DEGREE PROJECTIN THE FIELD OF TECHNOLOGY MECHANICAL ENGINEERING AND THE MAIN FIELD OF STUDY INDUSTRIAL MANAGEMENT
SECOND CYCLE, 30 CREDITS STOCKHOLM, SWEDEN 2021
Sustainability Project
Portfolio Selection
Framework
Developing decision criteria with a TBL
approach
FARAH KALIAN
MY ARGÅRDEN BJÖRN
KTH ROYAL INSTITUTE OF TECHNOLOGY
Ramverk för hållbar projektportföljstyrning
- Utveckling av beslutskriterier i enlighet med TBL
av
My Argården Björn
Farah Kalian
Examensarbete TRITA-ITM-EX 2021:241
KTH Industriell teknik och management
Industriell ekonomi och organisation
SE-100 44 STOCKHOLM
Sustainability Project Portfolio Selection Framework
- Developing decision criteria with a TBL approach
By
My Argården Björn
Farah Kalian
Master of Science Thesis TRITA-ITM-EX 2021:241
KTH Industrial Engineering and Management
Industrial Management
SE-100 44 STOCKHOLM
Abstract
Sustainability is one of the main drivers today for change in the world, many organisations are trying to be sustainable in their own way. One of the ways to do this is to integrate sustainability, or the triple bottom line (TBL), in their decision-making. This study concerns developing decision criteria for an NPO operating within the recycling- and waste management sector, to be applied in a project portfolio selection framework. Thus, the purpose of the study is to support decision-making that will promote sustainability by developing decision criteria. Consequently, the main research question for the study is: which criteria assure project selection aligned with TBL? The decision criteria were developed by following the five-step approach for developing criteria by Tillman and Cassone (2012). The research is designed as a qualitative single case study and the research questions are answered by conducting semi-structured interviews. The study has shown that by combining TBL and the five-step approach, criteria were able to be developed promoting all three dimensions of TBL. However, combining TBL and the five-step approach did imply some changes and adjustments to the original five-step approach. Hence, the discussion provides an outline of a suggested framework that integrates the TBL approach into the development of decision criteria and metrics.
Keywords: Sustainability, Triple Bottom Line, TBL, Decision criteria, Project selection,
Sammanfattning
Hållbarhet är en av de viktigaste drivkrafterna för förändring i världen idag och olika organisationer försöker vara hållbara på sitt eget vis. En strategi att göra detta är att integrera hållbarhet, eller triple bottom line (TBL), i sitt beslutsfattande. Denna studie handlar om att utveckla beslutskriterier för tillämpning i ett ramverk för projektportföljstyrning för en icke vinstdrivande organisation som arbetar inom sektorn för återvinning och avfallshantering. Syftet med studien är således att stödja beslutsfattande som främjar hållbarhet genom att utveckla beslutskriterier. Följaktligen är den huvudsakliga forskningsfrågan för studien: vilka kriterier säkerställer att val av projekt är i linje med TBL? Beslutskriterierna utvecklades genom att följa tillvägagångssättet för en femstegsmetod för att utveckla kriterier av Tillman och Cassone (2012). Studien är utformad som en kvalitativ fallstudie och forskningsfrågorna besvaras genom semistrukturerade intervjuer. Studien har visat att genom att kombinera TBL och femstegsmetoden utvecklades kriterier som främjar alla tre dimensioner av TBL. Att kombinera TBL och femstegsmetoden innebar dock vissa förändringar och justeringar av den ursprungliga femstegsmetoden. Diskussionen presenterar därför ett förslag på ett ramverk som integrerar TBL i utvecklingen av beslutskriterier och mätetal.
Table of Content
1. Introduction ... 1
1.1 Purpose and Research Questions ... 3
1.2 Delimitations ... 4
1.3 Structure of the study ... 4
2. Theoretical framework ... 5
2.1 Project Portfolio Management and Decision Criteria ... 5
2.1.1 Framework for Project Selection ... 5
2.1.2 Criteria and metrics in traditional project literature ... 7
2.2 Five-step approach for developing decision criteria... 10
2.2.1 Establishing overall objectives and goals ...10
2.2.2 Weight the objectives to determine their importance ...11
2.2.3 Select the decision-criteria ...11
2.2.4 Weight the decision criteria to determine their importance ...12
2.2.5 Develop metrics ...12
2.4 Metrics for environmental sustainability ... 15
2.4.1 Environmental impact measures ...15
2.4.2 Circular Economy and CE measures...16
2.5 Metrics for social sustainability... 18
2.6 Framework for developing decision criteria with a TBL approach ... 20
3. Methods ... 22
3.1 Research Design and Process ... 22
3.2 Methods Selection ... 22
3.2.1 Semi-structured interviews ...23
3.2.2 Literature Search ...26
3.3 Developing criteria and applying the criteria in a selection framework ... 26
3.4 Validity and Reliability ... 27
4. Case company ... 29
5. Results ... 31
5.1 General approach for project assessment ... 31
5.1.1 Systems thinking approach when working with projects. ...31
5.1.2 Selecting projects ...31
5.1.3 Choice of criteria ...32
5.2 Profit: Commercial, feasibility and realisation considerations ... 32
5.2.1 Laws and Regulations ...34
5.2.2 The market, the customer and the timing ...34
5.2.3 Profitability ...36
5.3 Planet: Circularity and environmental considerations ... 36
5.3.2 Environmental impact ...38
5.4 People: Social considerations ... 39
5.5 Project selection process ... 40
5.5.1 The first selection phase...40
5.5.2 The second phase ...41
6. Analysis... 42
6.1 Step 1: Establishing overall objectives and goals ... 42
6.2 Step 2: Weight the objectives to determine their importance ... 43
6.3 Step 3: Select the decision criteria ... 45
6.3.1 Go/Kill Criteria...45
6.3.2 Criteria for the planet dimension of TBL ...49
6.3.3 Criteria for the profit dimension of TBL ...52
6.3.4 Criteria for the people dimension of TBL ...54
6.4 Step 4: Weight the decision criteria to determine their importance ... 56
6.4.1 Weighting planet criteria ...56
6.4.2 Weighting profit criteria ...57
6.4.3 Weighting people criteria ...58
6.5 Step 5: Develop metrics/ Metric development ... 59
6.5.1 Metrics for the planet dimension criteria ...59
6.5.2 Metrics for the profit dimension criteria ...63
6.5.3 Metrics for the people dimension criteria...66
6.6 The integrated project Selection framework with TBL ... 69
6.6.1. The pre-screening stage ...70
6.6.2. Individual project evaluation ...70
6.6.3. The screening stage ...71
7. Discussion ... 72
7.1 The five-step approach and TBL integration ... 72
7.1.1 Step 1: Establishing overall objectives and goals ...72
7.1.2 Step 2: Weight the objectives ...73
7.1.3 Step 3: Selecting decision criteria ...73
7.1.4 Step 4: Weighting the decision criteria ...76
7.1.5 Step 5: Develop metrics ...76
7.2 Project selection framework ... 77
7.3 The quality of the study ... 78
7.4 Empirical contribution... 79
7.5 Conclusion ... 81
7.6 Sustainability Considerations ... 82
7.7 Limitations and Future Research ... 82
8. References ... 83
A1. Criteria and metrics in traditional project literature ... 92
A2. Criteria categories in traditional project literature... 95
A3. Impact categories used in LCAs for rubber and tyre ... 95
A4. Interview Questionnaire ... 96
A5. Kriterier för materialåtervinning ... 99
A6. Scales ... 100
LIST OF ABBREVIATIONS
PPM Project Portfolio Management
CE Circular Economy
LCA Life Cycle Assessment LCT Life Cycle Thinking
MCI Material Circularity Indicators NPD New Product Development NPO Non-profit organisation NPV Net present value
PM Project Management
PPM Project Portfolio Management PSIA Product Social Impact Assessment S-LCA Social Life Cycle Analysis
List of Figures
Figure 1. Illustration of where the subject of this study’s position in the theory ... 4
Figure 2. An integrated framework for Project Portfolio Selection adapted from Archer and Ghasemzadeh (1999) ... 6
