Briefing: The EU Circular Economy Act

Learn how the EU Circular Economy Act will reshape industries, compliance timelines, and strategies for sustainable growth.

What is the EU Circular Economy Act?

The EU Circular Economy Act (CEA) is a major upcoming EU law under the Clean Industrial Deal initiative. It is designed to facilitate Europe’s shift to a more circular economy to take advantage of the numerous environmental and commercial benefits of a circular system.

The Act supports the goal of doubling the EU’s circularity rate by 2030. To do this, it focuses on resource efficiency, waste reduction and circular product design. 

It aims to enhance economic resilience and competitiveness including by boosting green industries through the creation of a single market for secondary raw materials (i.e. recycled) and by tackling bottlenecks like fragmented waste rules. 

Once adopted, compliance is expected to apply to products placed on the EU market regardless of where the seller or producer is headquartered.

Why is the shift to a circular economy important?

The shift from a linear "take-make-dispose" economy to a circular economy, which keeps resources in use for as long as possible, will help to mitigate resource scarcity, pollution, mounting waste, climate change, biodiversity loss and even health issues and social inequity. Organisations aligning with a circular approach can benefit from multiple competitive advantages, including innovative new business models, cost savings and efficiencies, supply chain security, access to green finance and enhanced reputation.

Circular Economy Act timeline

2024 – CEA announced under the Clean Industrial Deal
Late 2025 to early 2026 – Public consultation and impact assessment
Late 2026 – Legislative proposal published
From 2028 – Phased implementation across sectors

How will existing circular economy laws and initiatives be impacted by the Circular Economy Act?

The CEA builds on previous circular economy initiatives including the 2015 and 2020 Circular Economy Action Plans. It is intended to act as an overarching framework that integrates, reinforces, and harmonises many existing and upcoming laws. 

As the CEA is still under development, the connections outlined below reflect current policy direction and expected alignment with existing legislation rather than final legal requirements.

Here is what it means for key circular economy-related regulations:

    
Which sectors are most impacted by the Circular Economy Act?

While the final scope of the CEA has not yet been confirmed, the following sectors are expected to be among the most significantly impacted based on policy priorities and alignment with existing circular economy legislation.

What are the business implications of the Circular Economy Act?

Many companies are expected to need to re-engineer products and supply chains to comply with the act as requirements are phased in. However, harmonisation and simplification across the EU market aims to remove potential geographical complexities and reduce the compliance burden.

1. Product eco-design and DPP

Companies are expected to face stricter eco-design requirements focusing on durability, repairability, modularity, and end-of-life recyclability. DPPs will become a core compliance tool, enhancing product traceability, data availability and transparency across value chains. Enforcement is expected to shift upstream from waste operators towards product manufacturers and importers, with DPPs becoming a primary tool for regulatory enforcement and compliance. 

2.    Extended Producer Responsibility (EPR) and waste simplification

Producers are expected to assume greater responsibility for end-of-life management, supported by more streamlined and digitalised EPR schemes and harmonised end-of-waste criteria. 

3.    Single market for recycled materials

Further harmonisation is expected to remove barriers to cross-border recycled material use, boosting both supply (quality, traceability) and demand, reinforced by public procurement and recycled content criteria. The creation of a single market for secondary raw materials will depend not only on volumes but on consistent quality standards, certification and traceability. This will also have implications for recycling technologies, product design, and supplier management and sourcing strategies. Circular public procurement is expected to play a growing role in creating demand for recycled and low impact products, accelerating market development in priority sectors.

4.    E-waste and Critical Raw Materials

Stronger requirements for e-waste collection, recycling, and material recovery are expected, especially for CRMs critical to clean-tech value chains. The separate, but linked, Critical Raw Materials Act, which is already in force, focuses on securing strategic supply chains and will be reinforced by the CEA’s drive for material recovery and the creation of a single market for secondary raw materials. 

5.    New circular business models and services

Companies are expected to expand repair, refurbishment, remanufacturing, take-back and product-as-a-service models, creating new revenue streams while reducing material costs and exposure to supply chain risks. 

How should you prepare for the Circular Economy Act?

Organisations can take a number of early steps to assess readiness, manage risk and position for compliance and opportunity.

