The unit of account the circular-economy standards world is converging on, and the place where SINE’s company-boundary thesis has to be restated more carefully.
The term
A value network (VN) is a set of organizations that cooperate through the provision of products, components and services, such that “value creation is not usually completed by individual organizations” (CE Association white paper, 2026, p. 2). The definition “conforms with ISO 59004”; the criteria for what counts as one “are expected to be made concrete in ISO 59011 and other future standards” (ibid., footnote 1).
| Standard | Status | Subject |
|---|---|---|
| ISO 59004 | published | CE vocabulary, principles, guidance — source of the VN definition |
| ISO 59010 | 2024 | Guidance on the transition of business models and value networks |
| ISO/AWI 59011 | under development | Organizing a value network towards circularity — requirements and guidance; the intended first home of CVP, as an annex. Confirmed from inside the committee: Kotaro Shimizu, a TC 323 contributor, calls it “ISO 59011, which addresses value networks within the CE” ⟨Third Open Forum, 2026⟩ |
| ISO 59020 | published | CE performance measurement — surveyed in the white paper’s appendix |
| ISO 59040 | published | Product circularity data sheet — surveyed likewise |
| ISO/TR 59032 | 2024 | Review of existing value networks — cited by the research report as a source of the VN typology below |
Committee: ISO/TC 323, with WG3 named as the venue for CVP’s definition and calculation methods.
⟨Inference: ISO 59011 being unfinished is the single most actionable fact on this page. The criteria for what a value network is — therefore where the measurement boundary falls, therefore whose data must be obtained — are being written now, in a working group whose membership is a matter of record. A contribution has somewhere to land.⟩
Why this corrects the company-boundary thesis
The wiki argued on 2026-10-16, from Hitachi’s Sustainability Report p. 36 alone, that a metric designed to incentivise investment gets defined over data the investor already holds, so the system boundary lands at the company boundary.
The definitional half of that is wrong, and the correction is worth having. CVP is explicitly extended to value networks:
CVP_VN = Σ(S_CE,i − I_CE,i) / ( Σ(C_CE,i + G_CE,i) − Σ C_D,i )
summed over all participating organizations i, with intra-network purchase costs C_D subtracted to prevent double counting. The authors chose the network boundary, not the firm boundary, and did so because “when assessing the sustainability of circular business, it is essential to capture the economic efficiency of not only individual organizations but also of entire networks.”
The operative half survives, and is sharper for the correction. The same study group records, as an obstacle it could not dissolve:
“The disclosure of numerator and denominator data within VNs is difficult.”
with four remedies on offer — internal-only use, third-party certification of the final value, year-on-year conversion instead of levels, and “data management by financial and other institutions as third parties”. All four are trust arrangements. None lets a figure be checked without being shown.
So the honest statement of the thesis is:
The boundary of the metric is the value network. The boundary of what can actually be computed and believed is still the firm, because the only instruments on the table for crossing it are an auditor, a trustee, or not crossing it. The gap between the two boundaries is the thing SINE builds for.
⟨Inference: this is a better position than the one it replaces. We are no longer arguing that the standard-setters think too small — they do not — but that they have specified a quantity they have no mechanism to obtain. That is a claim they have already conceded in writing, which makes it an opening rather than a criticism.⟩
The bargaining tell
The second remedy bullet gives the reason the VN data matters:
“Disclosing numerator and denominator values within a VN can be expected to have an effect in maintaining equity among the stakeholders that comprise the VN.”