Figure 3.The five-step approach for developing decision criteria (Tillman and Cassone, 2012) ... 10
Figure 4. MoSCoW Prioritization Scale ... 11
Figure 5.The triple bottom lines of sustainability ... 13
Figure 6. The waste hierarchy ... 17
Figure 7. The five-step approach for developing decision-criteria and an initial idea of a framework for developing decision-criteria with a TBL approach. ... 21
Figure 8.The research process ... 22
Figure 9. MosCow prioritization scale and own adaption of the scale ... 45
Figure 10. Hierarchy of endured tyre material. Data from Swedish Geotechnical Institute (2008) ... 59
Figure 11. The proposed framework for developing decision criteria and metrics integrating a TBL approach 77 Figure 12. The recommended Go/Kill criteria. ... 80
List of Tables
Table 1. Overview of the area of expertise of the interviewees, theme of the interview, its respective perspective
contribution, duration and date of the interview. ... 23
Table 2. The six different interviewee perspectives ... 25
Table 3. Keywords used for search sorted by research area. ... 26
Table 4. The contributions of the collected primary and secondary data. ... 27
Table 5. Ranking and relative weight of the TBL dimensions addressing by the objectives ... 45
Table 6. Summary of objective weights, criteria ranking, relative criteria weight and resulting criteria weight. ... 58
1. Introduction
This chapter introduces the study for which the first section describes the background of the problem followed by a section defining the purpose and the research questions of this study. Moreover, the study’s relevance, delimitations and significance are presented. Lastly, the structure of the study is presented at the end of this chapter.
Through the choice of their projects, a company can achieve and fulfil its goals and purpose. This, by ensuring that the choice of projects is in line with these objectives and goals. However, managing multiple projects in a rapidly changing business environment is challenging in many regards and requires decisions based on several factors and attributes which implies a complex setting. Furthermore, the selection of projects for a company’s project portfolio is a recurring and complex activity that requires a robust decision-making process. Project work constitutes the core of many businesses. The Project Management Institute (PMI) defines a project as “a temporary endeavour undertaken to create a unique product, service, or result'' (Project Management Institute, 2017, p.4). Hence, organisations that mainly work project-based need to focus on selecting the projects for their projects portfolios in order to establish a project portfolio that is aligned with their strategy and contributes to their success, in other words, they need to choose the right projects (Meskendahl, 2010). Project selection and more specifically, selecting the right project, is something that is considered by and established with Project Portfolio Management (PPM) (Morris and Jamieson, 2005). A project portfolio is “a set of projects, operations and subsidiary portfolios managed with the purpose to achieve strategic objectives” (Project Management Institute, 2017, p.13). Decision-making, in such a complex environment, demands systematic decision support methods in order to make thoroughly thought reliable decisions.
Moreover, organisations and companies need to manage resources and capital efficiently to eliminate and reduce the risk of losing their marketplace and to survive in a rapidly changing world (Hyväri, 2014). One current aspect, urging for a change in decision-making, is sustainability (Hope and Moehler, 2014). Agenda 2030 targets the three sustainability aspects, social, economic, and environmental. For organizations to stay relevant in the future, they must relate to sustainability in one way or another. For that reason, many organizations are trying to achieve business with projects and activities that are aligned with sustainable development principles (Keeble, Topiol and Berkeley, 2003). However, it is in many cases difficult to assess what effects the organization and the projects they take on have on the outside world, i.e. when visibility or feedback is low or slow in terms of the effect on output as well as the processes themselves. Impact on the firm’s financial situation and employee welfare are aspects that can be somewhat easily measured, but when looking outside the organization’s walls the direct and indirect consequences of a particular project will be difficult to assess. Thereby, the development of criteria and metrics to measure these consequences has also been proven to be difficult (Elkinson, 1998). One framework that helps tackle this is the Triple bottom line (TBL), which is the term first coined by Elkington in 1994 (Elkington, 1998). The term was developed as a guiding star for companies to adopt sustainable business thinking, driving them towards sustainability by including not only the traditional profitability bottom line but also the environmental- and social bottom line simultaneously. This, to maintain competitiveness and ensure future market success (Elkington, 1998). On a project level, TBL does, however, need to be complemented with traditional project management theories and methods if a thorough assessment and evaluation are to be conducted.
Project management is a crucial enabler for organisational success hence selection of the right projects is an important success factor for an organisation’s implementation of its strategies (Cooper, Edgett and Kleinschmidt(2000); Englund and Graham, 1999; Meskendahl, 2010). As stated in Englund and Graham (1999, p.53) “Growth in organizations typically results from successful projects”.Hence, what
project organisations choose to work with should be thought of well. Commonly for successful organisations is that they adopted a systematic approach in the portfolioevaluation process (Martinsuo, 2013; Cooper et al, 1997a,b). Project selection is one main factor for the success of project portfolio management (Meskendahl, 2010). The project portfolio selection stage in project portfolio management refers to the periodic funnelling process of project proposals in order to create a portfolio that supports the organisation’s objectives simultaneously as constraints such as available resources are considered (Archer and Ghasemzadeh, 1999). One example of such a funnelling process for project selection is the integrated framework for project selection developed by Archer and Ghasemzadeh (1999). Furthermore, a vital component of the project portfolio selection process is decision criteria. A criterion can be defined as “a standard on which a comparative judgement or a decision may be based” (Englund and Graham, 1999, p. 56). The criteria should assess to which extent a project contributes to an organization's overall objectives and therefore, the choice of criteria must be adapted for the specific organisation (Meskendahl, 2010).
Moreover, for the recycling- and waste management sector, there is a lack of best practices and database information on which decision criteria should be included for project assessment. In addition, methods for how those decision criteria should be developed are few, making it a particularly difficult task to define such criteria for new organisations or for those who are about to move to a new business field that lacks information and criteria databases (Cooper et al., 2000). One approach for criteria development is the five-step approach for developing decision criteria, in which criteria are established through the five steps; (1) establish overall objectives and goals, (2) weight the objectives to determine their importance, (3) select decision criteria, (4) weight the decision criteria to determine their importance, (5) develop metrics (Tillman and Cassone, 2012).
