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Measuring circularity - Useful indicators and tools for building a circular economy

Circular economy discussions remain confined within corporate glass walls, government chambers, academic conferences and co-working spaces of green-tech innovators at large. Yet, it is an ambitious feat, the success of which relies on its adaptation and adoption beyond these spaces.

While several projects have been taken up, especially in Europe, to develop tools for measuring circularity of whole cities, circularity has the potential to inspire small, achievable changes for everyone. Many tools are increasingly becoming available for companies, small and large, to easily jump on the circular economy bandwagon.

The Ellen Macarthur Foundation is at the forefront of developing useful tools and infographics that can find application for many. One such tool is the Material Circularity Indicator (MCI). Developed in consultation with industry leaders, MCI aims to inform a company about how restorative the flow of materials within a company is. Mapping the flow of materials is the first step to calculating an MCI score. Scores are assigned between 0 and 1, scored tending towards 1 indicate higher circularity.

Essentially, the key considerations are:

  1. Inputs used: What are the key inputs used for the product? Are they virgin? If not, what percentage of the inputs are recycled or reused? This is a great practice for everyone, a manufacturer or not! Thinking about the source of materials is the first and most essential step to circularity even in your home, workplace, small business etc.

  2. Utility or time in use: Durability and use of inputs may be calculated and compared with its average use time in similar tasks. This differs for each input based on its application in different industries. This would also take into account the repair and maintenance of inputs which increases its durability. Monitoring utility and lifespan is useful for reducing the costs of the replacement and increasing efficiency of products by increasing the intensity of use.

  3. Destination after use: Circularity warrants reduction of waste. Essentially, this means that both the source (inputs) and destination (outputs) are monitored. What ends up in the landfill, what is recycled/reused and what is converted into energy? These are some key considerations of any production line when assessing circularity.

  4. Lastly, the Ellen Macarthur Foundation also suggests tracking the ‘Efficiency of recycling’ processes used to produce recycled inputs and material. This is easier to implement if the outputs are recycled to create new inputs within the same company or organization. However, this may not always be the case. In such scenarios, tracking the source is sufficient.

Source: The Ellen Macarthur Foundation: Circularity indicators - An approach to measuring circularity

The above indicators provide a fundamental framework for collecting and monitoring data for measurement of circularity at a product level. A starting point, the MCI when scaled up can be adapted to handle more complexities in the production system, averaging individual MCIs across many different products of a company. Every product need not be individually measured, and standards of circularity scores will be possible once this method is applied across a range of contexts and industries, providing a reference list. The Circulytics tool does this at a company level. 30 companies signed up in Phase 1 for the development of this tool and tested it in their businesses. They range from FMCG, automobile to agriculture. Now, the Ellen Macarthur Foundation is inviting applications from more companies to sign up and get access to this tool to receive their circularity scores free of cost.

Another great tool available for self-assessment of circularity is the Circular Transition Indicators. It enables companies to self-assess without sharing data with third parties. Its methodology is based on the assessment of inflow and outflow of materials. Inflow measurements look at the source material, as in MCI, and outflow assessment measures the potential for recovery of material in the process cycle as well as actual recovery rates. It measures:

  1. A company’s effectiveness on closing the loop material flows: This part takes into account the company’s water and energy use, rates of reuse and recycling and potential for recovery.

  2. Optimization of resources: In this part, CTI measures how the material is recovered and recirculated into the production cycle. It observes rates of recycling, refurbishing, repair and remanufacturing across the different stages of the product cycle.

  3. Value-added to business: CTI indicators also include impact indicators to assess the value added to a business by adopting a circular approach.

If not now, then when?

In the current times, when a global pandemic has severely impacted supply chains, this tool is a great first step for businesses who are looking to change course towards localised solutions. The room for improvement is large as only 9 per cent of the global economy is circular today. With the tools available, companies can set a baseline score against which to measure performance in the coming years. As more companies sign up to third-party tools or conduct a self-assessment, anonymised industry-level data can contribute to important benchmarks and unlock potential for collaborations (See MSTC and Mahindra's partnership for India’s first auto-shredding facility). Results from a circularity assessment can inform business decisions about risks and opportunities and help identify and develop circular business cases that can be integrated into the design processes.


About the Author

Rivika (LinkedIn is a Masters student of Development Studies at the University of Melbourne with experience and interest in monitoring and evaluation, gender empowerment, livelihoods, cultural differences and coffee.

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