Harmonizing Metrics to Measure Circularity A Call to Action 2024

Introduction: The circular economy implementation gap CE strategies that aim to decouple economic growth from resource consumption are gaining traction. This can be observed at all levels, from businesses to governments and intergovernmental organizations across the globe. Countries including Brazil, Chile, China, Japan, Rwanda and South Korea have recently enacted CE action plans, as has the European Union (EU). Nearly 60% of businesses that have circular commitments have made them in the past two years. Nevertheless, a significant gap remains between intent and implementation. In fact, the global CE rate has declined from 9.1% to 7.2% over the past six years, according to the Circularity Gap Report 2024.2 While there are many barriers to the implementation of the CE, these are reinforced by the lack of universally accepted definitions, standardized metrics and harmonized regulatory frameworks. Without these, businesses and governments cannot track their progress, initiatives cannot be benchmarked and compared with each other, and investment cannot be deployed optimally to reward the most effective methods. Non-governmental organizations (NGOs), international organizations (IOs) and standard-setting organizations have made efforts in recent years to bridge this gap and lead the international community towards harmonization – a complex but much-needed exercise. This briefing paper examines the current landscape of CE metrics by reviewing existing literature and utilizing a novel industry survey of 400 companies, complemented by expert consultations with standard-setting organizations and key stakeholders. This paper does not aim to re-examine existing metrics and indicators;3 rather, it focuses on high-level challenges pertinent to decision-makers. It identifies key gaps and challenges in existing metrics and proposes recommendations for creating harmonized, impact- driven CE metrics. Such metrics are crucial for overcoming implementation barriers and advancing CE across industries and regions, ultimately supporting a more sustainable and climate-resilient future. Additionally, the paper highlights the need for enhanced cohesiveness among stakeholders and advocates for a collaborative approach to metric development that will drive effective circularity practices and facilitate global progress towards sustainability objectives.The circular economy (CE) presents a transformative opportunity by promoting extended resource use and sustainability, yet the lack of standardized and harmonized metrics remains a significant challenge. Circular Economy and Resource Efficiency Principles (CEREP) BOX 1 CEREP is a set of principles adopted at the G7 Ministers’ Meeting on Climate, Energy and Environment under the Japanese G7 Presidency, and later endorsed at the G7 Summit in Hiroshima, Japan. CEREP recognizes the role of businesses in expanding circular economy and resource efficiency across value chains and sectors globally and details the importance of enhancing monitoring and reporting. “Principle 5. Enhancement of Monitoring and Reporting: –Incorporate circular economy and resource efficiency in corporate-wide information disclosure including sustainability reports to facilitate engagement with the financial sector and the public in a transparent manner on areas such as value creation, business models, risks and opportunities, impacts, strategy, indicators and targets, and governance. –Monitor and take stock of the progress on circularity and resource efficiency along entire value chains based on identified relevant indicators.”Source: Circular Economy and Resource Efficiency Principles (CEREP), 2023 Harmonizing Metrics to Measure Circularity: A Call to Action 6