⟨Inference: that is a distributive statement. Each member needs the others’ value-added and expenditure figures in order to know whether its share of the circular surplus is fair; each withholds them because they expose its cost base to its own counterparties. Per coordination vs. bargaining failure, this is the bargaining column — and it passes the page’s own forward test, since the study group was constituted as a confidentiality committee before the content was weighed. It is also the cleanest instance the wiki holds of the configuration where the parties want the disclosure for fairness reasons and still cannot make it.⟩
An aggregate ratio over several firms’ financial statements, computed without any firm revealing its inputs, is the canonical secure-multi-party-computation problem — see cryptographic trust infrastructure. Eq. (3) is a sum of per-party numerators over a sum of per-party denominators minus a sum of intra-network costs: additively decomposable, with the only cross-party term being the C_D netting. ⟨Inference: that structure is unusually favourable — the netting is the one place where parties must agree on a shared quantity, and it is a quantity both sides of each transaction already know, which is what makes it checkable between them.⟩
Five topologies (ISO 59010 / ISO/TR 59032, as used by H-AIST)
The research report works from five example configurations drawn from ISO 59010 and ISO/TR 59032:
| Type | Shape |
|---|---|
| 1 | resource form unchanged along the chain (iron scrap: collect → sort → refine) |
| 2 | the focus resource is closed inside the boundary — per ISO 59010, possibly only part of the loop |
| 3 | the resource changes form inside the network (residue → energy → used to process another resource) |
| 4 | the resource is combined with an external resource and converted |
| 5 | platform network — two firms operate a platform with an unspecified number of members; between each member and the platform only information and money flow, while goods circulate directly among the members |
In practice these combine.
⟨Inference: Type 5 is the topology SINE’s own work sits in — a coordinating layer that sees information and money and never the goods. It is also the one the authors concede CVP handles worst: capturing all participants “is difficult in practice”, and their workaround is to draw the calculation boundary narrower than the network and exclude the unspecified members. So the standard’s treatment of the platform case is, by its own account, an exclusion rather than a method — and that is precisely where a protocol that aggregates without collecting would earn its place.⟩
⟨Inference: note also how Types 3 and 4 interact with the measurement. The authors warn that if externally introduced resources come to dominate, the network’s CVP “will approach the CVP of that company” and stops describing the network. A metric whose meaning degrades as the network becomes more open is a metric for tight, pre-agreed consortia — which is a constraint on how far the VN perspective actually travels.⟩
Unsettled, per the source
- Circularity of the definition: whether a VN is in scope “may depend on whether or not the VN is a CE” — and the CE-business definition is recorded in the same table as unresolved (EU taxonomy “still under development”; METI’s Circular Partners cover commerce only).
- The CE ratio: how a firm separates circular from non-circular business is “left up to the companies”, with certification as the only proposed check.
- Scale: CVP is intended “at the level of businesses to national governments”, explicitly not as a product metric — which is the opposite end of the scale from a digital product passport. ⟨Inference: the two are not competitors and do not even meet; a DPP records an object, a VN metric aggregates financial flows. Treat the earlier claim that they need “the same substrate” as retracted.⟩
Cross-references
- Circular Value-added Productivity (CVP)
- H-AIST CVP research report (April 2026) — the typology and the VN calculation method
- CE Association white paper (2026) — the source
- Circular Economy Association · Hitachi-AIST CECRL
- Coordination failure vs. bargaining failure
- Confidentiality gap in carbon accounting
- Cryptographic trust infrastructure (CCTI stack)
- Digital Product Passport — a different scale, explicitly
- Third Open Forum report (July 2026) — ISO 59011 confirmed from inside the committee
- Residual-value grading
Sources
sources/hitachi/2026-04-13-h-aist-cvp-research-report.pdf, §§3.1–3.3, 4.2 (typology, Methods 1–3, platform case)sources/standards/2026-10-16-ce-association-social-implementation-cvp.pdf, printed pp. 2, 4–8 ⟨page numbers corrected 2026-10-29; printed = PDF − 3⟩sources/hitachi/2026-07-30-h-aist-ce-lab-third-open-forum.md(Shimizu on ISO 59011 as the value-network standard; Ichikawa on WG2’s two parallel new standards; the May 2024 series “slated for review immediately upon its adoption”)sources/standards/2026-10-16-ce-association-social-implementation-cvp/tables-recovered-from-pdf.md