Rethinking Value
Metrics for a Circular Economy
Tag: Metrics
Author: Dr. Elliott Lancaster MBE
Published: October 2025
Reading time: 5 min overview
Executive Summary
The transition to a circular economy depends not only on new technologies, business models, and policies, but also on how success is measured. In the United Kingdom, progress toward circularity is still largely assessed through recycling rates and waste management indicators. While these metrics provide some insight into material flows, they offer an incomplete and, in some cases, misleading representation of resource efficiency and system performance.
This policy brief argues that the current reliance on recycling-based metrics obscures the broader objectives of a circular economy, which include maximising value retention, extending product lifespans, and reducing overall resource consumption. By focusing on downstream outcomes, existing measurement frameworks risk reinforcing a linear model of production and consumption, rather than enabling systemic transformation.
Drawing on emerging academic and policy literature, this brief examines the limitations of current metrics and proposes a more comprehensive approach to measuring circularity. It highlights the importance of indicators related to reuse, durability, and resource productivity, and outlines how these can be integrated into policy and practice. The central argument is that without redefining how value is measured, efforts to build a circular economy will remain constrained by incomplete and misaligned indicators.
1. Introduction
Measurement plays a fundamental role in shaping policy and practice. What is measured influences what is prioritised, funded, and ultimately delivered. In the context of the circular economy, metrics are particularly important because they provide the basis for evaluating progress, comparing performance, and guiding decision-making across sectors.
In the UK, circular economy measurement has historically been aligned with waste management systems, focusing on indicators such as recycling rates, landfill diversion, and waste generation. These metrics have been instrumental in driving improvements in waste handling and reducing landfill use. However, they reflect a narrow interpretation of circularity, centred on end-of-life processes rather than the full lifecycle of products and materials.
The circular economy, as conceptualised in the literature, extends far beyond waste management. It encompasses the design, production, use, and recovery of resources, with an emphasis on maintaining value at the highest possible level for as long as possible (Bocken et al., 2016). This broader perspective requires a corresponding shift in how performance is measured.
This brief explores the limitations of current metrics and proposes a more holistic framework for assessing circular economy progress.
2. The Limitations of Recycling-Based Metrics
Recycling rates have become the dominant indicator of circular economy performance in many policy contexts. While they are relatively easy to measure and communicate, they have several important limitations.
First, recycling is a downstream activity that occurs after products have reached the end of their useful life. As such, it does not capture the efficiency of upstream processes, such as design, manufacturing, and consumption. A high recycling rate may therefore coexist with high levels of resource extraction and waste generation.
Second, recycling metrics do not account for value retention. In many cases, materials are downcycled, meaning that their quality and functionality are reduced during the recycling process. This represents a loss of embedded energy, labour, and economic value (Allwood, 2014). Recycling rates alone do not distinguish between high-value and low-value recovery.
Third, recycling metrics can create perverse incentives. By focusing on the quantity of materials recycled, they may encourage systems that prioritise volume over quality, or that favour recycling over more desirable options such as reuse and repair. This can lead to suboptimal outcomes from both economic and environmental perspectives.
Finally, recycling metrics provide limited insight into overall resource efficiency. They do not capture reductions in material use, improvements in product longevity, or shifts toward service-based business models. As a result, they offer an incomplete picture of circular performance.
3. The Concept of Value in a Circular Economy
At the heart of the circular economy is the concept of value retention. Unlike linear systems, which focus on throughput and disposal, circular systems aim to preserve the value embedded in products and materials over time. This includes not only material value, but also functional, economic, and social value.
Value can be retained through a hierarchy of strategies, often referred to as the “R-strategies”, which include reduce, reuse, repair, refurbish, remanufacture, and recycle (Potting et al., 2017). These strategies differ in their ability to preserve value, with reuse and repair generally offering higher-value outcomes than recycling.
Measuring circularity therefore requires an understanding of how value is created, maintained, and lost across the lifecycle of products. This involves moving beyond simple material flow indicators toward more nuanced measures that capture the quality and duration of resource use.
In this context, the concept of resource productivity is particularly relevant. Resource productivity refers to the amount of economic value generated per unit of resource input, and is often used as an indicator of efficiency (OECD, 2019). However, it must be complemented by measures that capture environmental and social dimensions of value.
4. Emerging Approaches to Circular Metrics
In recent years, a number of frameworks have been developed to address the limitations of traditional metrics. One notable example is the Circularity Gap framework, which assesses the proportion of materials that are cycled back into the economy relative to total material use (Circle Economy, 2023). While this provides a more comprehensive view of material flows, it still focuses primarily on quantity rather than value.
Other approaches emphasise lifecycle assessment (LCA), which evaluates the environmental impacts of products and systems across their entire lifecycle. LCA can provide detailed insights into resource use, emissions, and environmental trade-offs, but it can be complex and resource-intensive to implement (Hauschild et al., 2018).