This study aims to contribute to the development of a sustainability project selection framework. A framework in which triple bottom line aspects are promoted and integrated. To be more detailed, existing frameworks for project portfolio selection in literature are intended to be used together with criteria developed by the Five-step approach for developing decision criteria by Tillman and Cassone (2012). Moreover, the approach of this study is to integrate TBL thinking while developing criteria that could be used for the screening and selection stages in the framework for project portfolio selection. Furthermore, to ensure eliminating the risk of studying businesses that claim to follow TBL and could be associated with greenwashing, thus, to not identify criteria that perhaps are secondary, a non-profit business has been chosen. This will be done in the particular context of an organisation within the recycling- and waste management sector.
Svensk Däckåtervinning AB, SDAB has been chosen as a case company for this study. The company is a non-profit organization (NPO) within the recycling- and waste management sector and operates to organize collection, processing and recycling of endured tyres (Svensk Däckåtervinning, 2019a, p.46). One important aspect of their operations is to operate new applications for the endured tyre material, through supporting or implementing innovation- and development projects. This, to drive the future and lead the way towards a circular economy. Since projects form the core of their operations in a context of an uncontrollable supply of materials, they want to ensure that the material is used in applications where it is most beneficial to the environment and helps to reduce the extraction of virgin resources. The new applications that SDAB contributes to must have commercial potential.
For a project-based organisation as SDAB in particular, this becomes even more crucial. Adoption of a systematic approach for portfolio evaluation, in particular, will promote success (Martinsuo, 2013; Fricke and Shenbar, 2000). SDAB who currently does not have a systematic approach for project
portfolio evaluation hence faces a disadvantageous position in creating success through its projects. In addition, SDAB is operating within a sector for which defined decision criteria for project assessment are lacking as well. This makes the task of choosing which of these projects to participate in is a serious challenge. For SDAB to be able to work in a direction aligned with its organisational vision, a systematic approach with customized decision criteria for project assessment will be crucial.
1.1 Purpose and Research Questions
The purpose of this study is to support decision-making that will promote sustainability. That, through the development of decision criteria for a project selection process in an NPO within the recycling- and management sector. This is argued to promote sustainability by systematizing the decision procedures to ensure projects align with TBL. However, in order to fulfil the purpose of this study the research questions formulated are:
Main RQ: Which criteria assure project selection aligned with TBL? RQ1: Which criteria assure sustainability in projects?
RQ2: Where in the project selection process are the developed criteria applicable and possible to use? Considering that the research questions address the questions specifying Which criteria assures alignment as well as Where in the process the criteria are applicable to use, the study is aimed to provide a number of criteria suggestions to be used for decision support in the project selection process. However, the questions are thought to be answered by following the five-step approach for developing criteria which further proposes how criteria could be developed. Thus, the answer to the first question is mainly carried out by developing the criteria all from the first step of the criteria development process, starting from establishing objectives. This, motivated by the author’s belief that in order to choose the right criteria, the process of developing them should be followed and understood as well.
1.2 Delimitations
The study revolves around the earlier phases of a project's life cycle and about project portfolio selection i.e., the assessment and prioritization of different projects for a project portfolio (see figure 1). The study does not propose any further recommendations about the implementation of the projects nor about how the projects shall be managed. Instead, the study focuses on developing and defining criteria for a selection framework that promotes the triple bottom line. However, to do that, project goals and objectives must be defined and formulated as well as the reasoning about their relative importance should be included. Thereby, the criteria and reasoning about the relative importance of the criteria developed should be concerned.
Figure 1. Illustration of where the subject of this study’s position in the theory
1.3 Structure of the study
The structure of the study is presented as follows, the first chapter 1. Introduction provides the reader with the main aspects and ideas to be considered in the study as well as the research questions and the purpose of the study. Moreover, the theoretical framework is presented in the next chapter 2. Theoretical framework, which provides information and background about the five-step approach for developing criteria by Tillman and Cassone (2012), The integrated project selection portfolio by Archer and Ghasemzadeh (1999) and Triple Bottom Line and its related metrics and principles. Finally, the framework developed for this study combining TBL and developing criteria model is presented. Furthermore, chapter 3. Methods present the chosen methods as well as the research process in the description of how the five-step approach was applied. In chapter 5, the results primarily collected by interviews are presented. Further, in chapter 6. Analysis, empirical data and theory were used for the development of criteria in accordance with the five-step approach. Moreover, the analysis also provides an analysis of how the criteria could be applied in the project selection framework. Finally, in chapter 7. Discussion, the criteria and the five-step approach combined with criteria are discussed. That, in addition to general recommendations and main takeaways, are presented in the chapter as well.
2. Theoretical framework
This chapter presents a review of the models and theories to be used in this study. Moreover, the conceptual model for the study is described in the final part of this chapter.
The literature has been studied and analysed in order to build a theoretical framework that is thought to cover the scope of this study and its purpose. This includes theories, models and processes for PPM and especially selection framework, decision-making criteria in the traditional project literature as well as managing innovations projects. Another core area for this work is sustainability, the TBL, and known methods and metrics across the triple bottom line. Based on this theoretical scope and by considering decision criteria and TBL, a framework has been developed for developing criteria to align TBL. The framework combines the area of PPM with TBL. The model will be tested and revised based on the findings from the empirical material.
2.1 Project Portfolio Management and Decision Criteria
Project portfolio management is about the management of multiple projects i.e., control and coordination of projects that share the same resources and have to reach and fulfil the same strategic goals (Martinsuo, 2013). Moreover, it could be seen as a decision process that is dynamic in which different projects are updated and revised constantly (Cooper, Edgett and Kleinschmidt, 1997a). PPM is intended to help the companies and organisations control and coordinate their own project portfolios and manage them, through practical tool books and global standards developed from PPM (Project Management Institute, 2017; Benko and McFarlan, 2003; Martinsuo, 2013). Project portfolio management is distinguished from project management since project portfolio management concerns choosing the right project and the latter one is about executing the project right (Project Management Institute, 2017). The PPM has three goals defined by Cooper, Edgett and Kleinschmidt (1997b, p.47) as “Maximising the value of the portfolio, Balancing the portfolio and Link to strategy”. Moreover, Cooper et al. (2002), Englund and Graham (1999), and Archer and Ghasemzadeh (1999) describe PPM and its importance for the evaluation, prioritization and selection of projects that are aligned with the company’s strategy (Martinsuo, 2013). Hence, PPM is important for an organisation’s strategic management, since it is considered outstanding when it comes to selecting the right project(Morris and Jamieson, 2005). PPM literature presents several frameworks and approaches for project selection. One of the most well-established and frequently cited frameworks for project portfolio selection, and which many selection frameworks are built upon are the integrated framework for project development by Archer and Ghasemzadeh (1999). This framework will be presented in the next section.
