Circular economy has been on the agenda for a long time. However, it has been challenging to fully embrace the concept — particularly when it comes to understanding how increased circularity can enhance profitability and resource efficiency. The World Business Council for Sustainable Development (WBCSD, the organisation behind the GHG Protocol) has long recognised the predicament and has developed a framework with standardised methods and metrics for measuring, setting targets, and taking action to improve circularity. One could say that the Global Circularity Protocol for Business (GCP) is the circular economy equivalent of the GHG Protocol. WBCSD anticipates that, over time, the new protocol will achieve the same level of recognition and widespread adoption.
The new protocol was launched during COP30, clearly highlighting the close connection between climate action and the need to circulate resources. Beyond being a central tool for climate mitigation, increased use of recycled materials and greater control over material flows also strengthen resilience. Many companies depend on volatile access to raw materials, a challenge that can be mitigated by reducing the use of primary materials. This, in turn, can contribute to more resilient value chains and lower business risks. In addition, EU legislation is driving developments in the right direction (do have a look at our LinkedIn post for a comment on this is developing).
GCP is built around five steps, and a major advantage is that the framework includes practical tools with detailed guidance on how to proceed.
1. Frame – In this first step, the key activity is to define specific use cases to focus on. The starting point is the company’s needs and the purpose of the work. GCP illustrates this with three types of use cases. One relates to reducing risks associated with dependence on critical raw materials or disruptions in supply chains. A company may also need to establish internal structure and governance for circularity, for example by defining and monitoring circular performance indicators. A further use case can be the obligation to report in accordance with ESRS E5.
2. Prepare – In the second step, a high-level mapping is carried out of the flows of materials, components and products from extraction to end‑of‑life management. Material flows are categorised into three scopes (A–C), depending on where in the value chain they occur. By gaining further understanding of resource use, waste generation, the use of critical raw materials, environmental and climate impacts, as well as associated risks, it becomes possible to identify circular hotspots, i.e. areas where circular measures can deliver the greatest effect. Finally, flows are prioritised based on volumes, business relevance and environmental impact.
3. Measure – Once the relevant flows have been selected, the next step is to identify which key performance indicators will lead to the desired outcomes. GCP defines two types of KPIs: those that illustrate how circular the flows are, and those that measure business value and impacts on environmental and social factors. When choosing circular KPIs, 2050 recommends taking the EU’s nine circular strategies (also known as the 9R framework) as a starting point. These cover the full spectrum of circularity and can help organisations think more creatively, avoiding the risk of focusing solely on simpler intervention areas such as material recycling. The Measure section is one of the most extensive parts of the GCP standard (around 70 pages long) and describes a wide range of indicators.
4. Manage – Once the key performance indicators have been calculated, an analysis can be carried out to identify where resources are being used unnecessarily, waste streams, the company’s exposure to vulnerable material flows, the extent to which recycled materials are being used, and so on. Based on this, targets and actions can be defined. In the first version of GCP, relatively little emphasis is placed on strategy development. However, we believe it is important to take this opportunity to use the analysis as a foundation for evaluating the need for new business models. To do this, it is essential to understand the needs, opportunities and challenges of different stakeholders. How would a new business model affect our suppliers and partners? Our customers? More in‑depth assessments are also required to understand how new business models influence financial flows, both for the company itself and for other actors in the value chain.
Once ambition levels for targets and the appropriate measures have been determined, it is crucial to integrate the strategies into the company’s management processes. The potential benefits of a circular economy, as described above, will not be realised as long as circularity is treated primarily as a communications topic — the true potential is reached only when circular strategies are embedded in the core business.
5. Communicate – To unlock the commercial advantages that circularity can offer, communication is essential. It helps build trust, influence the market, and demonstrate the tangible outcomes that circularity delivers.
How can you get started? We believe it is advisable to begin with a limited use case and test the methodology on a single product, a material flow, or a specific part of the company. It is important to engage the value chain early and to be willing to integrate insights from the results into existing reporting processes. In this webinar we go through the GPC more in detail.
Malin Forsgren
Senior Consultant at 2050
This article is part of 2050 Highlights, a series where we explore pressing sustainability and business topics. Want to learn more about how your company can navigate the evolving regulatory landscape? Contact us at 2050!