A patchwork of EU rules sets out the framework for waste, recycling and producer responsibility. The aim of the Circular Economy Act is to create a common framework that brings these rules together. The intention is not to replace directives such as WEEE and PPWR, but rather to ensure that the rules are more consistent and easier to implement.

– The Circular Economy Act is expected to be adopted by the end of 2026, although not all the details have been finalised yet. However, the ambition is clear. The aim is to create more harmonised rules within the EU and to increase the supply and demand of recycled materials and other circular alternatives, says Heidi Hautajärvi Stenmark, project manager at RISE. So far, EU countries have been slow to make the transition. The proportion of reused materials has only increased marginally since 2010. At that time, the figure was 10.7 per cent; by 2024, it had risen to 12.2 per cent. The current target is to double the circularity rate by 2030.

– I think there has been too much reliance on the idea that the circular economy would emerge once new markets for recycled materials, second-hand goods, and sharing platforms were established. However, it is difficult to align supply and demand when a market is completely new. In such cases, regulations may be necessary, says Ann-Charlotte Mellquist, unit manager at RISE.

Foundation of the Clean Industrial Deal

The Circular Economy Act is one of the key components of the Clean Industrial Deal. The Clean Industrial Deal aims to make sustainable products, services and business models the norm and change our consumption patterns to eliminate waste. The product groups highlighted as relevant to the Clean Industrial Deal are electronics/information and communication technology, batteries and vehicles, packaging, plastics, textiles, buildings and construction, and food, water and nutrients.

– Much of the legislation, including what we know so far about the Circular Economy Act, is based on waste management. For example, this approach involves setting recycling targets. What is really needed is a discussion about how much material we should use in the first place. However, we have to start somewhere. If you run a business in one of these sectors, you need to find out exactly what applies to the materials and products you handle, says Ann-Charlotte Mellquist.

Now is the time to start gaining a clearer understanding of your material flows, product data, supply chains, and opportunities for reuse and recycling. This information will become increasingly important in the future.

The creation of a single market for recycled materials and product passports is set to simplify the transition

A key aspect of the Circular Economy Act is the establishment of a single market for secondary raw materials within the EU, with the aim of increasing the supply of high-quality recycled materials and stimulating demand for them. Currently, waste regulations mean that an item is classified as waste as soon as an organisation stops using it. In such cases, the items may not be exported.

– This has been a huge obstacle to the circular economy, so I expect to see a change there. Easing this regulatory burden would have a significant impact, says Heidi Hautajärvi Stenmark.

Another piece of the puzzle that is clearly linked to the ambition of creating a single market for secondary raw materials is the concept of digital product passports. For example, a digital product passport could contain information on a product's materials, how it can be repaired and how its components should be handled at the end of its life. These passports are intended to increase traceability, transparency, and circularity throughout the entire value chain, from manufacturers to recyclers.

– This transition will require greater collaboration between companies, particularly within value chains. New logistics providers and platform developers will need to work alongside existing companies, which will require them to share data in new ways. Digital product passports can simplify this, says Ann-Charlotte Mellquist.

Digital training courses and collaborative workshops reduce the barriers to entry

If you think the Circular Economy Act sounds like a big, complex issue, you're right. It is a far-reaching legislative proposal designed to cover all aspects of circularity. However, one thing is clear: there are steps you can take right now. RISE, for example, has developed an introductory digital course where participants gain a basic understanding of digital product passports and how they can be used as a competitive tool. This kind of knowledge-building initiative can make new regulations more tangible.

Support is also available for developing new business models and products that are highly recyclable and have a long lifespan, which is known as future-adaptive design. RISE runs a collaborative workshop called the Circular Business Lab, where companies can access expertise in circular business models and resource flows. They can also collaborate with industry peers facing similar challenges in a neutral setting.

– In our collaborative initiatives, such as those in the textile sector, we have received a very positive response from the industry. This includes feedback from small and medium-sized enterprises, as well as larger companies. They recognise the value of joining forces to address shared challenges such as textile sorting and recycling. Testing innovative solutions together creates new opportunities for business development and collaboration, says Heidi Hautajärvi Stenmark.

