News
Economic resilience, security and the environment are intertwined. Sitra’s new memorandum highlights what the EU’s upcoming Circular Economy Act needs to change the game.
Communications and Public Affairs Lead, Global Circular Economy
Published
31.3.2026
Dependence on imported raw materials has made Europe vulnerable, exposed to supply chain disruptions and geopolitical uncertainty. Smart regulation is needed to create a level playing field for circular materials, products and business models, and to encourage innovation and reduce environmental pressures.
The European Union is currently formulating the Circular Economy Act (CEA) as a decisive step towards a competitive and more sustainable Europe. This presents a critical opportunity to move Europe’s circular economy from ambition to delivery.
With its new memorandum, Sitra hopes to bring fresh perspectives and concrete proposals to the European debate.
The circular economy has not progressed as hoped, even though much has already been done in the EU. The reasons for this are fragmented markets, weak incentives for recycled materials and regulatory barriers. The upcoming Circular Economy Act could be decisive for shaping the market for circular solutions, if it can harmonise the rules and address market shortcomings. A well-functioning European market would attract investments and support competitiveness. The objectives of the EU Circular Economy Act are strategic: reducing dependence on imported raw materials improves resilience.
“At the same time, the ability of the new measures to catalyse systemic change to accelerate the transition to a circular economy relies on strong coherence with product and trade policies,” says Johanna Suikkanen, Leading Specialist at Sitra, one of the authors of the memorandum.
Sitra’s new memorandum recommends that CEA measures focus on providing the scale and predictability market participants need, including through robust demand‑side measures. To accelerate the development of high-quality recycling and processing capacity—particularly for critical raw materials—the CEA should be supported by EU‑level financial instruments that de‑risk industrial investments. Data and digital data carriers should be recognised as core enablers of circular markets by improving transparency, quality assurance, material recovery and multiple life cycles. Effective implementation and coherence across existing legislation are essential to send clear and consistent market signals. Finally, the CEA should recognise the role of trade and external relations in as part of a circular economy.
Read the full memorandum here.