Monitoring Progress towards a Resource-Efficient and Circular Economy

4. The indicator set

4.1. Identifying relevant indicators

The indicators that best reflect major trends related to the transition towards a CE are to be carefully selected. The number of potentially useful indicators can be large. It is therefore necessary to agree upon criteria that guide and validate their choice and keep the selection at a manageable level. Building on earlier OECD work on environmental and green growth indicators the key principles in selecting indicators include: policy relevance and utility for users, analytical soundness, measurability (Box ‎4.1). These criteria are in line with the indicator selection criteria recommended under the Bellagio principles (EEA, 2021[13]): Relevant, Accepted, Credible, Easy to monitor, and Robust (RACER).

Box ‎4.1. Key principles in selecting indicators to monitor progress towards a circular economy

 

Policy relevance and utility for users	The indicator set should have a clear policy relevance, and in particular: provide a balanced coverage of the key features of a CE with a focus on those that are of common interest to OECD member and partner countries; be easy to interpret and transparent, i.e. users should be able to assess the significance of the values associated with the indicators and their changes over time; provide a basis for comparisons across countries; and lend itself to being adapted to different national contexts and analysed at different levels of detail or aggregation.
Analytical soundness	The indicators should be analytically sound and benefit from a consensus about their validity. They should further lend themselves to being linked to economic and environmental modelling and forecasting.
Measurability	The indicators should be based on data that are available or that can be made available at a reasonable cost, and that are of known quality and regularly updated.

Note: These principles and criteria describe the “ideal” indicator; not all of them will be met in practice. They are in line with the criteria recommended under the Bellagio principles (EEA, 2021[13]).

Source: Adapted from (OECD, 2011[14]) and from (OECD, 1993[15]).

As the CE is a cross-cutting multi-dimensional concept based on systemic approaches, it is important that the indicators selected under the different building blocks and themes:

• are aligned and can be interconnected to inform the assessment of policy outcomes and progress made. Indicators listed under “material life-cycle” could have a counterpart under “responses and actions”, as well as under “socio-economic opportunities”. This would help linking responses to results obtained as a first step in monitoring the effectiveness of policies.

• fit into an overall narrative framework while supporting more granular analysis.

As information on a CE is not yet available for all dimensions and aspects to be considered, the proposed indicator set encompasses both operational and aspirational indicators.

• Operational indicators are indicators that are available or could be made available at a reasonable cost in the short to medium term, and that build on recognised definitions and methodologies.

• Aspirational indicators are new or improved indicators that while relevant and desirable to fill gaps require important statistical and methodological efforts to become operational. Such indicators could become part of an internationally coordinated research agenda (see Chapter 5 and 6).

4.2. A 3-tier structure of indicator types

As for other OECD environmental indicators, a 3-tier structure of core, complementary and contextual indicators is used, based on their relevance, measurability, and usefulness to track key features of a CE transition.

• Core indicators (or their proxy when the core indicator is currently not measurable) are indicators that capture key elements of a CE, respond to main CE policy questions and point at developments or changes that require further analysis and possible action. Core indicators are designed to provide the big picture of the transition to a CE. They represent a common minimum set of indicators for use in OECD and other international work and that countries would be encouraged to produce or adapt to their own circumstances. The number of core indicators (or their proxy) should be limited so as to facilitate the monitoring and communication of major trends; it should not exceed 20-25.

  Both operational and aspirational core indicators are proposed. Operational core indicators are indicators that are highly relevant from a CE point of view, already measurable in a representative number of OECD countries or that OECD countries would be willing and able to report to in the short term or the medium term (e.g., within the next few years). Operational indicators mainly cover basic waste management, material flow and resource efficiency aspects. Aspirational core indicators are indicators that are highly relevant from a CE point of view, but not yet measurable, and that require further methodological and statistical developments. Most indicators needed to reflect the circularity of materials flows are aspirational, as are many response and opportunity indicators. They are included as an incentive for countries to develop underlying methodologies and/or to produce the required data. They are also proposed to become part of a research roadmap to be internationally coordinated.

  In the future, a shortlist of core indicators could be identified as headline indicators to inform high-level decision-makers and civil society and enable wider communication with the public.

• Complementary indicators: Indicators that accompany or complement the message conveyed by “core” indicators, by providing additional detail (sub-national detail, sectoral detail) or focus (particular materials or activities), or by covering additional aspects. For country application of the framework, other country-specific indicators can be added. For application in international work, complementary indicators that describe country-specific features are useful for country projects and peer reviews. Complementary indicators also include new and innovative indicators that are yet to be defined and developed, and that could become core indicators in future.

