This article was written in collaboration with Guy Vincent, Program Lead of Amsterdam Circular at AMS Institute.

As a supply chain professional, you’re likely aware of the increasing demand for sustainable practices and the shift towards a circular economy in today's business landscape. The idea of circular value chains is rooted in the broader concept of the circular economy, which challenges the traditional linear economic model. While the linear economy follows a “take-make-dispose” approach, circular value chains prioritise closing the loop by keeping materials and products in use for as long as possible.

However, while the desire to achieve circularity is compelling, the journey toward achieving it is far from straightforward. It requires a strong foundation built on traceability and financing — two essential pillars that enable transparency, foster collaboration, and provide the resources needed for sustainable innovation. This article explores the critical role these elements play in creating resilient, efficient, and impactful circular supply chains. We also introduce Amsterdam Circular, a pioneering program dedicated to accelerating chain financing and collaboration, and showcase some of their trailblazing portfolio companies driving innovation and sustainability in their own circular value chains.

What are circular supply chains?

Circular supply chains stand in contrast to traditional linear supply chains, which generate significant waste and rely on the constant extraction of resources. Instead, circular supply chains embrace the core principles of the circular economy: eliminating waste and pollution, keeping products and materials in circulation at their highest value, and regenerating natural systems.

By applying R-strategies, circular supply chains are designed to minimise waste and pollution from the outset. This approach prioritises using recycled materials, designing products for easy repair, and adopting low-waste manufacturing processes. Circular chains keep products, components, and materials in use for as long as possible through maintenance, reuse, and refurbishment, with recycling as a last resort. 

Central to this philosophy is the idea that products should be designed not just for their initial use but for easy disassembly, refurbishment, or recycling at the end of their life. This enables greater flexibility in extending product lifespans, reduces the demand for virgin material extraction, helps minimise waste streams, enhances the efficiency of processes, as well as aligning with legal requirements.  

Finally, regenerating natural systems shifts beyond mere protection to actively restoring the environment. This includes practices such as regenerative agriculture, ecosystem restoration, nutrient cycling, and transitioning to renewable energy. Together, these interconnected principles foster a closed-loop system for environmental sustainability and supply chain efficiency.

What are the benefits of a circular supply chain?

Circular supply chains offer many environmental and economic benefits. By keeping resources in use, companies can lower costs and minimise waste. These supply chains are also more resilient as they reduce reliance on finite resources and are better equipped to adapt to disruptions. The flexibility of circular supply chains is particularly valuable in today’s volatile market, where resource shortages and supply chain disruptions are becoming more common.

With collaborative networks, businesses can share resources and co-create solutions by forming partnerships across sectors. Not only does it help companies reduce their environmental impact, but it also positions them to meet the growing demand for sustainable products and keep up with the evolving regulatory requirements. 

Some key elements of regulatory compliance in this context are the European Sustainable Product Regulation (ESPR), the Corporate Sustainability Reporting Directive (CSRD), and the Corporate Sustainability Due Diligence Directive (CS3D), which set stringent standards for product sustainability, sustainability reporting, and sustainability due diligence respectively. Ensuring product and supply chain traceability will not only help businesses meet regulatory requirements but also accelerate their transition to circular models by focusing on the entire product lifecycle. 

As a result, circular supply chains offer a range of benefits, including greater efficiency, cost savings, and resilience, along with minimised waste and a reduced environmental impact. They can also enhance brand reputation, provide a competitive edge, open up opportunities for innovation, improve risk management, foster customer loyalty, and support long-term business sustainability.

Challenges in transitioning to circular supply chains

While the advantages of adopting circular supply chains are evident, companies face significant challenges when transitioning from traditional linear supply chains. The truth is that companies cannot become circular on their own. Collaboration is key, and financing fuels the incentives that align chain partners. Secure data sharing and supply chain traceability are necessary for the success of circular systems.

One major challenge is the lack of standardisation across circular supply chain practices. With various systems and frameworks in use globally, companies often struggle to align their processes, share data, and work effectively across different platforms. This fragmentation can slow progress and hinder the efficient collaboration needed for a circular model to function smoothly.

Another obstacle is the inherent complexity of global supply chains. Circular supply chains often span multiple tiers of suppliers, intermediaries, and logistics providers, making it difficult to track materials from raw inputs through to their end-of-life or reuse stages. Industries with long, fragmented value chains face particular difficulties in ensuring all steps are transparent and aligned with circular principles. 

Supplier fatigue can also happen when suppliers get overwhelmed by frequent data requests, leading to decreased responsiveness and engagement. This is more common in compliance programs where supply chain actors face multiple, often overlapping, document requests on topics like environmental, social, and governance (ESG) metrics. Such administrative burdens can cause suppliers to struggle with maintaining accurate information across different platforms. 

Resistance to change is a significant barrier. Many businesses, particularly smaller players or those entrenched in traditional linear supply chains, may be hesitant to invest in new technologies or shift their business processes to align with circularity. The transition requires not only technological adoption, but also training, cultural shifts, and a long-term vision, which can be difficult to implement without strong leadership and buy-in.

Finally, cost remains a key concern for many companies, especially for small and medium-sized enterprises (SMEs). Circular supply chains often require significant upfront investment in new processes, technologies, and infrastructure, making it difficult for companies with limited capital to make the transition. For startups focused on circular models, securing financing can be particularly challenging, as venture capitalists and traditional banks may be hesitant to fund what they perceive as high-risk ventures. Without adequate financial backing, many circular initiatives are at risk of stalling before they can scale.

