In order to move towards a more sustainable development, it is necessary not only to minimize the use of materials in the design stage and to find new materials as alternatives to nonrenewable ones (e.g. optical fiber instead of copper, biopolymers instead of polymers from oil) but also to reclaim as much as possible material value through effective recycling. To this extent, recycling can play a key role in multiple dimensions, while providing new business opportunities for innovative companies, having positive impacts on the society and the environment and fostering an effective circular economy as well. Because of the advanced waste management infrastructures available in developed countries, it is possible to achieve an almost complete collection of solid wastes into a variety of controlled bulk material flows. However, the picture for the follow-up step, the recycling of raw materials such as steel, non-ferrous metals, polymers and glass from these flows, is less positive. Materials value recovered from waste represents a very small fraction of European GDP. The fundamental issue is that policymakers still lack an effective key performance indicator for stimulating the recycling industry. Therefore although recycling plays an important role in the circular economy perspective, it is necessary to radically change the metric used so far to compute the recycling rate. Nowadays, the recycling rate is computed measuring the amount of material entering the recycling facilities. This approach has brought about an inaccurate and somehow misleading indicator (the recycling rate) which contributed to wrong decision making and to poor innovation in the industry. The new approach proposed in this paper considers the use of a Circular Economy Index (CEI) as the ratio of the material value produced by the recycler (market value) by the intrinsicmaterial value1 entering the recycling facility. It is argued that this index is related to strategic, economic and environmental aspects of recycling and it has very important implications as decision making tool. To compute the CEI it is necessary to know detailed information of the components and materials contained in each end of life (EOL) product entering the recycling facilities and how they end up in the recycled raw materials. Therefore an accurate accounting of materials (with standards if available), mass, chemical composition and smallest dimension (e.g. a screw, a plastic foil) is proposed.