• Contextual indicators: indicators that provide background information on socio-economic and environmental variables to facilitate interpretation in the appropriate country context and to inform about drivers of material use. They include general indicators on the characteristics of economic growth (GDP, income), changes in countries’ industrial structure, demographic structure and final consumption expenditure, as well as general inequality indicators. They also include general indicators on the factors that influence the environmental implications of material use such as energy and water use or the extent of protected areas.

The indicators are accompanied with references to additional information needed to guide interpretation, and with cross-references to other indicators and indicator sets.

4.3. Proposed indicator set

The list of proposed indicators draws on indicators available from the OECD’s own work and work by other international organisations, including:

• The OECD Core Set of Environmental Indicators, OECD sectoral sets of environmental indicators, the set of Green Growth indicators, and OECD indicators to monitor material flows and resource productivity [ENV/EPOC/WPEI(2011)4/REV].

• The revised EU monitoring framework for the circular economy (European Commission, 2023[16]).

• The list of indicators shortlisted by the UNECE Task Force on Measuring Circular Economy.

The list also considers indicators listed in national work, the OECD Inventory of Circular Economy Indicators (OECD, 2020[17]), the work by PACE on Circular Indicators for Governments (PACE, 2021[18]), and work by ISO 59004 WD2 on Circularity Measurement Taxonomy (ISO, 2024[19]). Coherence with the global list of SDG indicators and with the Bellagio principles (EEA, 2021[13]) is ensured. See Annex B for examples of national indicator sets considered.

It should be noted that the indicator set mainly focuses on the national and macro level but can easily be applied or adapted to other levels (sub-national, sectors, industries or firms, products). Furthermore, not all elements of a CE lend themselves to being measured by quantitative indicators and for several aspects current data availability is low. Also, there is no one-to-one correspondence between the CE dimensions and the indicators identified: a specific indicator can be relevant for more than one CE dimension; and an indicator listed under one theme can reflect a driver or a pressure for another theme.

Table ‎4.1 gives an overview of the proposed core indicators, structured in line with the conceptual framework. The list should not be considered as final. It may be reviewed and refined as data availability and quality progress and feedback from the use of the indicators is received.

Table ‎4.2 presents the complete list of the proposed indicator set together with an initial assessment of their relevance and measurability. Annex A provides further details to this list, including references to other sets in which the proposed indicators feature, and comments on their definitions, interpretation and measurability. This list and its initial assessment will be refined as work on the calculation methods and underlying data sources progresses. New data sources need to be identified for highly relevant indicators that are not yet measurable. Indicators that should be given priority for further research and development need to be identified (see Chapters 5 and 6).

Countries interested in applying the proposed indicator set may adapt it to their own circumstances and policy needs with a phased implementation that takes into account their capacity to engage in the production of CE data and indicators and to ensure proper interpretation (Section 5.2).

4.4. Communicating the indicators

The indicators can be presented and communicated in various ways. The most appropriate way depends on the target audience and on the context in which the indicators are to be used. The joint presentation of a suite of indicators reflecting various dimensions of a CE is most useful. Individual indicators can provide information about specific aspects relevant to the CE transition, but it is the indicator set that ensures a comprehensive and coherent monitoring.

As for other indicators, it is important to note that while CE indicators simplify the communication process, their relevance can vary by country, by audience, and by context. Supplementary information and analyses, and policy-oriented interpretation are required for them to acquire their full meaning. The dissemination and communication of the indicators can thus be greatly enhanced by preparing regular synthesis reports or factsheets that would leverage the analyses carried out and by providing links to more detailed statistics and additional information to ensure appropriate context on what is behind the values of the more aggregated indicators. Other tools that could usefully complement the indicators include scenario modelling that could help guide decision-makers towards optimal outcomes, life-cycle assessments (LCA) and environmentally extended input-output analysis that could enrich the messages conveyed by macro-level indicators.

An interesting avenue is to link and combine different indicators to balance the message conveyed, reflect the multi-dimensional features of a CE and facilitate interpretation. As a rule, indicators on responses and actions should lend themselves to being related to indicators on the material life cycle and to indicators on opportunities to help linking responses to results obtained as a first step in monitoring the effectiveness of policies. Indicators on the material life cycle should lend themselves to being linked to reference values (benchmarks, thresholds, baselines, objectives, targets) and to environmental issues such as climate change, toxic contamination, biodiversity, natural resource management.

