Circular Economy Indicators for Sustainable Investment Evaluation
- Apoorva Arya & Arpit Bhutani
- Sep 30, 2022
- 2 min read
The study, prepared by Circular Innovation Lab, focuses on developing a sustainability rating system for the Philippines’ Board of Investments (BOI). The report recognizes the growing role of foreign direct investment (FDI) in driving sustainable development but also highlights the risks if sustainability factors are overlooked. In the Philippine context, balancing economic recovery, environmental protection, and social justice has been particularly challenging, especially in the wake of COVID-19 disruptions and structural reliance on fossil fuels. To address this, the BOI is tasked with evaluating priority sectors for incentives under the Corporate Recovery and Tax Incentives for Enterprises (CREATE) Act, guided by the Strategic Investment Priority Plan (SIPP). The study’s central contribution lies in designing a tool that allows BOI to assess the sustainability of sectors and industries systematically, ensuring that incentive allocation is both fair and aligned with long-term development goals
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Circular Innovation Lab developed a practical, Excel-based tool that integrates the United Nations Sustainable Development Goals (SDGs) into three overarching dimensions—social, environmental, and economic. Each sector or industry is categorized using the Philippines Standard Industrial Classification (PSIC) system, and its performance across relevant SDG indicators is rated through a simple binary scoring method. This allows BOI to evaluate industries for potential risks and opportunities, producing a sustainability score that determines eligibility for SIPP incentives. Visual features, such as color coding for different tiers of incentives, make the tool user-friendly while promoting transparency. For example, certain indicators automatically signal whether a sector qualifies for Tier II or Tier III incentives, enabling quick identification of sustainability opportunities. To demonstrate its application, CIL tested the framework using agricultural case studies, such as the cultivation of perennial and non-perennial crops, which revealed how the methodology could guide both sectoral analysis and policy decisions
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The system designed by CIL does not merely assess compliance but encourages continuous improvement by highlighting gaps and setting thresholds. Sectors must meet a minimum threshold (0.33 per indicator and 0.5 overall) to qualify for incentives, ensuring that weaknesses in any one sustainability pillar are not overlooked. While the tool is still at a preliminary stage and faces challenges related to data availability and classification systems, it provides BOI with a robust foundation for embedding sustainability into investment promotion. By bridging international frameworks from OECD, UNESCAP, FAO, and WRI with local policy realities, CIL’s work positions the Philippines to attract FDI that contributes meaningfully to sustainable development while aligning national priorities with global goals. Ultimately, the rating system embodies CIL’s mission of enabling governments and institutions to operationalize sustainability in concrete, data-driven, and actionable ways.
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Access the full report here:
