Every circular regulation arriving in Europe asks for the same thing in different words: prove it. Prove what a product is made of, prove where the material came from, prove what share is recycled, prove what happens at the end of its life. The ambition to be circular is now widely shared and reasonably well understood. What decides whether a circular claim or a circular operation actually holds is the data sitting underneath it, and that data is the part most organisations have never governed.
The circular conversation has moved a long way on strategy and design. It has barely started on the discipline that makes reporting and claims trustworthy at scale: data governance. That gap is where a lot of circular ambition quietly converts into cost and exposure.
The new rules are data requirements wearing a sustainability badge
Strip the language back and the instruments landing on producers are data obligations.
The Digital Product Passport under the Ecodesign for Sustainable Products Regulation is a master-data and data-exchange problem before it is anything else. A passport needs one trusted record of what each product is, what it contains, where its materials came from, and how it is repaired and recovered, and that record has to be shared across the value chain and be true at the point of sale. That is master data management and data exchange, the core of enterprise data work, applied to products.
Extended producer responsibility with fees modulated by circularity turns product composition into a number on an invoice. When the fee a producer pays is set by how recyclable a product is, fee exposure can only be forecast from reliable composition data at product level. Composition data you cannot trust becomes fee exposure you cannot forecast.
Recycled-content and origin claims only survive scrutiny when they can be traced back to the source that justifies them. A recycled-content figure or a deforestation-free origin claim is data lineage made visible. Without that lineage the claim is an assertion, and assertions collapse the first time an auditor, a regulator or an investor pushes on them.
Sustainability reporting under the CSRD and the ESRS converts circularity into auditable data with a named owner and an audit trail. The reporting line stops being an annual return and becomes a data-control line that has to hold up to assurance.
None of this is solved by switching to recycled material and calling the result circular. The exposure sits in whether the data behind each claim is owned and verifiable, not in the ambition behind it.
This is where the ladder actually breaks
The Circular Readiness Levels already place the data layer where the friction is. CRL4, Operational Integration, is defined as circularity built into governance, systems, data structures, investment logic and decision-making. CRL2, Compliance Readiness, carries the warning that reporting happens but nobody owns the outcomes. The move from CRL3 to CRL4, the Evidence and Case Development work, is about turning live circular activity into evidence that leadership, regulators, partners and frameworks will trust. Evidence others trust is, mechanically, data others can verify.
The same wall shows up across very different sectors. In Dutch manufacturing, the binding constraints on circular production are rarely the machines. ERP, MES and shop-floor data exist but do not connect, return-on-investment models run on educated guesses because the underlying operational data is not reliable enough to model, and no single executive owns the intersection of circular strategy and production capability. In a textile brand, the producer fee, the recyclability and the passport all depend on composition data that historically sat in three different systems on three different desks. Different industries, one ceiling. The operational-integration ceiling is frequently a data-governance ceiling.
What data governance means in circular work
The phrase sounds like an IT concern. In circular work it is a commercial one, and it breaks down into a few concrete things.
Ownership
A named owner for each critical data domain: product composition, supplier and material provenance, material and waste flows. Most stalls trace back to data that nobody owns and therefore nobody maintains.
A single source of truth
One trusted definition of a product, a material and a supplier, so that procurement, finance and the sustainability team read the same record. Where each function works from its own version, every number is real and the totals still fail to reconcile.
Lineage
The ability to trace any claim back to the source that justifies it, which is what lets a recycled-content or origin claim survive an audit rather than a presentation.
Quality you can model on
Completeness and reliability high enough to forecast fee exposure and report against targets, instead of working from estimates that fall apart under scrutiny.
An operating model that outlives individuals
Defined rules, cadence and responsibility for keeping the data current, so circular practice no longer depends on a few motivated people. That independence from individual effort is precisely the shift from CRL3 to CRL4.
A claim is only as strong as the data beneath it
We have made a version of this argument before, for a single number. A circularity score is not a circularity claim, because the same economy holds several credible figures at once and a percentage means nothing until you name the metric, the method and the scope behind it. Measurement integrity is one face of data governance. The wider discipline is what keeps a whole system of claims standing when finance, regulators, auditors and investors each press on it from a different angle.
When that discipline is missing, circularity becomes theatre: precise figures, weak claims, and no reliable decision logic underneath. Data governance is how the figures earn the claims. It is the difference between a circular position that survives contact with an audit and one that was assembled afterwards to defend a number already published.
What this means for different roles
For CEOs
Circular strategy and data strategy are converging into one question. The organisations that treat product and material data as an asset to govern, rather than a reporting chore to survive, set the cost and capability benchmarks the rest of the market has to meet.
For CFOs
Fee exposure, recycled-content claims and investment cases all rest on data the business can stand behind. Composition and provenance data that cannot be trusted is unpriced risk already sitting on the balance sheet, waiting for a fee schedule or an auditor to surface it.
For Sustainability and Operations leads
The reporting line is becoming a data-control line. The work shifts from compiling an annual return to running data that has to be true at the point of sale, which means the data has to be designed in upstream, where products and volumes are decided.
For Data and IT leads
Circularity is now a first-class driver of master data, lineage and governance investment, and it comes with a regulatory deadline attached. The product passport is, in practice, the master-data programme the organisation was going to need anyway.
Where Circular Intelligence works
Circular Intelligence works on the transition layer between circular ambition and operational reality, which is exactly where the data layer decides outcomes. The Circular Readiness Levels place the data foundation at CRL4, and our Evidence and Case Development work, together with the Digital Product Passport and Supply Chain products, is where it gets built in practice rather than described on a slide.
The point we bring that circular strategy alone does not is this: data governance is a discipline in its own right, with decades of enterprise practice behind it, and circularity is one of the largest new applications of it. We treat circular data as something to be owned, traced and trusted before a claim is made on it, not gathered after the fact to defend one. That is what turns a circular ambition into a position that holds when the data is finally tested.
Take the next step
- Digital Product Passport Readiness Sprint. Map what product data you already have, what is missing, and who owns it, before a passport has to become compliant. See the product
- Supply Chain Circularity Track. Find where circular data breaks between organisations, which is usually where the claim breaks too. Build a track
- Talk to us. If a circular claim, fee position or report has to hold up, start with the data beneath it. Get in touch
Companion piece: A circularity score is not a circularity claim, on why naming the metric, method and scope is the difference between a claim that survives scrutiny and one that does not.
References and further reading
- Regulation (EU) 2024/1781, Ecodesign for Sustainable Products Regulation: Digital Product Passport and ecodesign requirements for priority product groups.
- Revised Waste Framework Directive (Directive 2008/98/EC as amended): extended producer responsibility for textiles, with fees modulated by how circular a product is.
- EU Deforestation Regulation (Regulation (EU) 2023/1115): provenance, geolocation and due-diligence data for in-scope commodities.
- Corporate Sustainability Reporting Directive and the European Sustainability Reporting Standards (ESRS): sustainability and resource-use reporting as auditable data.
Note on dates and scope: the regulatory landscape referenced above is still moving. The ESPR delegated acts, national EPR transposition and fee structures, the EUDR application timeline, and the scope of the CSRD and ESRS under the EU Omnibus simplification package are all being finalised, and should be reconfirmed against the current texts before this page goes live.