Discussions of the circular economy often lean toward the aspirational. It’s one thing to declare an ambition to move from waste to resource, quite another to quantify what is actually happening on the ground. The real challenge for policymakers, economists, and industry leaders is measurement: tracking not just intentions but material flows, and doing so in a way that reflects the structure of the real economy. The International Standard Industrial Classification (ISIC) system, when combined with robust waste data, offers a disciplined way to map circular progress sector by sector.
The starting point is to anchor circular activities in the ISIC framework. Recycling, under ISIC division 38, is the most obvious link—comprising waste collection, treatment, and materials recovery. Remanufacturing activities, such as the overhaul and reuse of machinery or automotive parts, are captured by ISIC 3314. These codes, though imperfect, provide the structure needed to tie economic activity to environmental impact. Most national statistical systems and many large firms now report waste management and recycling activity according to ISIC or similar classifications, allowing for comparison both within and across countries.
With this structure, the next task is to map material flows. This begins by assembling data on waste generation by ISIC sector, ideally broken down by type of material—metals, plastics, organics, electronics, and so forth. Waste management authorities and environmental regulators usually hold this data at the regional or national level, though its granularity varies. The more precisely these flows can be assigned to ISIC sectors, the more insight can be gained into which industries are driving waste and which are leading efforts to close the loop.
Tracking what happens to these waste streams is the next layer. For each ISIC sector, analysts should document the share of waste sent to recycling, to remanufacturing, to landfill, or for energy recovery. Landfill diversion rates—what percentage of sectoral waste is kept out of landfills through recycling or reuse—provide a basic but telling indicator of progress. Reuse rates, especially in sectors like machinery, electronics, or textiles, give further granularity, showing where true circularity is emerging and where it remains elusive.
From these building blocks, a circularity index can be constructed. The methodology is straightforward, if data-intensive. For each ISIC sector, calculate the proportion of total material input that is recycled, remanufactured, or otherwise cycled back into production, as opposed to being discarded. Weight these proportions by the volume of material flows and adjust for quality, where information permits—for example, distinguishing between high-value closed-loop recycling and lower-grade, downcycled uses. The result is a sector-specific score, comparable over time and, with appropriate normalization, across sectors and regions.
Such an index is more than a statistical exercise. For policymakers, it points directly to sectors where intervention is needed—either to support infrastructure, to incentivize better waste segregation, or to promote design for recyclability and reuse. For industry, it highlights both opportunities and risks: sectors with low circularity may face regulatory or reputational pressure, while those with high scores can market themselves as leaders in sustainability.
Challenges remain. Not all material flows are easily tracked, especially as products move across borders or change form during processing. ISIC codes themselves may lag behind emerging business models—what about sharing platforms, or companies whose primary activity is design for circularity? As with any classification-based analysis, the results are only as good as the underlying data and the care taken in assigning activities to codes.
Even so, the discipline of linking circular economy metrics to ISIC codes and material flows brings rigor to a field that can otherwise drift into abstraction. It allows progress to be tracked, gaps to be identified, and policies to be grounded in the realities of production and consumption. As ambitions for the circular economy grow, the importance of this clarity—and of continually improving the data and methodologies—will only increase.