Deep dive: construction circularity — metrics that matter and how to measure them

The construction industry generates approximately 600 million tons of construction and demolition (C&D) waste annually in the United States alone, representing nearly 40% of all solid waste streams—yet fewer than 25% of contractors systematically track circularity metrics that could transform this liability into a strategic advantage. As regulatory pressure intensifies and material costs escalate, the sector faces a critical inflection point: organizations that master circularity measurement will capture significant value, while those that ignore it risk obsolescence. This deep dive examines the metrics that matter most across commercial, residential, and infrastructure sectors, providing benchmark KPIs and practical measurement frameworks for North American markets.

Why It Matters

Construction circularity has transitioned from an aspirational sustainability goal to an operational imperative with measurable financial implications. The sector's linear "take-make-dispose" model is fundamentally incompatible with resource constraints, regulatory trajectories, and stakeholder expectations emerging across North America.

In 2024, the U.S. construction industry consumed approximately 2.3 billion metric tons of raw materials, with only 35% derived from recycled or reclaimed sources. Canada's construction sector demonstrated marginally better performance at 41% recycled content integration, driven by provincial regulations in British Columbia and Ontario. The Environmental Protection Agency's 2024 analysis revealed that C&D waste recycling rates plateaued at 76% for concrete and asphalt but remained below 40% for wood, drywall, and mixed materials—indicating significant untapped circular potential.

The economic case has crystallized dramatically. McKinsey's 2024 Built Environment Report documented that projects implementing comprehensive circularity metrics achieved 12-18% reductions in material procurement costs and 23% lower waste disposal expenditures. These savings compound when considering the carbon implications: embodied carbon regulations in California (CALGreen 2025 amendments) and New York (Local Law 97 compliance thresholds) now impose financial penalties for projects exceeding carbon intensity benchmarks, making circularity measurement synonymous with regulatory compliance.

For investors, the metrics landscape has evolved beyond ESG checkbox compliance. The Task Force on Climate-related Financial Disclosures (TCFD) and the emerging International Sustainability Standards Board (ISSB) frameworks increasingly require granular material circularity data. Real estate investment trusts (REITs) and infrastructure funds now face direct pressure from limited partners to demonstrate circular economy integration, with 67% of institutional investors surveyed by CBRE in 2024 indicating that circularity metrics influence capital allocation decisions.

The North American context presents unique characteristics. Unlike the European Union's mandatory Digital Product Passport requirements effective 2027, the U.S. and Canada operate within a patchwork of voluntary standards and regional mandates. This creates both challenges—fragmented data standards and measurement protocols—and opportunities for early adopters to establish competitive advantages before regulatory harmonization occurs.

Key Concepts

Understanding construction circularity metrics requires familiarity with several foundational concepts that inform measurement frameworks and benchmark comparisons.

Digital Product Passport (DPP): A digital record containing comprehensive information about a building component's materials, origin, environmental impact, and end-of-life recovery potential. In construction, DPPs enable tracking of material flows throughout building lifecycles, facilitating recovery, reuse, and recycling at demolition. The EU's mandatory DPP requirements for construction products (effective 2027) are driving global standardization, with North American manufacturers increasingly adopting compatible systems to maintain export competitiveness. Key metrics embedded within DPPs include recycled content percentage, recyclability score, toxicity indicators, and chain-of-custody documentation.

Capital Expenditure (CAPEX) Circularity Metrics: Measurements tracking circular economy investments during initial construction phases. CAPEX circularity KPIs include virgin material displacement rates, design-for-disassembly implementation percentages, modular component adoption, and recyclable material specification rates. A 2024 benchmark study by Turner Construction found that projects targeting >60% CAPEX circularity scores achieved net present value improvements of 8-14% over conventional approaches when incorporating 30-year lifecycle analysis.

Operational Expenditure (OPEX) Circularity Metrics: Indicators measuring circular practices during building operation and maintenance phases. OPEX metrics encompass material repair-versus-replace ratios, consumable recycling rates, equipment refurbishment adoption, and waste stream diversion during renovations. The Building Owners and Managers Association (BOMA) 2024 benchmarking data indicates that buildings achieving >75% OPEX circularity scores demonstrate 19% lower annual maintenance costs compared to conventional operations.