2.1.1 Framework for Project Selection
Project portfolio selection is defined by Archer and Ghasemzadeh (1999) as a process that is iterative in which projects are selected from the current projects and available proposals. Here, the projects are selected by the managers to meet the organisational objectives (Archer and Ghasemzadeh, 1999). Hence, the project portfolio selection could be described as a funnelling process where many project proposals are funnelled down to a fewer number. The integrated framework for Project Portfolio Selection presented by Archer and Ghasemzadeh (1999) consists of the five major stages: (1) Pre-screening, (2) Individual project analysis and (3) Screening, (4) Optimal portfolio selection and (5) Portfolio adjustment. Moreover, the model also consists of pre-process stages in which strategy development is included as well as post-process is included. The framework is designed to be adjustable and could be modified by the user for optimal fit meaning that the user can choose techniques and omit
or modify the stages to serve the specific needs (Archer and Ghasemzadeh, 1999). Additionally, since this study only considers selecting projects for project portfolio and not the optimization of the portfolio, only the first three stages are included in the study and hence neither Optimal portfolio selection nor Portfolio adjustment is described (see figure 2). Moreover, these three stages are considered as “off-line activities” meaning that they are executed before any committee for projects meets and could be done individually by managers (Ghasemzadeh and Archer, 2000, p.75). The first three stages are outlined and presented below.
Figure 2. An integrated framework for Project Portfolio Selection adapted from Archer and Ghasemzadeh (1999)
The first stage, pre-screening, is about rejecting the projects that do not fulfil the portfolio criteria, yet without complicated portfolio calculations. In project portfolio management theories, the term screening refers to a funnelling process that screens out projects using threshold criteria screens that “gate” if a project is considered a go or no-go. That, in order to have fewer projects that need to be looked at thoroughly and prioritized (Englund and Graham, 1999; Kumar et al., 2017; Archer and Ghasemzadeh, 1999; Martinsuo and Posekla, 2011). In this stage, the focus is on ensuring the strategic alignment of the project to the portfolio’s strategic focus by using guidelines developed from an earlier pre-process stage in which organisational objectives are developed. Thus, in this stage, projects that could be requiring huge resources and not fit the business strategy are eliminated (Archer and Ghasemzadeh, 1999; Englund and Graham, 1999). During a project’s initial screening, the project’s objectives alignment and fit to the organisation's strategy and philosophy is a very significant variable. Moreover, in order for a project to pass this stage, there are requirements such as having estimations of crucial parameters for the individual project evaluation as well as feasibility analysis and project champion. In this stage, mandatory projects, i.e., “projects agreed upon for inclusion, including improvements to existing products no longer competitive, projects without which the organization could not function adequately” are chosen as well (Archer and Ghasemzadeh, 1999, p. 212).
The next stage is individual project analysis. Here, every project is evaluated and assessed based on the feasibility analysis (that were required in order to pass the previous stage) and/ or the previously completed projects database, against a number of parameters. The output from the stage could be quantitative or qualitative. Here, an example of quantitative outputs for this stage is estimations for parameters such as NPV, ROI, the risk for a project and their respective uncertainties. Additionally, the qualitative outputs could be political and policy aspects. Moreover, the tools that can be adopted here are risk analysis, scoring, checklists or market analysis. The project’s resource requirement, as well as the expected time, could also be included in this stage (Archer and Ghasemzadeh, 1999). This stage allows the projects to be compared on the same basis (Ghasemzadeh and Archer, 2000).
The third major stage and the last one to be considered in this study is screening. In this step, the parameter estimates that were made in the previous stage are examined. This, in order to reduce the risk of choosing projects that do not fulfil the criteria set in advance such as having low ROI or such (Archer and Ghasemzadeh, 1999). Only projects that are mandatory or might be needed for some specific purpose such as supporting other projects.
The integrated framework for portfolio selection that is a part of project portfolio management theories only considers procedures and stages for selecting projects for a portfolio. Moreover, for an implementation of a PPM model in an organisation to be successful, choosing and selecting the project selection criteria is important to consider (Antunes, Loos and Miguel, 2012). Therefore, a more thorough description of criteria and metrics is presented in the next section.
2.1.2 Criteria and metrics in traditional project literature
Decision-making processes usually consider different criteria, metrics, attributes for which the different alternatives are measured upon (Tillman and Cassone, 2012, p.28). A criterion can be defined as “a standard on which a comparative judgement or a decision may be based” (Englund and Graham, 1999, p. 56). The criteria’s role is about helping in comparing projects rather than specifying them (Englund and Graham, 1999), by having the function to assess to which extent a project contributes to an organization's overall objectives and therefore, the choice of criteria must be adapted for the specific organisation. Furthermore, the criteria should be aligned with the organisation’s strategic objectives. Hence, the set of criteria to be used for assessment should be developed and structured by each organisation (Vargas, 2010; Dehouche; 2015; Meskendahl, 2010). A metric can be defined as “a
standard measure to assess performance in a particular activity” (Tillman and Cassone, 2012, pp. 18). Thus, metrics have the function of providing an assessment that can be used as decision support (Tillman and Cassone, 2012, pp.18-19).
Criteria are used in many contexts and processes, even for evaluation of different projects and could have a nature that is quantitative or subjective. Subjective data are often of the forward-looking characteristic used to predict and/ or estimate a possible outcome. Here, expert opinions can be used for the assessment of a subjective metric (Tillman and Cassone, 2012, pp.24-28). According to Nathan and Reddy (2011), the criteria’s set could be different and changed according to the purpose, however, criteria should be multileveled, multidimensional and multiple (Nathan and Reddy, 2011). Discussing the criteria to be used is important. It is even more necessary when having different stakeholders with different and conflicting values and objectives, it is important to discuss the set of criteria for the assessment and evaluation (Oral et al., 1991).
Criteria could be used for different purposes and in different stages of decisions, there could be decision criteria for passing gates, also called Go/Kill criteria that are criteria that must be fulfilled. According to Cooper et al. (2002), the decision-making at gates should include visible and clear criteria. Hence, criteria need to be clearly stated and defined. That, in order for the managers to be able to make relevant Go/Kill decisions on projects or ideas. However, Cooper et al. (2002) outline that the criteria for decision gates should be “operational, realistic and discriminating” (Cooper et al. 2002, pp.45-56). Meaning that one should be able to easily use the criteria while using available information as well as the criteria should be used to differentiate the better projects from others. The authors further suggest that a criteria category could be must-meet criteria, preferably formulated as a checklist, in order to kill projects that do not fit, or should-meet criteria that describe characteristics that are good or desirable to have and these could be rated or scored. Additionally, the author gives a list of must-meet criteria (See Appendix?) in which an example of a good Go/Kill criteria is strategic alignment and positive return as well as meeting legal policies and others (Cooper et al. 2002).