The design phase is crucial – Who do you need at the drawing board?

Heidi Hautajärvi Stenmark and Ann-Charlotte Mellquist's top tip for manufacturers is to be brave and try new things.

– The design phase is crucial, as it involves designing with sustainability, recyclability and reusability in mind. This is already addressed in several EU directives, but we are likely to see even more of this in the future. This shift in thinking will require new people to be brought in at the design stage. For a vehicle manufacturer, for example, it may be the service technicians who need to be included – the people who know which parts break down most often," she explains.

Ann-Charlotte Mellquist elaborates on this point.

– You need to think long-term. What would you do if the raw materials used in your products became scarce or too expensive? How well equipped are you to run a business that doesn't rely on buying new materials and ingredients? If you don’t consider these issues, you won’t succeed. Those who have thought things through and tested their ideas are best prepared to handle change, says Ann-Charlotte Mellquist.

IS Plåt is a family-run business based in Vellinge, Skåne, that has specialised in contract manufacturing of stainless steel and aluminium products since 1989. Its service portfolio now also includes laser cutting, machining, bending and welding.

A few years ago, the decision was made to systematise, document and clarify sustainability work, both internally and externally. Management opted to use the SIS/TS 2 Sustainability Declaration framework and commissioned RISE, an independent and accredited party, to verify the declaration.

However, the journey towards sustainability began much earlier.

'We have actually been working on sustainability for longer than we realised. It has always been in our interest to use resources efficiently and to look after our staff. We have also had a strong focus on quality from the outset. This is partly because we manufacture visible components, but also because the products we supply are consumer-oriented and used in exposed environments,” explains Erik Ralvert, CEO of IS Plåt.

From ambition to structured work

IS Plåt can reduce its climate footprint by selecting suppliers who have a high proportion of scrap in their materials.

We have been careful about this from the outset. The next logical step was to work exclusively with suppliers who smelt in Europe. The alternative to using European raw materials containing a high proportion of scrap is to use virgin material from Asia. According to Erik Ralvert, extracting finite resources to manufacture stainless steel causes approximately seven times as many carbon dioxide emissions as using European recycled material.

"These are natural elements for us and, in recent years, they have been grouped under the umbrella of sustainability work. Once we realised everything we were already doing, we identified areas where we could improve."

One such issue was energy consumption. In mid-2022, IS Plåt installed over 900 solar panels on its roofs. The solar cell inventory was later expanded by a further 300 panels. Today, solar energy accounts for around half of IS Plåt's energy consumption.

It is based on ISO 26000 and the Global Goals

To communicate its sustainability work in a credible manner, IS Plåt has worked in accordance with the SIS/TS 2 Sustainability Declaration framework. This framework is based on the ISO 26000 standard, 'Social Responsibility of Organisations', and the UN's Global Goals.

Lena Jönsson, an auditor at RISE, explains how the Swedish standard works.

"It consists of a 42-question questionnaire that guides customers in describing their sustainability work. What has been achieved? What are the plans for the future? The idea is that the questions will encourage companies and organisations to reflect on their strengths and areas for improvement", she says, continuing:

"While most small and medium-sized enterprises are not required to report under the Corporate Sustainability Reporting Directive (CSRD), they do need to deal with customers who are. A sustainability declaration can be used to respond to requirements set further up the value chain."

Prepared for upcoming legal requirements

Erik Ralvert points out that their customers have not yet imposed any reporting requirements, but he believes that a verified sustainability declaration will help them to attract the 'right' partners in the future.

"Today, we are not directly covered by EU requirements, but I am convinced that we will be in the future. Then we will be prepared. I also see the declaration and RISE verification as a competitive advantage. At the very least, it should be," says Erik Ralvert.

IS Plåt is already certified to ISO 9001 (quality management), ISO 14001 (environmental management) and ISO 3834-2 (welding quality management), so annual audits are nothing new. Now that RISE is continuously monitoring the sustainability declaration, IS Plåt is taking full advantage of the relationship.

"Having someone from outside not only review us, but also offer reflections on our work, is very rewarding. Hearing ideas from someone who meets so many other companies is extremely valuable," says Erik Ralvert.