Last reviewed 6 April 2020
Caroline Hand investigates a new tool from the Ellen MacArthur Foundation that can help organisations assess their current initiatives.
The goal of a circular economy is to eliminate waste by ensuring that material resources are circulated for as long as possible. At the end of their service life, products and materials are recovered, refurbished and reused, or regenerated and transformed into another useful material. The circular economy goes beyond the familiar “reduce, reuse, recycle” waste hierarchy by focusing on the design stage, creating products that will have a long life and/or be suitable for remanufacturing, refurbishment or recycling.
A circular economy also encompasses sustainable business models such as “product as a service” whereby customers do not actually own the goods — whether carpets, clothing or washing machines. (See the Circular Economy topic for a detailed background.)
As part of an overall environmental policy, many businesses are seeking to become more circular. But how can they evaluate and measure the success of their initiatives? Circulytics, a new tool created by the Ellen MacArthur Foundation (EMF), enables businesses to see how far they have come on the circularity journey, and to identify opportunities for future progress. This new tool is free to use: the EMF is motivated by a desire to create a circular economy worldwide, and thus conserve the Earth’s resources.
According to the Foundation, “Measurement helps [the transition to a circular economy] by highlighting to companies where they need to focus their efforts/improve relative to their sector and supports them in identifying and building on successes.” Data from participating companies will help the EMF to establish industry benchmarks, and hopefully will also generate helpful case studies to publish on its website.
Circulytics is based on a straightforward questionnaire, accessed via the EMF website. Smaller businesses should be able to complete it in eight hours or less, though larger, more complex organisations will need to set aside as much as 90 hours. Respondents will receive a score card: this gives an overall circularity score, plus scores for two “themes”: enablers and outcomes. The scores range from A+ (most circular) to E. Large businesses, and those who have signed up for the EMF’s CE100 initiative, will also get a free report from an analyst.
The idea is to give feedback not only on material flows (the outcomes) but also on the underlying priorities and structures which determine progress towards a circular business model. These include management commitment, target setting, staff training, investment, infrastructure and interaction with the supply chain (see below). Circulytics complements the two other circularity metrics which are currently available — the World Business Council on Sustainable Development (WBCSD) Circular Transition Indicators (CTI), and the Material Circularity Indicator. Companies can use the same datasets for all three tools.
“Enablers”, according to the EMF, are aspects of a business which allow a company-wide transition to happen. The Enablers score will show how likely a company is to capture circular business opportunities in the future.
The Enablers theme is subdivided into five categories, as follows.
Strategy and planning. Have you placed circularity at the heart of your business strategy? For example, have you drawn up a SMART target relating to circularity? Targets may relate to a number of areas, including innovation, corporate strategy, production and sales. If there is a target, do you also have an implementation plan to achieve it?
People and skills. Have you employed the skills and people required to transition to a circular business model? How are your circular initiatives communicated to staff, is training in place? Do you have any members of staff working at least part time on circularity?
Systems, processes and infrastructure. Have you invested sufficiently to support the change? Have you acquired the IT systems necessary to set up a circular business model, such as software with the ability to track materials, components, and products? This category could include reverse logistics, onsite waste collection, adaptation of equipment to use recycled packaging materials, etc.
Innovation. Are you developing new circular products, systems or services? How far is your R&D department, or product development function, geared towards circular solutions?
External engagement. Are you promoting your circular initiatives and influencing those in your business sphere such as the supply chain and customers? Do you interact with policymakers? Do you engage with investors to finance your circular economy initiatives?
The Outcomes score quantifies the “nitty gritty” of current material flows. Some of the questions relating to Outcomes are as follows.
Are your raw materials sustainably sourced?
Do you make use of recycled materials?
Are any of your biological materials (eg compost) sourced from waste?
What proportion of your energy usage comes from renewables?
How much of your waste is disposed of to landfill or incineration?
To what extent are your products designed along circular economy principles (eg durable, recyclable)
Do you offer your customers circular business models, eg take-back schemes, “product as service”, repair or remanufacturing?
When your own plant, equipment and other assets reach end of life, are they reused/repaired/ recycled?
The questionnaire is appropriate for service providers as well as manufacturers; businesses answer the questions which are relevant to their industry sector. The Circulytics tool will be updated each year. As yet it is not suitable for government organisations, but this may change in the future.
Experience to date
The Circulytics tool has been tested by over 30 companies, including well-known names such as BASF, Ikea, Solvay and Unilever. Their response has been very positive; Solvay’s CEO commented that “This circularity measurement tool is the most comprehensive tool there is to help businesses lead the transition to a circular economy, rethinking the way we use our resources, enhancing collective intelligence and speeding up innovation in material efficiency.”
The CEO of Hera (a major European utility group) concluded that “We have reached a stage where the need of accelerating and scaling up the transition towards a circular economy has become dramatically urgent, but companies can only improve and innovate what they measure: a far-reaching measurement of circularity is a key lever to enable companies to make a quantum leap.”
A high Circulytics score is likely to enhance a business’s sustainability credentials. The CEO of Teleplan, a large European electronics manufacture, was confident that “Circulytics will provide transparency to our customers about our company’s circular economy adoption.”
How to get your score
The first step is to assign the responsibility of filling in the questionnaire to a named reporter. They will complete the sign-up form on the EMF website. If your application is successful, you will get a link to the survey. You are likely to get your result within a month. The website includes detailed instructions for logging on and completing the survey, and further support is available from the Circulytics team at EMF. Your responses will be confidential, although aggregate data for industry sectors will be published.
For further information, see the Circulytics resources page. The Definitions document is particularly helpful in understanding the terminology used in the questionnaire, and also has links to some helpful case studies of circular business.