Several researchers have classified and categorized the criteria used for the evaluation and assessment of different projects. The different categories are compiled in table A2. Criteria categories in traditional project literature in the appendix. Vargas (2010) pointed out the criteria could be divided into six categories: financial, strategic, risks (threats), urgency, stakeholder commitment and technical knowledge. Whereas Schmidt et al. (2009) defined the three major categories; technical, marketing and financial for new product development projects evaluation and assessment, which they used in their surveys for collection of data. Englund and Graham (1999) further point out that a different unique set of criteria could be developed for each category, or a core set could be identified and then modified for each category and that it may be more effective to have different criteria (Englund and Graham, 1999). Furthermore, some of the most dominant criteria categories will be further described and explained. In addition to that, a summary of example criteria within each category identified in the literature is presented in table A1. Criteria and metrics in traditional project literature in the appendix.
The function of financial criteria is to capture the financial benefits of a project (Vargas, 2010).In PPM literature this type of criteria is very popular and dominant. Furthermore, these criteria are related to and consider profit, costs and productivity measures. When developing financial criteria, it is important to ensure quantifying capturing the requirements for the realisation of a project as well as benefits from it, such as the expected inflow and possible outflow in cash (Elbok and Berrado, 2020). However, for projects with the objective to generate qualitative benefits, such as system extension- and upgrades of facilities, the financial criteria should not be the main decisive criteria (Elbok and Berrado, 2020). Financial criteria such as NPV and payback are common methods to use in order to make Go/Kill decisions as well as for prioritizing projects. For new product development projects, however, financial measures have shown to be least useful (Cooper, Edgett, and Kleinschmidt, 2002; Cooper, 2006). The reason for this is primarily because of lack of data, i.e., the quality or reliability of financial measures becomes low (Cooper, 2006). Using financial criteria has furthermore been shown to have a negative association with regards to the performance of innovation projects of radical character (Carbonell, Rodriguez-Escudero and Munuera-Aleman, 2004). Moreover, the use of financial measures is most important in the post commercialisation of a product (Schmidt et al. 2009).
The strategy criteria, unlike financial criteria, are specific for each organisation, and those are correlated with the organisation’s specific objectives (Vargas, 2010). Strategic criteria take the project’s strategic fit to the organization's overall objectives, which will be highly relevant to assess in order to ensure that the portfolio will contribute to the fulfilment of a company's goals and visions. Thus, this criterion is
applicable for all types of projects (Elbok and Berrado, 2020).
Furthermore, it has shown that the use of strategic criteria, opposite from financial, to be associated with long term business potential (Martinosu and Posekla, 2011). When assessing new product projects, the focus should be put on the long-term strategic potential of the product or concept in order to be competitive and successful (Martinosu and Posekla, 2011).A survey by Cooper et al (2002) has shown that organizations that emphasize the project's strategic alignment above financial indicators have better overall organisational performance. Companies should hence, primary base portfolio selection on strategic considerations. In addition, it has shown that top-performing organisations do not use financial measures for project prioritization, instead, strategic indicators are used to a larger extent (Cooper, 2002; Englund and Graham, 1999). Moreover, Tupenaite et al. (2010) has defined and presented several criteria for project assessment in which the “Relevance of the project” was a category in which the associated criteria could be considered as strategic (see table A1. Criteria and metrics in traditional project literature in appendix).
Technical criteria take practical aspects such as scope, time, resources and interrelationships between different projects on the portfolio (Elbok and Berrado, 2020). In order to choose a project, one needs to know the technical knowledge that might be required to be able to execute the project and that is assessed by technical knowledge criteria (Vargas, 2010). There is a clear relationship between technical knowledge and the performance of the execution of a project (Vargas, 2010). Furthermore, technical feasibility in various aspects is a commonly assessed type of technical criteria that for new product development projects should be evaluated in the initial stages of a project selection process (Schmidt et al., 2009). Also, findings have shown that technical criteria have a positive association with competitiveness as well as long term business potential (Martinosu and Posekla, 2011).
Market criteria are another criteria category that is positively related to competitive potential (Martinsuo and Posekla, 2011). This criteria category is as outlined by Schmidt et al. (2009) used for the evaluation of new product development projects in the early evaluation stage. Market opportunity criteria are important in all stages of the assessment of new product development projects (Schmidt et al., 2009). However, according to Carbonell, Rodriguez-Escudero and Munuera-Aleman (2004), focus on customer acceptance and market potential in the early phases of the project selection has a high correlation with the performance of incremental product development. Schmidt et al. (2009) on the other hand meant that customer acceptance should be taken into consideration after the market introduction of a product.
Qualitative criteria consider aspects from leveraging of competencies to product performance (Cooper, 2006; (Schmidt et al, 2009). Qualitative criteria have a much stronger correlation to organisational success than financial indicators (Cooper et al., 2006). During the development stages, especially in the testing phases of the product and market of a new product’s performance and quality are important measures (Schmidt et al, 2009).
As to be able to answer the question specifying Which criteria assure TBL alignment, the intention is to answer this question by developing criteria from scratch using a model for developing criteria that are considered by the authors as suitable to use in this context, i.e., where goals and objectives are not clearly specified. Therefore, the chosen model is presented in the next section.
2.2 Five-step approach for developing decision criteria
Methodologies and approaches used for the development of decision criteria have originated from rational decision-making processes. One of those methodologies is a five-step approach for developing decision criteria suggested by Tillman and Cassone (2012). The steps that are included in the framework are shown in Figure 3 and are: (1) establishing overall objectives and goals, (2) weigh the objectives to determine their importance, (3) select the decision criteria, (4) weigh the decision criteria to determine their importance and (5) develop metrics. Each of the steps will be thoroughly described below step by step.
Figure 3.The five-step approach for developing decision criteria (Tillman and Cassone, 2012)
2.2.1 Establishing overall objectives and goals
In the first step, goals and objectives are stated (Tillman and Cassone, 2012, p.29). A goal is a state that is desired and strived for (Grünig and Kühn, 2013, p. 16). Companies always strive for a target state that is described by and consists of their goals (Grünig and Kühn, 2013, p. 16). Having established objectives is a crucial matter for an organisation to manage and steer the organisation towards its vision (Tillman and Cassone, 2012, p.11; Vargas, 2010). Without knowing the objectives, it will be difficult to assess different alternatives in order to make an informed decision. Hence, defining objectives is vital, serving as a base for well-grounded decision-making (Keeney, 2013). Since organisations often have multiple conflicting objectives, this will be highly important to manage to balance between these objectives (Tillman and Cassone, 2012, p.29). Moreover, the goals should be a representation of a real and significant consideration in the decision-making in order to serve as building blocks for the determination of decision criteria and metrics (Tillman and Cassone, 2012, p.11, p.27). However, the set of objectives should be independent meaning that overlap between objectives should be avoided in order to not assess the fulfilment of the objectives more than once (Keeney, 2013).
