EU Circular Economy Regulation on the Horizon

The concept of a circular economy centres on designing out waste and pollution, keeping products and materials in use longer, and regenerating natural systems. This closed-loop model replaces the traditional linear "take‑make‑waste" approach, with reuse, repair, refurbishment and recycling as core principles.

Globally, adopting circular strategies across sectors like iron and steel, plastics, food, cement and aluminium could reduce emissions by up to 9.3 GtCO₂e—roughly the equivalent of all current emissions from transportation.

On 1 August 2025, the European Commission launched a public consultation for the upcoming Circular Economy Act, set for adoption in 2026. This forthcoming regulation is part of a broader strategy to embed circularity into the EU economy, aiming to double the current circularity rate and reduce dependency on virgin materials across a wide rang of material.

The Act proposes to establish a single market for secondary raw materials, making it easier for businesses to source recycled inputs, reduce material waste, and limit exposure to global supply chain risks. It also links closely with other industrial and sustainability strategies—such as the Clean Industrial Deal and the Competitiveness Compass—positioning circularity as a key driver of both environmental and economic resilience.

For industries, this regulation represents a shift from voluntary commitments to enforceable obligations. Product design will be directly influenced by new criteria around durability, repairability, and recyclability. Manufacturers will need to consider end-of-life treatment and materials recovery at the start of the design process.

As circular principles become embedded in procurement, production, and reporting, businesses that proactively adapt will benefit from smoother compliance, cost savings through material efficiency, and increased appeal in low-carbon markets. For others, failing to prepare may mean higher costs, supply disruptions, and barriers to market access—especially in sectors exposed to the EU Carbon Border Adjustment Mechanism (CBAM) or facing ESG-driven procurement standards.

Learn More: Get your Guide to Global Climate Regulations →

Stay ahead in the era of sustainability with our comprehensive guide to navigating climate regulations across the European, American, and Asia-Pacific regions. This free eBook is essential for businesses looking to align with evolving environmental standards and future-proof operations.

The EU’s 2026 circular economy regulation intersects directly with carbon management. Key regulatory frameworks like the Ecodesign for Sustainable Products Regulation (ESPR), also entering into force in 2026, will require manufacturers to incorporate design principles that extend product life and reduce carbon intensity—from repairability and modularity to recycled content.

Circular design not only reduces material demand but also significantly lowers embedded emissions. For example, using recycled aluminium requires just 5% of the energy needed to produce the same volume from raw materials. Similarly, extending a product’s lifetime by one year can significantly reduce associated Scope 3 emissions, particularly in electronics, automotive and industrial equipment sectors. Thus, circularity should naturally be part of established carbon management strategies.

Circular sourcing also enables companies to reduce reliance on emissions-heavy raw materials, enhancing supply chain resilience while cutting lifecycle emissions. These shifts are becoming increasingly important as regulations like CBAM apply carbon costs to imported goods with high embodied emissions.

Sustainability regulations increasingly require granular, auditable metrics—covering repairability, recyclability, renewable energy and lifecycle carbon. Companies need to be able to calculate and report:

• Repairability scores: Assessing ease of disassembly, spare parts availability, and service access.
• Recycled content: Percentages of reused materials at product or component level.
• Carbon footprint: Cradle-to-gate or full lifecycle emissions by SKU or product family.

These indicators are interlinked: modular design not only increases recyclability but also simplifies lifecycle emissions tracking. Repairable products delay replacement cycles, directly lowering manufacturing emissions. Circularity is not separate from decarbonization—it is a core strategy.

The upcoming regulation calls for preparation on several fronts:

• Map your product portfolios: Evaluate design for longevity, repairability, and recycled content.
• Align sustainability and product teams: Carbon and circular metrics must feed into the same design and procurement processes to create products that outlast competitors and stay cost effective
• Invest in data infrastructure: Traceability from raw material to product end-of-life is essential for compliance and emissions reductions.
• Engage suppliers: Circularity and carbon visibility are increasingly interdependent. Collaboration is key to shared improvement.

By integrating circularity metrics into emissions management strategies, companies can unlock new value—reducing both carbon liabilities and material costs while meeting rising regulatory and stakeholder expectations.

carbmee’s platform empowers manufacturers and supply chain leaders to operationalize circularity within carbon management. Here’s how:

1. Track and Integrate Circularity Metrics

carbmee supports the calculation and integration of circular indicators—like repairability scores, recycled content, and end-of-life treatment pathways—as part of comprehensive carbon modeling. This gives sustainability and product teams real-time insight into how design choices influence emissions.

1. Scale Product-Level Carbon Transparency

Using ERP and procurement data, carbmee automatically generates auditable Product Carbon Footprints (PCFs) at the SKU level—embedding emissions intelligence across sourcing, design and reporting functions. Circular strategies can be evaluated for their financial and emissions impact simultaneously.

1. Ensure Regulatory Readiness

With pre-built logic for ESPR, CSRD and the upcoming Circular Economy Act, carbmee provides companies with the frameworks and automation to stay ahead of regulation. This includes audit-grade emissions tracking, supplier data exchange, and integrated scenario planning.

1. Link Circularity to Financial Risk and ROI

Carbmee’s AI models help quantify how circular design impacts both emissions and costs. This includes marginal abatement cost curves, internal carbon pricing, and investment modelling—helping companies make business cases for sustainable innovation.

1. Empower Decentralized Teams

From procurement to engineering to sustainability, carbmee’s intuitive platform helps non-experts act on complex carbon and circularity data. Collaborative tools, supplier engagement features, and automated reporting enable real impact—without relying on external consultants.

The upcoming EU Circular Economy Regulation will be a defining force for industrial transformation. Far from being a reporting exercise, it embeds circularity into how products are designed, manufactured, and managed across their lifecycle. For manufacturers and procurement leaders, aligning with these principles isn’t just about compliance—it’s about unlocking emissions reductions, cost efficiencies, and long-term resilience.

By combining carbon transparency with circular intelligence, companies can move beyond fragmented sustainability efforts and drive true operational change.

Carbmee stands ready to help. Whether you’re mapping product lifecycles, modeling emissions savings from recycled materials, or preparing for CBAM and CSRD audits, our platform offers the data infrastructure and intelligence you need.

Ready to lead with circularity and carbon performance? Book a demo at carbmee.com and see how we can help you move from compliance to competitive advantage or head over to case studies to learn from our customers.