The shift from linear to circular economic models is gathering momentum around the world. Policymakers, businesses, and researchers increasingly recognize that sustainable growth requires more than just efficient resource use—it demands the creation of closed loops, where materials and products are reused, remanufactured, and recycled rather than discarded. But how does one measure progress toward a circular economy, given the complexity and cross-sectoral nature of these changes? Here, the International Standard Industrial Classification (ISIC) system is proving invaluable, offering a data-driven lens to monitor the transition.
At its core, the circular economy is about extending product life cycles, reducing waste, and maximizing resource recovery. These principles show up in economic activity through a variety of sectors—some new, others long established. With the rise of circular practices, certain ISIC categories have gained new prominence. Recycling services (ISIC 38), for instance, are now central in tracking national and regional progress. So too are waste management (ISIC 3811), material recovery (ISIC 3830), and repair activities (ISIC 9529). Each offers a measurable window into the degree to which an economy is moving away from “take-make-dispose” and toward more regenerative models.
The approach, in practice, is systematic. National statistical agencies and environmental researchers collect data on business registration, revenues, employment, and investment by ISIC code. A sustained increase in the number or activity level of firms in ISIC 38—especially subcategories for hazardous waste processing, secondary material trading, or e-waste handling—signals real growth in the circular sector. Similarly, remanufacturing, which often straddles codes for both manufacturing and repair, is tracked by following shifts in ISIC-coded activity from primary production to refurbishment and maintenance.
These sectoral trends, when set against baseline data, provide a narrative of circular transition. If, for example, a country sees a marked rise in employment in recycling services, coupled with stagnation or decline in landfill operations, it’s a strong sign that circular principles are gaining traction. On the other hand, limited or no movement in relevant ISIC codes may reveal barriers—regulatory, financial, or technological—that need to be addressed.
Yet, measuring circularity purely by economic activity can be misleading. A booming recycling sector, for example, does not automatically equate to reduced environmental impact if upstream consumption continues to rise. For this reason, researchers are proposing composite indices that combine ISIC-coded economic indicators with environmental metrics: waste diverted from landfill, greenhouse gas emissions reductions, material input per unit of GDP, or product lifespans. Such indices provide a more holistic picture—capturing not just activity, but outcomes.
Constructing these indices involves careful methodological choices. Weighting must reflect both the economic and environmental contributions of each sector. Data integration is needed across disparate sources—business registries, environmental agencies, and sometimes even remote sensing. The result, when done well, is a tool that policymakers can use to benchmark progress, identify lagging areas, and target interventions more precisely.
One practical application has been at the city or regional level, where ISIC data is granular enough to support local policy. Municipalities can track the rise of circular businesses, measure changes in waste flows, and link these trends to incentives or pilot programs. For example, a city investing in repair cafes and community tool libraries may see corresponding growth in ISIC 9529, while new rules on electronic waste spur activity in ISIC 3830.
International organizations, too, are paying attention. The European Union’s Circular Economy Action Plan, for instance, relies on ISIC-coded sector data to compare progress among member states, informing funding decisions and policy harmonization. Countries leading in ISIC 38 activity often serve as models for others, illustrating both best practices and pitfalls.
There are, of course, ongoing challenges. ISIC categories themselves must evolve as new business models emerge—think product-as-a-service platforms, sharing economies, or advanced remanufacturing that blurs the line between production and repair. Data collection, especially in developing economies, can lag or lack granularity. Informal sector activities, which often play a major role in material recovery and reuse, may be undercounted or missed entirely.
Even so, the direction is clear. The integration of ISIC data with environmental performance metrics is becoming standard practice in the assessment of circular economy progress. This enables better coordination among agencies, clearer communication with stakeholders, and more accountable, evidence-based policy.
Tracking the circular economy through ISIC indicators offers both rigor and flexibility. It allows policymakers, researchers, and businesses to move beyond rhetoric and measure real progress. As the world moves ever closer to sustainability imperatives, the value of such data-driven, sectoral monitoring will only increase—guiding not just policy, but investment, innovation, and the shared journey toward a truly circular economy.