Carbon Offsets and Embodied Carbon Credits: Market mechanisms allowing organizations to compensate for unavoidable carbon emissions through investments in carbon reduction or removal projects. In construction circularity, offsets interact with metrics through embodied carbon accounting—the emissions associated with material extraction, manufacturing, and transportation. California's Buy Clean California Act mandates Global Warming Potential (GWP) disclosures for structural steel and concrete, establishing benchmarks against which offset requirements are calculated. Effective circularity metrics must integrate offset considerations to provide comprehensive environmental impact assessments.

Water Circularity in Construction: Metrics tracking water consumption, recycling, and discharge throughout construction and operational phases. Construction sites consume substantial water resources for dust suppression, concrete mixing, and equipment operation. The U.S. Green Building Council's LEED v4.1 framework establishes water circularity credits, with benchmark thresholds requiring >30% reduction from baseline consumption and >50% greywater integration for premium certification levels. Water circularity metrics are increasingly material in water-stressed regions including the Southwest United States and portions of Western Canada.

What's Working and What Isn't

What's Working

Standardized Material Circularity Indicators (MCI) Adoption: The Ellen MacArthur Foundation's Material Circularity Indicator methodology has gained significant traction in North American commercial construction. Major general contractors including Skanska USA, Clark Construction, and PCL Construction now require MCI calculations for projects exceeding $50 million. The standardization enables cross-project benchmarking and portfolio-level tracking. Skanska's 2024 sustainability report documented an average MCI score improvement from 0.31 to 0.47 across their U.S. portfolio between 2021 and 2024, demonstrating measurable progress through consistent measurement.

Building Information Modeling (BIM) Integration with Circularity Data: The integration of circularity metrics within BIM workflows represents a transformative advancement. Autodesk's Revit platform now supports embedded material passport data, enabling real-time circularity scoring during design phases. Mortenson Construction's implementation of BIM-integrated circularity tracking across their healthcare portfolio reduced material waste by 34% and increased salvaged material utilization by 28% between 2023 and 2024. The visualization capabilities enable design teams to optimize circularity outcomes before procurement decisions are finalized.

Regional C&D Recycling Infrastructure Expansion: Investment in construction and demolition waste processing infrastructure has accelerated across major metropolitan areas. The Dallas-Fort Worth region added three advanced C&D sorting facilities in 2024, increasing processing capacity by 40%. These facilities enable higher-value material recovery, supporting improved circularity metrics for projects utilizing their services. Benchmark data from these facilities indicates that advanced sorting achieves 85% diversion rates compared to 62% for conventional operations, directly improving project-level circularity KPIs.

Deconstruction Ordinances Driving Metric Adoption: Portland, Oregon; San Jose, California; and Milwaukee, Wisconsin have implemented deconstruction ordinances requiring systematic disassembly of buildings meeting age and size thresholds. These regulations mandate detailed material tracking and recovery reporting, effectively requiring circularity metrics for compliance. San Jose's 2024 compliance data showed that regulated projects achieved 78% material recovery rates compared to 34% for conventional demolition, demonstrating the policy mechanism's effectiveness in driving metric adoption and performance improvement.

What Isn't Working

Fragmented Measurement Standards: The absence of unified North American circularity measurement standards creates significant friction. Projects operating across multiple jurisdictions must navigate incompatible reporting requirements, undermining data comparability and increasing compliance costs. A 2024 survey by the Associated General Contractors of America found that 73% of contractors identified "measurement standard fragmentation" as their primary barrier to circularity metric implementation. The divergence between LEED, BREEAM, Living Building Challenge, and regional standards forces organizations to maintain multiple parallel measurement systems.

