City authorities are able to steer the dominant system toward new orientations—such as a circular economy—through policy. With the different instruments at their disposal, they are able to incentivise businesses, citizens and other governments to adopt certain actions. In the pursuit of a more circular economy, particular policy instruments hold a pivotal role to support the adoption of circular strategies. They can also be instrumental in ensuring economic, societal and environmental value during the transition.
However, due to the diversity of available tools and instruments—that may also vary within different governmental contexts—it can be difficult for municipal policymakers to understand which specific and available policy instruments can support circularity. Therefore, it is important to identify and categorise a clear framework of available policy instruments for a more circular economy to support policy- and decision-making.
A policy instrument intervenes in an economy and society, with the intention of changing how the system operates. Based on the influence of policy instruments in cities, this framework is arranged into five main categories:
The framework consists of three tiers; Tier one indicates the key function that policy can play, Tier two presents key policy directions, while Tier three presents a specific urban policy instrument. Each Tier three policy is also linked to a relevant case example to further illustrate its application.
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Tier 1 |
Tier 2 |
Tier 3 |
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MOBILISE |
Visions and Ambitions |
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Govern the Transition |
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Convene Towards Action |
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EDUCATE |
Communication and Awareness |
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Education and Curriculum |
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Knowledge Management |
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Research and Development |
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MANAGE |
Spatial Planning |
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Public Procurement |
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Infrastructure |
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Asset Management |
Circular use of public-owned assets (land, buildings and equipment) |
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INCENTIVISE |
Direct Financial Support |
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Frameworks |
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Fiscal Frameworks |
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REGULATE |
Regulation |
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Legislation |
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The relevance of different (groups of) policy instruments will vary for cities based on how far they are in their circular transition. Further, the national political and administrative contexts of a country will influence the level of autonomy municipal governments may have in deploying policy instruments. Therefore, it is important for each municipal government to understand which policy instruments are most suited to their local context.
The framework is designed for municipal policymakers and advisors that are working to implement the circular economy. It is geared towards an audience that understands the opportunities that a circular economy can deliver, and wishes to identify the practical tools and instruments that are at their disposal to support the transition within their city.
Most recently, the City of Amsterdam used this framework in their Circular Economy Strategy 2020-2025 as a foundation to identify priority actions. The framework can also serve as a unified foundation for further research into the impact of certain circular economy policies across a variety of outcomes, such as foreign direct investment.
The framework will also be integrated within Circle Economy’s Circle City Scan Tool to help drive the adoption of circular policy instruments in cities around the world. Circle Economy’s Knowledge Hub also hosts examples of policy instruments in practice, using version one of the Urban Policy Instruments Framework. It will be updated to reflect the updated framework.
The framework has been developed based on both academic literature and case studies. In the first iteration, the Toolkit for Policy Makers from the Ellen MacArthur Foundation (EMF) served as a basis. Using this foundation, the Circle Economy team collected over 400 case studies of governments across the globe supporting the circular economy and attributed these to the policy instruments put forward in the toolkit.
The framework was then enriched with policy instruments from academic and other literature through an extensive literature review. Next to the circular economy, this framework research also focused on the neighbouring fields of eco-innovation, green growth and sustainable development policy. Subsequently, the framework was reviewed by both experts and practitioners within the circular economy sector.
In a second iteration, the framework was enhanced to include the management of urban infrastructure, the mobilisation of relevant stakeholder groups to support and guide the transition and more detailed knowledge management strategies. The more action-oriented categorisation of EMF’s Urban Policy Levers framework served as a guiding basis upon which to restructure the framework, as well as supporting literature and the Circle Economy team’s practical experience working with municipal stakeholders. The output of this second iteration is a policy framework that is more action-orientated to support policy and decision-making.
The framework recognises the diversity of measures that municipal governments can employ and the many ways to influence the circular transition. The measures, however, differ in relevance for different municipal governments, according to their mandate. So, it is important for further research to identify how relevant particular instruments may be to the common needs of municipal governments across geographical contexts, to different levels of government (national and international), as well as different ‘maturity’ levels of the circular economy transition. With such research, more targeted frameworks may be created that are tailored to a given level of government, mandate or stage of transition.
What is more, designing and implementing effective policy to support the transition towards circularity requires coordination and alignment with a variety of stakeholders, such as businesses, civil society, as well as other departments and levels of government. To further support the adoption of circular policy, it is interesting to explore which stakeholders and investments are commonly associated with a particular policy instrument.