Where data are available, indicators on the material life cycle broken down by industry can be presented as part of sector profiles together with data from the SNA and the sequence of SEEA accounts, such as economic activity data (e.g. industry output, value added, operating surplus, employment), information on economic instruments (e.g. taxes, subsidies) and data on environmental pressures (e.g. GHG emissions, use of water resources).

Table ‎4.1. Overview of framework themes and proposed core indicators

Framework	Themes		Proposed core indicators (a)
Material life-cycle and value chain	The material basis of the economy	1	Material consumption & productivity (DMC, RMC): trends and mix
	The circularity of material flows and the management efficiency of materials & waste	2	Total waste generation: trends, intensity per GDP and per capita
		3	Circular material use rate
		4	National recycling rate
		5	Waste going to final disposal
	Interactions with trade		none
Interactions with the environment (b)	Natural resource implications	6	Natural resource index: energy & mineral resources
		7	Intensity of use of renewable freshwater resources
	Environmental quality implications	8	GHG emissions from production activities
		9	Pollutant discharges from production activities to water bodies and proportion safely treated
		10	Placeholder: Impacts on human health
Responses and actions	Support circular use of materials, promote recycling markets and optimise design	11	Taxes and government support for circular business models
	Improve the efficiency of waste management and close leakage pathways	12	Investment in waste management infrastructure, waste collection and sorting (government, businesses)
	Boost innovation and orient technological change for more circular material lifecycles	13	R&D expenditure on CE technologies (government, businesses)
	Target setting and planning		none
	Strengthen financial flows for a circular economy and reduced leakage	14	Business investment in CE activities
	Inform, educate, train	15	Placeholder: Education and training
Socio-economic opportunities for a just transition	Market developments and new business models	16	Gross value added of CE sectors
		17	Jobs in CE sectors
	Trade developments		none
	Skills, awareness, behaviour	18	Placeholder: Behaviour
	Inclusiveness of the transition	19	Placeholder: Distributional aspects & socio-economic inequality of CE policies

Notes:

(a) The proposed core indicators include both operational core indicators that are measurable for most OECD countries, and aspirational core indicators that require further work and that countries are encouraged to produce. Placeholders refer to indicators that are yet to be identified and defined. Other indicators that could become core indicators in future can be found in Table ‎4.2.

(b) Can easily be complemented with other core environmental indicators to give a balanced picture of interactions with the environment. See the OECD Core Set of Environmental Indicators and environmental indicators used to monitor the SDGs.

Table ‎4.2. Framework themes and proposed indicators

Annex A provides further details to this list, including references to other sets in which the proposed indicators feature, and comments on their definitions, interpretation and measurability.

