Measuring Circular Economy
Measuring the “circularity” of a product or service can be a challenge due to the complexity and variety of actions, activities and projects that could be called “circular.” Unfortunately, no single accepted framework exists to enable organizations to assess and report their “circularity.” This lack of framework represents one of the greatest needs, and greatest opportunities, in the circular economy.
A complete accounting of all activities, at least early on, is not necessary to communicate about how a circular program is progressing. Starting with the generally accepted idea that “circularity” reflects the move from linear supply chain models to circular models, the initial focus of program measurement should be on measuring attributes or activities that reflect circulating materials through the supply chain rather than using virgin materials or disposing of products in a landfill at the end of their useful life.
For the most part, the metrics associated with each of the projects summarized in this Toolbox are at this level – basic measures of how material is flowing through a supply chain and back into new products. Many of the metrics presented are also just different ways of looking at the same activities. For example, a company recycling products may look at how much material they recover, but a company manufacturing bottles with recycled content would look at how much of that same material they used, and a company that has a closed-loop material system can look at both numbers. “Double counting” occurs when different actors can use the same material and legitimately claim the benefits of the activity that produced the material. This is a significant concern when trying to quantify a circular system and one of the challenges facing any standard framework for measuring circularity.
Note: The metrics presented in the Circular Economy Toolbox projects have been proposed by the Circular Economy Toolbox's expert staff; they do not reflect actual metrics utilized by a company to measure its circular program.
Circular Economy Metrics
Amount Recovered: An accounting of the amount of product or material is collected, returned, diverted from landfill or otherwise recovered by an organization. This value can serve as a numerator when calculating the percent recovered as a portion of sales or products distributed, or as a denominator when looking at specific rate of product or material recovered. As a stand-alone number may also be reported as a diversion rate.
Carbon Footprint: A life cycle accounting approach that looks at the total amount of carbon emissions that are related to (or "embedded in") a product due to the consumption of fossil fuels. This includes indirect sources of carbon like the carbon emissions related to burning fossil fuels to produce energy for factories or transportation. Reducing the overall carbon footprint of a product life cycle is one approach organizations use to describe how they are reducing their impact with respect to climate change.
Estimated Cost Savings per Rental: When operating a rental or leasing business model, this measures what an individual saves when leasing or renting versus buying a new product. This idea can be expanded out to include environmental or social benefits to renting versus buying (implying manufacturing) either through a carbon footprint or estimated impact offset type measurement.
Estimated Impact Offset (Resources, GHGs, Water): The amount of resources that aren't used (e.g., materials that are replaced by recycled content, water that is saved) and emissions that aren't made, as with greenhouse gases. Most often seen with water, energy consumption, and GHGs, there are multiple different calculators available on-line to help with such a calculation. This type of metric may also be used to describe the benefit of the "product as service" business models by reporting the material or cost saved when a person or organization uses a service rather than buying a product.
kWh Produced: Amount of energy produced from a given renewable energy source. Appropriate time frame would need to be determined by the project, but kilowatt hours (kWh) is the standard unit for measurement.
Payback Time: Often a reported metric for a renewable energy system, payback time or return on investment measures the amout of time it took for savings generated from switching from traditional energy sources to pay for the cost of any equipment required from the switch.
Percent Materials Composition: The amount of product or material that is sourced from a particular recovered material or product stream. This factor of material or product composition may be calculated as the amount of material used in to the total amount of product or material sold or produced in a given timeframe. This type of measure is most commonly seen at the product or package level, but may be reported at a corporate level to describe how much recycled material is being used in an entire product portfolio. When using a variation of this metric, it is important to provide enough information to understand what is represented by the percentage - weight or sales or product units - as well as the timeframe over which the data was collected. Related metrics include:
- Renewable Source: A specific measure of how much material is from a renewable source when the traditional source is non-renewable. For example, bottle plastics made from plant-based sources rather than fossil fuel sources, not a t-shirt made out of cotton.
- Certified Source: A specific measure of how much material is from a certified source of that resource. For example, using FSC-certified wood in furniture or paper products.
- Recycled Content: A specific measure of how much material is from a recycled material stream, such as the amount of recycled plastic is used to manufacture a bottle. Depending on what type of material is in question, the recycled content could come from pre-consumer sources (i.e., excess or waste from a manufacturing process) or from post-cosumer sources (i.e., recycled materials from used manufactured goods).
- Recovered Content: A more general way of indicating that material used in a particular application came from recovered or recycled material streams rather than virgin material streams.
- Compostable: A measure of how much of a product or package can be composted at the end of its useful life. Providing information on whether the material is compostable in small, usually residential compost piles or whether it can only be composted at commercial facilities is a best practice when communicating compostability.
