The European Union is preparing to take the next step in its circular economy journey with the launch of the Circular Economy Act (CEA). Currently under consultation, the Act will correct gaps in previous EU circularity and waste legislation, to better drive circularity across EU markets.
If you are interested in understanding how the CEA could impact your business, read on. Below we provide you the context behind the legislation, what it’s expected to cover, and several points that require particular attention. As usual, our experts have also included actionable steps your organisation can take to not only prepare for the CEA but also seize the opportunities it brings.
Want someone with deep experience and connections in the EU to help guide your sustainability strategy? Get in touch!
EU Circular Economy Act: How It Came To Be
Although for many it might seem like a new topic, the EU began moving from a linear model towards circularity nearly a decade ago.
The first Circular Economy Action Plan (CEAP), published in December 2015, looked to embed circular thinking across the entire product lifecycle – from design to disposal – via 54 targeted actions. Later, revised under the European Green Deal, the 2020 version of the CEAP made circularity a pillar of EU industrial and climate policy.
The forthcoming Circular Economy Act builds on these foundations to further improve legislative gaps and simplify certain elements to ensure that products and materials remain in use for as long as possible. Introduced under the Clean Industrial Deal, the Act is designed not only as an environmental measure but also as a competitiveness strategy, positioning circularity as a driver of resilience, innovation, and growth for EU businesses.
Understanding the Core of the CEA
The CEA will consolidate and address the gaps left by the previous mandate. It is set to function as corrective legislation, a so-called ‘omnibus’ initiative, updating and streamlining frameworks such as the Waste Framework Directive (WFD), the Waste from Electrical and Electronic Equipment (WEEE) Directive, and others.
The CEA’s Objectives
The Circular Economy Act should create a single market for secondary raw materials and enable the Union to:
- Use resources more efficiently by promoting the recovery of valuable raw materials and ensuring a steady supply of high-quality recyclates that can replace virgin materials.
- Reduce waste through stronger and more consistent recycling systems across the EU, closing the gaps that prevent materials from being properly collected, treated, and reintroduced into the economy.
- Boost the competitiveness of secondary raw materials by removing economic barriers that hold back circularity, by improving the free movement of secondary raw materials across EU borders, and tackling price gaps with virgin materials.
In the infographic below, you can see how these ambitions translate into practical measures.
In terms of scope, the legislation will cover a wide range of industries and product groups, including ICT and packaging, but it is not clear whether (or how) key sectors such as textiles will be included at this stage.
The Link with the Environmental Omnibus
The Environmental Omnibus is being developed in parallel, with its own proposal expected at the end of 2025. While the CEA will set out new obligations, the Environmental Omnibus is intended to simplify and align existing rules. Their overlap is most visible in the area of Extended Producer Responsibility (EPR), where the CEA is likely to expand and modernise obligations, while the Omnibus will aim to streamline reporting and reduce duplication. Together, they will shape both the substance of EPR and the way it is managed.
Challenges and Points of Attention Within the CEA
As the Circular Economy Act moves forward, there are several elements that businesses should follow carefully. These cover both regulatory design and market conditions, and together they will shape how the Act is applied across sectors.
Fragmented Extended Producer Responsibility
As detailed in our EPR scheme analysis, current requirements vary greatly across the bloc and companies face the burden of registering and reporting separately in every Member State where they operate. This process makes compliance both administratively heavy and costly. The CEA could help move EPRs towards harmonisation – something that many industry players have advocated for – possibly through a single EU digital platform for registration and reporting.
Imbalance Between Virgin and Secondary Materials
A persistent barrier to circularity is the fact that virgin materials are often cheaper and easier to source than secondary ones. This creates a structural disadvantage for recycled inputs and undermines the growth of the secondary raw materials market. Policy options on the table include adjusting public procurement criteria so that authorities prioritise products with recycled content, and introducing fiscal incentives such as lower VAT rates for circular products.
Expansion of EPR to New Product Groups
The CEA may extend EPR obligations beyond existing categories. Mattresses, furniture and tyres are mentioned as candidates, given their significant waste volumes and current gaps in recycling.
Slow Development of End-of-Waste Criteria
End-of-Waste criteria determine when a material ceases to be considered waste and can be traded freely as a product. Progress has been slow and uneven across sectors. Textiles have seen movement, while for rubber no criteria have been developed at all. This is a point of concern since the lack of clear rules can undermine investment in recycling infrastructure and cross-border trade.
The Legislative Timeline
The legislative process for the Circular Economy Act will take several years, with distinct opportunities for businesses to engage at each stage:
- 1 August – 6 November 2025: Public consultation and call for evidence on the CEA.
- 2026: Impact assessment, external studies, and stakeholder workshops, with SMEs as a particular focus.
- Q4 2026: Expected publication of the Commission’s proposal for the CEA.
- 2027–2028: Negotiations between the European Parliament and the Council, leading to adoption.
Getting Ahead of the CEA: Our Recommendations
We have compiled the following recommendations to highlight where companies can take action to prepare and benefit from the EU’s transition into a circular economy.
- Engage Early: Don’t wait until the proposal is on the table. Seize the opportunity to participate in the CEA consultation and the Environmental Omnibus call for evidence, ensuring that their positions are aligned in both instances when it comes to overlapping subjects, such as EPR.
- Establish Priorities and Provide Evidence: We would suggest that companies focus on a few clear priorities of the Circular Economy Act around streamlining existing legislation and offering recommendations on how a market for secondary materials can be facilitated. Be sure to also provide evidence that strengthens your position, which could include data around EPR inefficiencies, costs of fragmented compliance, and barriers to using secondary materials, for example.
- Build Collaborations: Engaging alone can work, but collective advocacy is more powerful. Identify partners in your value chain who share the same interests, whether recyclers, suppliers, or other players, and align your messages.
- Invest in Design and Data: Prepare for possible legislative scope expansion by assessing how your products can be made more recyclable or reusable. At the same time, improve your internal data systems and seek integration with your value chain. Extensive reporting requirements and digital compliance tools are a vital part of the EU’s environmental policy framework and adopting a holistic traceability approach will make compliance much easier.
Key Takeaways
The Circular Economy Act will be one of the defining pieces of legislation for Europe’s policy agenda in the coming years, and it deserves attention not only to ensure compliance. The CEA is also a chance to shape Europe’s transition to a more resilient and resource-efficient economy. Businesses that act now will have a say in how obligations are designed and course-corrected, avoid unnecessary costs, and position themselves as leaders in a market that increasingly values transparency and innovation.
If your company is looking for practical guidance, tailored impact assessments, or support in making your voice heard in Brussels, we can help. Get in touch with us to discuss how to turn the coming changes into strategic business opportunities.