Learn about the main EU regulations that support the establishment of circular economy performance indicators in companies.
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The EU has not yet formally established any concrete requirements for specific performance indicators to measure the circularity of companies. However, within its policy strategy on circular economy, it has developed in recent years several regulations and policies that support this need. These are the 5 main ones:
This is the main European regulation that establishes the objectives and requirements of the Member States in relation to waste management and the circular economy.
According to this Directive, Member States must establish performance indicators and monitoring systems to ensure consistency in measuring progress in the implementation of waste prevention, reuse, recycling and resource recovery measures.
Amends Directive 94/62/EC on packaging and packaging waste. Establishes measures to promote the circular economy and reduce the impact of packaging on the environment.
In particular, according to this Directive, Member States must collect and transmit data on packaging waste prevention, preparation for reuse, recycling, recovery and disposal of packaging waste, as well as on the amount of recycled and reused materials.
It establishes measures to reduce the generation of plastic waste and promote the circular economy.
In relation to circular measurement requirements, this Directive establishes that Member States must determine measurement and monitoring systems for the reduction targets for the consumption of single-use plastic products, as well as for the recycling targets for the plastic waste generated.
Importantly, it establishes a series of indicators to measure progress in reducing the impact of plastic products on the environment and requires reporting and data collection by producers, importers and distributors of plastic products.
This EU legislative initiative seeks to improve disclosure of non-financial information by companies.It replaces the existingNon-Financial Reporting Directive and broadens the scope and disclosure requirements for more companies.
According to it, the European Commission must adopt sector-specific standards, standards for listed SMEs and standards for non-EU companies by June 2024.
As of January 1, 2024, the new reporting obligations will already apply to large companies, which will be required to submit their sustainability reports by 2025.
What about Spain? We are awaiting the approval of the Spanish law that will transpose the CSRD directive.
The CSRD establishes more stringent requirements in terms of information to be included in corporate sustainability reports. It also establishes that companies within its scope must present their non-financial information in accordance with common standards, the European Sustainability Reporting Standards (ESRS).
The ESRS were issued for public consultation at the end of 2022, and have already been adopted by the European Commission in August 2023. They affect more than 50,000 companies subject to the EU's Corporate Sustainability Reporting Directive (CSDR) - up from around 12,000 today - and are a crucial step in turning high-quality environmental disclosure into a business standard.
▶️ These standards will apply from 2025 (reporting on 2024 data).
The ESRS E5. Resource use and circular economy.
Included in the ESRS suite is the draft ESRS E5 standard, which sets out disclosure requirements related to resource use and circular economy, particularly in relation to material resource inputs, resource outputs and waste.
With respect to disclosure requirements related to the measurement of circularity, the draft states that companies must report:
This qualification tool establishes technical criteria and specific requirements for the identification of economic activities that contribute to the transition towards a sustainable economy, including the circular economy.
It has a draft delegated act on the European Taxonomy for the objective of transition to a circular economy that establishes requirements on measurement and indicators for companies.
In relation to the circular measurement requirements it establishes that companies have the responsibility to report on the percentage of their economic activity that contributes to or aligns with the established circular economy objective. To this end, companies are required to measure their performance against established technical criteria. Some of the criteria contemplated in the draft are:
In Spain we do not yet have specific regulations on the need to establish circular economy performance indicators for companies. However, the Spanish Circular Economy Strategy (EEEC) or Spain Circular 2030, is aligned with the objectives of the EU Circular Economy Action Plans and does establish indicators and requirements that correspond to those selected at European level:
Some of the indicators included in these documents focus on self-sufficiency in raw materials, waste generation, food waste generated and economic indicators.
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