Sustainability Assessment in Circular Inter-Firm Networks

The circular economy (CE) has become a driving paradigm for businesses and their supply chain partners. While companies are starting to embrace CE practices, i.e. circular business models, strategies and product solutions, the sustainability impacts of these practices with regards to the UN Sustainable Development Goals are not necessarily assessed. Given the collaborative nature of CE practices, involving actors along the whole product life cycle, this thesis focuses on sustainability assessment within circular inter-firm networks and how this assessment can meaningfully contribute to decision-making. Through a systematic literature review within the fields of industrial ecology (IE) and circular supply chain management (CSCM), suitable assessment approaches in literature were identified and integrated into a framework. The framework is divided into evaluation approaches, dominated by IE approaches, and decision-supporting approaches, where CSCM approaches are prevalent. It emerged that approaches based on life cycle thinking (LCT) are amongst the most frequently applied in both fields. The assessment approaches from literature were then compared to the actual assessment practices of 43 companies active with CE practices in Italy and the Netherlands. While the academic assessment approaches were both quantitative and qualitative, most of the approaches applied in practice were qualitative. One exception were the LCT methodologies, such as life cycle assessment (LCA) and the carbon footprint, which were frequently employed by respondents. Besides assessment, practitioners underlined the importance of close relationships and trust when initiating CE practices and assessing them. The thesis also lines out four criteria for sound sustainability assessment in circular inter-firm networks: balance of sustainability dimensions; the intergenerational nature of sustainability; stakeholder involvement; and LCT. Both the assessment approaches from literature and practice were then benchmarked against these criteria. As emerged from this research, the social sustainability aspects are less frequently addressed than the environmental and economic ones. This is connected to the social dimension’s conceptualisation in the fields of IE and supply chain management, two fields that struggled with integrating the social aspects, which has now also become an issue for inter-firm networks in CE itself. After all, the social assessment approaches are diverse, inherently context-dependent and mandate stakeholder inclusion. Interviews also showed that there is no consensus amongst CE actors on whether the social dimension belongs to the CE concept or only to sustainability. However, this distinction was deemed to be obsolete for conducting an assessment in practice, given that social CE aspects are expected to be covered by corporate social responsibility policies. Of the 43 interviewed companies engaged with CE practices, less than half conducted some kind of social assessment, which was mostly qualitative; the main barriers were a lack of expertise and missing standards. The most prominent LCT-based social assessment methodology, the social LCA, is not yet well disseminated both in literature and practice, partially explained with its comparatively recent establishment, but, more importantly, due to its complexity and limited data availability. It was found that research should support companies in identifying the strategic relevance of social issues, which can then be managed through assessment, especially in the light of the Sustainable Development Goals. On top of the repertoire of assessment approaches, this thesis also presents two case studies that apply circularity and environmental sustainability assessment approaches. The first case is a multi-national packaging corporation, implementing a life cycle-based assessment approach in its sites in Italy and China. Using the dynamic capabilities perspective, it was analysed how the assessment practices can contribute to the company’s microfoundations and how they are connected to other microfoundations (such as strategic partnership and sustainability strategy). This helped to explain why and how life cycle-based assessments can play a strategic role in companies that want to make their business processes more circular, providing a science-based rational for prioritising strategies. Yet, higher circularity would not necessarily entail more favourable sustainability results, which is why circularity and sustainability assessment tools should be employed together. The second case study focuses on the adaptation of a LCA to its respective local context in Northern Italy. It compared the environmental impact of serving canteen food in single-use tableware from compostable plastics with the impact of reusable tableware made from ceramics, steel, and glass. Through the epistemological lens of the actor network theory, the end-of-life scenario of the LCA and the interpretation of its results were contextualised. The results showed that, in this example, there is no environmental argument in favour of compostable plastics. Actor network theory helped to better understand how the putative environmental friendliness of compostable plastics is framed by human and non-human actors (e.g. narratives, documents, infrastructure) within this circular inter-firm network. Meanwhile, the socio-economic implications of these two scenarios are yet to be analysed. It is further essential to understand the limitations of the LCA, given it can only provide a partial (limited set of impact categories) and unidimensional (focusing on environment) picture of a system’s sustainability. Moreover, LCA should thus not be viewed as neutral, but as an assessment approach that also mirrors the world view of LCA practitioners in their modelling choices. These considerations are especially relevant given the LCA methodology’s status as a best practice assessment approach in the CE context, bound to increase its application substantially.