Recycling data brings us closer to measuring circular business

2020-02-20 Heidi Pirtonen and Niko Olsson

How can the expansion of circular business be measured? Measuring is an important tool for monitoring and, thus, managing change. However, measuring is not possible if we do not know what exactly it is that we are supposed to measure.

There are many definitions of circular economy, and the words reduction, reuse and recycling come up often. Innovations and questions related to renewable energy are also often seen as key factors. The diversity of the definitions and the lack of practical information, however, pose challenges in terms of measuring. We must first define circular economy and circular business next.

At the beginning of 2019, Statistics Finland initiated a project to develop indicators of circular business as part of the Circwaste project. An extensive collection of indicators, presenting data from a regional perspective where possible, will be completed by the end of 2020.

The objective is not to build one all-encompassing indicator that would be difficult to interpret and might not yield any practical information. The best way to describe such a wide phenomenon is to observe it from several perspectives. The collection of indicators will be assembled from existing statistics, meaning that the project will actually recycle data in line with the theme!

Monitoring progress fascinates everyone

Around the world, different actors are trying to measure circular economy. However, no one has yet been able to develop a consistent method of measurement. Eurostat, for example, uses ten indicators to measure circular economy. The indicators describe various sides of circular economy, such as production, consumption, waste management and recycled materials as well as economic perspectives, such as funding, jobs and innovations.

The UN, in turn, has published a well-known set of sustainable development goals with a collection of indicators consisting of hundreds of key figures to measure said goals. While the sustainable development indicators do not directly measure circular economy, some of them are related to it and some are consistent with the Eurostat indicators.

We have used the indicators of both Eurostat and the UN in forming our own collection of indicators.

Widespread phenomenon requires many indicators

As the project has progressed, we have heard some key stakeholders, and subject matter experts from Statistics Finland have assisted in outlining some of the indicators. We started to make circular economy more tangible by thinking about the different functions included in circular economy. We then outlined preliminary indicators on the basis of these functions.

The functions and indicators are described using a ring-shaped model. The ring consists of various sections: design, extraction of materials, production, logistics, commerce and services, consumption, waste, reuse and recycling, energy and funding. We must note that different subsections may overlap. 

The indicators describe circular economy from different perspectives and are not mutually commensurate or equally important. The indicators should be reviewed not as separate measurements but as a more extensive whole; a reduction in overall waste volumes or landfill dumping, for example, reveals very little of circular economy. In fact, several indicators emphasise decoupling; it must be possible to connect the figure to economic development, for example. As a result, we can ensure that a fall in waste volumes, for instance, is not the result of a dwindling economy but of changes in economic structures and operating methods.

Measuring circular business is a challenge

Measuring circular economy and related business is by no means a simple task. During the project, we have identified a number of challenges, including the lack of practical definitions and the incompatibility of statistical information and classifications for measuring circular economy. In the future, more work will be needed to further develop and expand the indicators.

However, there is great need to measure circular business. Measuring and the resulting monitoring of changes help support decision-making and the promotion of circular economy, amongst other things. Hopefully, the definitions can also be utilised outside of Finland.

Statistics Finland will continue searching for the indicators, and stakeholders will also be heard during 2020. Even though we are producing an extensive collection of indicators during the project, they do not have to be final by any means. We hope the collection will be a flexible and developing package that takes user needs into consideration.

Senior Statistician Heidi Pirtonen and Senior Statistician Niko Olsson, Statistics Finland

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