A proposal to measure the circular economy implementation and sustainable development goals achievement using objectively weighted indices

Abstract

ABSTRACTGovernments, companies and citizens around the world consider necessary to adopt a new circular economy (CE) model that allows solving the planet’s environmental challenges and guaranteeing sustainable economic growth. Europe advocates this philosophy, but there is no widely accepted index to measure CE implementation at a macro level. This paper proposes a new index based on principal component analysis for European Union countries that use all information available without losing any information by the dimensionality reduction and consider objective weights based on the percentage of variance that each one retains. Moreover, we develop a disaggregated analysis considering the CE dimensions set out in the ‘CE monitoring framework’, allowing a more comprehensive analysis than when using a single indicator of CE implementation. This method is also used to build an index of the degree of achievement of the sustainable development goals (SDGs) to see how they relate to the CE; the relationships between CE dimensions; and between SDGs. The results by geographical areas reveal a higher level of CE implementation in western European and EU-15 countries, with Luxembourg, Austria, Denmark, the Netherlands and Belgium alternately holding the top positions depending on the CE dimension considered. Therefore, the new European countries and the countries in the east must encourage measures to improve the implementation of the economy. In addition, there is a positive, strong and significant relationship with SDGs 8, 9 and 11, with both the overall CE implementation index and the disaggregated indices, and a negative one with 7 and 15.KEYWORDS: Circular economysustainable development goalssynthetic indicatorprincipal component analysisEuropean Union Highlights We propose new synthetic indices of the CE implementation and achievement of the SDGs.This proposal accounts for all existing information, leaving nothing out, however, irrelevant it may seem, and uses objective weights.The results show that Luxembourg, Austria, Denmark, the Netherlands and Belgium hold the top positions.Western European countries and those that make up the EU-15 are the ones that present the highest levels of CE implementation.There is a clear relationship between the SDGs 8, 9 and 11 and CE implementation.AcknowledgmentsSpecial thanks to the editor and the anonymous reviewers for their suggestions regarding this paper.Disclosure statementNo potential conflict of interest was reported by the author(s).Additional informationFundingThis work was supported by the Department of Applied Economics I, University of Castilla-La Mancha, Spain [grant numbers 00421I126].