Circular Economy Measurements

In the last few weeks, we’ve covered a lot of information about the circular economy. Before we move on, let’s take a few short paragraphs to recap the essentials.

The circular economy is a model that separates economic growth from the consumption of finite resources. It creates something called restorative flow, where raw materials, components, and products are all reused at the highest level of utility, while minimizing pollution and waste.

The goal of the circular economy is to optimize the system, not simply the production process itself.

But wait. Isn’t optimizing the production process a phenomenal way to reduce waste? Well yes, it is, but it also fails to account for the broader implications of this optimization.

Let me explain.

It’s relatively easy to show how more efficient production reduces waste (a good thing) and increases profits (usually a good thing). But now, consider the main by-products of this efficiency: increased use of virgin materials or the release of toxins into the air, water, or ground surrounding a production facility. These detrimental effects may never be addressed or measured—no matter how much harm they cause to communities—because they depend on how “waste” is defined in an operational system.

The solution, therefore, is to think bigger. To take the idea of eliminating waste and build on it. To create a self-sustaining, restorative system . . . and establish an all-encompassing entity called the circular economy.

The Groundbreaking Work (and Measures) from the Ellen MacArthur Foundation

Founded in 2010, the Ellen MacArthur Foundation (EMF) has a simple mission: to accelerate the global transition to a circular economy. This mission, in turn, can be achieved when organizations commit to using:

  • Regenerative product design
  • Restorative business models
  • Efficient reverse logistics
  • Supportive systems of infrastructure

In my last update, I touched on the measurements the EMF has developed to help companies incorporate more restorative practices into their business models. In 2013, the foundation began working on financial measurements. Then, in 2015, it released the Material Circularity Indicator (MCI), developed in partnership with Granta Design.

The MCI, in the words of the EMF, calculates “how restorative the material flows of a product or company are.”

The MCI is supported by two other metrics—the Linear Flow Index (LFI) and utility (which measures the use and durability of a product). It is a straightforward way to calculate the restorative flow of a specific product or a group of similar products. Even better, the MCI is an invaluable tool for eco-friendly product design.

That said, it is downright challenging to scale the MCI and its supporting measurements across an entire organization. And it is equally difficult to use these measures to understand an organization’s current level of circularity.

Enter Circulytics.

 

The Purpose and Importance of Circulytics

Launched by the Ellen MacArthur Foundation in early 2020, the purpose of Circulytics is to give organizations comprehensive support as they transition from a linear to a circular economy. Any organization—regardless of industry, size, or complexity—can use Circulytics to make the most of their circular efforts.

Here’s what I mean.

As an organization goes circular, it needs measurements to help persuade its employees, customers, and shareholders that the effort is worthwhile.

It needs measurements to build momentum for circularity, track its progress, and create loyalty among eco-conscious consumers.

And finally, an organization needs measurements that make a strong case when it’s time to ask external institutions or government bodies for help in driving the change.

Circulytics has the potential to do all these things and more. It can be a game-changer in helping companies create the innovation, capacity, and impetus they need to convert to a successful circular economy.

What Circulytics Offers

Circulytics gives organizations a comprehensive decision-making framework to guide the development and implementation of circular strategies. Specifically, Circulytics:

  • Measures a company’s entire circularity, not just its products and material flows
  • Supports decision-making and strategic development as companies progress toward the circular economy
  • Demonstrates an organization’s circular strengths and highlights areas for improvement
  • Gives investors and customers transparent information on a company’s circular economy efforts, if the company so desires

And beyond these measurements, Circulytics can help organizations:

  • Develop circular business strategies to generate revenue, design out waste, keep materials and products in use, and generate environmental benefits
  • Provide comprehensive tracking of company progress against key measures
  • Deliver unprecedented clarity about a company’s circular economy performance, as well as open up new opportunities for generating brand value with key stakeholders

Now, you might say that’s an awesome set of features and benefits. But you might also be itching to get past the marketing talk and into the real world. So, let’s talk concrete actions now.

In 2019, the Ellen MacArthur Foundation partnered with 30 global organizations. The goal was to capture the key facts and conditions that would measure a company’s current circularity.

The result was a report and circularity score, organized in this way:

Source: Ellen MacArthur Foundation: Circulytics

All this work, of course, became what we now know as Circulytics.

Particularly interesting here are the enablers and outcomes categories. The enablers section gathers insights on how likely an organization will be to pursue circular economy business opportunities. The outcomes section defines how circular an organization currently is, based on its products and material flows. For service-based businesses, the outcomes focus on how well service teams can support the principles of circularity and the work done by other groups.

Interested in learning more? The first step is to go here and apply to take part in the program.

Naturally, I’d be thrilled to learn more about your circular (or even Circulytics!) journey. Please share your thoughts and questions in the comments section below, or reach out to me at juli@jhl-solutions.com.

In my next update, we’ll leave the world of numbers and turn our attention to something more immediately actionable—that is, how retailers can ramp up their recycling efforts.

See you next week.