What is the circular economy?

A circular economy is a way of producing and consuming that keeps products and materials in use for as long as possible. The European Parliament defines it as a model that involves sharing, leasing, reusing, repairing, refurbishing and recycling existing materials and products.

It is the opposite of the linear economy, which follows a take-make-use-throw away pattern and depends on large amounts of cheap raw materials and energy. In a circular economy, a product is designed to last, to be repaired and to be taken apart, and its materials come back as input for new products when it finally reaches the end of its life.

How a circular economy works

The circular loops are usually ranked by how much value they keep:

1. Design for longevity. Durable products with replaceable parts and software that stays supported.
2. Use longer. Maintenance, repair and upgrades keep the original product working.
3. Reuse and refurbish. Second-hand sales, rental and refurbishment give the product another owner.
4. Remanufacture. Used parts are restored to as-new condition and built into new products.
5. Recycle. Materials are recovered and turned into recycled content for new products.

Recycling keeps materials but loses most of the value of the product. That is why EU policy now puts so much weight on durability and repair, not only on waste.

The EU Circular Economy Action Plan

The European Commission adopted A new Circular Economy Action Plan (COM(2020) 98) on 11 March 2020. It aims to make sustainable products the norm, empower consumers, and double the EU's circular material use rate. It focuses on seven value chains: electronics and ICT, batteries and vehicles, packaging, plastics, textiles, construction and buildings, and food, water and nutrients.

The plan led to the main EU product laws on circularity:

• Ecodesign for Sustainable Products Regulation (ESPR), Regulation (EU) 2024/1781. Extends ecodesign from energy-related products to almost all physical goods, with requirements on durability, repairability, recycled content and footprints, and creates the Digital Product Passport.
• EU Battery Regulation, Regulation (EU) 2023/1542. Carbon footprint, recycled content, removability and the battery passport.
• Packaging and Packaging Waste Regulation (PPWR), Regulation (EU) 2025/40. Recyclable packaging, reuse targets and recycled content in plastic packaging.
• Right to Repair Directive, Directive (EU) 2024/1799. Manufacturers must offer repair for listed products, applied from 31 July 2026.
• Empowering Consumers Directive, Directive (EU) 2024/825. Bans greenwashing and planned obsolescence practices from 27 September 2026.

Extended producer responsibility rules add the end-of-life side: producers pay for collection and recycling of packaging, electronics, batteries and, in the coming years, textiles.

Where the EU stands

Eurostat measures progress with the circular material use rate, the share of materials used in the EU that come from recycling. In 2024 it was 12.2%, the highest figure so far, but only slightly above earlier years. The Netherlands led with 32.7%, followed by Belgium and Italy. The 2030 aim is to double the rate to 23.2%.

The Circular Economy Act

To close that gap, the Commission announced a Circular Economy Act in its 2026 work programme. As of early November 2026 it is still at the announced stage; the Commission's proposal is expected on 11 November 2026. Its stated aim is to help double the circular material use rate by 2030. Once proposed, it will go through the European Parliament and the Council before becoming law.

What it means for brands

• Products must last and be repairable. ESPR delegated acts and the Right to Repair Directive turn durability, spare parts and repair information into legal requirements.
• Product data has to travel. Repairers, second-hand buyers and recyclers need to know what a product is made of and how to fix it. The Digital Product Passport is the EU's tool for that.
• Claims are checked. Durability and environmental claims must be accurate and supported.
• Ownership does not end at the sale. Repair, resale and take-back keep a brand in contact with the product for years.

How to prepare

1. Map which laws apply to your product groups: ESPR, batteries, packaging, repair, EPR.
2. Design for repair: replaceable parts, available spare parts and published repair guides.
3. Collect material and footprint data from suppliers, ready for passports.
4. Give every product a lasting digital identity that owners, repairers and recyclers can reach by scanning it.