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CSRD and circular economy: Navigating sustainability reporting with the Circular Transition Indicators


There’s a new sheriff in town when it comes to sustainability reporting for companies operating within the European Union. Her name is “Corporate Sustainability Reporting Directive (CSRD)” and she’s on a mission to enhance sustainability reporting standards toward radical transparency, better comparability and informed decision-making for companies, investors and consumers. Broadly aligned with international voluntary reporting frameworks such as the Global Reporting Initiative (GRI), CSRD mandates comprehensive and verified Environmental Social and Governance (ESG) reporting that will be able to provide more precise insights into a company’s sustainability risks and opportunities while helping companies identify how to create value in a more sustainable way for both people and planet.

The way we produce and process materials and products is responsible for 45% of global greenhouse gas emissions (GHG) and 90% of biodiversity loss. To meet our climate objectives, halt and reverse biodiversity loss and provide access to a dignified life to all while staying within the limits of our planet, we need a fundamental transformation in how we produce, design, use and recover materials and products. This can only be achieved through the widespread adoption of circular economy solutions. Despite the strong economic case - a study from Accenture estimates that the circular economy can bring a USD $4.5 trillion opportunity - a transition from linear to circular has been lagging. Even the most motivated companies struggle to show the value-creation potential in embracing circularity and investments in circular solutions remain marginal across all sectors.

CSRD represents a game changer in the shift from a linear to a circular economy. For the first time, the most ambitious set of mandatory reporting requirements includes a dedicated standard that closely links a company’s resource use with its sustainability performance. The new European Sustainability Reporting Standard (ESRS) E5 introduces the first mandatory reporting on resource consumption, waste generation, circular design, and recovery of products and materials. By encouraging companies to assess their circularity performance across the entire value chain, the CSRD has the transformative power to drive companies to take a systemic approach to sustainability reporting and develop an understanding of the environmental and social impacts associated with a company’s activities, products, and services.

While this is a step in the right direction, much is left for companies to unravel as they develop the necessary knowledge and data to credibly prepare for reporting along the topics covered by ESRS E5. The standard covers qualitative elements such as policies, actions and resources the company invests in as part of its transition to circularity. It requires companies to report on key quantitative indicators, such as targets and circular performance across resource inflows; and resource outflows, including waste management and the company’s overall contribution to circularity through design for recovery and the actual recirculation of products and materials.

The Circular Transition Indicators (CTI) is a widely adopted framework for measuring circular performance developed by the World Business Council for Sustainable Development (WBCSD) in collaboration with over 50 companies and key thought leaders in the circular economy space, such as Circle Economy, GRI, Cradle to Cradle and the Ellen MacArthur Foundation. CTI is fully aligned with requirements from ESRS E5 and can help companies harness the transformative potential of the circular economy across CSRD’s new requirements.

The CTI framework is simple, applicable across industries and value chains, comprehensive yet flexible, complementary to a company’s existing sustainability efforts and agnostic as to material, sector or technology.

With CTI, companies can independently understand their circular performance, organize and build data on the materials flowing through the company, create baselines, identify risks and opportunities, develop targets and roadmaps for action and monitor progress.  

CTI is aligned with the new CSRD’s reporting standards. This paper, developed by KPMG and supported by WBCSD, explores how companies can effectively begin their journey toward reporting according to CSRD’s resource use and circular economy standards using CTI.

Without transitioning to a circular economy, we simply can’t achieve a net-zero, nature-positive, and equitable future. The new EU reporting requirements highlight the importance of transparency, accountability and measurable progress in promoting responsible practices that respect our planet’s finite resources. CTI can help provide a clear pathway for organizations to integrate circular economy principles in their reporting practices, enabling them to demonstrate their commitment to sustainability.

As of 2025, 50,000 companies will be affected by the new requirements. The time to start is now! 

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