• Impact assessment and gap analysis: Analyse where, when and how compliance obligations are likely to affect your sector as well as specific products and services. Conduct a gap analysis to identify priority risks, strategic opportunities and inform a roadmap of action.
• Eco-Design readiness: Begin audits of product design criteria (durability, repairability, modularity, end-of-life recyclability) and anticipate DPP compliance requirements.
• EPR systems evaluation: Review existing EPR schemes, preparing for increased digital reporting requirements and potential fee structure changes.
• Material and supply chain mapping: Trace key materials across the value chain, assess recyclate quality and availability, review end-of-waste readiness including opportunities for cross-border material flows.
• E-Waste and critical raw materials strategy: Prepare infrastructure and logistics for enhanced e-waste collection, recycling and CRM recovery.
• Internal capability building: Upgrade internal systems to support product-level data tracking, reporting, and digital compliance. Upskill staff to understand and implement updated systems and new circular economy requirements.
• Product portfolio prioritisation: Identify priority products with higher regulatory risk or strategic opportunity for early redesign, piloting and alignment with eco-design and Digital Product Passport requirements.

Recommended actions

Organisations can take a number of practical actions to build capability and position for compliance.

• Start coordinating across internal functions: Create cross-functional working groups to align R&D, procurement, operations, compliance, finance, and marketing teams to embed circularity.
• Supplier and value-chain collaboration: Engage suppliers, recyclers and logistics partners to co-develop standards, data sharing arrangements and  sustainable material sourcing strategies.
• Develop and test circular models: Conduct feasibility studies and pilot circular business models such as repair-as-a-service, leasing, take-back schemes, or reusable packaging programmes.
• Public sector procurement alignment: Position products to meet upcoming public-sector circular procurement criteria.
• Scenario planning and impact assessment: Undertake scenario analysis and risk assessments across potential CEA outcomes,  evaluating regulatory, operational and market impacts.
• Governance and accountability: Establish senior ownership and governance structures to oversee circular economy strategy implementation and regulatory monitoring.

Strategic imperatives

The CEA presents a number of strategic imperatives for companies.

• Mitigate regulatory risks: Non-compliance could lead to fines, product restrictions, or market exclusion as CEA obligations come into force in the late 2020s.
• Protect product portfolios: Products that cannot meet future eco-design, recycled content or traceability requirements may require redesign, delayed launch or withdrawal from the EU market.
• Unlock opportunities: Pioneering circular products and services can increase investor appeal, secure early-mover advantage, and enhance brand resilience.
• Drive cost and resource efficiency: Circular design and increased use of recycled content can reduce dependency on virgin materials and help hedge against price volatility and resource scarcity.
• Prepare for market shift: Aligning with the CEA will support strategic readiness for evolving regulatory and procurement landscapes.

By proactively aligning strategies, operations, and partnerships with the CEA’s objectives, and leveraging external expertise, UK and EU companies and trade associations, can transform regulatory headwinds into competitive strengths.

Support from Ricardo

Ricardo supports organisations with circular economy transition, combining policy expertise, technical delivery and strategic advisory services to help manage risk, ensure compliance and create long-term value from emerging CEA requirements.

• Policy intelligence and strategy
  Our experts provide tailored policy insights, regulatory monitoring and horizon scanning on the CEA, delegated acts and sector specific implementing measures. We support evidence-based engagement and regulatory strategy to help organisations anticipate new obligations, develop action plans and engage early with emerging requirements.
• DPP and data readiness
  We support organisations with early-stage scoping and readiness for DPP including data requirements mapping, gap analysis, governance and preparation of product data strategies to support future traceability and regulatory compliance.
• Assessment and roadmapping
  Our experts map product life cycles against eco-design, DPP, EPR, e-waste and circular market criteria. We can provide compliance gap and readiness analysis at a sectoral, portfolio or product level.
• Innovation and business model design
  We can support the development and testing of compliant circular business models and products evaluating financial and operational impacts and support capability building.
• Stakeholder and market engagement
  We can work with you to find funding and partners for collaboration as well as helping you to communicate the benefits of a circular approach to your stakeholders as part of our support to implement your strategy.
• Change management and communications
  Adopting a circular approach represents a huge opportunity for businesses and successful implementation means embedding it in the culture of your organisation and network. We offer internal or public-facing training tailored to your organisation and sector to facilitate this process.
• Sustainable procurement and supplier engagement
  We deliver sustainable procurement support and supplier engagement programmes that strengthen data transparency, sourcing strategies and supplier readiness across complex supply chains.
• Sustainable packaging and packaging EPR
  We can advise you on ongoing compliance with legislation including  packaging EPR and PPWR. We can support in the reduction of plastic usage, including single-use audits, conduct packaging supply chain audits and develop strategies to reduce environmental impact and increase business resilience. 

More information

• Get in touch with any questions or to explore how we can support you
• Circular economy 
• New solutions for Europe to track and progress its journey to a circular economy
• European Commission Circular Economy Act