Framework themes and indicator topics	Proposed indicators (a)	Type (b)	Rel. (c)		Meas. (d)
Material life-cycle and value chain
1. The material basis of the economy - Production, consumption, accumulation
1.1 Material inputs	Direct material inputs (DMI, RMI): trends and mix	Comp	H	H/M
	Proportion of materials from renewable natural stocks in DMI	Comp	H	H
1.2 Material consumption	Material consumption and productivity (DMC, RMC): trends and mix	Core	H	H/M
	Proportion of materials from renewable natural stocks in DMC	Comp	H	H
	Proportion of recyclable raw materials in DMC	Comp	M	L
1.3 Material accumulation	Net addition to stocks	Comp	H	M
	Changes in man-made stocks of mineral resources	Comp	M	L
2. The circularity of material flows and the management efficiency of materials and waste
2.1 Waste generation (materials ending up as waste)	Total waste generation: trends and intensity per GDP, per capita ‒ Municipal waste generation	Core	H M		M H/M
	Waste generation trends by source, and by waste or material type, e.g. Hazardous waste; Waste electrical and electronic equipment; packaging waste, plastics; construction & demolition waste; mining and quarrying waste	Comp	H		M
	Total primary waste supply by sector (from waste accounts)	Comp	H		M/L
	Waste generation compared to DMC (or DMI) (total, by type of material)	Comp	M		M
	Food waste generated: Food loss index; Food waste index	Comp	H		L
	Hazardous waste generated & % treated, by type of treatment	Comp	M		M
2.2 Circularity of material flows	Circular material use rate	Core	H		H/M
	Intermediate consumption of secondary (raw) materials in production processes	Comp	H		L
	Renewable content of material inputs into production processes	Comp	H		L
2.3 Products diverted from the waste stream	Ratio of products repaired or reused to new products sold, by product type	Comp	H		M/L
	Placeholder: Remanufacturing by sector or by branch	Comp	H
2.4 Materials diverted from final disposal through recycling or recovery	National recycling rate ‒ Municipal waste recycling rate	Core	H		M
	Recycling or recovery rates for selected waste or material types	Comp	H		M
	Incineration with energy recovery	Comp	M		H
	Capacity of waste recovery infrastructure, by type	Comp	M		M
2.5 Materials leaving the economic cycle	Waste going to final disposal	Core	H		H/L
3. Interactions with trade (see also “opportunities” below)
3.1 Trade in materials	Material exports, material imports and Physical trade balance (incl. in RMe)	Comp	M		H
	Material intensity of trade flows (trade value indicator)	Comp	M		H
3.2 Trade in CE related materials and products	Trade in waste, secondary materials, secondary raw materials, second-hand goods, end-of-life products	Comp	M		M
Interactions with the environment (to be supplemented with other environmental indicators as appropriate)
1. Natural resource implications
1.1 Changes in natural resource stocks	Natural resource index: energy & mineral resources / Depletion ratios	Core	M		M/L
	Domestic extraction from natural stocks (renewable & non-renewable) (trends; mix)	Comp	M		H
	Changes in natural stocks (global) of mineral resources	Ctx	M		M
	Intensity of use of renewable freshwater resources (water stress)	Core	H		M
	Intensity of use of forest resources	Comp	H		M
1.2 Other natural resource impacts	Water abstracted for material extraction and processing	Comp	M		M
	Water footprint of selected products or sectors	Comp	M		M
	Natural resource residuals: Unused extraction (by material group)	Comp	M		L
2. Environmental quality implications
2.1 Impacts on climate	GHG emissions from production activities ‒ Total GHG emissions	Core	H		M H
	Proportion of emissions from waste management or waste sector	Comp	M		M
	Carbon footprint (CO2)	Comp	H		M
	Carbon footprint of priority materials or products, of selected sectors	Comp	M		L
2.2 Impacts on air quality	Air pollutant emissions from production activities (trends, intensities)	Comp	M		M
2.3 Impacts on water and soil quality	Pollutant discharges from production activities to water bodies & proportion safely treated ‒ Total discharges to water bodies & proportion safely treated	Core	H		M
	Proportion of waste improperly managed (proxy for waste leakage) Number of uncontrolled open landfills	Comp	M		M
	Placeholder: Soil contamination	Comp	M
2.4 Impacts on biodiversity	Placeholders: Impacts on land, habitats and species	Comp	H
2.5 Impacts on human health	Placeholder	Core	H
	Population exposure to air pollution; related premature deaths and welfare costs	Comp	M		M
	Placeholder: Water-related health impacts	Comp	M
	Placeholder: Population living in the vicinity of waste management sites and production sites	Comp	M
Responses and actions
1. Support circular use of materials, promote recycling markets and optimise design
1.1 Measures supporting circular business models and encouraging reuse, repair, remanufacturing	Taxes and government support for circular business models ‒ VAT relief and tax credits for refurbished/repaired items; Tax benefits for businesses for the purchase/use of repaired, refurbished, remanufactured items ‒ Trade tariffs: Import/export taxes for re-used & refurbished equipment compared to taxes on new equipment ‒ Subsidies and other transfers supporting a CE	Core	H		M
	Circular Public Procurement (CPP) or Green Public procurement (GPP)	Comp	H		L
	Investments in infrastructure supporting circular business models, beyond waste management	Comp	H		L
	Population with access to circularity options (e.g. repair services)	Ctx	H		L