2.2.2 Weight the objectives to determine their importance
This step involves defining the relative importance of achieving the objectives relevant to a decision among each of the objectives stated in the previous step (Keeney, 2013; Tillman and Cassone, 2012, p.13). Weighting the objectives is important since conflicting objectives often implies that one area is benefitted while, simultaneously, another is disadvantaged (Tillman and Cassone, 2012, p.13). Among several methods for weighting the Normalized Direct Weighting Scheme is one commonly used (Tillman and Cassone, 2012, p.13). Here, each objective is valued on a scale in which it receives numerical value which then is divided by the sum of numerical values. One example of a subjective scale commonly used for prioritization is the MoSCoW Prioritization Scale (see figure 4).
Figure 4. MoSCoW Prioritization Scale
2.2.3 Select the decision-criteria
The criteria should have the ability to track to the extent of fulfilment of the objectives established in step 1 (Tillman and Cassone, 2012, p. 17-18; Vargas, 2010; Keeney and Gregory, 2005). In order to assess and measure the potential of performance and accomplishment of the defined objectives, criteria that can assess to which extent an objective will be fulfilled must be defined (Tillman and Cassone, 2012, p. 17-18; Vargas, 2010; Keeney and Gregory, 2005). Those criteria should be arranged in a hierarchy to clearly display which criteria track the respective objective (Tillman and Cassone, 2012, p. 20; Luu Kim and Huynh, 2008). An initial set of criteria should be developed, reviewed and then revised to a set of fewer, critical criteria since having too many measures can be unmanageable (Tillman and Cassone, 2012, p. 19-20; Luu Kim and Huynh, 2008). It is preferable to choose a few criteria that are most significant to the organisation in order for them to be manageable and reflect clear goals against which possible solutions can be assessed or measured (Tillman and Cassone, 2012, p. 19-20; Englund and Graham, 1999).
As mentioned, the function of the criteria is to compare projects in order to differentiate projects from each other and to prioritize them (Englund and Graham, 1999; Tillman and Cassone, 2012, p. 27). A criterion should therefore have the capacity to measure the most vital differences between projects such as costs and time for implementation (Tillman and Cassone, 2012, p.27). Moreover, a specific characteristic, should, similar to objectives, not be assessed more than once. At least it should be avoided, and thus, the criteria should be independent, i.e not overlapping in content or target area for assessment (Tillman and Cassone, 2012, p. 27; Benaija and Kjiri, 2015). Benaija and Kjiri (2015) refer to this as “Lack of redundancy”. Additionally, the criteria should be clearly defined to ensure an understanding of what is needed to fulfil each of the criteria. This can be supported by establishing a
clear description of each criterion(Elbok and Berardo, 2020; Tillman and Cassone, 2012, p. 27; Englund and Graham, 1999).
2.2.4 Weight the decision criteria to determine their importance
In this step, the relative importance of the criteria in the decision-making process should be established by assigning a weighting factor to each criterion. By weighting criteria, one could assure that the best of the best could be determined and optimized (Englund and Graham, 1999; Tillman and Cassone, 2012, p. 23-24; Antunes, Loos and Miguel, 2012, p. 67), however, all the project proposals have to fulfil each of the selection criteria to some extent. First, an initial weight for each decision criteria should be developed and then, the decision-maker should adjust the first set in order to ensure plausibility. This since, in many cases, all criteria are not equally important to the organisation, and therefore decision-makers should decide upon the weight for each criterion (Elbok and Berrado, 2020; Nathan and Reddy, 2011). Deciding on weight for each criterion is a process that requires care as well as logic and the weighting process can be supported by experts in the field (Nathan and Reddy, 2011).The final weight of each criterion should be calculated based on the organisational objective for each associated criteria as well as the individual decision criteria importance (Tillman and Cassone, 2012, p. 23-24).
2.2.5 Develop metrics
In this last step in the five-step approach, based on the criteria determined, the metrics should be identified. As for the selection of decision criteria, an initial set of metrics for each criterion should be developed, reviewed and then revised to fewer critical metrics satisfying the decision-makers. As with criteria, only the number of metrics should be kept to a minimum (Tillman and Cassone, 2012, pp. 17-18, 28). A (good) metric should be aligned with the organisational mission, goals and objectives (Tillman and Cassone, 2012, p. 18-19; Keeney and Gregory, 2005). Metrics should be easy to measure as well as being meaningful and understandable for the organisation and it is that decision-makers understand what data needed in order to measure each of the metrics (Tillman and Cassone, 2012, p. 18-19, p.28).
As mentioned, criteria can be quantitative or subjective. To identify metrics, determination, whether a criterion should be measured by qualitative data or subjective data, must be decided, implying deciding whether using objective or quantitative data or a subjective scale for measurement. Qualitative metrics are easier to measure since they by their nature are comparable and easily adapted to a scale or metric (Tillman and Cassone, 2012, p.28; Benaija and Kjiri, 2015). In situations when there is no objective data available or if obtaining such data would require an extensive number of resources, expert opinions (by senior management or experts in the business field) can be utilized to generate a subjective assessment (Tillman and Cassone, 2012, p.24; Keeney and Gregory, 2005). When working with subjective or qualitative criteria, a scale should be used since subjective metrics rarely have a numerical value as objective metrics do (Benaija and Kjiri, 2015). Moreover, when using a subjective scale, the components in the scale must be clearly formulated in a language that is deemed naturally suitable and adapted to for the metric in concern (Tillman and Cassone, 2012, p. 28).
2.3 Triple Bottom Line
The term Triple Bottom Line, TBL was introduced by John Elkington in 1994 (Elkington, 1998). The concept originates from sustainable development for which the most well-established definition follows as “Sustainable development is development that meets the needs of the present without compromising
the ability of future generations to meet their own needs." (WCED, 1987). Since the introduction of TBL, the term has often been used interchangeably with sustainability in the literature (Alhaddi, 2015). This since TBL was developed as a guiding construct for companies aiming to adopt sustainable business thinking, driving them towards sustainability by including not only the traditional profitability bottom line but also the environmental- and social bottom line simultaneously. This, to maintain competitiveness and ensure future market success (Elkington, 1998). TBL emphasizes the integration
of economic, environmental and social dimensions in a triple bottom line (figure 5) in order to reach
sustainability (Elkington, 1998; Elkington, 2004). Furthermore, Elkington argues that these three bottom lines should be equally emphasized (Elkington, 2004). The three dimensions of TBL are often referred to as the three Ps, namely, people, planet and profit (Hall and Slaper, 2011).
Figure 5.The triple bottom lines of sustainability
The environmental- or planet dimension of sustainability is about ecological sustainability, thus concerning everything that impacts the ecosystems around the planet. Here, water, air, land ecosystems are included for which impacts such as emissions, water- and land use, pollination and biodiversity is taken into consideration. In order to track the status of the ecosystems, nine environmental planetary boundaries have been defined by Stockholm Resilience Centre. Exceedance of any of this will violate the whole ecosystem(KTH, 2021b). Currently, the emergent most urgent planetary boundaries that are currently moving out of the system boundaries are climate change, biodiversity loss, shifts in nutrient cycles, and land use (Stockholm Resilience Centre, 2021a). Moreover, stated by Stockholm Resilience Centre (2021b).
