In the realm of corporate sustainability, standards and frameworks guide organizations toward responsible and transparent practices. Two significant contributors to this landscape are the International Organization for Standardization (ISO) and the European Sustainability Reporting Standards (ESRS), particularly ESRS E5 on Resource Use and Circular Economy. Focusing on ISO standards for the circular economy—especially ISO 59000 and ISO 59020—alongside ESRS E5 helps businesses streamline their sustainability efforts and ensure robust compliance with circularity and resource management goals.
What are ISO 59000 Standards?
The ISO 59000 family of standards focuses specifically on circular economy practices, providing guidelines that help organizations transition from linear models of production and consumption to sustainable, circular systems. These standards ensure businesses measure and manage circularity across their operations and supply chains.
ISO 59020: Measuring Circularity
ISO 59020 is crucial in this context as it offers a framework for measuring the circular economy performance of businesses. It aligns directly with the Circular Transition Indicators (CTI) framework and complements the ESRS E5 reporting standards. With ISO 59020, organizations can quantify circularity metrics, ensuring that their resource use, recycling, and waste management strategies meet global and European sustainability criteria.
The figure below originates from the Landscape Analysis of Circularity-related Corporate Performance & Accountability and Policy & Regulation. Led by the World Business Council for Sustainable Development (WBCSD) in collaboration with The One Planet network (OPN), provides an in-depth analysis of the current landscape of circularity metrics and frameworks and highlights the gaps and opportunities within the circular economy to inform and guide future business practices and policy frameworks.
What is ESRS E5?
The European Sustainability Reporting Standards (ESRS) are part of the European Union’s Corporate Sustainability Reporting Directive (CSRD). ESRS E5 focuses specifically on Resource Use and Circular Economy, emphasizing sustainable resource management and circular economy principles. The goal is to help businesses transition from traditional linear models to circular ones where products, materials, and resources are reused, repaired, and recycled.
Common Challenges with Data Collection
One of the significant challenges for businesses working toward compliance with both ISO 59020 and ESRS E5 is data collection. Gathering accurate, comprehensive data on resource use, recycling rates, and circularity efforts is not only time-consuming but also critical to fulfilling the requirements of both standards. Without the right tools, businesses often struggle to collect and process the necessary data, leading to inefficiencies, auditing headaches, and increased risks of non-compliance.
How Software Tools Can Help
Access to the right software solutions is a key factor in overcoming the data-collection challenge. Circular IQ’s software, for instance, is designed to support businesses in collecting, processing, and reporting circular economy data, aligning perfectly with the requirements of ISO 59020, the CTI framework, and ESRS E5. By leveraging Circular IQ’s software, companies can:
- Save Time: Automate data collection and processing, allowing teams to focus on strategic initiatives rather than manual data entry.
- Smoothen Auditing: Ensure that data is organized, traceable, and readily available for audits, reducing the stress and effort involved in the compliance process.
- Avoid Risks of Non-Compliance: By streamlining reporting and ensuring alignment with regulatory requirements, businesses can reduce the likelihood of compliance issues and associated fines or penalties.
Commonalities Between CTI, ISO 59020 & ESRS E5
Shared Focus on Circularity and Sustainability
Both ISO 59000 standards and ESRS E5 place circularity at the core of their sustainability objectives. ISO 59020, for instance, provides specific measurement tools for circularity, allowing businesses to monitor and report their performance in line with the Circular Transition Indicators (CTI) framework. ESRS E5 similarly requires companies to disclose their resource use and circular economy practices, creating a shared emphasis on measurable sustainability. See the visual below that shows the overlap in data-points.
Alignment on Resource Efficiency
ISO 59020, which is part of the broader ISO 59000 series, focuses on helping organizations track and improve resource efficiency in circular systems. It provides a standardized methodology for assessing circularity across operations. ESRS E5 shares this objective by mandating that companies report on their resource efficiency initiatives and circular economy strategies, ensuring alignment between European and international standards.
Promotion of Circular Economy Principles
ISO 59000 series, especially ISO 59020, encourages businesses to implement circular economy principles such as reuse, repair, and recycling. ESRS E5 explicitly targets the same principles, requiring detailed disclosures of resource use, recycling, and waste management. Both frameworks work to reduce environmental impact and foster a more sustainable, circular economic model.
Enhancing Transparency and Reporting
ISO 59020 and ESRS E5 both emphasize the importance of transparent reporting. ISO 59020 provides a structured approach for documenting and measuring circularity, helping businesses track their progress and performance. ESRS E5 builds on this by requiring companies to disclose comparable, reliable data on resource use and circular economy efforts, ensuring stakeholders have access to meaningful insights.
Risk Management
Effective risk management is another shared aspect. ISO 59020 allows businesses to identify potential risks related to resource inefficiencies and waste, offering guidelines to mitigate these risks. ESRS E5 similarly requires companies to assess risks related to resource use and circular economy practices, ensuring organizations disclose potential sustainability risks and their mitigation strategies.
How CircularIQ Can Help with ESRS E5
Comprehensive Data Management and Reporting
CircularIQ provides robust data management capabilities that streamline the collection, analysis, and reporting of sustainability data. This helps businesses align with ESRS E5 requirements by ensuring accurate and comprehensive documentation of resource use and circular economy practices.
Standardized Reporting Frameworks
CircularIQ simplifies the adherence to standardized reporting frameworks like ESRS E5 by offering pre-configured templates and guidelines. This ensures that businesses can easily comply with the detailed and standardized disclosure requirements mandated by ESRS E5.
Risk Assessment and Management
With CircularIQ’s CTI Tool, businesses can effectively assess and manage sustainability risks related to resource use and circular economy. The tool helps identify potential risks in inflows and outflows, providing a clear framework for documenting and addressing these risks, as required by ESRS E5.
Enhanced Transparency and Communication
The CTI Tool promotes transparency by providing a clear and structured approach to documenting and presenting non-financial data. This aligns perfectly with ESRS E5’s emphasis on transparent sustainability reporting, making it easier for businesses to communicate their sustainability impacts and compliance efforts to stakeholders.
