Unlock the power of circularity: Advancing the circular economy through data exchange

What is the current global landscape of circularity?

The circular economy holds immense promise to address climate change, biodiversity loss, and pollution. However, 92.8% of global operations are still entrenched in linear models of production and consumption, highlighting substantial opportunities to transition toward more sustainable practices. 

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Despite the low adoption rates, there is reason to be optimistic. Across the globe, nearly 3,000 circular economy commitments have been made — including 135 policies spanning 17 different sectors — showcasing a concerted effort to develop frameworks that support circularity. These commitments reflect a growing recognition of the urgent need to transition away from the traditional linear model. Industries ranging from manufacturing and construction to fashion and technology are exploring ways to reduce waste, extend product lifecycles, and minimise environmental impacts.

What data is required for circularity?

Understanding current regulations and frameworks is key to helping businesses navigate their compliance obligations and realise their circular potential. The whitepaper analysed frameworks by leading circularity initiatives such as the EU’s Ecodesign for Sustainable Products Regulation (ESPR), the ISO Product Circularity Data Sheet, and the Battery Passport. It found that most data requested by regulations and voluntary frameworks fall into three main categories:

1. Reuse and recycling information: Data on how products and materials can be reused, remanufactured, or recycled is essential for closing the loop in circular supply chains.
2. Materials and chemical substances: Information on materials, including the identification of hazardous substances and their recyclability, is critical for ensuring safe and efficient recycling processes.
3. Environmental information: Data on a product’s environmental impact, including carbon emissions and energy use, helps minimise ecological footprints.

While the data required by current regulations lays a solid foundation for developing circular strategies and business models, addressing emerging data needs will be crucial in preparing for evolving circular economy demands. Other data areas that could become increasingly important as circular models evolve are:

4. Product authentication and certifications: Data that verifies the quality and condition of products entering second-life stages (e.g., resale or remanufacturing) is key to maintaining value and ensuring product integrity.
5. Material origins and renewability: Detailed information about the origins of materials, especially bio-based ones, is essential to understanding their environmental benefits. For instance, bio-based materials like corn starch-based polymers require proper end-of-life management for their benefits to be realised.
6. Integration with other regulations: Coordinating circularity data with existing product-specific regulations, such as packaging waste management, will streamline recovery and recycling processes, ensuring alignment with evolving rules.

Why is standardised circularity data important?

The shift to circularity demands reliable, harmonised data for:

• Effective decision-making and internal performance measurement
• Regulatory compliance with frameworks like Ecodesign for Sustainable Products Regulations (ESPR) and Corporate Sustainability Reporting Directive (CSRD)
• Collaboration across sectors, enabling supply chain transparency

Achieving standardised circularity data is not just a technical necessity but a foundational step toward actionable progress in sustainable business practices. The whitepaper recommends establishing a core set of standardised, sector-agnostic circularity data points as a critical step toward consistent data collection and measurement. 

Despite varying requirements across regulations, the identification of 14 key data categories from existing frameworks and standards could help create a unified foundation. This would enable consistent circularity measurement, support effective data-sharing protocols, and allow for meaningful comparisons across industries.

What are the challenges in circularity data exchange?

With the increasing focus on the circular economy, it is clear that several significant challenges impede the efficient exchange of circularity data. These issues must be addressed to enable meaningful progress and collaboration across industries.

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One major barrier is the concern around data confidentiality. Companies are often hesitant to share sensitive information openly due to fears of misuse or breaches. This lack of trust stifles transparency and limits the flow of valuable data, which is crucial for advancing circularity initiatives.

Another challenge lies in the lack of standardised data sharing and limited system interoperability, resulting in incomplete information. Without reliable, accurate environmental product data, businesses risk making poor decisions based on incomplete or incorrect information. This fragmentation reduces businesses’ ability to collaborate effectively across the value chain, hindering the development of a fully functioning circular economy. 

The high cost of implementing effective data-sharing protocols is also a significant obstacle. In many regions of the Southern Hemisphere, there is limited access to the infrastructure required for secure and efficient data exchange. This financial burden creates a barrier to entry, slowing the adoption of circular practices.

Overcoming these challenges will be essential for fostering a robust and interconnected circular economy. By addressing issues related to security, interoperability, cost, and data quality, businesses can unlock the full potential of circularity.

Collaborative initiatives such as the Global Battery Alliance, Catena-X, and Gaia-X demonstrate how interoperable tools, common data standards, and digital infrastructure can establish trust and enable seamless data exchange across value chains. Leveraging these lessons can help industries co-create a dynamic system capable of addressing challenges and anticipating future needs.

How Circularity Data Exchange (CDX) can leverage the Partnership on Carbon Transparency (PACT) for global alignment

The Circularity Data Exchange (CDX) initiative plays a pivotal role in advancing the global circular economy by providing the necessary infrastructure to operationalise and scale frameworks. Developed in the context of the Global Circularity Protocol (GCP) for Business, and aligned with WBCSD's Circular Transition Indicators (CTI) framework, CDX lays the foundation for a unified approach to circularity data, supporting efforts to drive international alignment and improve data sharing across industries. 

The whitepaper highlights the importance of using tested frameworks to develop scalable, efficient systems that align with the complexities of modern value chains. The Partnership for Carbon Transparency (PACT), developed by WBCSD, offers a proven approach for exchanging Scope 3 carbon emissions data. This successful framework provides valuable lessons that can be applied to the Circularity Data Exchange (CDX) initiative, helping to improve the exchange of circularity data.