“The major challenges currently facing the world, including persistent poverty, rising inequalities, biodiversity loss, and climate change, are increasingly recognized as the emergent outcomes of social and ecological interactions'' - Odi Selomane, lead author (Stockholm Resilience Centre, 2021b) The social- or people dimension of sustainability, on the other hand, regards aspects such as well-being, human rights, justice, power, establishing equality as well as fulfilment of the needs of each individual. In addition to satisfying basic human needs, social sustainability is also about support and enabling the possibility for people to grow and fulfil their goals (KTH, 2021a). Furthermore, the economic- och profit dimension of sustainability, unlike the planet- and people dimension, is a human-created system, hence, this aspect can be viewed from several different perspectives in regard to sustainability and sustainable growth (KTH, 2021c). Factors included within this aspect are related to the flow of money such as income, expenditures, and taxes (Hall and Slaper, 2011).
One key feature that has helped increase the adoption rate of TBL is that it is highly adaptable and incorporates different areas and perspectives. As such the TBL approach has been argued to be suitable
for any kind of organization since it can be applied and fitted to the unique company needs (Hall and Slaper, 2011). The challenging part of TBL is not defining it but measuring it. This, since there are few established methods for measuring TBL, nor standardized measures that consider each of the bottom lines. Some have advocated for monetizing all dimensions in dollar terms to get a common measure for all areas, while others have criticized this notion, arguing that financial values cannot be put on certain social and environmental aspects (Hall and Slaper, 2011; Alhaddi, 2015).
In addition to the three areas of TBL, profit, people and planet, Elkington (1998) pointed out that a major challenge with assessing TBL performance is the assessment in the shear zones, i.e., the areas for which the sustainability aspects overlap. Frameworks for sustainability assessment must consider all three TBL dimensions and particularly important is to include their interfaces and relation to each other (Elkington, 1998, 372). This complements the three Ps and helps organisations evaluate their value chains, management systems, operations, and markets from a sustainability perspective (Elkington, 1998, p. 373). To address coverage of those overlapping zones, Elkington (1998) presented seven sustainability revolutions or drivers, namely, Corporate Governance, Time, Partners, Lifecycle Technology, Transparency, Values, Markets. Below follows a short description of each of the seven sustainability drivers.
● The 1st sustainability driver: Market
The sustainability driver market is about market competition, or increased market competition and thus, also about managing market competition in order to stay competitive. This requires an understanding of market conditions in order for the business to survive on the market. Such understanding will be a key for long term success (Henriques and Richardson, 2004).
● The 2nd sustainability driver: Values
The second sustainability revolution is driven by a transition in societal as well as human values (Henriques and Richardson, 2004). The new paradigm of values emphasis a shift from careless business models to careful or caring business models and shifting from a me-approach to a we-approach. Here, diversity will be an important success factor and the overall approach for long-term business advantage, adopting a sustainability drive instead of base main incentives on economic growth (Elkington, 1998).
● The 3rd sustainability driver: Transparency
This driver raises transparency in terms of increasing international scrutiny with regards to business thinking, priorities and activities (Henriques and Richardson, 2004). A shift from “need to know” to “right to know”- business climate as well as communication-based on active dialogue instead of one-way communication will be important characteristics of this new paradigm within transparency (Elkington, 1998).
● The 4th sustainability driver: Life cycle technology
This sustainability driver emphasizes taking a product’s performance from cradle to grave, taking virgin material extraction as well as recycling and disposal into consideration (Henriques and Richardson, 2004). This revolution springs from a transformation towards a systems perspective thinking, where the emphasis is on function instead of products and instead of sales, the lifetime of customer value is in focus (Elkington, 1998).
● The 5th sustainability driver: Partners
The fifth sustainability driver is about new forms of partners and partnership. In order to stay relevant in the future, companies and organisations will have to collaborate with each other. Parties that earlier
were competitors or enemies now might initiate collaboration projects viewing each other as “complementors” (Elkington, 1998; Henriques and Richardson, 2004). Here, it will be important to find ways to work together within the same industry or market with parties that are potential rivals (Henriques and Richardson, 2004).
● The 6th sustainability driver: Time
The new paradigm of viewing and managing time will be about strategy over tactics and restoration instead of extraction (Elkington, 1998). Long-term business strategies will become more and more important. This, as well as time-related competitive advantages such as the adoption of just-in-time approaches, will be important for future success and further on, survival on the market(Henriques and Richardson, 2004).
● The 7th sustainability driver: Corporate governance
The Corporate governance sustainability driver is a result of or driven by each of the other six drivers. This driver is about the increased emphasis on aspects such as the design of value chains or business ecosystems of the company, i.e., issues that do not directly regard product- and process design (Henriques and Richardson, 2004). The new paradigm is about TBL instead of the financial bottom line, innovation instead of downsizing and stakeholders above shareholders (Elkington, 1998). Organisations will need to fully incorporate TBL into the DNA or core of the business to be relevant in the long term (Henriques and Richardson, 2004).
TBL theory does not provide a comprehensive set of methods or strategies for assessment of an organisation's operations upon the three dimensions, planet, people and profit. The profit dimension is deemed covered by traditional project literature. However, profit and planet dimension are deemed to be addressed by environmental- and social sustainability assessment methods and metrics. Hence, such methods and metrics will be presented in the following section.
2.4 Metrics for environmental sustainability
2.4.1 Environmental impact measures
Environmental footprints
There are different types of environmental footprint measures providing a measurement of various aspects of environmental impact. The carbon footprint measures the total amount of greenhouse gas emissions generated by a product throughout its life cycle, thus, everything from extraction and use of virgin material until its end-of-life. The metric used for the carbon footprint is CO2 equivalents, i.e. CO2e (Mont, 2007). The ecological footprint on the other hand estimates the total land- and sea area needed to both absorb CO2 emissions that consumption generates, but also the amount of land- and sea area needed to produce the number of renewable resources that is consumed. The ecological footprint metric is m2 (Hayden, 2019; Global Footprint Network, n.d.). Moreover, the water footprint refers to the amount of freshwater usage for an individual, a process, the life cycle for a product, a business or a nation. Hence, this measure provides an indicator for the pressure of freshwater resources (Water Footprint Network, n.d.).
Life Cycle Assessment and Life Cycle Thinking
Life Cycle Assessment (LCA) is an environmental assessment tool to assess the impact of a material, product or process throughout its entire life cycle. Data of consumed emissions and resources for the
objects of the analysis are collected and summarized in a life cycle inventory. Then, impacts in terms of human health, environment and raw material use are assessed impacts (European Commission, 2010). When conducting an LCA, several sorts of data of impacts such as emissions from production, amount of waste produced, and production of virgin material are gathered. Since these impacts are highly varying in terms of the type of emission or impact, they are translated into a set of common impact categories (Ecochain, n.d.). Impacts categories include aspect as “climate change, ozone depletion, eutrophication, acidification, human toxicity (cancer and non-cancer related) respiratory inorganics, ionizing radiation, ecotoxicity, photochemical ozone formation, land use, and resource depletion” (European Commission, 2010). Different types of emission are assigned to each of those categories, which enables comparison between different products or processes for example with regards to impact indicators (European Commission, 2010).
