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As business conversations around the circular economy shift from conceptual aspirations to concrete action plans, leaders are preparing to reshape traditional business models into circular successors. However, the road from intention to implementation is long and complicated, with few points of reference to gauge progress along the way.
Building upon the latest insights from circular economy think tanks and thought leaders, this blog series explores ways in which the circular transformation can be measured at the business level through sustainability performance management systems.
Definition of the Circular Economy
A circular economy is one that is restorative and regenerative by design, and which aims to keep products, components and materials at their highest utility and value at all times, distinguishing between technical and biological cycles – Ellen MacArthur Foundation
Summary: As waste recovery and recycling processes improve, businesses require additional indicators to gauge and enhance their performance as part of a broader system. This need can be met by adding selected destination and recyclability indicators to existing sustainability performance management systems.
The business case
Waste equals food. A concept that is by no means new, but one that is being reinvigorated across businesses with increasing speed and scale. The renewed focus on recovery and recycling systems (see box below) can be attributed to three key trends:
- Resource price volatility is underscoring the need for the end-of-life material reuse in order to reduce business exposure to escalating feedstock costs.
- Improving recovery processes are increasing the quantity and quality of recycled materials and components, and also making them financially attractive.
- Customer acceptance of post-consumer material and second-life components is increasing, enlarging the range of products in which they can be used.
What is recovery and recycling?
- Products are designed to be recovered at end-of-life so that their components and materials can be reused.
- Businesses facilitate end-of-life recovery through infrastructure installation and customer behavior change.
- Residual waste (non-reusable materials or components) is down-cycled or sent to energy-from-waste facilities.
The challenges ahead
Whilst recovery and recycling is advantageous across many sectors and communities, there are still barriers to achieving wide-spread business buy in.
- Legacy design approaches around ‘single use’ can restrict the potential for end-of-life products to be separated into recoverable components and materials.
- Complex materials (monstrous hybrids) may preclude a material or component return to the technical or biological spheres for effective recycling.
- Underdeveloped recovery infrastructure may reduce the commercial attractiveness or environmental benefits of material recovery to a point that it is no longer viable.
Despite the challenges stated above, the business case for recovery and recycling remains strong. However, to facilitate its broader adoption, additional recovery and recycling focused indicators are required. Therefore, the remainder of this post proposes a response to the question ‘which indicators can be added to sustainability performance management systems to measure recovery and recycling?
The strongest opportunities for the addition of recovery and recycling indicators are found in the ‘Destination’ and ‘Recyclability’ categories (see heat map below – as explained in the first Circular Optimisation blog). This alignment has been proposed due to the fundamental importance of product location at end-of-life, and in turn the recyclability of its components and materials.
Establishing circular indicators
Note: defining the scope of analysis is a critical preliminary step prior to adding circular indicators.
Measuring recycling rates is standard practice for many businesses. However, existing indicators tend to focus on impacts within the organisational scope instead of measuring system wide benefits. To measure progress towards circularity this needs to change, as within a circular economy comprised of interconnected waste flows, recovered products may not be returned to their original source. Yet, through a sequence of events, the value of their recovery will.
With a systems perspective in place, indicators can be introduced to measure the proportion of a product portfolio that is suited for third party recovery destinations such as household recycling bins, community recycling banks or specialist facilities. Measuring (and improving) product suitability for these destinations is essential to creating the closed loop material flows upon which businesses can, in the long term, collectively depend for continuous feedstock supply.
In parallel, a set of indicators can be used to identify the segments of a product portfolio that retain their recyclability as they progress through manufacturing stages. This can reveal the segments of a product portfolio where (a) efforts to ensure end-of-life recovery should be prioritised and (b) where product design or manufacturing processes can be modified to improve recyclability.
In instances where products with high recyclability are also highly suitable for recovery destinations (and their delivery to such destinations is highly likely) indicators can be used to infer the avoided landfill contributions or embedded energy losses through completed recovery and recycling.
Setting circular targets
With a systems view, and corresponding recovery and recyclability indicators in place, organisations can set measurable targets to benchmark, monitor and improve performance. Examples of this could be:
Increase the proportion of a product portfolio that is suitable for mainstream recovery destinations
Increase the proportion of finished products with high recyclability
Reduce waste sent to landfill through improved likelihood of products being delivered to end-of-life recovery locations
Closing the loop
Many businesses already benefit from a range of recovery and recycling indicators. What is now needed is to elaborate on these, and in doing so, harness the data gathered through sustainability management performance systems to improve performance within a broader system of recovery and recycling.
Leigh Carter is a consultant at UL EHSS and holds an MBA in Sustainability. His main business area of interest is operational sustainability within organisations.