A circular economy is an economic system in which the value of products, materials, and other resources in the economy is maintained for as long as possible, enhancing their efficient use in production and consumption, thereby reducing the environmental impact of their use, minimising waste and the release of hazardous substances at all stages of their life cycle, including through the application of the waste hierarchy.
Under the EU Taxonomy, the transition to a circular economy is one of six environmental objectives. Economic activities that substantially contribute to circularity — such as product design for durability, repair and reuse services, or recycling infrastructure — can qualify as taxonomy-aligned. ESRS E5 (Resource Use and Circular Economy) requires companies to disclose their resource inflows, outflows, and waste management practices, as well as their strategies for increasing material circularity.
For companies reporting under CSRD, circular economy disclosures are particularly relevant for manufacturing, retail, and construction sectors. These disclosures include metrics on waste generation, recycling rates, and the use of secondary raw materials.
Explore EU Taxonomy alignment for circular economy activities and learn about CSRD environmental disclosure requirements. Read our guide on ESRS reporting standards for a complete overview of E5 requirements.
See how Coolset helps companies with circular economy reporting and CSRD compliance →
