How to measure the circular economy

Published on Wednesday, 12 June 2019

The circular economy has emerged from its infancy and is now a well-established paradigm. It is no longer viewed as simple recycling but as an integrated reinterpretation of the business model. The moment has come to take the pivotal leap: to turbocharge all the benefits of the circular economy through investment, new technologies and industrial partnerships. And, most importantly of all, to develop a measurement metric as otherwise we won’t know how far the transition has progressed, whether the actions taken were appropriate and what practical impact they had.

The quantitative approach was one of the hot topics at the third World Circular Economy Forum, organised in Helsinki by the Finnish Innovation Fund Sitra, between 3 and 5 June. It was attended by over 2,000 experts from around the world. The quantitative approach was also the subject of the special “Circularity Metrics and the Fair Use of Data” round table in which Enel’s Head of Circular Economy Luca Meini also took part.

As Executive Director of the European Environment Agency Hans Bruyninckx explained in his opening address, we still don’t have a metric i.e. a collection of unanimously defined and accepted standards of measurement. However, this does not mean there is a lack of promising initiatives being driven by the companies most aware of the issue. Indeed Meini went on to describe the one Enel developed.

The Enel model, which is known as CirculAbility, is split into the Group’s main areas: procurement, customer services and assets (plant and infrastructure). The three areas are also interlinked: on the procurement side, the circularity of the products we purchase is measured. In addition to being pivotal to making our supply chain more circular, however, this metric is also used as an input for the other areas. On the assets side, we analyse the circularity of the construction, working life and decommissioning phases, but procurement data is vital to this. 

In Enel X, we measure circularity both internally, to improve our products and services, and as an actual customer service. Once again, procurement data is fundamental to this process. 

“When we began working on the theme around four years ago, we looked around to see whether there was an example we could use as a reference, but there wasn’t,” explained Meini in Helsinki. “There were lots of proposals but they weren’t satisfactory to us because, as far as we were concerned, the circular economy had to embrace the entire value chain, including renewable resources and the energy issue. Later on this approach would largely prove to be successful, but this was not the case at the time.” As a result, we went on to independently develop our own model which we put online: “We made it public to share it with other companies and improve it.” This is our contribution to helping define a shared metric: “A single international model cannot simply materialise out of nothing: it needs to be developed using the experience of pioneering companies as a starting point.”

The other round table participants also talked about their experience with data and metrics. The Netherlands is a very positive success story, as the country’s Minister for the Environment Stientje van Veldhoven revealed in her description of the steps the nation is taking in order to achieve a “completely circular” economy by 2050 (with the intermediate goal of 50% by 2030). She also emphasised the importance of engaging suppliers in this transition. 

Recycling percentages are the most widely available indicators on a national level. Globally, 9.1% of waste is recycled, as Shifting Paradigms founder Jelmer Hoogzaad explained. Here in Europe, that figure, albeit referring only to solid waste, stands at around 50%, according to Eurostat Vice-President Arturo de la Fuente who then went on to summarise the circularity criteria adopted by the European Commission.  

Amanda Rejström, co-founder and CEO of Spark Sustainability, returned to the subject of customers and explained how data can change consumers’ choices and direct them towards greater circularity. Involving citizens is fundamental also according to Sitra Project Director Jaana Sinipuro, who says the goal is not merely to obtain objective data but also make it available to everyone in a clear and transparent manner.

In order to overcome the obstacles that are still putting the brakes on the development of the circular economy, Bruyninckx concluded, we need a general metric capable of measuring the circularity of a country or a business in much the same way that we are currently able to measure greenhouse gas emissions. There is still a long way to go but the innovative experiences presented during the Forum provide plenty of encouragement and are a sign of confidence.