For endured tyres, in particular, implementing an LCA is a challenging task since the material composition varies a lot, and in addition, the complete list of material included is confidential information (Svensk däckåtervinning, 2019, p.49; Pehlken and Roy, 2006). This implies that identifying which impact categories that are relevant to use will be difficult (Pehlken and Roy, 2006). A summary of the impact categories used in a set of LCAs conducted on scrap tyres or rubber material can be found in Appendix (see table A3. Impact categories used in LCAs for rubber and tyre).
Moreover, one answer to the challenge of implementing a full-scale LCA is the concept of life cycle thinking (LCT) which refers to adopting a simplified approach toward LCA. While LCA is a method, LCT is a philosophy (Ecoinvent, n.d.). This approach is useful when information and data required to establish a detailed LCA is not available. For small companies, this approach is particularly beneficial since resources in smaller companies often are rather limited. LCT can provide the decision-maker reliable decision support and direction, however, the reliability directly depends on the quality of available data as well as the estimations made by the decision-maker (Pehlken and Roy, 2006).
2.4.2 Circular Economy and CE measures
Circular economy (CE) is a concept in which the flow of resources is circular, i.e., material is recycled and reused opposite from a linear economy, where the flow of resources (from virgin material to waste) is linear. CE is about resource efficiency for natural resources aiming to preserve the product’s, materials and resources value as long as possible through circulating the material and components by, when the end of their life, return them into the market, thus, minimize waste production (Eurostat, 2021a; Eurostat, 2021b). Two different fundamental strategies for CE are (1) Slowing resource loops and (2) Closing resource loops (Bocken et al., 2016). Slowing resource loops refers to the development of long-lived products through a long lifetime as well as extending the lifetime of products in use. Closing resource loops, on the other hand, is about circulating the material flow, i.e., create loops (Bocken et al., 2016).
The fundamental concept of circular economy is presented and clarified in the waste hierarchy, commonly structured as from most preferred to least preferred; (1) prevention, (2) reduction, (3) recycle, (4) recovery, (5) disposal, see figure 6 (Lazarevic, 2012). However, there are many adoptions and extensions of these proposed in CE literature (see Reike et al., 2018).
Figure 6. The waste hierarchy
Circular resource use has the possibility to promote growth, reduce the amount of greenhouse gas emissions as well as create jobs (European Commission, n.d.c; Ellen McArthur Foundation and Granta Design, 2015). Through the creation of more service-based jobs that do not require an academic education the matching on the labour market will improve when shifting towards a circular economy (Statens offentliga utredningar, 2017).
The circular economy begins at the early stages of the life cycle of a product through smart product design as well as production processes that can reduce resource waste, avoid inefficiencies and create new, more sustainable business opportunities (Bocken et al., 2014; Eurostat, 2021b; Whicher et al., 2018). Design factors to consider in order to enable circularity through an extended lifetime are such as durability, maintenance and repair, upgradability and remanufacture (Bocken et al., 2016; Whicher et al., 2018). Furthermore, disassembly, reassembly as well as standardisability are important aspects to consider when designing for an extended lifetime of a product or process (Bocken et al., 2016). When designing in order to enable closing loop systems, in particular, it is important to use a material that can be safely recycled multiple times and, as for extending the lifetime purposes, that the product can be disassembled and reassembled easily(Bocken et al., 2016).
Regardless of the benefits of CE, highlighted by several sources, circulating material is by itself not a guarantee for improving environmental sustainability (PRé Sustainability, 2021a; Sehnem et al., 2019). The use of recycled material can for instance imply an increased level of emissions than raw material used due to the required processing such as increased transportation for collecting the material. Moreover, the use of energy- and water use, or a lower lifetime of a product caused by quality loss can also lead to less planetary benefits (PRé Sustainability, 2021a).
There are more than 50 methods for measuring circularity, however, no well-established common measure considers aspects relevant for both businesses as well as for products (Linder, Sarasini and van Loon, 2017). In a study (Elia et al, 2017) made to evaluate 14 environmental assessment tools, five CE requirement was defined as:
● Reduce material use and use of raw material.
● Increase the percentage of material that is renewable and recyclable. ● Reduce emission
● Reduce the loss of valuable material.
One approach for measuring circularity is the circularity measure Material Circularity Indicator (MCI) developed by Ellen McArthur Foundation and Granta Design (2015). The MCI is calculated based on the following four aspects:
● The amount of material used to produce a product that comes from raw material and recycled material respectively.
● The intensity for which a product is used when comparing it to a similar industry average product. Here, durability, as well as repair or maintenance, are included.
● The amount of material that goes to (or energy recovery), the amount that is gathered in order to be recycled and which of the components are recovered for reuse.
● The efficiency of the recycling processes that are used for producing recycled material and to recycle the material after it has been used in an application.
To assess the circularity of a material or material based on these aspects, a comparison upon a similar reference product upon these four inputs is done. The MCI generates a value between 0 and 1, which indicates the level of circularity of the product where a value close to 1 indicates a higher level of circularity, meaning that a product only using virgin material would get the value 0 while a product that consisting of a high amount of recycled material will get a value closer to 1 (Ellen McArthur Foundation and Granta Design, 2015; PRé Sustainability, 2017). In this method, there are no indicators taking the environmental or the social dimension of sustainability into account in the evaluation, however, there are a set of examples provided as “complementary indicators”. These are categorized into risk- and impact indicators. Suggested risk indicators are Material price variation, Material supply change, Material Scarcity, Toxicity and suggested impact indicators are Energy use, CO2 Emissions, Water use (Ellen McArthur Foundation and Granta Design, 2015).
Another method for measuring circularity is the CIX tool developed for the building company Riksbyggen to measure the circularity in construction projects. The tool is aimed to be used for decision support in order to promote CE. The tool provides such support for projects in their early life stages in the form of a checklist. Aspects included are utilization rate, design for circularity, minimizing waste, maximized technical lifetime of the different components of the building project as well as architectural aspects such as maximized aesthetical lifetime, elasticity, flexibility and generality (ETTELVA Arkitekter, 2020).
Product-level circularity (C) is a circularity measure that measures product circularity by giving it a monetary value. The C- value has a range between 0- 100% and is calculated as a ratio between the recirculated value and the economic value (Linder et al., 2017). Hence, C takes account for the proportion of the product, i.e how much of the product consists of recycled material, for which furthermore the build-in value is calculated. Hence, this measure both considers processing costs such as collection, inspection, cleaning and sorting as well as the value of the recycled material that is used in the product (Re: source, 2018).
2.5 Metrics for social sustainability
There are several methods and metrics developed attempting to quantify social sustainability, both on a national and organisational level. Examples of such methods on a nation's level are the Social Progress Index (SPI), Happy Planet Index (HPI) and Human Development Index (HDI) which address aspects such as basic human needs, wellbeing and opportunity for growth. Common indicators and indices for measuring sustainability on this level are life expectancy, education level, human rights, health and
