Making ESG Reporting Meaningful: A Circular Economy Perspective.

Today,  sustainability is no longer optional, Environmental, Social, and Governance (ESG) reporting has become a necessary move for firms to prove they are committed to a better tomorrow… But as ESG reporting becomes mainstream, the problem is making it pay. One possible path forward is to leverage circular economy principles—rethinking the way resources are extracted, used, and regenerated—making ESG narratives tangible, high-impact changes.

By combining ESG aspirations with circular approaches, businesses can step beyond reactive compliance and build towards proactive innovation. This article explains how the implementation of circular principles may enrich, make more credible, and more forward-looking ESG reporting.

The Case for Circular Thinking in ESG

More than 90% of S&P 500 companies now publish a sustainability report, most reports still stick to reporting standard metrics like emissions and workforce diversity. Important as these are, they leave out the interconnectedness of sustainability issues. Circular thinking fills in that gap.

Environmental Impact: Circular design decreases waste and emissions by extending product lifecycles and reviving ecosystems.

Social Impact: Local repair efforts, reuse programs, and circular supply chains create jobs, foster inclusivity, and empower communities.

Governance: Traceability of resources, ethical sourcing, and creating open circular KPIs enhances governance.

Reports that cover these subjects transcend static data—they become points of evidence for system transformation.

How to Bring Circularity into ESG Reporting

1. Define and Quantify What Circular Looks Like
The measurement is the initial hurdle. Companies apply measures like Circulytics (Ellen MacArthur Foundation) or Circular Transition Indicators (WBCSD) to quantify material circularity, product reuse, and recovery at the end of life. For instance, a company might claim 60% of inputs are from post-consumer recycled material, reducing virgin resource dependency.

That is a great narrative and should be featured in your report. As a company you can track your material flow, identify waste hotspots, and monitor circular performance and ESG benchmarking via digital dashboards.

2. Embed Circularity into Product and Service Design
Design is where circularity starts. ESG reports that detail how products are designed to be durable, repairable, or recyclable demonstrate leadership over compliance. Modular electronics that facilitate part replacement keep devices on the go longer. Each one fixed means one less in landfill.

3. Pursue Industrial Symbiosis as a Strategic Leverage
Industrial symbiosis—another’s waste being another’s input—can significantly reduce the aggregate environmental impact while promoting innovation.
In Denmark’s Kalundborg Symbiosis, firms exchange resources like steam, gypsum, and treated wastewater, avoiding over 600,000 tons of CO2 each year.
Beyond green benefits, these systems generate jobs and community resilience, placing them ideally for ESG narrative-building.

4. Use Smart Tech to Authenticate and Report Progress
The future of integrating ESG with circularity is one of data transparency. Emerging smart tech solutions allow organizations to chart material lifecycles, monitor take-back schemes, and validate claims.

It is possible to embed software into a company to track the process of recycled plastic from collection to being put back into products, creating auditable proof of circularity.

Based on Google’s 2024 Sustainability Report and the Circularity Gap Report 2024 by Deloitte and Circle Economy Foundation, Google is advancing global recycling optimization through AI technologies like CircularNet, used by organizations such as Saahas Zero Waste and Recykal to enhance material sorting and reduce landfill waste. This is an indicator of where technology meets sustainability

5. Tell Human-Centered Stories
While numbers count, stories stick. ESG is made real by stories which involve community-based reuse facilities, employee-led zero-waste ventures, or customer take-back programs.
One firm that takes old uniforms and turns them into bags and tells employee stories behind the effort can make its impact personal.

The Payoff: ESG Value Amplified by Circularity

Circular strategies are not so much good PR as they are powering business resilience. Accenture figures that embracing circular business models could unlock $4.5 trillion of economic value by 2030. Companies incorporating such approaches into ESG see greater investor trust, higher brand allegiance, and genuine operation efficiencies.

According to NielsenIQ’s 2023 sustainability report, The Changing Climate of Sustainability, consumer attitudes are shifting significantly toward valuing genuine sustainability efforts. It reveals that 69% of global consumers now consider sustainability more important than they did two years ago, and 77% are prepared to stop purchasing from companies that engage in greenwashing. This underscores a growing demand for authenticity in corporate sustainability practices.

Firms embedding circular economy strategies within ESG frameworks can achieve cost savings through the optimization of the use of resources and reducing waste, as well as increased talent attraction and stakeholder confidence

Overcoming Challenges

Embracing circularity within ESG is not without challenges:

• Data Granularity: Gathering and verifying granular circular data is time-consuming.
  Solution: Begin with high-priority materials or goods and broaden scope step by step with standardized frameworks.
  
  Credibility Issues: Stakeholders are suspicious of greenwashing.
  Solution: Use third-party verification or science-based targets.
  
  Resource Limitations: Shifting to circular systems may demand initial investment.
  
  Solution: Begin with pilot initiatives that yield quantifiable ROI and scale from there.
  
  

Conclusion

ESG reporting must not merely report the past—it must frame the future. Combining circular economy thinking sets a clear direction towards regenerative business models. A systems approach infuses ESG frameworks with purpose, clarity, and intention. For companies prepared to break linear forms and design for circularity, ESG reporting is a story no more. It’s a design for enduring value, resilience, and shared prosperity.

For businesses which are aspiring to perform or achieve business value with ESG reporting, remember that this is a new practice—a young emerging practice. Even financial reporting, which has been refined over over 100 years but still is not perfect, ESG is a fresh discipline where even seasoned practitioners are making it up as they go along. This youth is potential: if financial reporting is still in the works after all this time, imagine what’s waiting for those just getting started in ESG.

With the principles of the circular economy to direct us, business can experiment, innovate, and grow, releasing more and more opportunity as the industry matures. Whether it’s optimizing resources, enhancing transparency, or building partnerships, the future is about growth and impact that will continue to build with time.