circle Economy Foundation.
• International Organization for Standardization. (2024). ISO 59020:2024 Circular Economy: Measuring and Assessing Circularity. Geneva: ISO.
• Philips. (2025). Annual Report 2024: Environmental Profit and Loss Account and Circular Economy Performance. Amsterdam: Koninklijke Philips N.V.
• Renault Group. (2025). Climate and Environment Report 2024: Circular Economy Metrics and Progress. Boulogne-Billancourt: Renault Group.
• BASF. (2025). Battery Materials Digital Product Passport Pilot: Results and Methodology. Ludwigshafen: BASF SE.
• European Commission. (2024). Product Environmental Footprint Category Rules: Status Report and Implementation Guidance. Brussels: Directorate-General for Environment.
• Sphera. (2025). GaBi Database 2025 Release Notes: Coverage, Updates, and Methodology Changes. Chicago: Sphera Solutions, Inc.