- Containing Remanufactured Components: A specific measure of how many products sold or produced in a given time frame have components that were repaired or remanufactured. A complementary measure to percent remanufactured; these two could be used together to show how much of the products being remanufactured is actually resold afterward.
Percent Recovered: The amount of product or material that is recovered relative to a baseline amount. This recovery percent may be calculated as the amount recovered to the total amount of product or material sold or produced in a given timeframe, or of the material recovered what percent is directed to different management options. This metric can also be used at different levels of granularity. For example, a company could report the percent of total products sold that were recovered in a month by product unit, or the percent of a particular product manufactured over a year that was returned for recycling by the weight of products manufactured and collected. When using a variation of this metric, it is important to provide enough information to understand what is represented by the percentage - weight or sales or product units - as well as the timeframe over which the data was collected. Related metrics include:
- Percent Reused: A specific measure of what percent of a given product or material stream was reused or resold after testing and cleaning. If it is used with respect to a product, it usually refers to reuse of whole products, but may also be specified for components that are recovered from returned products to be used to repair broken versions of the same product or placed on the secondary market for others to use.
- Percent Refurbished/Remanufactured: A specific measure of what percent of a given product or material stream was repaired and reused or resold. "Refurbish" usually refers to products that required more than just testing or cleaning before being reused, including repair or part replacement. "Remanufacturing" may also be used to designate the same group of products. Remanufacturing is more commonly used for products or components that are part of business to business transactions (e.g., remanufactured engines for heavy equipment), whereas refurbishing is more common for products in the business to consumer space (e.g., refurbished personal computer).
- Percent Recycled/Reclaimed: A specific measure of what percent of a given product or material stream was recycled. This does not include material sent to incineration rather than landfill. It may include materials that are sent to smelters to recover metals as the recycling process. Depending on the product or material, this may be further specified as pre-consumer recycling, such as recovering wasted material in a manufacturing facility, or post-consumer, where recycling happens after the product has been used.
- Percent Remarketed: In the case of food that would normally be disposed of, the percent of food waste that is recovered and remarketed as such, for example fruit that is sold even if it does not meet the normal aesthetic standards of the retailer.
- Percent Closed Loop/Upcycling/Downcycling: A specific measure of what percent of a given product or material stream was recovered and returned to the supply chain for reuse in the same or a similar product. The company using the recovered content in their new product does not have to be the original manufacturer, the type of product just needs to be the same. This is more specific than the related term of upcycling, where products or materials are returned to any supply chain to produce goods that are of the same or greater value on the market. Downcycling is the opposite: recovered materials are sent to supply chains that produce goods of lesser value than the original product.
- Percent Material or Process Stream: A more granular version of percent recovered that specifies what route a percent of the recovered product or material stream moves in after its initial treatment. This could be specifying how much of different types of plastics are recovered by resin code, or how much of a material or product stream goes to different processing locations based on the material type or use, for example, metal pieces going to a smelter, plastics going to a reprocessing facility, and components going for reuse. This may be represented by a collection of the other types of recovery percentages discussed here.
Percent Recyclable: A more advanced metric that accounts for how much of a product is designed to recoverable at the end of its useful life. Accurately communicating this metric requires not only understanding what materials can be recycled, but if those materials would be accessible at the end of the product life or if parts are available to repair used equipment. If a metal piece is glued to a plastic piece, they are both technically recyclable, but won't be as there aren't commonly available processes that can separate the materials so they can be recycled. Whether a product can be effectively recycled or repaired at the end of its useful life can be considered an indirect measure of how well a product is designed for circularity, since these factors determine whether the resources in the product can be cycled through the system. Related metrics include:
- For a Company: Across a product portfolio, how much material can be recovered at the end of the product's useful life.
- For a Product: What percent, commonly by weight, of a product that can be separated for recycling or is accessible for repair or replacement.
- Repairable: A specific measure of how many of a product's parts can be accessed and repaired or replaced, and for which the replacement parts are available.
- Shipped in Compostable/Recyclable Packaging: A specific measure of what percentage of a product is shipped in packaging that can be recycled or composted.
Progress Toward Goal: After setting a goal, reporting progress toward that goal over time until the goal is reached. For example, if a company has a goal of using 80% recycled materials by a certain date, they would report how much recycled material they are using at regular intervals up to that date.
Return on investment (ROI): Usually expressed as a percentage, ROI expresses the profit made for a set investment: (net profit/cost of investment) x 100. Often used with investments in capital equipment, manufacturing facilities or infrastructure to support circular economy models.