Inadequate Lifecycle Cost Integration: Despite compelling evidence that circularity investments generate positive returns over building lifecycles, conventional financial analysis practices continue to undervalue these benefits. Most project pro formas evaluate circularity investments against first-cost metrics without incorporating operational savings, residual value enhancement, or regulatory risk mitigation. The National Institute of Building Sciences' 2024 analysis found that only 23% of commercial construction projects incorporate lifecycle cost analysis that captures circularity benefits, resulting in systematic underinvestment in high-circularity approaches.

Supply Chain Data Opacity: Material manufacturers frequently lack detailed circularity data for their products, impeding accurate project-level measurement. Environmental Product Declarations (EPDs) remain voluntary for most construction materials in North America, and existing EPDs often exclude circular economy indicators. A 2024 analysis by the Carbon Leadership Forum found that only 41% of structural steel products and 28% of concrete products sold in North America had EPDs with sufficient circularity data for comprehensive MCI calculations. This data gap forces project teams to rely on generic assumptions that may misrepresent actual circularity performance.

Insufficient Skilled Workforce: Implementing sophisticated circularity metrics requires specialized competencies that remain scarce in the construction workforce. Quantity surveyors, sustainability consultants, and BIM managers capable of executing comprehensive circularity assessments command premium compensation and are concentrated in major metropolitan markets. The U.S. Bureau of Labor Statistics does not yet track circularity-specific occupations, but industry surveys suggest fewer than 5,000 professionals in North America possess advanced circularity measurement capabilities against demand for more than 20,000.

Key Players

Established Leaders

Skanska USA: This Swedish-headquartered contractor's U.S. division has established industry-leading circularity measurement practices, publishing detailed MCI scores across their portfolio and committing to 50% recycled content utilization by 2030. Their proprietary tracking platform enables real-time circularity KPI monitoring across active projects.

Lendlease Americas: The Australian-based developer's North American operations integrate circularity metrics within their "Mission Zero" carbon commitment. Their Chicago and San Francisco developments demonstrate >65% circularity scores through systematic design-for-disassembly and material passport implementation.

Turner Construction Company: As the largest general contractor in the United States, Turner's adoption of circularity metrics influences sector-wide practices. Their 2024 circular economy report documented material-specific KPIs across 15 construction categories, establishing benchmarks adopted by industry associations.

Mortenson Construction: Specializing in healthcare and renewable energy construction, Mortenson has developed sector-specific circularity benchmarks that account for specialized regulatory requirements and material constraints unique to these facility types.

EllisDon Corporation: Canada's largest construction company has implemented comprehensive circularity tracking aligned with Canadian Standards Association guidelines, demonstrating leadership in the Canadian market and providing cross-border benchmark comparisons.

Emerging Startups

Rheaply: This Chicago-based platform enables enterprise-level material reuse tracking and marketplace functionality, supporting circularity metric improvement through enhanced secondary material sourcing and surplus redistribution.

Cambium Carbon: Operating a certified carbon credit program for urban wood recovery, Cambium Carbon provides measurement tools that integrate reclaimed wood utilization into project-level carbon and circularity accounting frameworks.

Madaster: Originally Dutch, Madaster's North American expansion brings material passport and circularity scoring platforms that generate building-level circularity assessments compliant with emerging international standards.

Circular Ecology: This consultancy-turned-software-company provides embodied carbon and circularity calculation tools, including the widely-adopted ICE (Inventory of Carbon and Energy) database underpinning many North American circularity assessments.

Material Mapper: A California-based startup providing AI-powered waste stream analysis that enables real-time circularity metric tracking during demolition and construction phases, addressing the data collection challenges that impede accurate measurement.

Key Investors & Funders

Breakthrough Energy Ventures: Bill Gates' climate-focused fund has invested in multiple construction circularity startups, signaling strategic importance and providing growth capital for scaling measurement and implementation platforms.

Canada Infrastructure Bank: This Crown corporation has incorporated circularity metrics within infrastructure project evaluation criteria, providing preferential financing terms for projects demonstrating superior circularity performance.

Fifth Wall: The largest venture capital firm focused on real estate technology has made multiple investments in circularity-enabling platforms, including material tracking and building performance measurement systems.

