The circular economy is a production and consumption model that aims to extend the lifecycle of products and manage all resources more responsibly and consciously. This approach generates productivity and competitiveness, ensuring energy efficiency, economies of scale and greater environmental sustainability. It is particularly important in the European Union, where more than 2.5 billion tons of waste are produced each year.
The benefits of the circular approach
Investing in a circular approach leads to numerous benefits, including:
- Reduced production costs: Lower expenditures on raw material acquisition and waste management.
- Improved carbon footprint: Reduced need to extract and produce new raw materials, helping to mitigate climate change.
- Attracting investors: Sustainable businesses are seen as less risky and more resilient over the long term. Accompanying green investments with digitisation can increase productivity by 14%.
Multi-sector leadership
Circularity involves several supply chains, including agribusiness, packaging, textiles and apparel, wood and furniture, and shipbuilding. These supply chains integrate circular practices into their production stages, from the choice of green raw materials to the use of renewable energy and digital technologies, to minimise waste and make durable and reusable products.
A key aspect of the circular economy is business collaboration. Leading companies serve as a point of reference for smaller firms, promoting an integrated approach across different sectors. The success of this model is already visible: reduced waste, higher production efficiency and lower operating costs. The European goals are even more ambitious, however, aiming for a zero-carbon economy by 2050.
European leaders in the circular economy
The European Environment Agency’s (EEA) 2025 report provides an overview of the progress and challenges of the circular economy in Europe. Here are some highlights:
- Circularity rate: In 2023, Europe’s circularity rate was 11.8 percent, an improvement over previous years, but still far from the sustainability goals.
- Quality of recycling: The quality of recycled materials needs to be improved for their reuse in new products.
- Markets for secondary materials: Development of robust markets for recycled materials and improved waste collection and treatment infrastructures.
- Innovation and digitisation: Importance of innovation to improve production efficiency and reduce waste.
- Stakeholder engagement: Essential to promote a culture of sustainability and facilitate the transition to a circular economy.
Circular Economy Network (CEN) – Circularity performance of major EU countries
The Circular Economy Network (CEN) analysed the circularity performance of Italy, France, Germany, Spain, and Poland. The circularity performance of the five largest EU economies was compared using European Commission indicators: production and consumption, waste management, secondary raw materials, competitiveness and innovation, ecological sustainability and resilience.
Circularity performance analysis:
1. Circularity performance assessment in the last available year (2024):
- Italy: 45 points
- Germany: 38 points
- France: 30 points
- Poland and Spain: 26 points
2. Circularity trends of the top five European countries over the past five years:
- Italy: 41 points
- Germany and Spain: 40 points
- Poland: 25 points
- France: 21 points
Conclusions
The circular economy is a key production and consumption model for sustainability and competitiveness in Europe. Investing in this approach brings many benefits, including lower production costs, an improved carbon footprint, and attracting investors interested in sustainability. Circularity involves different supply chains, promoting business-to-business collaboration and the adoption of innovative and digital practices.
Visible success stories such as less waste and more production efficiency are already demonstrating the potential of this model. But the European goals are even more ambitious, aiming for a zero-carbon economy by 2050. The involvement of all actors in the value chain and the development of markets for secondary materials are both essential to achieve these goals.