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Policy recommendations

In order to move away from monitoring individual and isolated flows towards a systematic monitoring of the physical economy, we recommend:

  • Developing a data infrastructure for material and energy stocks and flows that integrates stocks and flows data from governmental statistics and individual projects into a systems context. This is a large task requiring coordinated efforts between different government, businesses, and research institutions as well as facilitation through legal and institutional means.
    • There is a need for institutions that have a mandate and the necessary resources to coordinate the data integration at the national, EU, and global levels. For this purpose, MinFuture call for the establishment of a high-level working group, which will evaluate institutional options to coordinate the monitoring of the physical economy. Organisations such as the IRP, IEA, OECD, UNSD IGF, and UNECE could play an important role in establishing such a group.
    • Legal interventions have a great potential to facilitate the development of a data infrastructure for physical accounting. At the EU level, legal options include the possibility of either amending the existing INSPIRE Directive or preparing a new Directive for monitoring the physical economy. Setting out clear legal conditions is important as they provide the right motivation to national governments to move in this direction. Moreover, they help ensure that data infrastructure on physical material stocks and flows is compatible and usable across national boundaries. For this purpose, common implementing rules are needed, for example in data specifications, metadata, data services and data interoperability.
  • Addressing the main knowledge gaps that exist regarding the physical accounting of:
    • Geological stocks. A mass-balance consistent accounting of geological stocks does not yet exist. Securing access to future minerals supply requires in-depth knowledge of the quantities and qualities of materials stored in the earth crust. For this purpose, a framework for reporting mass-balance-consistent figures of geological stocks over time and space is required. Additionally, further developments and improvements in 3D geological models are necessary in order to provide important underpinning knowledge about geological stocks.
    • Anthropogenic (in-use) stocks. Here, we recommend the development of a standardised methodology and framework for physical accounting of anthropogenic stocks, which will provide consistent terminology, calculation methods and enable the integration of existing accounting approaches. In addition, data need to be produced using techniques and tools, such as remote sensing, GIS, 3D city models and others describing the built environment.
    • Production and trade. Statistics of production and trade are inconsistent, which greatly hampers the possibility to track materials through the supply chain. We recommend the establishment of an international expert group working on a long-term goal to harmonise production and trade statistics from a global supply chain and material cycle perspective.


Business recommendations

In order for physical accounting to contribute to improving competitiveness, to simplifying reporting and communicating good environmental practice, we recommend:

  • Establishing a physical accounting that links to already existing financial accounting at site and company level. This would facilitate gaining new insights into potentials for improving resource efficiency and reducing costs.
  • Using bottom-up, real-time data from process control systems in order to build a resource flow picture for industrial plants. Through this, it is possible to optimise the performance of plants and benchmark processes across similar operations.

In order for companies to improve strategic decision-making through physical accounting along supply chains we recommend:

  • Support the development of a common data infrastructure along value chains or among sectors to facilitate collaboration. This can be achieved in cooperation with industry associations or with government institutions that have started to monitor the physical economy.
  • The development of a data infrastructure for the monitoring of the physical economy can be greatly improved by reporting the data in a system context, e.g., by providing the metadata necessary to understand the reference points. This should include harmonised technical and monitoring procedures, which ensure that data reporting is done in a system context.