Different policy instruments have a range of outcomes and impacts on particular systems or stakeholders, with some better suited to achieving particular outcomes than others. An important avenue for further research building on this framework is to study the efficacy of particular policy instruments on certain intended outcomes. Research in this vein has already begun to be carried out in relation to the effectiveness of certain instruments on foreign direct investment. Additional research to assess the influence of certain policy instruments on given outcomes could also be centred around, for example, per capita recycling and raw material consumption rates, and eco-innovation patents, among others.
Furthermore, government's policy interventions often consist of multiple instruments, resulting in a policy mix. Policy mixes leverage the interaction between policy instruments in order to achieve desired outcomes in a more efficient and effective way. For example, Extended Producer Responsibility (EPR) schemes are often implemented by means of product take-back requirements in combination with fiscal instruments such as penalties and charges. As such, EPR schemes enable environmentally sound end-of-life management, while negatively affecting the price of undesirable end-of-life management. Further research and analysis to identify common policy mixes in relation to the circular economy can provide an important foundation for policymakers to support circular economy adoption.
Finally, the current understanding of how municipal governments can intervene in a system to make it more sustainable orientation is continually evolving. As new and novel ideas and types of policy instruments are developed, such as fields of behavioural economics and ‘nudging’, it is interesting to see how the circular economy, and this framework, can evolve to incorporate such ideas and instruments to foster sustainable change.
We are striving to continually update our frameworks to ensure they remain relevant and are best suited to facilitate action. To this end, we welcome suggestions and comments on this framework from our Knowledge Community.
Some notable sources and references are included in the list below. A full documentation of sources for each policy instrument can be found on Circle Economy’s Knowledge Hub.
Bouwm, I.M.; Gerritsen, A.L.; Kamphorst, D.A. & Kistenkas, F.H. 2015. Policy instruments and modes of governance in environmental policies of the European Union: Past, present and future. WOt-technical report 60. Wageningen University, the Netherlands.
EC-IILS. 2011. Policy options and instruments for a green economy. European Commission & International Institute for Labour Studies. Joint Discussion Paper Series No. 12. Available online via: http://ec.europa.eu/social/BlobServlet?docId=7251&langId=en
EJOLT. 2012. Policy Instruments for Sustainability. Environmental Justice Organisations, Liability and Trade. Available online via http://www.ejolt.org/2012/11/policy-instruments-for-sustainability/
Ellen MacArthur Foundation. (2015) “Delivering the Circular Economy: AToolkit for Policymakers“ Online
Ellen MacArthur Foundation. (2019) “City Governments & Urban Policy Levers“ Online.
IPP (Innovation Policy Platform). N.d. Universities and Public Research Institutions. The Innovation Policy Platform, OECD & World Bank. Available online via: https://www.innovationpolicyplatform.org/content/universities-and-public-research-institutes
Jordan, A,; Wurzel, R.K.W. & Zito, A. 2005. The Rise of ‘New’ Policy Instruments in Comparative Perspective: Has Governance Eclipsed Government? Political Studies. Vol.53 pp.477-496
OECD. 2010. Regulatory Policy and the Road to Sustainable Growth. Available online via https://www.oecd.org/regreform/policyconference/46270065.pdf
OECD. 2011. Environmental Taxation: A Guide for Policy Makers. Organisation for Economic Co-operation and Development. Available online via: https://www.oecd.org/env/tools-evaluation/48164926.pdf
OECD. 2013. A Toolkit of Policy Options to Support Inclusive Green Growth. Organisation for Economic Co-operation and Development. Available online via: https://www.oecd.org/media/oecdorg/directorates/developmentco-operationdirectoratedcd-dac/environmentanddevelopment/IGG-ToolkitAfDB-OECD-UN-WB-revised_July_2013.pdf
OECD. 2016. OECD Policy Instrument for the Environment: Database documentation. OECD. Available online via: http://www.oecd.org/environment/tools-evaluation/PINE_Metadata_Definitions_2016.pdf
Sánchez, Á,P. & Deza, X.V. 2015. Environmental policy and eco-innovation: An overview of recent studies. Ética Empresarial y Responsabilidad Social. Col. Vol.25(58)
Silva, E. & Acheampong, R. 2015, Developing an Inventory and Typology of Land-Use Planning Systems and Policy Instruments in OECD Countries. OECD Environment Working Papers, No. 94, OECD Publishing, Paris.
Tojo, N.; Neubauer, A. & Bräuer, I. 2008. Waste management policies and policy instruments in Europe. International Institute for Industrial Environmental Economies (IIIEE) Reports. Available online via: https://www.ecologic.eu/sites/files/project/2015/documents/holiwastd1-1_iiiee_report_2__0.pdf
White, R & HEckenberg, D. 2012. Legislation, regulatory models and approaches to compliance and enforcement. Available online via http://www.utas.edu.au/__data/assets/pdf_file/0006/278007/Briefing_Paper_6_-_Laws_Regulation_Enforcement.pdf
WTO. 2006. World Trade Report 2006: Exploring the links between subsidies, trade, and the WTO'. World Trade Organization. Available online via https://www.wto.org/english/res_e/booksp_e/anrep_e/world_trade_report06_e.pdf
Max Russell - Project Manager Cities Programme
Blake Robinson - Senior Strategist Cities Programme
Marijana Novak - Data Strategist
Laxmi Haigh - Science Writer
Nicolas Raspail - Design Lead
The New York Circular City Initiative, convened by Freshfields, applies circular thinking to one of the great cities of the world. Its vision is to create the first truly circular urban economy, one that would drive job creation and growth and elevate New York City as a global beacon for sustainability.
This report, supported by Circle Economy, sets out a circularity model for the city that could create over 11,000 new jobs across the income spectrum, deliver over $11bn in economic benefits and reduce waste to zero. This is based on an analysis of more than 50 potential levers that could create circularity in NewYork. Each was assessed for its impact on jobs, economic growth and the environment.
In its latest whitepaper, the Coalition Circular Accounting explores Facades-as-a-Service as a method to battle waste and increase the circularity of buildings. The Facades-as-a-Service will provide a customisable, dismantable facade that provides a building with ventilation, sunlight regulation and energy generation, all adjustable by remote control. The Product-as-a-Service business model benefits circular construction by incentivising manufacturing companies to retain responsibility for their product and their performance before, during and after its lifespan.
However, current financing models can present major barriers for companies with circular business aspirations. Asset ownership for example, characterized by an extended balance sheet, is unpopular amongst financiers and suppliers, whilst essential for incentivising a long term business perspective.
In light of these current and persistent financing barriers, the Coalition Circular Accounting has launched a white paper that elaborates on the opportunities and risks of Product-as-a-Service business models. The paper proposes a new contractual structure as an enabler and raises the issue of the misfit between current financing structures and circular business models.
This report provides a first structural analysis of the relationship between resilience and the circular economy. It explores how the circular economy increases social-ecological resilience, dives into potential trade-offs between the two and highlights the labour market characteristics that are prerequisites for both a more circular and resilient economy. Based on these findings, the report gives recommendations to help businesses, governments and educators develop and implement circular economy strategies which enhance resilience.
The Circularity Gap Report Norway is an in-depth analysis of how Norway consumes raw materials—metals, fossil fuels, biomass and minerals—to fuel its societal needs. Currently, 97.6% of materials consumed each year never make it back into the economy. Norway also has one of the highest per capita consumption rates in the world at 44.3 tonnes per person.
In the face of the climate emergency and the EU's decision to strive for full circularity, Norway's need for a circular transition is urgent. Our report shows that the country can become 45.8% circular by restructuring business and industry. The report dives into six scenarios for a potential way forward and explores how governments and businesses can facilitate circular consumption and prepare the labour market for the transition. With a good tripartite cooperation in Norwegian employment, a highly-educated and digitally competent population and a long history with renewable energy and plastic recycling, Norway is well set to become a pioneer in the circular economy.
The Doughnut of social and planetary boundaries can be turned into a city-scale tool by asking this very 21st-century question:
How can our city be a home
to thriving people in a thriving place,
while respecting the wellbeing of all people
and the health of the whole planet?
It is a question that invites every city to start exploring what it would mean to thrive within the Doughnut, given that particular city’s location, context, culture and global interconnections.
Through the Thriving Cities Initiative, we have worked with pioneering cities to downscale the Doughnut; creating the first City Portraits. The City Portrait has been developed to foster big-picture thinking, and cross-departmental collaboration within the City and with a wider network of changemakers to co-create the city's transformation. The City Portrait uses detailed city-specific data to provide a holistic snapshot of the city and its impact through four lenses – arising from combining social and ecological domains at local and global scales – which together provide a new perspective on what it means for a city to thrive. It appreciates what makes a city unique, while understanding its global influence and responsibility.
Watch the video below of Kate Raworth explaining our approach to 'Downscaling the Doughnut', read more about the City Portrait here.
The City Portrait Canvas is a simplified version of the City Portrait, since it does not begin by creating a statistical overview of the city. Instead, it draws on the portrait's conceptual framework of the four lenses. Even without creating a detailed City Portrait, city changemakers can use the City Portrait Canvas as a thinking tool for exploring and designing city strategies, policies and programmes.
Using the City Portrait Canvas, city changemakers can analyse and refine new and existing city strategies, policies and programmes through four interconnected lenses - social and ecological, local and global. The aim is to design strategies that can generate co-benefits between social and ecological dimensions, both within the city, and for the planet and people worldwide. By using the City Portrait Canvas, city changemakers have the opportunity to apply holistic thinking while developing strategies for thriving cities.
