Circular Economy Metrics
How do we measure the circular economy and is it helpful to do so?
In 2013, I helped to secure and deliver a two year project between the Ellen MacArthur Foundation and Granta Design to deliver a metric for the circular economy, the work being funded in part by the LIFE+ program.
Our proposition was that, without being able to measure circularity, it would be impossible to tell whether or not circular economy initiatives were succeeding. Secondly, having a metric would enable those seeking to adopt the circular economy to design specifically for this objective.
The result of the project was the Materials Circularity Indicator (MCI), the first comprehensive methodology for quantifying how circular products and companies are - published in 2015.
What is circularity?
Making a product or a company more circular is not, you see, the same as just recycling more, or wasting less, or making something last longer, or using it more intensely - in fact it is all of these things combined, which means that it can’t be simply described by a metric that addresses just one of these aspects.
As we embarked on the project we were keen to incorporate measures that were indicative of a successful circular economy model, such as energy efficiency, carbon intensity, resource scarcity, toxicity, price volatility, water use… these were all, of course, key metrics that we would want to deliver improvements in, as part of the circular economy.
Our first attempt resulted in a hefty equation combining most of these metrics. It generated a number that we could use to compare products. However, when we started trying to improve our score it was nearly impossible to know where to start. There were so many levers we could pull, and it wasn’t obvious from our circularity score which one offered the best opportunity.
It was at that stage that we recognised that aspects like toxicity and environmental impacts already had well established metrics of their own. By attempting to incorporate them into our circularity metric we were, in essence, reinventing the wheel. What we really wanted to do was to understand how making a system more circular would interact with these other metrics and deliver something that was, ideally, better in every respect. Failing that, we wanted to be able to understand the trade-offs inherent in our system to enable us to optimise appropriately and prioritise the benefits that mattered most to the business.
The solution we ended up with then became a relatively simple mass-flow equation, ranking the flow of materials into the product, according to the waste hierarchy, and also the flows of materials out of the product, in a similar way. We recognised that recycling is, more often than not, actually down-cycling and so we used the recycling efficiency as a means of rating the recycling flows.
We also needed to incorporate the material savings that occur through extending the lifetime of products or by increased their utility. We did this by benchmarking against a ‘standard industry product’ - our reasoning being that it was the standard industry product we were trying to replace and the performance of this incumbent product would be different in each case. If our circular product lasted twice as long as the average product of that type or was used twice as intensively, it would displace the need for one additional product on the market - reducing the material required overall. Using the average product as a benchmark also meant that, as product durability and utility improved towards the natural limit, the focus would naturally shift from making things last to addressing the more fundamental flows into and out of the product.
In some of the resulting peer reviews of the methodology, there has been some confusion as to why aspects like environmental impacts weren’t included in the MCI approach. I hope that the above rationale helps to explain this and I would caution anyone working in this field to be careful to differentiate between ‘circularity’ and the outcomes of a ‘circular economy system’ as they are not the same thing.
How Circular can a product be?
We then found ourselves asking just how circular a product could be - there obviously needed to be a limit. I recall trying to work out what the most circular product might be, to use as a benchmark. For me it was a dry-stone wall, a single material, long-lifetime product that could be readily disassembled and reconfigured/upgraded and generated almost no waste. What product would you select? Let me know in the comments section below.
In the end, we resolved to have a score from 0 to 1, where 0 would be entirely linear and 1 would be perfectly circular. To overcome the possibility that we might find something even more circular, we also made it harder to improve the closer the score got to 1 - meaning in effect that every product or company would be confined within the same range, making it easier to compare different options.
The result was a methodology that we consulted on extensively with a diverse set of stakeholders, and later published for the world to adopt.
Integration and adoption of the Materials Circularity Indicator (MCI)
The company I worked for at the time, Granta Design, was the first to incorporate the Material Circularity Indicator (MCI) methodology as a prototype within a toolset designed, in close collaboration with leading advanced engineering companies, to evaluate the environmental, legislative and supply risks of products. Here it benefitted from the substantial materials, processing, environmental and regulatory data already incorporated within the product and its web-based access made it readily usable by a broad audience.
