Measuring the development of circular economy

Preliminary study on national level barometer for circular economy

4.9.2015

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Contents

1. Background

2. Objectives of the study

3. What is Circular Economy?

4. Criteria for an informative barometer

5. Perspectives and indicators of circular economy

6. Conclusions

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Background

• The need for tackling climate change and saving natural resources has

generated one of the fastest growing business areas in the world, circular

economy

• The potential increment value of circular economy for Finland is estimated to

be approximately 1,5-2,5 billion euros

• Circular economy is one of the key areas of Sitra’s (The Finnish Innovation

Fund) operations (more information www.sitra.fi)

• Across countries, green growth and circular economy indicators are

developed by differend organizations and actors e.g. Ellen MacArthur

Foundation

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Objectives of the study

• The objective of Sitra is to forward circular economy by building a roadmap with

other Finnish actors to ease moving towards circular economy

• The pursued change will also generate a need for measuring and monitoring

circular economy

• The objective of this pre-study is to suggest ideas about the preliminary content

and execution of the barometer measuring and indicating the development of

circular economy

• In this study, barometer is a comprehensive set of indicators that reflects

the development of circular economy in Finland

• The study was completed by Gaia Consulting Oy over June – August 2015

(www.gaia.fi)

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What is Circular Economy?

• Minimizing and cutting out material loss and waste streams

• The value of materials and goods remains and circulates – they

will be shared, reused and recycled

• Matter will be replaced with services

• With circular economy, used natural resources and other

resources will generate as much well-being as possible

More about circular economy from Sitra’s web page

http://www.sitra.fi/en/ecology/circular-economy

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Criteria for an informative barometer 1/2

• Describes the current state and development and gives a versatile picture

of circular economy and, at best, also indicates its future potential

• Summarizes the issue in reasonable amount of indicators

• Is at least partly based on available information, but is also able to bring

up new measurable indicators as well

• Enables international comparison

• Offers useful information for policymakers and media

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Criteria for an informative barometer 2/2

• Indicators already used in different contexts,also have aspects of circular

economy, but not all perspectives of circular economy appear in these

indicators

• Circular economy usually appears in the interfaces, which could be a

challenge for gathering statistics

• Circular economy usually comes with different trade-offs in social and

environmental impacts. In its best, an informative barometer would explain

also these trade-offs.

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Perspectives and indicators of circular economy

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Essential perspectives of circular economy

1. Use of natural resources and resource productivity

2. Material cycles

3. Consumption

4. Business, concepts and innovations

5. Changes in national economy and society

6. Drivers and enablersThe most important building parts for a

barometer are the essential perspectives of

circular economy, the development of

which the barometer should indicate. These

perspectives should describe the contents

of circular economy and help to understand

its dynamics.

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Essential perspectives of circular economy

Business, concepts and innovations

Consumption

Changes in national

economy and society

Drivers and enablers

PEOPLE

COMPANIES AND

ORGANIZATIONS

SOCIETY

Materialcycles

Use of naturalresources and

resourceproductivity

IMP

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Alternative indicators

1. Use of natural resources and

resource productivity

• Indicators reflecting total consumption of

natural resources

• Indicators reflecting resource productivity

• Indicators reflecting the use of non-

renewable and critical natural resources

2. Material cycles

• Indicators reflecting material loss

• Indicators related to nutrient cycles

• Indicators related to water cycles

• Indicators related to energy

• Indicators related to materials’ life cycle

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Alternative indicators

3. Consumption

• Food related resource consumption

indicators

• Living related resource consumption

indicators

• Mobility related resource consumption

indicators

• Other consumption indicators relevant to

circular economy

• Indicators reflecting household costs related

to consumption

• Values and attitudes related to consumption

4. Business, concepts and

innovation

• Amount of business, investments and

export related to circular economy

• Lifetime of products, sustainability and

product design

• Circular economy innovations

• Values and attitudes related to business

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Alternative indicators

5. Changes in national economy

and society

• Indicators describing the structures of

national economy

• Efficiency of land use

• Circular economy in social media and

internet

6. Drivers and enablers

• Price development of raw materials

• Regulation

• Digitalization

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Conclusions

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Conclusions

• Circular economy is a multi-dimensional concept with no clear definition. In addition,

information describing circular economy is limited. Therefore, forming the comprehensive

barometer for circular economy is challenging.

• Many of the phenomena related to circular economy occur primarily at micro level, indicating

the changes taking place in company level and behavior of individual consumers. These

changes are difficult to measure at national level.

• Many indicators seem to work better for recognizing opportunities and following the temporal

changes than enabling international comparison between countries.

• In addition to suggested indicators for the barometer, it is also important to recognize the

impact on environment and well-being, which are the objectives of the circular economy

(these impacts can also be negative).

• The impact path from circular economy’s phenomena and activities to its results should be

clear. Otherwise, the developed indicators might describe more other phenomena than

circular economy itself.

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Potential indicators for further development (1/2)

1. Resource productivity, which describes the value derived from the use of natural

resources. International comparison using traditional resource productivity indicators is

challenging. Therefore, more sophisticated indicators that include the consumption of

renewable and critical resources are needed.

2. Material loss is describing resource losses in material cycles. Material loss indicators

include e.g. landfill material flows, incineration of non-renewable materials and community

waste. In addition, an indicator for nutrient loss should be developed. Food loss can indicate

consumer behavior and resources lost in the food chain.

3. An indicator reflecting values and attitudes towards consumption and new ways of

consumption that indicates changes on consumer behavior (e.g. collective ownership,

sharing and recycling) now and in the future. This requires further development for

recognizing the right indicators and information sources since established specification,

indicators or information sources do not exist in this field.

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Potential indicators for further development (1/2)

4. Defining and measuring business related to circular economy is challenging, but

necessary in order to understand the potential related to growth and social significance of

circular economy. The challenge is that circular economy usually occurs in the interfaces

between companies and industries. One possible indicator could be related to visibility and

meaning of circular economy in social media.

5. Sustainability of material cycles to describe the length of material cycles and increase

the understanding about life cycles of materials and products. This indicator requires further

development, but one option could be to monitor the life span of chosen products.

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