Download the City Portrait Canvas and get acquainted with the four lenses of the City Portrait. Watch the 10 minute introductory video. Then read the Why, and What of each lens to familiarise yourself with the different themes related to a city's local aspirations and global responsibilities. For a deep dive into the City Portrait tool and its four lenses, we recommend reading the 'Creating City Portraits' methodological guide.
Select a strategy you are working on in your city that you would like to assess for its social and ecological impacts, on both a local and global level. Note down the main components of the strategy on the City Strategy Worksheet. Then, write the name of your strategy inside the diamond shape in the centre of the City Portrait Canvas.
Now, dive deeper into the local impacts of your strategy.
Now explore the global impacts of your strategy. Repeat a), b) and c) from Step 3 for the Global lenses.
Tip: While doing the exercise, you might find yourself alternating between the positive and negative impacts. We recommend that you find your own intuitive way to navigate between steps a) and b).
Summarise your key insights from Steps 3, 4 & 5 on the City Strategy Worksheet. Ask yourself “how would you refine the existing strategy to enhance its social and ecological benefits?”
‘Creating City Portraits’ is the methodology for downscaling the Doughnut of social and planetary boundaries to the city. The tool provides a holistic snapshot of the city and its impact through four lenses–both social and ecological, local and global–which together provide a new perspective on what it means for a city to thrive. It appreciates what makes a city unique, while understanding its global influence and responsibility.
The Creating City Portraits guide is based on experience of applying the methodology with pilot cities in the Thriving Cities Initiative - Philadelphia, Portland and Amsterdam. Having received a huge level of interest in the City Portrait methodology to ‘downscale the Doughnut’ since the publication of the Amsterdam City Doughnut, the Thriving Cities Initiative is publishing this guide with the intention to make it as simple as possible for others to use and adapt.
Would you like to create a City Portrait for your city? Use our City Portrait Canvas, a tool to assess city strategies, policies, and programmes in a holistic way, integrating environmental and social, local and global considerations.
Learn more about how the Doughnut can be turned into a tool for transformative action in this 12 minute introductory with Kate Raworth.
TCI is a collaboration between Circle Economy, C40 Cities, Doughnut Economics Action Lab and Biomimicry 3.8. It takes cities on a journey to become thriving places, while respecting the wellbeing of all people and the whole planet.
Educators, researchers, people from cities and places, business and enterprise are invited to join Doughnut Economics Action Lab's collaborative platform, which brings together like-minded changemakers who are putting Doughnut Economics into practice.
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Circularity presents opportunities for local labour markets. To tap into this potential, it is vital to understand how many and which jobs are already contributing to the circular economy locally. To obtain a baseline analysis of employment in the local circular economy in Cornwall and the Isles of Scilly (CIoS), Tevi and Circle Economy collaborated on the Circular Jobs Monitor. The Circular Jobs Monitor is an online tool that gathers and displays the amount and type of jobs that are part of the circular economy. This report summarises the results that are displayed on the monitor and outlines next steps that can be taken to build on these results and further tap into the opportunities the circular economy presents the local labour market.
Tevi is an ERDF-funded programme helping Cornish SMEs to grow whilst supporting Cornwall's transition to a circular economy. Tevi currently supports over 300 enterprises through bespoke consultancy services, challenge networks and a grant scheme. Tevi is delivered by the University of Exeter in partnership with Cornwall Wildlife Trust, Cornwall Council and Cornwall Development Company.
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The Netherlands is a global frontrunner in the race to circularity with a Circularity Metric of 24.5%. However, the government has ambitious goals: an economy that is 50% circular by 2030 and 100% circular by 2050. The Circularity Gap Report, the Netherlands, recommends wide-ranging ways in which the economy can pivot away from its linear habits across four key sectors: agriculture, construction, manufacturing and energy. The suggested strategies could triple the Dutch metric from 24.5% to 70%.
More and more countries are recognising the circular economy as a means to make their economies more competitive, improve living conditions for growing populations, help meet emissions targets and avoid deforestation. But how countries reach an ecologically safe and socially just development space for their people varies greatly. The Circularity Gap Report for Countries provides insight into the best interventions to boost circularity on a national level and the tools to monitor progress.
The Circularity Gap Initiative aims to highlight the urgency of the transition to a circular economy and inspire key decision makers in both government and business to coordinate action to accelerate that transition. We do this by bringing together stakeholders from academia, businesses, NGOs and governments to input, evaluate and endorse annual reports on the state of the transition based on the latest scientific evidence.
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