Building wilth flag during the press conference of the European commissioner for Environment and Water Resilience and a Competitive Circular Economy Jessika Roswall in the Berlaymont the headquarters of the European Commission an institution of the European Union in Brussels in Belgium on 4th of Frebruary. (Photo by Martin Bertrand / Hans Lucas / Hans Lucas via AFP) (Photo by MARTIN BERTRAND/Hans Lucas/AFP via Getty Images)

Hans Lucas/AFP via Getty Images

Major businesses have called on the European Union (EU) to deliver a strong Circular Economy Act which will deliver ambitious regulatory proposals and create a true single market for circular solutions.

The EU Circular Economy Act aims to accelerate Europe’s transition to a circular economy, reduce dependencies on critical raw materials, and strengthen economic resilience.

Due for adoption later this year, the legislation also aims to double Europe’s circularity rate from its current figure of 12% to 24% by 2030.

A group of companies, in coordination with the Ellen MacArthur Foundation, recently delivered a joint letter to the European Commission, calling for ambitious regulatory proposals.

The letter states that circular business models are being held back by market fragmentation, inconsistent rules, and economic incentives that still favour linear approaches.

And it was signed by various businesses, including the LEGO Group, SAP and TOMRA.

The Ellen MacArthur Foundation also recently released a white paper setting out why the EU Circular Economy Act is a key opportunity for both European and national policymakers.

The Foundation’s business policy engagement lead, Carsten Wachholz, said the new EU legislation is important, because all the signs point to Europe missing its goal to double the share of secondary raw materials used to produce goods by 2030.

Wachholz added this trajectory comes at the same time as the EU wanting to become less dependent on imported materials, and growing concerns about supply chain disruptions due to wars and geopolitics.

“Companies are ready to invest, but they are hitting a wall, and these are always the same problems. Either markets are too small, or depend on whether you can transport used products, parts or secondary raw materials,” he told me.

Wachholz said the Circular Economy Act can change diverging definitions across different pieces of national waste legislation.

He added it can also provide additional guidance so that member states get to a common understanding about how these regulatory requirements should be implemented across the EU single market.

And he said it could also create a level playing field which puts circular business models on the same level as existing linear models, and allow companies to have more predictability and regulatory clarity to put the investments where they are needed, either in redesigning products, or in reverse logistics and recirculation.

“To bring it all together, businesses are asking for a market that works - consistent rules, fair pricing, and the kind of regulatory certainty that lets them invest at scale. These are the three big wins for the circular economy,” said Wachholz.

The chief executive and president of the recycling company TOMRA, Tove Andersen, said the upcoming EU Circular Economy Act is a vital opportunity to turn Europe’s circular ambitions into reality, in an email.

Andersen added the potential for Europe to be the global circularity leader through said commitment is evident.

“However, from our position at the centre of material recovery and circularity across plastics, metals and textiles, we see the same structural barriers repeatedly slowing the transition to a circular economy,” she added.

“To overcome these, the EU Circular Economy Act must create a true European single market for circular products and materials, aligning economic incentives such as VAT and procurement to favour circular choices.”

Angela Hultberg, global head of sustainability at Kearney said the EU Circular Economy Act will only be successful if it fixes the economics of circularity, in an email.

Hultberg added businesses need functioning markets for secondary materials, demand certainty, and regulation they can depend on for longer than four years.

“Without harmonised definitions, quality standards and consistent rules across borders, circularity will remain a project rather than a new way of handling goods,” she told me.

“Building the infrastructure needed will not be cheap, companies deserve to know there is a long-term plan in place. "

Hultberg added circularity means far more than recycling, which she said is where current policy seems to focus.

“The real gains come from all parts of the circularity spectrum, like durability, repair, reuse and remanufacturing,” she said.

“Mandatory recycling targets can help achieve scale quickly, and EU member states should lead by using public procurement to create demand.”