While the PACT framework is a valuable first step for global alignment, it needs to evolve to address the dynamic and evolving nature of circular data requirements at the product level. Expanding this approach will enhance data sharing, foster international alignment, and facilitate stronger collaboration across industries, driving the transition to a truly circular economy.²

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Why do companies need to start taking action?

As global challenges like climate change, resource depletion, and pollution intensify, the need for businesses and economies to transition to sustainable practices has never been more urgent. The circular economy provides a framework that addresses these challenges by reducing waste and maximising resource efficiency, making the insights from this whitepaper critical in guiding that transition.

Governments and regulatory bodies worldwide are responding to these challenges by implementing policies and regulations that promote sustainability and circularity. In this context, businesses must understand how to effectively exchange and utilise circularity data to remain compliant and meet evolving regulatory requirements. With growing regulations on sustainability, delaying action on circular economy practices not only risks penalties but also missed opportunities to align with new standards. 

Much like how companies have had to adapt to the General Data Protection Regulation (GDPR) — which imposes fines of up to 4% of a company’s global annual turnover for serious data protection infringements — companies must now consider the EU Green Claims Directive. Under this directive, companies making unsubstantiated environmental claims (also referred to as “greenwashing”) could face fines of at least 4% of their annual turnover. The stakes are high, and failure to act now could have significant financial consequences.

Data is central to informed decision-making, and in an era where it plays a pivotal role in business strategy, access to reliable and standardised circularity data is crucial. Organisations must grasp the value of this data to enhance their operational efficiency, improve sustainability performance, and stay competitive.

The interconnected nature of today’s global economy means that collaboration across sectors is essential. Interoperability and data sharing are key to fostering collaboration and driving collective action towards circularity. This extends beyond businesses to consumers, who are increasingly demanding transparency about the sustainability practices of the companies they support. By effectively communicating their circularity efforts through credible data, businesses can gain a competitive edge and build stronger consumer relationships.

Embracing circular economy principles can also drive innovation, opening doors to new business opportunities. Organisations that leverage circularity data are better positioned to identify areas for improvement, optimise resource use, and develop products and services that align with sustainable practices.

For successful collaboration in the circular economy, establishing trust among stakeholders is essential. This whitepaper stresses the importance of verification mechanisms and data integrity standards, which are critical to ensuring the accuracy and credibility of shared circularity data. By extending trust mechanisms, like those in PACT, to circularity data, companies gain confidence in sharing information transparently. 

Ultimately, trust, credibility, and secure data sharing are vital to driving the success of circular economy initiatives and encouraging participation.

What are the next steps?

The whitepaper suggests the following next steps to lay the groundwork for enabling consistent, comparable, and credible circularity data at the product level. 

1. Establish a core set of circularity data points that are applicable across sectors

Reaching a consensus on standardised data points is crucial to the creation of a unified approach to collecting consistent circularity data. For example, the paper identified 14 data categories based on the content of existing frameworks and standards, although their information requirements under the different regulations and standards differ. Industries need the harmonisation of this process at a global level. This standardised core set of sector-agnostic data requirements will provide the foundation for consistent circularity measurement, enabling the development of data-sharing protocols and, ultimately, the ability to generate comparative results across industries.

2. Tailored data requirements for sectors

Once a core global standard is established, data points must be tailored to meet sector-specific needs. Different industries and products have unique requirements. For instance, user manuals and longevity data are critical for electronics, while material composition and waste management are more relevant for the chemical sector. Leveraging existing compliance data can help refine product-specific data requirements.

3. Product traceability across the value chain

Product traceability is essential for preserving the value of circular models. As products move through different life-cycle stages, including second-life uses, having a consistent and shared record-keeping system is crucial. Collaboration between tier 1 and 2 suppliers, as well as end-of-life stakeholders, is required to extend traceability to higher-tier suppliers, while protocols such as the UN Transparency Protocol provide a solid foundation for developing global traceability frameworks.

4. Develop incentive schemes

Beyond regulatory requirements, financial mechanisms are essential – such as innovative incentive models and competitive procurement schemes. These can encourage primary data collection and the development of IT infrastructure for data exchange. Closed-loop systems can unlock value by reducing operational costs and improving supply chain efficiency. Circular business models like product-as-a-service can also enable businesses to retain ownership, fostering reuse and remanufacturing while generating revenue through leasing or subscriptions.

Conclusion

The path to a fully functional circular economy faces significant challenges, with fragmented data and the lack of standardised circularity definitions at its core. Without clear guidelines on what data is required to enable circularity or an understanding of the value this data can bring, efforts to collect, share, and use circularity data will remain inconsistent. Building trust through addressing confidentiality concerns and incentivising participation is a critical first step toward a cohesive circularity data ecosystem.

Initiatives like PACT provide valuable insights into managing data through standardisation, integrity, and secure sharing practices. However, these efforts alone cannot fully address the complexities of circularity data exchange. Moving beyond current methodologies will require a collaborative and comprehensive approach to harmonise definitions, design adaptable data models, and implement robust verification systems.

The journey toward a circular economy requires global collaboration, harmonised data exchange, and innovative frameworks. By prioritising standardisation and interoperability, businesses can drive meaningful change while gaining a competitive edge in a sustainability-driven market.