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EU sustainability policy is at a pivotal moment. Growing awareness of major environmental challenges like climate change, biodiversity loss, and pollution has driven policymakers to develop new regulations to protect the environment. At the same time, leaders are working to balance these goals with economic needs and social well-being. This has prompted a shift towards making existing policies more coherent, effective, and less burdensome.
Within this evolving landscape, the circular economy has moved from a niche concept to a cornerstone of the European Union's sustainability strategy. Its appeal lies in its dual promise: it is both an environmental and economic model. By allowing for economic growth without increasing resource consumption, it aims to protect the environment while promoting innovation, competitiveness, and new business opportunities.
This article serves as a guide to help identify key EU policies that embed circular economy principles—whether to monitor, implement, or prepare for—depending on a company’s sector, size, and strategic ambition. It is intended for business leaders, sustainability experts, and policymakers navigating the fast-changing policy landscape. We outline both current and new policies, including revisions, updates, expected timelines, and relevant standards and tools to support effective implementation.
By viewing upcoming regulations as opportunities rather than compliance challenges, businesses can position themselves to create long-term value. Based on our review of the current policy landscape, we highlight three key messages to help unlock this potential:
The number of EU policies incorporating circular economy principles is expanding quickly. Businesses that proactively align with these developments will be better positioned to manage regulatory risks, seize innovation opportunities, and secure their license to operate in a resource-constrained world.
The EU policy map organises current EU circular economy policies by purpose: 1. Reporting & Communications, 2. Product Design, 3. Due Diligence, 4. Waste and resource Management, 5. Trade. It also highlights supporting tools and standards. Milestone years (from 2025 onwards) mark policy launches, revisions, or new targets. Colours indicate the primary life-cycle stage addressed, as shown in the EU Circular Economy Figure; if a policy spans multiple stages, only the main one is shown. Some policies outside the Reporting & Communications category may still include relevant elements.
The CSRD enhances corporate transparency and accountability, requiring companies to disclose detailed data on resource use, waste, and product impacts. Reporting must include recycled versus virgin inputs and design features like durability, reparability, and recyclability—closely aligned with the Ecodesign for Sustainable Products Regulation (ESPR).
Beyond compliance, this reporting can identify inefficiencies, reduce costs, and strengthen risk management by tracking waste generation, resource intensity, and reliance on critical materials. It can also boost reputation, attract sustainable finance, and improve competitiveness in markets that value circular practices.
Timeline: The first reporting wave (NFRD companies) began in 2025, followed by Wave two in 2028, and Wave three in 2029.
The CSDDD extends corporate responsibility across the entire value chain, promoting circularity through responsible sourcing and lifecycle thinking. It covers upstream (raw materials, production inputs, logistics, subcontracting), internal activities, and downstream (distribution, transport, storage) activities—initially focusing on direct business relationships.
While the CSRD emphasises reporting, the CSDDD focuses on strategy and action. Companies must map suppliers, assess environmental risks, and integrate circular supply chain models such as reuse, take-back, and remanufacturing. These approaches reduce reliance on virgin materials and enable lower dependency on high-risk suppliers.
Timeline: Large companies must comply from 2028, making early preparation key to managing risks, cutting costs, and seizing opportunities.
The ESPR introduces design requirements to improve durability, reparability, and recyclability across all lifecycle stages. It also establishes the Digital Product Passport (DPP), a key data tool that reports environmental information—mirrored in the Construction Products Regulation (CPR) for the construction sector, which relies on Environmental Product Declarations (EPDs), which are standardised, verified documents detailing a product's environmental impact over its lifecycle.
These measures promote greater data collection, traceability, and transparency.
Timeline: The ESPR entered into force in July 2024, with first provisions—such as the ban on destroying unsold textiles and footwear—effective in 2026. The delegated act on DPPs for textiles and furniture is expected in 2027. The revised CPR, entering into force in January 2026, adds requirements for recyclability, disassembly, durability, repairability, and recycled content.
For more information on DPPs, see our blog: Digital Product Passports Can Generate Millions in Circular Revenue for Fashion Brands.
The CBAM aims to prevent carbon leakage by applying a carbon price to certain imported goods, ensuring parity with EU products. Covering high-emission sectors such as steel, cement, aluminium, fertilisers, and electricity, it requires importers to report and pay for embedded CO2 emissions..
Although primarily a climate measure, the CBAM indirectly incentivises circular strategies such as using recycled or lower-carbon materials, remanufacturing, reuse systems, material-efficient production, and durable product design—all of which reduce compliance costs and emissions while enabling new business models like product-as-a-service.
Timeline: CBAM had a transitional reporting phase (2023–2025); full implementation begins in 2026, requiring certificate purchases under the EU ETS carbon price.
