Harmonizing Metrics to Measure Circularity A Call to Action 2024

Key challenges in advancing circular economy metrics and implementation TABLE 2 1. Multiplicity of CE definitionsVaried concepts and definitions: CE encompasses multiple interpretations, with both established principles and emerging concepts. This variance complicates the development of globally accepted definitions and boundaries, making consistent measurement of CE activity and impacts difficult. Difficulty in achieving consensus and harmonization: Stakeholders face challenges in aligning on CE metrics and standards due to differing priorities, definitions and approaches. 2. Complexities in translating CE metrics into impact proxiesDisconnect between circularity and impact: CE metrics are often treated in isolation, or as process-driven metrics, and not clearly linked to measurable environmental, social or economic impacts. Difficulty in measuring regenerative effects: CE metrics may fail to capture the regenerative effects for nature and ecosystems into long-term positive environmental outcomes and their compounding impacts. Incomplete life-cycle data: Metrics often prioritize waste management and recycling over strategies like reuse, repair and remanufacturing, leaving gaps in understanding the full impact throughout life-cycle phases.6 For example, trade-offs made during the design phase, which affect the entire life cycle, such as balancing weight reduction with durability or lifespan extension with ease of disassembly, may not be captured. 3. Lack of harmonization on metrics and standardsDiffering regulatory requirements: Regulatory frameworks vary across regions and institutions, leading to inconsistent accounting methodologies that complicate compliance for businesses operating in multiple jurisdictions. Evolving standards and metrics: Rapid technological, market and regulatory changes make it challenging to maintain relevant and consistent metrics. Inconsistencies in measurement and reporting: Diverse methodologies and reporting formats hinder benchmarking and data aggregation. For example, while carbon accounting is becoming increasingly relevant for ensuring consistency in reporting across borders, the GHG Protocol is currently undergoing revisions to better measure circularity and account for CE considerations through trade-related climate policies such as the EU’s Carbon Border Adjustment Mechanism (CBAM). Supply chain complexity: Variations in how materials and products are traced across supply chains create challenges in accurately measuring circularity impacts, such as emissions reductions and resource savings across multiple product, component and material life cycles. 4. Data acquisition and credibilityMultidimensional nature of circularity: Capturing comprehensive data across material flows, energy use, waste management and life-cycle stages is a complex process, which requires robust methodologies. Integration challenges: Implementing CE practices requires significant changes in data management, workflows and systems, which can be resource-intensive and face internal resistance. Data accessibility: Measuring circularity across complex supply chains is hindered by a lack of data collection and sharing protocols, insufficient data infrastructure and inconsistent data quality. Policy and data disconnect: Policies designed to extend product life cycles and promote reuse often lack the granular data needed to assess their effectiveness. 5. Misalignment between regulatory and market driversGeographical and legislative variability: CE regulations vary by region, creating a fragmented landscape. Multinational companies need to adjust their supply chains to satisfy local laws, such as trade regulations and waste classifications. Compliance costs: Adhering to diverse regulatory requirements incurs significant additional costs, including administrative expenses and investments in supporting technology infrastructure. Impact on market competitiveness: Regulatory disparities can lead to unequal competition, as businesses operating under stricter regulations bear higher operational costs compared to those in regions with less stringent requirements. Need for economic incentives: Integrating economic factors like cost savings, revenue generation and financial benefits into CE metrics can drive wider adoption of circular practices. Harmonizing Metrics to Measure Circularity: A Call to Action 12