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Part 1: Thought Leadership: Dr. Jim Goddin, Technical Director Circular Economy

Part 1: Measuring Circularity | IS Thought Leadership By Dr. Jim Goddin, Technical Director Circular Economy

The circular economy has gained considerable traction over the past decade, its economic focus breaking through organisational barriers in a way that the environmental focus of previous incarnations was unable to before.
At its core, the circular economy has a systems focus, considering not just a product, but the service that the product provides, the supply chain that enables that service and the broader economic, environmental and social impacts of the system.
The idea behind the circular economy is to substantially decouple the economic growth provided by these system services from the outdated linear 'take-make-dispose' economy and all of the risks that this brings with it. Such risks include the climate change and ecosystems damage that we’re all familiar with.
Businesses also face their own set of existential threats. Economic risks associated with price volatility, supply chain disruptions from extreme weather or geopolitical events, prohibition of chemicals upon which entire industries have been based, conflict minerals, and extended producer responsibility play a role in the growing willingness to place Environmental, Social and Corporate Governance (ESG) at the heart of investment decisions.
Coupled to some of these risks is the fact that ore grades for many of the everyday materials we use have been in long term decline. Producing new materials now takes more energy and results in more spoil and other waste. This continuing trend applies to many, if not most, of the materials we use today.


Image: An illustration of the decline in ore grades, G. Mudd, Monash University

At the same time, the demand for resources grows, driven by an emerging middle class aspiring to the lifestyle that developed nations have become accustomed to, a lifestyle enabled by overconsumption. Since the start of the 20th century, the demand for materials has increased ten-fold and is expected to double or triple again between 2010 and 2030.
The circular economy is heralded by many as a tonic to these woes, a way to rethink old patterns of consumption and to enable continued economic growth while delivering environmental transformation, social equity and reduced business risk – if it can be delivered effectively.

Image: The 'Butterfly diagram' from the Ellen MacArthur Foundation, illustrating the primary components of a circular economy

For the majority of circular economy systems, the maximum economic value lies in the 'inner loops'. These inner loops include strategies such as minimising material use, utilising products more heavily, reuse and remanufacturing. The 'outer loops' include recycling and downcycling, strategies that recover some of the material value but not the more significant value added through manufacturing and IP.
The inclusion of renewable energy as a focus has a twofold significance. The most obvious is that burning fossil fuels is very linear and should therefore have no place in a circular economy. Less obvious is that some of the arguments for the use of highly linear materials are based on transportation impacts, assertions that only hold true while transport is powered by fossil fuels, highlighting the need for circular economy practitioners to step back and take a systems view.
Retrofitting the circular economy to existing products is a comfortable place to start for many. The net result is that most businesses focus on recycling –the most straightforward strategy to bolt on to a legacy system. Whilst recycling, and the use of recycled materials, should be encouraged, the focus on these outer loops often misses the more considerable opportunities offered by the circular economy. Companies that are serious about the circular economy should start in the knowledge that they will almost certainly need to go further than recycling.
McDonough and Braungart, the founders of the Cradle-to-Cradle movement, that preceded the circular economy, spoke of a fundamental shift beyond just doing 'less bad', where negative impacts are minimised, towards doing 'more good', where positive effects are also optimised.

Image: The Upcycle Chart, part of the Cradle to Cradle Continuous Improvement Strategy

Doing more good isn't something that usually fits with business as usual. Those that actively seek to do more good are often the same businesses that are willing to tear up the rulebook and reimagine the service they provide from scratch. The opportunity for these businesses to minimise their costs whilst seizing a disproportionate market share is undoubtedly there. The risk for those who are unwilling to do so is that someone else will.
In 2010, I was fortunate to meet the CEO of the Ellen MacArthur Foundation, the outcome of that chance conversation was a collaboration that lasted most of the next decade, with a particular focus on developing metrics for the circular economy. You can't improve what you don't measure, and the opportunity to reflect circularity to product designers and engineers in a way they could easily understand and readily action was enticing.
The outcome of our collaboration was the Materials Circularity Indicator (MCI) methodology, which was published by the Ellen MacArthur Foundation in 2015 and updated in 2019.
Conceptually MCI is relatively simple and looks at three main areas:
  1. Where materials are coming from into a product – the inner loops giving you a better score than the outer loops.
  2. Where materials go to after the product – again the inner loops get you a better score than the outer loops of.
  3. How the product is used – making a product that delivers its service for longer by making it more durable, or by utilising it more heavily improves your score.
The outcome of the MCI is a score between 0 (for a linear system) and 1 (for a perfectly circular system).
MCI allows a user to quickly examine and evaluate systemic changes to their service alongside other complementary approaches, such as LCA, enabling them to understand how circularity could be deployed to improve the economic, environmental and social benefits they seek for their business and their customers.
MCI is different from certification schemes like Cradle to Cradle, which continues to set a more holistic benchmark to aim for. Using MCI early in the design process will, however, encourage the right type of mindset and promote the early gathering of data that will ultimately be useful when it comes to this type of certification.
To be continued: In part 2 I will be looking at measuring circularity in infrastructure specifically, featuring an Australian industry example.


About the Author:

Dr. Jim Goddin | Technical Director Circular Economy at thinkstep-anz.
He specialises in circular economy systems design and worked alongside the Ellen MacArthur Foundation to co-author the widely adopted Material Circularity Indicator methodology. He is a Chartered Engineer with a PhD in materials engineering and is both a Fellow and a Strategic Advisor of the Institute of Materials, Minerals and Mining. Jim has worked extensively on the development of eco-design tools and the assessment of business risks resulting from critical materials and hazardous substances legislation.