Quantifying the circular economy: Global circularity is low and has gone into reverse
Circle Economy’s investigation into circularity paints a bleak picture, but the power of countries can be harnessed to change the game
It’s difficult to put a figure on global circularity, but not impossible. In fact, the world is 8.6% circular, finds Netherlands-based impact organisation Circle Economy’s latest report. Launched during The World Economic Forum (WEF) in Davos in January, the Circularity Gap Report (CGR) 2020 presents hard truths; circularity is not just low, but it’s gone into reverse. In the initial CGR launched in 2018, global circularity stood at 9.1%. As well as present the core findings of the groundbreaking report, this article seeks to further investigate this quantification of circularity and asks, how important is it for us to quantify our journey to a circular economy?
“In this critical time, we see a lot of vision and bottom-up movement all going in the right direction, but what we don’t have in place yet are the metrics by which we can really steer action. We need to see where the big levers and interventions lie in the system, which we can target for change. For that, however, we need a measurement for progress, as well as a stronger evidence base to see where the bang for the buck is,” says Marc de Wit, lead author of the report, in an exclusive interview.
From niche to centre stage
The increasingly ubiquitous nature of circularity commitments is undoubtedly driven by the mounting level of urgency concerning the degradation of planetary health. Scientific proof of the impact our linear tradition has on the environment and humanity is mounting, and politics- and business-as-usual is no longer a viable option.
The circular economy model has transitioned from the fringes of academic conversation to be firmly lodged in the future blueprints of some of the highest-grossing global companies, as well as across national governments and multilateral organizations. European Commission President Ursula von der Leyen wasted little time in her new post before bringing the Green Deal — which details a plan to create the world’s first carbon-neutral continent and places circularity at its heart — to the table.
This top-level engagement comes as bottom-up activism has also undergone a revival. A swell of climate consciousness has occurred amongst the future voters of generation Z who dare to slam the reluctance of states to “listen to the science”. The movement was partly inspired by the example of teenage activist Greta Thunberg who was even named Time’s Person of the Year in 2019 and has been nominated for the prestigious Nobel Peace prize — twice.
As 2020 began, Circle Economy’s latest CGR may have presented some bleak facts, but it also brings a number of core platforms for change to the fore. Alongside the tangible communication of measurement of circularity, it pushes forward an agenda and action plan for transitioning to a circular economy by identifying the pivotal role of nation-states in working to increase the scant figure of 8.6%. No country is meeting the basic needs of its citizens, whilst also operating within the physical boundaries of our planet. “We are all developing countries now,” says the report. The momentum is there, the numbers clear; the time for action now.
The circular economy: a means to an end
A fully-fledged circular economy minimises waste and makes the most of resources. In such a system, resource input and waste, emissions and energy leakage are reduced by closing or narrowing material loops and associated energy consumption through repair, reuse, remanufacturing, recycling or long-lasting design, for example.
The fact that the circular economy is thoroughly embedded within other ascents for sustainability, such as a low carbon future, is increasingly understood. In fact, the goal of the Paris Agreement to limit global warming to 1.5°C above pre-industrial levels can only be achieved by way of a circular economy. The circular and low-carbon agendas are complementary and mutually supportive, the report explains.
But crucially, Circle Economy highlights how the transition to circularity is a means to an end and plays a pivotal role in not just environmental degradation, but also social inequality. The end goal is to establish an ecologically safe and socially just operating space (safe and just space) for mankind. (a)
In this way, the move from linearity to circularity is thoroughly couched as a bridge to an ecologically safe and socially just space. But this transition needs structure as real progress is difficult to gauge, and many are fatigued at the slow rate at which countries scramble to reach, or continue to renege, multilateral agreements that hope to push the environmental agenda forward and result in concrete outcomes. Key examples here include the Sustainable Development Goals (SDGs) and the Paris Agreement.
Conceptual notions may help facilitate rising awareness and galvanize discussion, but integral to bona fide progress are numbers — in other words, metrics and measurements. Or, as Circle Economy has christened its measurement of circularity: the Circularity Gap Metric (CGM).
8.6% — how and why?
Of all the non-metallic minerals, fossil fuels, metals and biomass that enter the world’s economy each year, just 8.6% are cycled back. This number is the CGM, which is the result of Circle Economy’s methodology that extrapolates how resources flow around the global economy, as well as how they satisfy certain societal needs, and to what rate they are wasted or cycled back into use. The team does this by using a Material Flow Analysis (MFA) and Sankey diagram to display the transformation of natural and secondary resources into societal needs and wants, such as housing and nutrition.