Material flow analysis (MFA) is another important tool, used to track the movement of materials through economic systems. MFA can help identify inefficiencies and opportunities for circular interventions, but like recycling metrics, it may not fully capture value retention.
More recent developments have focused on indicators such as product lifespan, durability, and utilisation rates. These metrics provide insight into how long products are used and how intensively they are utilised, offering a more direct measure of circular performance (den Hollander et al., 2017).
Despite these advances, there is still no widely adopted, standardised framework for measuring circular economy performance at a national level. This presents a challenge for policymakers and practitioners seeking to assess progress and design effective interventions.
5. Policy Recommendations
To address these challenges, this brief proposes a set of policy recommendations aimed at improving the measurement of circular economy performance in the UK.
First, a national framework for circular economy metrics should be developed. This framework should integrate multiple dimensions of circularity, including material flows, value retention, and resource productivity. It should provide clear guidance on indicators, data collection, and reporting, ensuring consistency across sectors.
Second, recycling rates should be complemented with higher-order indicators. These could include measures of reuse, repair, and remanufacturing, as well as indicators of product lifespan and durability. By capturing upstream activities, these metrics would provide a more accurate picture of circular performance.
Third, data infrastructure should be strengthened. Effective measurement requires reliable and accessible data, yet data on material flows, product lifespans, and circular activities is often limited or fragmented. Investment in data systems and digital tools, such as product passports, could help address this gap.
Fourth, metrics should be aligned with policy incentives. For example, public procurement criteria and funding programmes should be linked to circular performance indicators, encouraging organisations to prioritise value retention rather than simply waste reduction.
Fifth, international alignment should be considered. As supply chains are global, harmonising metrics with international frameworks can facilitate comparison and collaboration. This is particularly relevant in the context of emerging standards within the European Union.
Finally, capacity-building initiatives should be implemented to support the use of circular metrics. This includes training for policymakers, businesses, and educators, as well as the development of tools and guidance for practical application.
6. Strategic Importance
Improving circular economy metrics is not merely a technical exercise; it has significant strategic implications for the UK.
From a policy perspective, better metrics enable more effective decision-making. By providing a clearer understanding of system performance, they can help identify priorities, allocate resources, and evaluate outcomes.
From an economic perspective, metrics can influence business behaviour. By shaping incentives and expectations, they can encourage investment in circular practices and support the development of new markets and business models.
From an environmental perspective, more comprehensive metrics can help ensure that interventions deliver real improvements in resource efficiency and emissions reduction, rather than simply shifting impacts from one stage of the lifecycle to another.
Moreover, improved metrics can enhance transparency and accountability. By providing a more accurate and nuanced picture of progress, they can support public trust and engagement in the transition to a circular economy.
7. Conclusion
The transition to a circular economy requires a fundamental shift in how value is understood and measured. While recycling rates have played an important role in driving improvements in waste management, they are insufficient as a primary indicator of circular performance.
This policy brief has argued that current metrics are too narrowly focused on end-of-life processes and fail to capture the broader objectives of circularity. It has highlighted the need for a more comprehensive framework that incorporates measures of reuse, durability, and resource productivity.
Redefining how value is measured is essential for aligning policy, business, and societal actions with the principles of a circular economy. Without this shift, efforts to build a more sustainable and resilient system will be constrained by incomplete and misaligned indicators.
Ultimately, the question is not simply how much we recycle, but how effectively we use and retain the resources that underpin our economy.
References
Allwood, J.M. (2014) ‘Squaring the circular economy: the role of recycling within a hierarchy of material management strategies’, Handbook of Recycling, pp. 445–477.
Bocken, N.M.P., de Pauw, I., Bakker, C. and van der Grinten, B. (2016) ‘Product design and business model strategies for a circular economy’, Journal of Industrial and Production Engineering, 33(5), pp. 308–320.
Circle Economy (2023) The Circularity Gap Report 2023. Amsterdam: Circle Economy.
den Hollander, M.C., Bakker, C.A. and Hultink, E.J. (2017) ‘Product design in a circular economy: Development of a typology of key concepts and terms’, Journal of Industrial Ecology, 21(3), pp. 517–525.
Hauschild, M.Z., Rosenbaum, R.K. and Olsen, S.I. (2018) Life Cycle Assessment: Theory and Practice. Cham: Springer.
Korhonen, J., Honkasalo, A. and Seppälä, J. (2018) ‘Circular economy: The concept and its limitations’, Ecological Economics, 143, pp. 37–46.
OECD (2019) Global Material Resources Outlook to 2060. Paris: OECD Publishing.
Potting, J., Hekkert, M., Worrell, E. and Hanemaaijer, A. (2017) Circular Economy: Measuring Innovation in the Product Chain. The Hague: PBL Netherlands Environmental Assessment Agency.
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