To seize the potential of Circular Economy (CE) organisations need to evaluate and communicate their progress moving away from the non‐sustainable paradigm of ‘take‐make‐dispose’ towards circularity. Existing CE assessments for organisations focus on companies. Although the need for CE assessment is recognised in both public and private sectors, little progress has been made towards developing an approach for public sector organisations. CE assessment in public sector organisations is particularly important due to their role model, agenda setting and economic function. Therefore, this article co‐develops a CE assessment framework for public sector organisations. Portuguese public sector organisations were involved as a participatory case study. The result is a framework that covers the following components: (i) a system definition; (ii) a definition of 35 CE assessment elements; (iii) CE assessment targets; and (iv) CE indicators. The framework contributes to the understanding of circularity from a public sector perspective considering three key aspects: resources, operations and processes as well as social and employee related activities. Implications for CE assessments in the public and private sector encompass the importance for an early involvement of stakeholders to get a sector specific perspective, the need to address user‐friendliness and the requirement for continuous testing of CE assessments.

Circular Economy (CE) is seen as a key strategy in achieving sustainable development and the United Nations Sustainable Development Goals (SDGs). To seize the potential of CE, public and private organisations need to evaluate and communicate their progress moving away from the non-sustainable paradigm of “take–make–dispose” towards circularity. The literature and practitioners demonstrate a growing interest in CE assessment as a driver for this transition. Nevertheless, the majority of CE assessments are implemented in private companies and implementation in public sector organisations is low. This article presents the challenges that currently prevent public sector organisations from implementing CE assessment and derives strategies to overcome them. A total of 21 CE and assessment experts from the Portuguese public sector were interviewed, and the results were triangulated with an extensive policy document review. The findings show that cultural barriers, particularly a lack of public and political pressure as well as a resistance towards change, are considered the main challenges for CE assessment implementation. Cultural challenges drive structural ones such as a lack of leadership commitment, the voluntary nature, and a missing clear governance for CE assessment. Technical and financial challenges, contrary to previous findings of the literature, are not prioritised and are seen as a result of the cultural and structural challenges. Overall, the research suggests that CE assessment is often a discussion among academics and highly specialised practitioners. In order to drive its implementation, the debate has to involve stakeholders beyond expert circles to trigger awareness for its necessity and to facilitate usage for a broader audience.

The use of life cycle‐based assessment has been defined a crucial microfoundation to implement circular business models from a dynamic capabilities perspective. Through a case study of a multi‐national packaging corporation in the plastics sector, the application of an industry‐developed circularity assessment, the Circular Transition Indicators (CTI), is analysed in two manufacturing locations (Italy and China). The aim is to identify how this life cycle‐based assessment can amplify the company's capability to sense, seize and reconfigure its resources. Data were collected from a company placement, interviews, and sustainability reports. The CTI mainly contributed to the sensing microfoundations concerning the company's life cycle‐based perspective and the use of environmental management tools. It also proved to complement existing life cycle‐based approaches because it does not identify sustainability impacts, but only captures material flows. Furthermore, the results showed how the CTI implementation benefitted from existing microfoundations, such as the strategic collaboration with knowledge partners and previously collected sustainability and process efficiency data. Finally, it was also discussed for which microfoundations the CTI results could be most useful: to improve internal resource management processes and to support external circularity pledges. This paper contributes an empirical example to connect dynamic capabilities with life cycle management literature in a circular economy context.