A round ruler: how to measure the circular economy

There is a well used phrase amongst management consultants that is usually a derivative of “What you can measure you can manage.” As I build complex models of environmental impacts for a living, I fully buy into the aspiration of these words, measuring complex environmental impacts help people manage them.

In practice I am not always so sure - usually at 11:35pm - when a particular bit of analysis seems to not make any sense, I occasionally wonder if I have fallen into the trap of the pantometrist. Is this counting for the sake of counting?

Do current measurements of the circular economy fall into this same trap? What are you measuring? And if you cannot measure it how are you going to manage it?

There are a number of metrics that have been proposed as a basis for measurement. Zero Waste Scotland has done some good work looking at the greenhouse gas emissions from waste management. The Ellen MacArthur Foundation have looked at the circularity of materials in businesses and built a circularity index. EU and UN statisticians have built environmental accounts using material flows through economies.

All good suggestions, but are they up to the job?

Let’s consider a practical question for a physical product like a washing machine. Firstly, I will need to analyse the different strategies for the product – the impacts of re-use, refurbishment, remanufacturing and recycling, as per the diagram below. I need to work out which of these will be better, when should an old machine be remanufactured rather than refurbished for example?

Circular economy

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Secondly, I have different impacts to consider. I need to analyse water use, GHG emissions, and perhaps other pollutants. I may even need to trade off improvements in GHG emissions against water and material use. Thirdly it is the circular economy– what economic measures should I be collecting and measuring?

None of the methods mentioned above can really meet this challenge. Whilst material use and its circularity might help create less waste, will they deliver GHG savings? How do these compare against the water impacts of each approach? Do they include the economic impacts?  

Natural capital accounting

The emerging field of natural capital accounting might have an answer. Here impacts can be valued to enable comparison between different environmental impacts. It can be applied to complete value chains from extraction to disposal, it uses consistent units to enable me to analyse trade offs between impacts.

At PwC, we use natural capital accounting in our Total Impact Measurement and Management (TIMM) framework. An example TIMM wheel is shown in the diagram below. This enables us to compare different types of environmental impacts alongside social and economic effects of each option.TIMM tool

This means we can choose the best options to build a more circular economy. I will have moved from pantometry to purpose!

I think this approach can help companies reduce environmental impacts, avoid options that do not deliver benefits, and optimise investment in the circular economy. If you would like to find out more, I am presenting these ideas with some PwC colleagues in a workshop at the Resource Event at ExCel in London on March 8th.

Workshop title and description: Optimising the circular economy – how can natural capital accounting help

Date: Tuesday, 8 March 2016

Timing: 15.30 – 17.00 (1.5hrs)

Registration: is open here on the Resource website. You will need to register online to attend this event.

 

Henry

Henry le Fleming, PwC

Sustainability and Climate Change - www.pwc.co.uk/circulareconomy

+44 (0) 207 213 4097 | [email protected]