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Resource duration as managerial indicatorof circular economy

Earth’s natural esources are important for economic and human well being. To keep the balance of resources the consumtion patterns must be studied and rather than taking up a linear approach we should go for a more circular one. Such a circular econmy I cathching attention of govts but it is the managers and corporations which shoud realize the importance of circular economy. This paper introduces a new indicator for the assessment of performance that are related to circular economy.

How can the actions by managers and corporations be assessed using the principles of circular economy (Reuse Recycle Reduce)?

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Why do we need a new indicator?

Normally organizations are assesed using economic , environmental and social indicators which rely on burden based logic. We need an indicator which focuses on materil and product use. Therefore a measure taken to assess the actions of managers and corporations should be based on longevity

Indicators represent the phenomena that is not easily quantified or for which there is no unit of measurement. The main use of an indicator is to structure the decisions made by managers.

They can be grouped into i) Burden based ii)Value based

Longevity Indicator

Material flow analysis concentrates on the flow and the stock of a material in the system. It helps in determining the lack of balance of ue of non renewable resources but also the efficiency of use of resources . This clearly connects with the principles of circular economy.Using all this and understanding the material flow to develop an indicator, we can consider that goal of the circular economy is to keep the material in use for as long as possible. An indicator related to circular economy principles will indicate reduction, reuse and recycling.

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B= (B1+B2) (1)

B1= (w1*x1*U1 ) (1.1)

B2 = (w1*x1*w2*x2*U2) (1.2)

C=C1+C2 (2)

C1= (A1+B1+B2)*(w1*y1*z1)/1-(w1*y1*z1) (2.1)

C2 = (A+B1+B2)*[(w1*x1*w2*y2*z2)/(1-w1*x1*w2*y2*z2)] (2.2)

Mobile phones as an example

• Precious metals

• Metals are important for financial and environmental reasons

• Content of material changes from time to time

• Use of secondary material can be a good revenue stream

• Market saturation

• Sales and stocks have increased

Application of indicator

When we apply the longevity calculations it is possible to workout the average contributed lifetime of precious metals contained in the handsets.

There are 3 assumptions made:

 Avg initial lifetime= 24 months

 15% handsets are returned

 65% of returned are refurbished and 95% of metals are recovered.

These assumptions are based on the estimations of industry experts. It is said that the avg lifetime of refurbished product is 12 months and due to product obsolescence and processing cost refurbished phone is not refurbished again and it is also put to recycling.

The overall calculations and assumptions arrive to a point where steps A”,B”,C are combined where A=24months B=0.630months and Recycling adds C1 =2.514 months C2=0.173months

That is a total longevity of 27.3 months


Longevity means the level to which materials remain in the system.A perfect circular system means materials remain there forever. Results show 3 key elements

• Longer use

• Greater recycling

• Greater refurbishment

The drivers of refurbishment and recycling are the same. Therefore more the refurbishment less the recycling and vice versa. Existing indicators are applicable at a bigger level bet longevity indicator can be used by any stakeholder.

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There is an assumption that higher refurbishment rate are good and more preferable.But results show that high refurbishment leads to low longevity “,Because No. of refurbished handsets recycled are lower Because if refurbished handsets are not returned the material will be lost.

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