A forthcoming Circular Economy Act will complement existing sectoral directives, aiming to enable the free movement of circular products, secondary raw materials, and waste across the EU. It seeks to boost the supply and demand of high-quality recycled materials.
In 2026, the Commission will conduct impact assessments and external studies, hold stakeholder workshops with a particular focus on Small and Medium-sized Enterprises (SMEs), and is expected to publish its formal legislative proposal for the Circular Economy Act in Q4 2026. You can find the link to Circle Economy’s reaction to the initial proposal here.
From the policy map, three overarching trends emerge that define how the circular economy is being embedded across EU legislation.
1. From waste to lifecycle: Broadening the scope of circular economy policies
Waste and resource management remains the most heavily regulated area, with nine key directives, reflecting its long-standing policy focus through instruments like the End-of-Life Vehicles Directive (2000) and the Waste Framework Directive (2008). However, attention is rapidly expanding beyond waste to new domains—Reporting & Communication, Product Design, Due Diligence, and Trade—each now supported by four to five policies, along with complementary standards and tools such as the Global Circularity Protocol and the European Sustainability Reporting Standards.
Many newer regulations, including the 2024 Ecodesign for Sustainable Products Regulation, take an integrated lifecycle approach, encouraging companies to embed circular economy principles across sourcing, production, use, and end-of-life, rather than treating sustainability as an afterthought.
2. Circular economy as a lever for sustainability and climate policy integration
Circularity is not an end in itself, but rather a systemic approach to achieving broader environmental goals, including climate neutrality, zero pollution, and biodiversity preservation. By reducing waste, hazardous substances, and virgin material use, circular strategies support cleaner air, relieve pressure on ecosystems, protect biodiversity, and lower greenhouse gas emissions. As a result, circular economy policies are increasingly being integrated into climate policy, reinforcing their potential as powerful tools for climate action.
For hard-to-abate sectors like cement, steel, and plastics, circular economy solutions—such as material efficiency, remanufacturing, and recycling, reuse, and repair—are essential for deep decarbonisation beyond what renewable energy alone can deliver. Circular economy policies reinforce climate goals by reducing life-cycle emissions (Ecodesign for Sustainable Products Regulation), reducing the need for virgin materials (Directive on the Repair of Goods and the revised Industrial Emissions Directive) or making virgin resource extraction and waste disposal relatively more expensive (CBAM). By embedding circularity within their operations, companies can address climate, pollution, and biodiversity goals simultaneously, positioning the circular economy as an enabler of long-term sustainability rather than a separate goal.
3. Increasing emphasis on transparency and data availability
In most EU directives and regulations, data is becoming a central element, with a strong focus on traceability and transparency. Policies such as CSDDD, the EU Deforestation Regulation, and the Critical Raw Materials Act emphasise due diligence as a core component, shifting the focus from simple compliance to proactive risk management across the entire value chain. Companies are legally required to identify, prevent, mitigate, and report negative environmental impacts, starting with their tier-one suppliers and extending beyond, tracking data such as supplier details, product origin and destination, environmental performance, and material composition.
Implementations like the Digital Product Passport under the ESPR and the Battery Passport under the Batteries Regulation enable the tracking and storage of this data, which is also essential for reporting under various standards or protocols, whether it is the European Sustainability Reporting Standards connected to CSRD, the newly developed Global Circularity Protocol, or ISO standards for circular economy tracking. Alongside the CSRD, the EU Taxonomy enhances transparency for investors, regulators, policymakers, and other business stakeholders. Meanwhile, policies such as the Empowering Consumers Directive, Green Claims Directive, Textile Labelling Regulation, and standards like the EU Ecolabel focus on improving transparency for both consumers and businesses. The growing emphasis on data and due diligence reflects the EU’s broader commitment to ensuring transparency across all levels of the value chain and among diverse stakeholders.
Circular economy policy is becoming a defining factor for European businesses— especially in resource-intensive sectors, consumer goods, and global supply chains. While the policy landscape is complex and evolving, early engagement and strategic alignment can provide both risk mitigation and competitive advantage. With new measures taking effect from 2026, companies should adopt integrated, life-cycle-based circular strategies that address multiple policies simultaneously. Turning this strategic vision into action starts with robust data foundations. Companies can assess current capabilities and gaps, define key indicators using existing tools and standards (as shown in the policy map), strengthen data infrastructure (through ERP enhancements or new tools), and collaborate with suppliers and partners to gather value-chain information. Over time, this data will support better decision-making on product design, procurement, and end-of-life management.
By embracing upcoming regulations as drivers of opportunity, businesses can unlock long-term value, strengthen resilience, and lead the transition to a circular economy. We encourage readers to identify the drivers for their own business and sectors: share insights, challenges, and success stories while navigating this evolving policy landscape.