Providing a year-zero baseline measurement for the circularity of the global economy offers many advantages. “Having metrics is very important in the transition to circularity in order to monitor progress and provide a more tactile approach and a performance indicator for something as abstract as a circular economy,” says Michelle Steenmeijer, a data analyst at Circle Economy and contributor to the report.
Key to Circle Economy’s mission is translating the state of circularity to a large range of audiences. In this way, a single metric aptly communicates how far we are away from achieving a circular economy and helps to amplify calls to action.
But, in sourcing a powerful overarching metric, there are limitations to consider. This is because when it comes to consolidating the performance of an entire global economy which is full of intricacies, simplifications are required and certain complexities may not be fully represented.
“The circular economy hinges on slowing, narrowing and closing flows. If all these dynamics happen to their capacity, it will contribute to the head indicator. But to what degree they do so separately is not represented in the metric. It’s a high-level measurement that first and foremost serves the purpose of driving people to action,” Steenmeijer explains.
It is crucial to accompany the performance indicating metric with contextual figures to complete the story and unveil the complexities behind the situational measurement. This is because the metric considers the relative size of cycled materials as a share of the total material input.
Depicted in dramatic graphic productions in the report, the findings show that total resources entering the global economy have increased by 8.4% in just two years from 92.8 billion tonnes in 2015 to 100.6 billion tonnes in 2017, the latest year for which figures are available.
In that period, total extracted resources have increased by 9%, from 84.4 to 92 billion tonnes. But the total of materials that are reused has grown by just 2%, from 8.4 to 8.6 billion tonnes, and fallen as a proportion of overall material use. This shows that our demand for materials cannot nearly be satisfied with recovered materials, and we have a long way ahead to reach a balance.
Overall, the global use of materials has nearly quadrupled in 50 years, from just 26.7 billion tonnes in 1970. Amazingly, it is forecast to rise to between 170 and 184 billion tonnes by 2050.
8.6% — what now?
Circle Economy’s work contributes to the emerging evidence base that supports decision-makers in business, politics and civil society with key insights and metrics to guide their action in the most impactful way. In particular, it seeks to move thinking on global circularity in the direction of better measurement, so as to be able to set targets uniformly and track progress consistently year-on-year.
“The transition to a global circular economy will continue to require new data and metrics to enable public and private sector leaders to make the best decisions. This Circularity Gap Report is another step forward, providing leaders with data and insights on how to understand national-level circularity and possible ways to cluster, learn from similarly-situated countries, and better understand their individual and collective transitions,” said David B. Mcginty, Global Director at Platform for Accelerating the Circular Economy (PACE), at the time of the report’s launch.
Such measurement is crucial to measure progress, posits de Wit. “The fact that it is complex shouldn’t be mistaken for the fact that we can’t measure it in easy to understand metrics to see if we are going in the right direction.”
Indeed, the use of circularity metrics are increasing not only at the systems level — in terms of material flows — but also on the business level, such as Ellen Macarthur’s recently released Circulytics, and WBCSD’s Circular Transition Indicators, as well as on the product level, where life-cycle assessment has been the dominant instrument for some time.
Locating patterns in global data
So, how can we begin to tackle this widening circularity gap? The report sets forth that critical facilitators and core enablers of the circular economy are countries — not because of what they have achieved in the past, but what they could deliver in the future.
The report applies further analysis to find where 176 countries sit in relation to circularity and the ecologically safe and socially just space. It does so by comparing social performance indicators determined by the United Nations Human Development Index (HDI) score of the country, with the performance of its Ecological Footprint (EF), an indicator that accounts for human demand of biological sources. This is an existing framework developed by the Global Footprint Network.
Together, the two indicators make up the so-called distance from the safe and socially just space. This “distance” essentially shows how the starting point for each country in its journey toward safe and socially just space is different, and therefore circularity can play a different role in reaching this space.
We are all familiar with the somewhat outdated narrative of “developing” and “developed” nations, but the report introduces a new paradigm: all countries are developing nations in regard to functioning circularly.
“At present, some countries are close, others are far away; each starts from a different point on the map; but, all have a distance to go — all countries are developing now,” reads the report.
