Proposed by European Commission President Ursula von der Leyen and led by Environment Commissioner Jessika Roswall, the upcoming EU Circular Economy Act is set to become a cornerstone of Europe’s new clean industrial policy.
With resource scarcity, mounting waste, and global competition at the forefront, the Act aims to transform how European industries operate, thus turning today’s environmental pressures into tomorrow’s strategic opportunities.
Curious about how this upcoming proposal could influence your business? Keep reading to learn more!
What is the EU Circular Economy Act?
As one of the pillars of the new Clean Industrial Deal, the Circular Economy Act will push for systemic change, fostering lead markets for circular products, cutting through regulatory complexity, and unlocking investment in the technologies and infrastructure that will power Europe’s green transition.
But this is not just about environmental compliance. The Act signals a shift in how the EU defines industrial competitiveness. Whether it’s scaling up reuse in packaging, redesigning electronics for repairability, or accelerating recycling for critical raw materials, the new framework will require businesses to rethink products, supply chains, and business models.
At its heart, the Act is expected to seek to:
- Harmonise circular economy rules across Member States, reducing fragmentation;
- Boost circular infrastructure, including recycling and material recovery systems;
- Incentivise secondary raw materials and resource-efficient design;
- Align with existing EU frameworks such as the Packaging and Packaging Waste Regulation, the Waste Framework Directive, and the Eco-design Regulation.
As a result, key sectors such as packaging, electronics, chemicals, construction, transportation, and textiles are set to be affected by the EU Circular Economy Act.
The goal? A more resilient, autonomous, and globally competitive Europe that leads on sustainability rather than follows.
Why does the EU need a Circular Economy Act?
Environmental necessity
The current consumption patterns are unsustainable – by 2050, humanity will need three planets’ worth of resources at the current rate of consumption. Therefore, the EU’s transition to a circular economy is not just an environmental necessity but a prerequisite for achieving the EU’s 2050 climate neutrality target and halting biodiversity loss.
Why should your business care? The shift to a circular economy will drive organisations to rethink their resource use, focusing on sustainability and waste reduction. Do not hesitate to get in touch with us should you wish to better understand how this might impact your company or organisation.
The need for raw materials: critical and secondary
The new Act aims to scale up these efforts by establishing a Single Market for waste and secondary raw materials, as well as by placing a particular focus on strategic and critical resources such as rare earth elements, cobalt, gallium, copper, lithium, and magnesium. This aligns with the EU’s Critical Raw Materials Act, which was approved in 2023 and came into force in May 2024. These critical raw materials are vital for Europe’s green and digital transitions but are largely imported outside the EU from countries such as Australia, Chile, and China, making the EU susceptible to supply chain disruptions.
Why should your business care?
The EU Circular Economy Act aims to reduce the EU’s reliance on third countries by enhancing domestic recycling and recovery, boosting strategic autonomy, and positioning Europe as a sustainability leader. Businesses operating in the EU may need to adapt by sourcing locally, investing in circular technologies, and aligning with sustainability goals to remain competitive.
The impact of the EU Circular Economy Act on businesses
The Act is likely to include a mix of new obligations, incentives, and regulatory streamlining. Here’s what we can expect:
- Compliance and new standards
From right-to-repair rules to digital product passports, the legislation could introduce stronger requirements on product design, transparency, and lifecycle performance.
- Simplification where it counts
Companies investing in circular business models could benefit from simplified permitting and harmonised standards, thus reducing administrative burdens and opening cross-border growth opportunities.
- Funding and incentives
The Act could launch new financial support through grants, tax breaks, and public-private partnerships to fund innovation in circular supply chains, infrastructure, and technologies.
- Business model transformation
The Act could push a shift toward product-as-a-service, extended producer responsibility, and closed-loop systems, requiring companies to rethink how value is created and captured.
Recent developments on the Circular Economy Act
The first half of 2025 has seen a sharp escalation in EU-level activity around the Circular Economy Act. These developments reflect mounting political momentum to integrate circularity into the EU’s broader industrial, environmental, and competitiveness agendas.
- Spring 2025: Throughout spring, the Commission held structured dialogues with key European Parliament committees (ENVI, IMCO, HOUS) to discuss what the Circular Economy Act will look like. Notably, these exchanges focused on extended producer responsibility (EPR), secondary material markets, and support for recyclers.
- Summer 2025: The Commission formally launched a suite of regulatory actions designed to set the groundwork for the Circular Economy Act, including:
- Introduction of the Digital Waste Shipment System (mandatory by 21 May 2026);
- Evaluation of the WEEE Directive (highlights systemic gaps in e-waste collection and recovery)
- New rules on battery recycling and material recovery (adoption imminent)
- Opening of a public consultation on the classification of “green-listed” waste (open until 31 October 2025)
- Coming soon: The public consultation on the Circular Economy Act, expected to provide early insight into right-to-repair obligations, digital product passports, and green public procurement criteria.
Next steps for the EU Circular Economy Act
The EU Circular Economy Act is moving fast, and the public consultation is just around the corner. This is a crucial moment for organisations to prepare, shape upcoming rules, and secure a competitive edge before decisions are locked in.
At Publyon, we have a proven track record in supporting businesses navigating EU circular economy policies. From drafting impactful input to engaging with the right EU stakeholders, our sustainability and circular economy experts, m.pulina@publyon.com and E.Druta@Publyon.com are ready to position your business at the forefront of the circular transition.
Ready to act before the rules are written? Get in touch today.