JLL Spark: The venture arm of commercial real estate services giant JLL invests in proptech solutions including circularity measurement platforms, leveraging their extensive client relationships for market access.

U.S. Department of Energy Building Technologies Office: Through the Advanced Building Construction Initiative and related programs, DOE provides grant funding for circularity measurement innovation and demonstration projects across residential and commercial sectors.

Examples

Example 1: Microsoft Silicon Valley Campus Redevelopment

Microsoft's 2023-2025 campus expansion in Mountain View, California, established new benchmarks for large-scale commercial circularity. The 2.5-million-square-foot project achieved a Material Circularity Indicator score of 0.58—substantially exceeding the commercial office benchmark of 0.35. Key metrics included 72% recycled structural steel content (versus 25% industry average), 94% C&D waste diversion during demolition of existing structures, and complete digital product passport implementation for all building systems. The project documented $14.2 million in material cost savings through systematic secondary material sourcing and realized $3.8 million in waste disposal cost reductions. CAPEX circularity investment of $28 million generated projected 40-year lifecycle returns exceeding $180 million through reduced operational costs and enhanced asset residual value.

Example 2: Toronto Region Metrolinx Rail Expansion

The Eglinton Crosstown Light Rail Transit project incorporated circularity metrics within Canada's largest active infrastructure project. The transit authority mandated contractor reporting against 23 specific circularity KPIs, including excavated soil beneficial reuse (>85% achieved versus 60% target), concrete recycled aggregate content (minimum 30%), and structural steel recycled content (minimum 90%). Water circularity metrics required closed-loop tunnel boring machine operations with >95% water recycling—achieved through on-site treatment systems. The project's reporting framework, developed in partnership with the University of Toronto Circular Economy Lab, has been adopted as a template for Canadian infrastructure projects, establishing precedent for systematic circularity measurement in public works.

Example 3: Hines T3 Timber Office Buildings

Hines' T3 (Timber, Transit, Technology) development program exemplifies residential/commercial mixed-use circularity metrics. The Minneapolis T3 building, completed in 2016, established baseline metrics subsequently improved across the T3 portfolio. The 2024 T3 Collingwood in Austin, Texas achieved 84% biogenic material content through mass timber structural systems, with comprehensive chain-of-custody documentation enabling carbon storage credits. OPEX circularity metrics demonstrated 47% lower maintenance material waste compared to conventional office buildings. The project implemented complete material passports enabling future component recovery, with financial modeling documenting 22% enhanced residual value assumptions based on recoverable material values. Cross-portfolio benchmarking across seven T3 projects established sector-specific timber building circularity KPIs now referenced by the American Wood Council.

Action Checklist

FAQ

Q: How should organizations prioritize circularity metrics when resources for measurement are limited?

A: Organizations should prioritize metrics with the greatest financial materiality and regulatory relevance. For most North American commercial construction, this means focusing initially on three core metrics: Material Circularity Indicator (MCI) scores for structural systems (typically 40-60% of embodied carbon), C&D waste diversion rates (directly impacting disposal costs and increasingly regulated), and recycled content percentages for steel and concrete (subject to emerging procurement mandates). These three metrics capture the majority of circularity value while requiring manageable data collection effort. As measurement capabilities mature, organizations can expand to comprehensive CAPEX/OPEX circularity tracking, water circularity, and component-level material passport implementation. The key principle is establishing consistent measurement of priority metrics rather than inconsistent tracking across all possible indicators.

Q: What circularity benchmarks should commercial real estate investors expect from development partners?

A: Investor expectations should reflect sector-specific performance ranges while pushing for continuous improvement. For new commercial office construction in 2025, reasonable benchmark thresholds include: MCI scores >0.40 (top quartile achieves >0.55), C&D waste diversion >80%, structural steel recycled content >85%, concrete recycled aggregate content >25%, and water circularity (greywater/recycled water) >30% of construction phase consumption. Investors should require lifecycle cost analysis demonstrating positive NPV for circularity investments over 20+ year horizons. For existing building acquisitions, OPEX circularity assessments should document current waste stream composition and identify improvement pathways. Critically, investors should require data quality documentation, as self-reported metrics without third-party verification or documented methodologies provide limited assurance.