Screenshot of the Granta Design BoM Analyzer
Since publication, the methodology has also been incorporated into several other leading commercial tools including the GaBi Circularity Toolkit by thinkstep and various in-house tools that I’m aware of. Regional industries are starting to adopt it to benchmark their products, for example I’ve been informed that the Dutch Green Building Council have started incorporating the approach within their Inside Inside database of sustainable interior products, balancing MCI against Environmental Product Declaration (EPD) data. Several european research projects I’m aware of have also incorporated it, often in an excel format, to benchmark the outputs of their project or to teach young researchers about circular design.
Circular Bio-economy.
The one significant component that the 2015 methodology didn’t cover was biological materials. The limited budget and time available to us and the apparent complexity of biological cycles was considered too much to address within the project, this has however since been incorporated into the methodology by a 2019 revision I led with the assistance of a group of circular economy leaders within the CE100 - you can read more about that update here.
Material Circularity and Life cycle assessment.
One of the things we noticed when we started to use the circular economy metrics methodology in test cases was that we didn’t always observe the environmental benefits we expected from the model. It turned out there was a methodological gap between the typical deployment of life cycle metrics (energy and CO2 for example) and the multiple lifecycle approach of the circular economy.
If we take, for example, the redesign of a product to enable reuse, we might expect to use a material that, by its nature, has a higher embodied energy - more durable materials do often require more energy to produce. The environmental impacts of the first lifecycle of the product might be higher as a result of this, but the impacts of the second (and subsequent) lifecycles would be substantially lower due to the reuse model. At some point the average impact per lifecycle would, we hope, reduce below that of the linear product and we would end up with an overall better outcome. To assess this though, we need to expand the boundary conditions of our life cycle assessment (LCA) to consider all of the lifecycles of the product. We would also need to factor in the additional transport, logistics, disassembly, replacement of components, etc. required to recover the product and return it to use… We actually ran a follow on project with the Ellen MacArthur Foundation called ResCoM in which we explored how to achieve this - I’ll cover more on that in a later post.
This multiple lifecycle approach brings to light the important question of when the Material Circularity Indicator is used. Do we apply it during the design phase, when we won’t know for sure how our product will perform out in the field, how many products may fail or be lost from our model will significantly change the result. If we apply it retrospectively then the marketing benefit from our circular design has been mostly lost.
This is a topic we returned to repeatedly over the years (particularly when discussing future certification schemes) and my opinion remains that it needs to be both.
If we imagine our transition from a current linear product model towards a future circular model, our actual circularity at the design stage is an aspirational one that depends upon the product design but also has to factor in the business model, consumer behaviour, legislative and supply chain changes, government policies… we can assume these, but we can’t know for sure that our product will be as circular as we design it to be at that stage. I would argue however that there should be a recognition at that stage for the aspiration of our circular system design, for what we are setting out to achieve.
We should however also follow that up with a measure of how our designed system is actually performing in real life. As we deploy the product in the field, we should be looking to gather data on product returns, failure rates, supply chain transport impacts and costs… From this, we can build a picture of how well we are realising our circular design and, hopefully, take corrective action, if needed, to realise our circular economy vision as a reality. Many of the systems we would require to gather the data needed for this exercise already exist, but are not yet being deployed towards this objective.
The Circularity of Companies
The Material Circularity Indicator (MCI) methodology was primarily aimed at evaluating products, but there was strong interest in being able to evaluate companies, regions and countries as well. We managed to incorporate the company level assessment by including aggregation approaches which treated companies as the sum of their products (a product in this case not necessarily being limited to something the company produces and sells). The approach certainly works and to my mind should be scalable to regional level. To take this approach does however require substantial analysis at the product level. It is understandable that for some companies a lighter approach is preferable - although I would maintain that such a lightweight, qualitative approach would undoubtedly also miss many of the opportunities for economic and environmental gain that the circular economy is meant to deliver.
The Ellen MacArthur Foundation has recently created a ‘Circulytics’ methodology, that takes its lead from this more detailed, product oriented methodology, in order to provide a benchmark that works at the company level with a lower level of input data required. Ultimately though, it is difficult to know how circular you are being without data to inform your assessment, or to verify your claims.
I for one am confident that the future of the circular economy will undoubtedly have a place for companies, tools and frameworks to improve supply chain reporting of the provenience, composition and even the emotional associations of the objects we manufacture and use from day to day.
Overall, developing the Material Circularity Indicator has been a great initiative to be a part of and I’m proud to see the methodology out there and being adopted, we had a great team, the project was a lot of fun to deliver and I would like to take the opportunity to thank all of those involved.