Measuring the development of circular economy Preliminary study on national level barometer for circular economy Gaia Consulting 4.9.2015 Päivi Luoma, Lauri Larvus, Mari Hjelt, Minna Päällysaho ja Maija Aho

1. Measuring the development of
circular economy
Preliminary study on national level barometer for circular economy
4.9.2015

2. 2
Contents
1. Background
2. Objectives of the study
3. What is Circular Economy?
4. Criteria for an informative barometer
5. Perspectives and indicators of circular economy
6. Conclusions

3. 3
Background
• The need for tackling climate change and saving natural resources has
generated one of the fastest growing business areas in the world, circular
economy
• The potential increment value of circular economy for Finland is estimated to
be approximately 1,5-2,5 billion euros
• Circular economy is one of the key areas of Sitra’s (The Finnish Innovation
Fund) operations (more information www.sitra.fi)
• Across countries, green growth and circular economy indicators are
developed by differend organizations and actors e.g. Ellen MacArthur
Foundation

4. 4
Objectives of the study
• The objective of Sitra is to forward circular economy by building a roadmap with
other Finnish actors to ease moving towards circular economy
• The pursued change will also generate a need for measuring and monitoring
circular economy
• The objective of this pre-study is to suggest ideas about the preliminary content
and execution of the barometer measuring and indicating the development of
circular economy
• In this study, barometer is a comprehensive set of indicators that reflects
the development of circular economy in Finland
• The study was completed by Gaia Consulting Oy over June – August 2015
(www.gaia.fi)

5. 5
What is Circular Economy?
• Minimizing and cutting out material loss and waste streams
• The value of materials and goods remains and circulates – they
will be shared, reused and recycled
• Matter will be replaced with services
• With circular economy, used natural resources and other
resources will generate as much well-being as possible
More about circular economy from Sitra’s web page
http://www.sitra.fi/en/ecology/circular-economy

6. 6
Criteria for an informative barometer 1/2
• Describes the current state and development and gives a versatile picture
of circular economy and, at best, also indicates its future potential
• Summarizes the issue in reasonable amount of indicators
• Is at least partly based on available information, but is also able to bring
up new measurable indicators as well
• Enables international comparison
• Offers useful information for policymakers and media

7. 7
Criteria for an informative barometer 2/2
• Indicators already used in different contexts,also have aspects of circular
economy, but not all perspectives of circular economy appear in these
indicators
• Circular economy usually appears in the interfaces, which could be a
challenge for gathering statistics
• Circular economy usually comes with different trade-offs in social and
environmental impacts. In its best, an informative barometer would explain
also these trade-offs.

8. 8
Perspectives and indicators of circular economy

9. 9
Essential perspectives of circular economy
1. Use of natural resources and resource productivity
2. Material cycles
3. Consumption
4. Business, concepts and innovations
5. Changes in national economy and society
6. Drivers and enablers The most important building parts for a
barometer are the essential perspectives of
circular economy, the development of
which the barometer should indicate. These
perspectives should describe the contents
of circular economy and help to understand
its dynamics.

10. 10
Essential perspectives of circular economy
Business,
concepts and
innovations
Consumption
Changes in
national
economy and
society
Drivers and
enablers
PEOPLE
COMPANIES AND
ORGANIZATIONS
SOCIETY
Material
cycles
Use of natural
resources and
resource
productivity
IMPACTSONENVIRONMENTANDWELL-BEING

11. 11
Alternative indicators
1. Use of natural resources and
resource productivity
• Indicators reflecting total consumption of
natural resources
• Indicators reflecting resource productivity
• Indicators reflecting the use of non-
renewable and critical natural resources
2. Material cycles
• Indicators reflecting material loss
• Indicators related to nutrient cycles
• Indicators related to water cycles
• Indicators related to energy
• Indicators related to materials’ life cycle

12. 12
Alternative indicators
3. Consumption
• Food related resource consumption
indicators
• Living related resource consumption
indicators
• Mobility related resource consumption
indicators
• Other consumption indicators relevant to
circular economy
• Indicators reflecting household costs related
to consumption
• Values and attitudes related to consumption
4. Business, concepts and
innovation
• Amount of business, investments and
export related to circular economy
• Lifetime of products, sustainability and
product design
• Circular economy innovations
• Values and attitudes related to business

13. 13
Alternative indicators
5. Changes in national economy
and society
• Indicators describing the structures of
national economy
• Efficiency of land use
• Circular economy in social media and
internet
6. Drivers and enablers
• Price development of raw materials
• Regulation
• Digitalization

14. 14
Conclusions

15. 15
Conclusions
• Circular economy is a multi-dimensional concept with no clear definition. In addition,
information describing circular economy is limited. Therefore, forming the comprehensive
barometer for circular economy is challenging.
• Many of the phenomena related to circular economy occur primarily at micro level, indicating
the changes taking place in company level and behavior of individual consumers. These
changes are difficult to measure at national level.
• Many indicators seem to work better for recognizing opportunities and following the temporal
changes than enabling international comparison between countries.
• In addition to suggested indicators for the barometer, it is also important to recognize the
impact on environment and well-being, which are the objectives of the circular economy
(these impacts can also be negative).
• The impact path from circular economy’s phenomena and activities to its results should be
clear. Otherwise, the developed indicators might describe more other phenomena than
circular economy itself.

16. 16
Potential indicators for further development (1/2)
1. Resource productivity, which describes the value derived from the use of natural
resources. International comparison using traditional resource productivity indicators is
challenging. Therefore, more sophisticated indicators that include the consumption of
renewable and critical resources are needed.
2. Material loss is describing resource losses in material cycles. Material loss indicators
include e.g. landfill material flows, incineration of non-renewable materials and community
waste. In addition, an indicator for nutrient loss should be developed. Food loss can indicate
consumer behavior and resources lost in the food chain.
3. An indicator reflecting values and attitudes towards consumption and new ways of
consumption that indicates changes on consumer behavior (e.g. collective ownership,
sharing and recycling) now and in the future. This requires further development for
recognizing the right indicators and information sources since established specification,
indicators or information sources do not exist in this field.

17. 17
Potential indicators for further development (1/2)
4. Defining and measuring business related to circular economy is challenging, but
necessary in order to understand the potential related to growth and social significance of
circular economy. The challenge is that circular economy usually occurs in the interfaces
between companies and industries. One possible indicator could be related to visibility and
meaning of circular economy in social media.
5. Sustainability of material cycles to describe the length of material cycles and increase
the understanding about life cycles of materials and products. This indicator requires further
development, but one option could be to monitor the life span of chosen products.

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