Q: How do circularity metrics integrate with carbon accounting requirements?

A: Circularity and carbon metrics are deeply interconnected but measure distinct phenomena. Circularity metrics track material flows—recycled content, recyclability, waste diversion—while carbon metrics quantify greenhouse gas emissions. The integration occurs through embodied carbon calculations: higher circularity typically correlates with lower embodied carbon, as recycled materials generally require less energy-intensive processing than virgin alternatives. Regulatory frameworks increasingly require both. California's Buy Clean Act mandates GWP (Global Warming Potential) disclosures that implicitly incentivize circularity, while emerging federal GSA standards may require explicit circularity metrics alongside carbon intensity thresholds. Organizations should implement measurement systems capturing both dimensions, using tools like the EC3 (Embodied Carbon in Construction Calculator) that incorporate circularity-adjusted carbon factors. The most sophisticated frameworks calculate carbon credit values for circular material utilization, enabling integrated financial analysis.

Q: What technology investments are essential for robust circularity measurement?

A: Essential technology infrastructure includes three layers. First, BIM platforms with material data integration capabilities—Autodesk Revit, Bentley Systems, or equivalent—enabling specification-level circularity tracking during design phases. Second, procurement and supply chain systems capable of collecting and validating EPD data, recycled content certifications, and chain-of-custody documentation from suppliers. Third, construction phase tracking systems including waste management software (e.g., Re-TRAC, Wastebits) with real-time diversion rate calculation and RFID/IoT capabilities for material movement monitoring. For organizations seeking advanced capabilities, machine learning-powered waste stream analysis (offered by startups including Material Mapper and AMP Robotics) can dramatically improve sorting accuracy and data quality. Investment requirements vary significantly by organization size, but minimum viable systems for project-level circularity tracking typically require $50,000-$150,000 in software and implementation costs for mid-size general contractors.

Q: How should circularity metrics inform building valuation and transaction decisions?

A: Circularity metrics should integrate into building valuation through multiple mechanisms. Direct operational impact analysis should quantify OPEX savings from circular practices—reduced waste disposal costs, lower maintenance material expenditure, and extended component lifecycles. Regulatory risk assessment should evaluate exposure to emerging mandates, with buildings demonstrating superior circularity positioned more favorably as compliance requirements tighten. Residual value modeling should incorporate material passport data, recognizing that buildings with documented component recovery potential hold enhanced end-of-life values. Market positioning analysis should consider tenant and investor preferences, with evidence indicating growing demand for circular buildings particularly from technology, financial services, and professional services tenants with corporate sustainability commitments. Appraisers and transaction advisors should request circularity documentation during due diligence, with MCI scores, waste diversion records, and material passport availability increasingly material to valuation conclusions.

Sources

U.S. Environmental Protection Agency. "Advancing Sustainable Materials Management: 2024 Fact Sheet." EPA 530-F-24-001, December 2024.
Ellen MacArthur Foundation. "Circularity Indicators: An Approach to Measuring Circularity—Methodology." Version 3.0, 2023.
McKinsey & Company. "Built Environment 2024: The Circular Opportunity." McKinsey Global Institute, September 2024.
Turner Construction Company. "2024 Sustainability Report: Circular Economy Performance Metrics." Turner Construction Company, March 2024.
Carbon Leadership Forum. "2024 North American EPD Availability Study." University of Washington, January 2024.
California Air Resources Board. "Buy Clean California Act: 2025 Implementation Guidelines and GWP Benchmarks." CARB Publication 24-405, November 2024.
CBRE Research. "Investor Sentiment Survey: ESG and Circularity in Commercial Real Estate." CBRE Group, Inc., Q3 2024.
National Institute of Building Sciences. "Whole Building Design Guide: Lifecycle Cost Analysis in Practice." NIBS Report 2024-12, August 2024.

Deep dive: construction circularity — metrics that matter and how to measure them (angle 6)