Amsterdam Circular: Chain financing for circular supply chains

Amsterdam Circular, led by program director Guy Vincent, is taking bold steps to address the complexities of circular supply chains. Acting as a circular chain accelerator — also called a circulator — Amsterdam Circular specialises in providing chain financing solutions tailored to circular startups and their partners. The organisation’s goal is to support startups in forming and funding value chains that harness circular revenue models, driving both business growth and sustainability. This initiative aligns with Amsterdam’s ambitious target to halve its raw material consumption by 2030.

Through facilitating chain partnerships, Amsterdam Circular helps startups accelerate revenue growth and access vital funding through co-financing from public and private investors. Chain coordinators play a pivotal role in aligning partners, negotiating fair terms, and fostering collaboration across the supply chain. This approach not only enhances resilience but also unlocks new value through innovative models like product-as-a-service and reverse logistics. Participants also benefit from workshops and education on circular finance and value chains, while building connections with partners such as AMS Institute, the City of Amsterdam, and Invest-NL.

“Traceability enables circular chain collaboration,” emphasised Vincent. “Companies that are looking to make their chain more resilient can get started by mapping out their ideal chain partnership, what we call a Minimum Viable Ecosystem, which creates enough value to drive commercial traction for all chain partners. When financial incentives align, successful chain collaboration follows.”

Interested in finding out more? You can access to Guy Vincent’s webinar with Circularise on Circular Supply Chains.

Examples of circular chain collaboration in practice

Here are some inspiring examples of circular chain collaborations that have come out of the Amsterdam Circular Circulator. 

No Palm Ingredients

No Palm Ingredients transforms agricultural waste streams, such as potato peels, into a palm oil alternative, using precision fermentation. Large multinationals, such as Unilever and Colgate-Palmolive, were interested in using No Palm to shorten their supply chains and reduce dependence on palm oil plantations, to support their sustainability ambitions. However, the cost of delivering samples of No Palm was high, and required delicate chain coordination between their agricultural suppliers, fermentation lab partners, and end customers. 

Recognising the high global demand for alternative palm oil products, financiers stepped in to bridge the gap with €5 million in co-financing. This funding enabled No Palm to deliver samples to Unilever and Colgate-Palmolive, resulting in product validation and driving business expansion.

C2CA

C2CA is a concrete upcycling company with facilities that grind up concrete waste from the construction industry to turn into cement, gravel, and sand for new projects. This attracted the attention of construction and engineering firm Duravermeer, who wanted to halve their CO2 emissions by 2030, and realised that the biggest CO2 emissions could be prevented by switching to upcycled cement rather than using raw primary materials. To achieve the scale required for such transformative change, C2CA needed to electrify their operations completely. 

The chain collaboration led to the formation of CITADEL, a large EU-backed research project to build and test demonstration plants. By doing so, C2CA addresses Scope 1 and 2 emissions directly while helping clients like Duravermeer tackle Scope 3 emissions throughout their supply chain. Recognising the high commercial potential and global impact, investors co-financed a €10 million Series A round to enable C2CA to expand operations internationally and further drive sustainability in the construction industry.

Why is traceability crucial for circular supply chains?

In circular supply chains, the focus is on keeping resources in use for as long as possible. Traceability refers to the ability to track products and materials throughout their entire lifecycle, from raw material sourcing to end-of-life disposal or reuse. It plays a pivotal role in enabling visibility across supply chains required for regulatory compliance and sustainable practices. 

In a circular economy, traceability becomes even more critical as companies strive to reduce Scope 3 emissions, which account for approximately 90% of total CO2 emissions. To meet sustainability targets and regulatory requirements, businesses need to track and report on emissions and resource usage throughout their entire value chain. Product traceability platforms can facilitate this by providing accurate, real-time data on product origins, compositions, and environmental footprints.

One of the most powerful tools to enable traceability in circular value chains is the digital product passport (DPP). A DPP provides a secure and immutable record of a product's journey through the value chain. This ensures that information on materials, processes, and environmental impact remains accessible, allowing stakeholders to make informed decisions about reuse, recycling, or disposal.

Examples of a digital product passport in practice

Biosphere Solar is another inspiring Amsterdam Circular portfolio company that is creating fully repairable and upgradable photovoltaic (PV) panels, setting a new standard for circularity in the renewable energy sector. Driving this change is the integration of a dynamic digital product passport, developed in collaboration with Circularise. 

This passport ensures transparency and secure data exchange across the value chain, providing essential information about materials, components, and environmental impact while protecting sensitive business data. By incorporating predictive maintenance modules and dynamic life cycle assessments, the passport optimises repair processes and end-of-life strategies, enabling reuse, refurbishment, and recycling to minimise environmental impact. 

Conclusion

Circular value chains are more than just an aspirational goal — they are a critical response to the environmental, economic, and regulatory pressures shaping the future of business. By enabling transparency, traceability unlocks critical insights into supply chain operations, supports regulatory compliance, and ensures alignment with sustainability goals. 

Innovative financing models provide the capital and incentives necessary for businesses to embrace circular strategies, scale their impact, and support circular chain collaboration. “Circular financing is evolving to support chain collaboration”, says Vincent, “and traceability technology brings it all together. In the coming years, we will see chain financing innovations that enable supply chains to become more resilient and profitable. Circular supply chains have an exciting decade ahead.”

By fostering partnerships across the supply chain, these financing models help align stakeholders, drive joint initiatives, and ensure that circular practices are adopted at every stage of the product lifecycle. This collaborative approach enhances the efficiency and resilience of circular value chains, enabling businesses to leverage shared resources, expertise, and networks to create lasting, sustainable impact.

As companies collaborate to close material loops, minimise waste, and foster regeneration, they not only address pressing global challenges and comply with increasing sustainability regulations but also create competitive advantages and long-term value. This is the way businesses can transition toward a sustainable, resilient, and regenerative economy.

‍Access Guy Vincent’s webinar with Circularise on Circular Supply Chains.