But the creation of the accompanying graphic, in between pages 23 and 24, illustrates not only how no country inhibits the safe and just space, but also the sheer diversity between the countries when lined up from least distance to largest distance. “Just as circularity cannot yet be correlated to anything environmentally, socially or economically, the same goes for the distance from the safe space toward where each country is in its economic, social and environmental development,” says Steenmeijer.
The galaxy essentially reiterates a core message from the report; all countries are equal in the transition to circularity. “We are all developing countries and a circular economy is a means to an end for development and for us all to reach a safe and just space. And, to allow the safe and just space to grow bigger, potentially, by growing the earth’s biocapacity per person through improved resource management. This will also make it easier for countries to reach the space. It’s a snowball effect.”
We already know that countries have a pivotal role to play in the global picture, as laid out in the SDGs and the Paris Agreement. Circle Economy also pushes that they offer fertile ground for battling the shrinking circularity gap.
But there is a vast heterogeneity between countries; some operate well within the physical and ecological boundaries of our planet, but without satisfying certain basic needs. Conversely, other countries increasingly provide basic levels, but do so by overshooting the sustainable means of the planet. Therefore, as the circular economy is a means to an end, circular roadmaps must be tailored to country profiles to deliver beneficial social outcomes too.
Build, Grow and Shift
Despite clear divergences between countries, suitable circular economy strategies can be developed based on discernible common needs and structural parallels. These strategies can provide a systemised approach to the transition. The report authors say that to facilitate this move, we need to think in three dimensions: how resource use links to social outcomes via provisioning systems. Provisioning systems comprise both physical and social systems; the former include networks of infrastructure, technologies, and their efficiencies (b), while the latter encompass government institutions, communities, and markets.(c) Provisioning systems are the essential link between biophysical resource use and social outcomes. For example, different forms of transportation infrastructure (railways versus highways) generate similar social outcomes at very different levels of resource use.(d) This is the framework that underpins the key points transition pathways for circularity provided.
Based on the two dimensions of Social Progress Ecological Footprint, countries fall into three broad profiles:
Build — A low rate of material consumption per capita means Build countries currently transgress few planetary boundaries, if any at all. But they are struggling to meet all basic needs, including HDI indicators such as education and healthcare. Region examples: India, Bangladesh, Ethiopia.
Key transition pathways circularity: Design circularity into the building of new stocks by prioritising regenerative resources and design-for-disassembly, for example, empower the informal economy through upskilling and organization of informal workers and build up a sizable sustainable economy, by employing circular agriculture, for one.
Grow — These countries are manufacturing hubs, hosting an expanding industrial sector and leading the way when it comes to building. This rapid industrialisation, as well as a growing middle class, have occurred concurrently with rising living standards. Examples: Latin American countries, China, Brazil.
Key transition pathways circularity: Foster smart consumption by rethinking business models, such as introducing shared-use programmes, design circularity into the building of new stocks and consumer goods, transform the local economy, particularly in terms of waste management, and grow the capacity for renewable energy.
Shift — Home to a minority of the global population, material consumption in Shift countries is 10 times greater than in Build. Their extraction of fossil fuels is relatively high, as is their participation in global trade. So despite high HDI scores which are resulting in comfortable lifestyles, these countries have a way to go in consuming resources in line with the planet’s resources. Examples: United States of America, EU member states, Middle Eastern countries.
Key transition pathways circularity: Lifetime extension, increased material efficiency and adopting shared models will foster smart consumption, take control of the impact of imports and exports on other countries and drive the renewable energy transition.
For a detailed look into the actionable pathways suggested to each country group, you can download the full report here.
The opportunity is real
In response to the report, Carolina Schmidt, Minister for the Environment at the Government of Chile, highlighted that it “sparks an alarm for all governments” and calls for an “array of policies” to be deployed to catalyze the transformation. To echo the report; opportunity is real. And now we have the numbers to back it up.
“We have a choice in determining the pace at which we increase global circularity,” says de Wit. The question is, will it be fast enough?
(a) Raworth, K. (2017). Doughnut economics : seven ways to think like a 21st century economist. White River Junction, Vermont : Chelsea Green Publishing.
(b) Cullen, J. M., Allwood, J. M. & Borgstein, E. H. (2011). Reducing energy demand: what are the practical limits? Environ Sci Technol, 45, 1711–1718.
(c ) Jo, T.-H. (2011). Social provisioning process and socioeconomic modeling. Am J Econ Sociol, 70, 1094- 1116.
(d) O’Neill et al. (2018). A good life for all within planetary boundaries, Nature Sustainability, 1, 88–95.