A circular economy is an economic system aimed at eliminating waste and promoting the continual use of resources through practices such as reducing, reusing, and recycling. Its metrics measure performance in the areas of material circularity, resource efficiency, and waste prevention. They enable businesses and policymakers to make informed decisions and accelerate the transition to a more sustainable and resilient economy. We will explore some key metrics that will help you assess the resourcefulness of your business.
Circular Economy Metrics and Resource Use Indicators
Circular economy metrics offer a different lens through which to view economic performance. Rather than focusing solely on the volume of economic activity, these indicators measure how efficiently resources flow through economic systems, how effectively individuals convert waste into value, and how resilient resource disruptions make supply chains. The following are some of the metrics your business could consider:
Resource Productivity
To calculate your firm’s resource productivity, divide your total sales by the mass of non-recycled material. Higher resource productivity indicates your firm generates more value per material used and allows your business to match efficiency targets.
Product Recyclability
Product recyclability represents the share of a product that someone can reuse or recycle after use. High recyclability lessens your firm’s impact on the environment. Your customers can return used products as part of a potential reward program, which not only boosts recycling rates but also ensures that your product’s lifecycle remains high, which is a key element when working under a circular economy.
Percentage of Renewable Energy
Tracking this metric helps your firm rely less on non-renewable resources such as petroleum and fossil fuels. The U.S. Environmental Protection Agency (E.P.A.) targets specific consumption goals for companies to meet before transitioning to renewable energy. Firms aim to increase their use of renewable resources to meet sustainability goals.
Warranties
Your product’s warranty period will act as a proxy for its durability and long shelf life. Having a longer warranty period means the consumer reuses, repairs and remains confident in its longevity. Encouraging customers to use your product for as long as possible reduces the amount of waste generated.
As more businesses become environmentally conscious and use the circular economy framework, their metrics become essential tools for macroeconomic management and assessment of resources. The gradual transition to this framework is not just an environmental imperative but an economic necessity for maintaining stability and prosperity in an increasingly resource-intensive world.
