C
Circular Economy
Definition
A circular economy is an economic model designed to eliminate waste and the continual use of resources by keeping products, materials, and substances in use for as long as possible through reuse, repair, remanufacturing, and recycling, in contrast to the linear ‘take-make-dispose’ economy. In ESG reporting, ESRS E5 (Resource Use and Circular Economy) under the CSRD requires companies to disclose resource inflows, outflows, waste generation, and circular economy practices. The EU Circular Economy Action Plan (2020) and Packaging and Packaging Waste Regulation (PPWR) (EU) 2025/40 provide the legislative framework.
Source
ESRS E5 (Resource Use and Circular Economy), Commission Delegated Regulation (EU) 2023/2772; EU Circular Economy Action Plan (COM(2020) 98); PPWR (EU) 2025/40.
Practical Explanation (Compliance Context)
Manufacturers and brands are subject to circular economy obligations through EPR schemes (WEEE, packaging, batteries), the PPWR’s recyclability and recycled content requirements, and ESRS E5 disclosures. Circular economy KPIs — material circularity indicator, waste diversion rate, recycled content percentage — are increasingly required in annual sustainability statements and investor questionnaires.