A New Circular Economy Index and its impact on Corporate Carbon Emissions
Julieta Díez-Hernández, José María Díez-Esteban, Óscar López-de-Foronda, Florencio López-de-Silanes
Keywords:
Circular Economy; Corporate Environmental Performance; Carbon Emissions; Circularity Indicator; Corporate Social Responsibility; ESG
Abstract:
We develop the Corporate Circular Economy Index (CCEI) to provide empirical evidence on the relationship between corporate Circular Economy practices and carbon emissions. Using a decade-long dataset of STOXX Europe 600 firms, the index integrates multiple dimensions, including policy disclosures, monitoring mechanisms, initiatives, and resource efficiency. Applying a Generalized Method of Moments estimation, our analysis reveals a notable causal relationship: an increase in the index from the 25th to the 75th percentile is associated with an 18% reduction in carbon dioxide emissions.
Through Partial Least Squares Path Modelling, we identify key corporate policies driving emission reductions, including social sustainability measures, biodiversity protection, green investments, target setting, and clear governance structures via Corporate Social Responsibility Committees and Environmental Management Teams. Our findings remain robust across alternative carbon emission standardizations, econometric methods, and controls for endogeneity. These results highlight the importance of specific Circular Economy dimensions in improving corporate sustainability outcomes. In addition, the proposed Circular Economy Index, along with its components and sub-indices, is accessible and applicable for practitioners across different corporate contexts.
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 A New Circular Economy Index and its impact on Corporate Carbon Emissions [PDF file] [Filesize: 1.36 MB]
 10.7441/joc.2026.SI.05
Díez-Hernández, J., Díez-Esteban, J. M., López-de-Foronda, Ó., & López-de-Silanes, F. (2026). A New Circular Economy Index and its impact on Corporate Carbon Emissions. Journal of Competitiveness, 18(SI), 110–141. https://doi.org/10.7441/joc.2026.SI.05
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