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Across Europe and beyond, governments, businesses and citizens are rethinking the foundations of their production and consumption systems. As natural resources become scarcer, environmental pressures intensify, and global supply chains grow more fragile, the circular economy emerges as a compelling response, one that reconciles economy with planetary boundaries.
Unlike the traditional “take, make, dispose” linear model, the circular economy is a systemic transformation built on keeping materials and products in circulation for as long as possible through smarter design, efficient use, and responsible recovery.
At its core, the circular economy is based on five key principles that touch every stage of the value chain: designing products to be safe, durable and recyclable; producing efficiently and minimising waste; promoting sustainable consumption models; extending product lifespans through repair and reuse; and turning waste into valuable resources.
EEA, 2024
By connecting these elements into a single regenerative loop, the circular model conserves resources, reduces environmental impacts, fosters sustainable growth, creates jobs, and enhances long-term resilience.
The Circular Economy in Europe
Transitioning to a circular economy has become a strategic priority for the European Union. Circularity is now framed not only as an environmental goal but as a core pillar of Europe’s resilience, security, and economic strategy. This ambition was notably echoed in this year’s European Green Week held under the theme “Circular Solutions for a Competitive EU,” underscoring the EU’s commitment to integrating circularity into its competitiveness strategy.
Despite progress under the Green Deal, Europe remains largely linear, with only 12% of materials being reused or recycled. The Clean Industrial Deal sets an ambitious target to double this circularity rate to 24% by 2030, a milestone that requires aligning regulation, innovation, and market demand.
To support this transformation, the European Commission is expected to adopt the Circular Economy Act in 2026. The Act aims to:
- Establish a Single Market for secondary raw materials;
- Increase the supply and demand for high-quality recycled materials;
- Align and harmonise regulations on key EU circularity initiatives across Member States;
- Encourage circular innovation and investment through financial incentives.
The Circular Economy Act is a key component of the EU Competitiveness Compass, which envisions making the EU the global leader in circular economy practices by 2030. The circular transition is not only an environmental imperative but also a competitiveness strategy, one that will help Europe become more resilient, less dependent on foreign resources, and better prepared for future shocks.
To ensure an inclusive approach, the European Commission launched in August 2025 a public consultation on the upcoming legislation, open until 6 November 2025. All stakeholders are invited to contribute to help shape the future of Europe’s circular economy.
Interconnections with Other Sustainability Topics
Insights from EFRAG’s State of Play 2025 report confirm the growing importance of circularity. Among companies that have published ESRS-aligned sustainability statements, the circular economy stands out as the second most frequently reported environmental topic after climate change and is identified as material by around 65% of reporters.
However, circularity does not exist in isolation, it is deeply connected with other global sustainability priorities. It acts as a cross-cutting lever that reinforces multiple Sustainable Development Goals including responsible consumption (SDG 12), climate action (SDG 13), decent work (SDG 8), and life on land (SDG 15).
Biodiversity
An estimated 90% of biodiversity loss is associated with resource extraction and processing. By reducing the demand for virgin inputs and promoting regenerative design, circular strategies help relieve pressure on ecosystems and foster nature-positive outcomes. For further insights on biodiversity, see our previous article “Writing the Future with Nature” published on 22 September 2025.
Climate Change
Globally, about 45% of greenhouse gas emissions stem from the production and use of goods, materials, and food. Applying circular strategies across just five sectors (cement, aluminium, steel, plastics, and food) could cut these emissions by nearly half. Circularity thus complements decarbonisation pathways by tackling the materials side of the emissions equation.
Social Impact
The circular transition also creates economic and social opportunities. Repair, remanufacturing, and recycling industries are labour-intensive, generating local jobs and new skills. Circular models strengthen community collaborations and support a just transition, ensuring that environmental progress goes hand in hand with social inclusion and shared prosperity.
Opportunities for Businesses
For businesses, circularity is not just simply a regulatory expectation, it is a strategic opportunity to create lasting value. There is no single path forward; each company must determine how best to integrate circular principles into its product design, supply chains, and customer engagement.
By embedding circular thinking, companies can reduce material costs and supply risks, increase operational efficiency, and unlock new revenue streams through reuse, repair, and service-based models. Circularity also enhances customer loyalty and brand reputation, as consumers increasingly favour responsible and transparent companies.
Circularity is not merely about waste management, it is about rethinking value creation. Companies that integrate circular models early will be better equipped to thrive in a future defined by resource scarcity and stakeholder expectations.
Conclusion
Europe’s circular transition is accelerating, but the gap between vision and action remains significant. Doubling the circularity rate by 2030 will require strong collaboration across policymakers, industries, and consumers.
The tools, funding mechanisms, and regulatory frameworks are taking shape, what remains is the commitment to implement.
The circular economy is not just about reducing impact; it is about redesigning success. Let’s start the conversation together, our experts can help you explore the transition and highlight the reporting elements that truly matter for your business.