1.2 Measures encouraging eco-design	Design for extending lifespans (i.e. durability, repairability, upgradeability): Requirements for (i) minimum lifespan, warranties, software upgrades; (ii) accessibility to spare parts	Comp	H		M
	Design for recycling, dismantling & material circularity: (i) Bans/Guidelines on hazardous substances; (ii) Taxes on difficult-to-recycle items; (iii) Availability of guidance documents on design for recycling	Comp	H		M
1.3 Measures encouraging efficient use of materials and economically efficient waste recovery	Reform of subsidies encouraging unsustainable use or extraction of materials	Comp	H		M
	Extended Producer Responsibility (EPR) schemes: availability and distance between reported performance and set target	Comp	M		M
	Availability of Deposit-refund systems (DRS) & Pay-as-you-throw (PAYT) schemes	Comp	M		H/M
2. Improve the efficiency of waste management and close leakage pathways
2.1 Measures to improve waste management	Investments in waste management infrastructure, waste collection and sorting	Core	H		M
	Population with access to waste management services	Ctx	M		H
2.2. Measures to encourage waste reduction	Bans, taxes on frequently littered items or single-use items (e.g. plastics)	Comp	H		H
	Tax rate/tonne landfilled or incinerated	Comp	H		H
	Landfill bans	Comp	H		H
3. Boost innovation and orient technological change
3.1 Measures supporting R&D	R&D expenditure on CE technologies	Core	H		M/L
3.2 Technology development and international diffusion	Patented inventions for (1) recycling and secondary raw materials; (2) reuse and repair models	Comp	M		M/L
4. Target setting and planning
4.1 Targets & distance to targets	Placeholder: Distance to targets (resource productivity; recycling; waste reduction & prevention; recycled content; reuse; landfill)	Comp	H/M
4.2 CE strategies & plans	Placeholder	Comp	M
5. Strengthen financial flows
5.1 Domestic financial flows	Business investment in CE activities	Core	H		M
	Revenue from CE related taxes	Comp	H		H/M
	Government budgets allocated to CE objectives	Comp	H		M
5.2 International financial flows	CE related Official Development Assistance (ODA)	Comp	M		L
	CE related Foreign Direct Investment (FDI)	Comp	M		L
6. Inform, educate and train
6.1 Information instruments	Placeholders: Eco-labelling; product labelling & certificates; requirement to provide repair guidelines: (i) information on expected lifespan, (ii) dismantling guidelines & material content lists	Comp	M
6.2 Education and training	Placeholder: Integration of CE issues in school curricula and professional training	Core	H
Socio-economic opportunities for a just transition
1. Market developments and new business models
1.1 CE entrepreneurship, goods & services	Gross value added of CE sectors	Core	H		H/L
	CE start-ups and trademarks; CE certification of companies	Comp	M		L
1.2 Employment markets & jobs	Jobs in CE sectors	Core	H		H/L
	Jobs in sharing economy, reuse and repair activities	Comp	H		L
1.3 Recycling markets	Markets for recycled materials	Comp	H		L
2. Trade developments
2.1 Trade in CE related goods and services	Trade in (i) recovered (secondary) and (ii) recycled (secondary raw) materials	Comp	M		M/L
	Trade in recyclable raw materials	Comp	M		L
2.2 Supply security	Domestic material autonomy	Comp	H		H
	Supply security of “strategic” raw materials	Comp	H		M
	Food security; Energy security	Comp	H		M
3. Skills, awareness and behaviour
3.1 Skills	Placeholders: CE literacy ; CE skills	Comp	H
3.2 Awareness	Public opinion on CE issues and actions	Comp	M		L
3.3 Behaviour	Placeholder: Change in household, consumer, firm behaviour	Core	H
4. Inclusiveness of the transition
	Placeholder: Distributional aspects & socio-economic inequality of CE policies	Core	M
Socio-economic and environmental context
1. Factors that drive demand for materials
1.1 Socio-demographic factors	Population growth and structure Household size	Ctx	M		H
1.2 Economic factors	GDP growth and structure (trends, value added by sector)	Ctx	M		H
	Income levels: GDP per capita	Ctx	M		H
	Income inequality (Gini index); wealth inequality	Ctx	M		H/M
	Human development index (HDI)	Ctx	M		H
	Final consumption expenditure: government, household	Ctx	M		H
1.3 Sectoral drivers	Construction e.g., floor space per capita, value added of construction sector	Ctx	H		M/L
	Other
2. Factors that influence the environmental implications of material use
2.1 Environmental drivers	Energy supply and consumption: trends and intensities	Ctx	H		H
	Water use efficiency in production activities and in final consumption	Ctx	H		M
	Protected areas	Ctx	M		H/M
	Other

Notes: (a) All indicators are expected to reflect change over time. For a more detailed list of indicators with references to international indicators’ sets and comments on the indicators’ measurability and interpretation, see Annex A.

(b) Indicator types: A 3-tier structure, based on the indicators’ relevance, measurability and usefulness to track aspects of a circular economy transition: Core indicator (Core) (red colour) or their proxies (-); Complementary indicator (Comp); Contextual indicator (Ctx). Placeholders refer to indicators that are yet to be identified and defined.

(c) Relevance indicates the level of relevance/usefulness of the proposed indicator for the given topic: High (H); Medium (M); Low, to be reviewed (L).

(d) Measurability indicates the current availability of data and agreed methodologies.

High (H) = measurable in the short term; Medium (M) = measurable in the medium term; Low (L) = measurable in the longer term.